diff --git a/parsed_sections/prospectus_summary/2015/APPF_appfolio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/APPF_appfolio_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/APPF_appfolio_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/AVXL_anavex_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/AVXL_anavex_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..cf6fce23be65447dbbf51e3bb4a4d00db192ba37 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/AVXL_anavex_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY Anavex Life Sciences Corp., a Nevada corporation, is referred to as Anavex, we, us, our, or the Company throughout this prospectus. The items in the following summary are described in more detail later in this prospectus. This summary does not contain all of the information you should consider. Before investing in our securities, you should read the entire prospectus carefully, including the Risk Factors beginning on page 5 and the financial statements and related notes beginning on page F-1. Overview Our Current Business We are a clinical stage biopharmaceutical company engaged in the development of drug candidates to treat Alzheimer s disease, other central nervous system (CNS) diseases, and various types of cancer. Our lead compounds ANAVEX 2-73 and ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Aricept), are being developed to treat Alzheimer s disease and potentially other central nervous system (CNS) diseases. In December 2014 a Phase 2a clinical trial was initiated for ANAVEX 2-73, which is being evaluated for the treatment of Alzheimer s disease. The randomized trial is designed to assess the safety and exploratory efficacy of ANAVEX 2-73 alone as well as in combination with donepezil (ANAVEX PLUS) in patients with mild to moderate Alzheimer s disease. ANAVEX 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain and to reverse the pathological hallmarks observed in Alzheimer s disease. ANAVEX 2-73 showed no serious adverse events in a previously performed Phase 1 study. In pre-clinical studies, ANAVEX 2-73 demonstrated anti-amnesic and neuroprotective properties in various animal models including the transgenic mouse model Tg2576. We intend to identify and initiate discussions with potential partners in the next 12 months. Further, we may acquire or develop new intellectual property and assign, license, or otherwise transfer our intellectual property to further our goals. Our Pipeline Our pipeline includes one clinical drug candidate and several compounds in different stages of pre-clinical study. Our proprietary SIGMACEPTOR Discovery Platform produced small molecule drug candidates with unique modes of action, based on our understanding of sigma receptors. Sigma receptors may be targets for therapeutics to combat many human diseases, including Alzheimer s disease. When bound by the appropriate ligands, sigma receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development) of disease. Compounds that have been subjects of our research include the following: ANAVEX 2-73 ANAVEX 2-73 may offer a disease-modifying approach in Alzheimer s disease (AD) by using ligands that activate sigma-1 receptors. In AD animal models, ANAVEX 2-73 has shown pharmacological, histological and behavioral evidence as a potential neuroprotective, anti-amnesic, anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity to sigma-1 receptors and moderate affinities to M1-4 type muscarinic receptors. In addition, ANAVEX 2-73 has shown a potential dual mechanism which may impact both amyloid and tau pathology. In a transgenic AD animal model Tg2576 ANAVEX 2-73 induced a statistically significant neuroprotective effect against the development of oxidative stress in the mouse brain, as well as significantly increased the expression of functional and synaptic plasticity markers that is apparently amyloid-beta independent. It also statistically alleviated the learning and memory deficits developed over time in the animals, regardless of sex, both in terms of spatial working memory and long-term spatial reference memory. TABLE OF CONTENTS PROSPECTUS SUMMARY 1 CORPORATE INFORMATION 4 THE OFFERING 4 SECURITIES OFFERED 4 RISK FACTORS 5 RISKS RELATED TO OUR BUSINESS 5 RISKS RELATING TO OUR COMMON STOCK 11 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 15 USE OF PROCEEDS 16 MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 17 SELLING SECURITY HOLDERS 19 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 BUSINESS 44 MANAGEMENT 50 DESCRIPTION OF SECURITIES 57 PLAN OF DISTRIBUTION 57 LEGAL MATTERS 59 EXPERTS 59 WHERE YOU CAN FIND ADDITIONAL INFORMATION 59 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITY 60 FINANCIAL STATEMENTS i PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS II-1 SIGNATURES II-12 You should rely only on the information contained in this prospectus. We have not, and the Selling Security Holders have not, authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell, nor are the Selling Security Holders seeking an offer to buy, securities in any state where the offer or solicitation is not permitted. The information contained in this prospectus is complete and accurate as of the date on the front cover of this prospectus, but information may have changed since that date. We are responsible for updating this prospectus to ensure that all material information is included and we will update this prospectus to the extent required by law. This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data and we do not make any representation as to the accuracy of the information. Based on the results of pre-clinical testing, we initiated and completed a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX 2-73 in 2011. In this Phase 1 SAD trial, the maximum tolerated single dose was defined per protocol as 55-60 mg. This dose is above the equivalent dose shown to have positive effects in mouse models of AD. There were no significant changes in laboratory or electrocardiogram (ECG) parameters. ANAVEX 2-73 was well tolerated below the 55-60 mg dose with only mild adverse events in some subjects. Observed adverse events at doses above the maximum tolerated single dose included headache and dizziness, which were moderate in severity and reversible. These side effects are often seen with drugs that target central nervous system (CNS) conditions, including AD. The ANAVEX 2-73 Phase 1 SAD trial was conducted as a randomized, placebo-controlled study. Healthy male volunteers between the ages of 18 and 55 received single, ascending oral doses over the course of the trial. Study endpoints included safety and tolerability together with pharmacokinetic parameters. Pharmacokinetics includes the absorption and distribution of a drug, the rate at which a drug enters the blood and the duration of its effect, as well as chemical changes of the substance in the body. This study was conducted in Germany in collaboration with ABX-CRO, a clinical research organization that has conducted several Alzheimer s disease studies, and the Technical University of Dresden. ANAVEX PLUS ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Aricept ) is a potential novel combination drug for Alzheimer s disease. Aricept (donepezil) is now generic. ANAVEX 2-73 showed in combination with donepezil an unexpected and clear synergic effect of memory improvement by up to 80% in animal models. A patent application was filed in the US for the combination of donepezil and ANAVEX 2-73 and if granted would give patent protection at least until 2033. In a humanized calibrated cortical network computer model the unexpected pre-clinical synergy between ANAVEX 2-73 and donepezil was confirmed and ANAVEX PLUS showed an anticipated ADAS-Cog response of 7 points at 12 weeks and 5.5 points at 26 weeks, which represents more than 2x the ADAS-Cog of donepezil alone. ANAVEX 3-71 ANAVEX 3-71, previously named AF710B is a preclinical drug candidate with a novel mechanism of action via sigma-1 receptor activation and M1 muscarinic allosteric modulation, which has shown to enhance neuroprotection and cognition in Alzheimer's disease. ANAVEX 3-71 is a CNS-penetrable mono-therapy that bridges treatment of both cognitive impairments with disease modifications. It is highly effective in very small doses against the major Alzheimer's hallmarks in transgenic (3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, and also has beneficial effects on inflammation and mitochondrial dysfunctions. ANAVEX 3-71 indicates extensive therapeutic advantages in Alzheimer's and other protein-aggregation-related diseases given its ability to enhance neuroprotection and cognition via sigma-1 receptor activation and M1 muscarinic allosteric modulation. ANAVEX 1-41 ANAVEX 1-41 is a sigma-1 agonist. Pre-clinical tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration or death) through the modulation of endoplasmic reticulum, mitochondrial and oxidative stress, which damages and destroys cells and is believed by some scientists to be a primary cause of AD. In addition, in animal models, ANAVEX 1-41 prevented the expression of caspase-3, an enzyme that plays a key role in apoptosis (programmed cell death) and loss of cells in the hippocampus, the part of the brain that regulates learning, emotion and memory. These activities involve both muscarinic and sigma-1 receptor systems through a novel mechanism of action. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering: [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company (Do not check if a smaller [X] reporting company) CALCULATION OF REGISTRATION FEE Title of Each Class of Securities Being Registered Amount to be Registered(1) Proposed Maximum Offering Price per Share(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee (2) Common Stock, $0.001 par value per share* 15,486,358 $0.18 $2,787,544.44 $323.92 Total 15,486,358 $323.92 *The shares of common stock being registered hereunder are underlying shares of the warrants sold and issued to the Selling Security Holders. (1) Pursuant to Rule 416 under the Securities Act, the shares being registered hereunder include such indeterminate number of shares of common stock as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act. The price per share and aggregate offering price are based on the average of the high and low sales prices of the registrant s common stock on March 2, 2015, as reported on the OTC Markets OTCQX. The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. ANAVEX 1037 ANAVEX 1037 is designed for the treatment of prostate cancer. It is a low molecular weight, synthetic compound exhibiting high affinity for sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels. In advanced pre-clinical studies, this compound revealed antitumor potential with no toxic side effects. It has also been shown to selectively kill human cancer cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient mice models. Scientific publications describe sigma receptor ligands positively, highlighting the possibility that these ligands may stop tumor growth and induce selective cell death in various tumor cell lines. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate sigma-1 and/or sigma-2 ligands can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions with ion channels, our drug candidates may play an important role in inhibiting the processes of metastasis (spreading of cancer cells from the original site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation. Our compounds are in the pre-clinical and clinical testing stages of development, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown in human testing. Our Target Indications We have developed compounds with potential application to two broad categories and several specific indications. The two categories are diseases of the central nervous system, and cancer. Specific indications include: Alzheimer s disease In 2014, an estimated 5.2 million Americans are suffering from Alzheimer s disease. The Alzheimer s Association reports that by 2025, 7.1 million Americans will be afflicted by the disease, a 40 percent increase from currently affected patients. Medications on the market today treat only the symptoms of AD and do not have the ability to stop its onset or its progression. There is an urgent and unmet need for both a disease modifying cure for Alzheimer s disease as well as for better symptomatic treatments. Depression - Depression is a major cause of morbidity worldwide according to the World Health Organization (WHO). Pharmaceutical treatment for depression is dominated by blockbuster brands, with the leading nine brands accounting for approximately 75% of total sales. However, the dominance of the leading brands is waning, largely due to the effects of patent expiration and generic competition. Our market research leads us to believe that the worldwide market for pharmaceutical treatment of depression exceeds $11 billion annually. Epilepsy - Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked seizures. These seizures are transient signs and/or symptoms of abnormal, excessive or synchronous neuronal activity in the brain. According to the Centers for Disease Control and Prevention, epilepsy affects 2.2 million Americans. Today, epilepsy is often controlled, but not cured, with medication that is categorized as older traditional anti-epileptic drugs and second generation anti epileptic drugs. Because epilepsy afflicts sufferers in different ways, there is a need for drugs used in combination with both traditional anti-epileptic drugs and second generations anti-epileptic drugs. Decision Resources, one of the world s leading research and advisory firms for pharmaceutical and healthcare issues, finds that the epilepsy market will increase from $2.9 billion in 2011 to nearly$3.7 billion in 2016. Neuropathic Pain We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in any part of the body. Neuralgia is more difficult to treat than some other types of pain because it does not respond well to normal pain medications. Special medications have become more specific to neuralgia and typically fall under the category of membrane stabilizing drugs or antidepressants. Our market research leads us to believe the worldwide market for pharmaceutical treatment of neuropathic pain exceeds $5 billion annually. Malignant Melanoma - Predominantly a skin cancer, malignant melanoma can also occur in melanocytes found in the bowel and the eye. Malignant melanoma accounts for 75% of all deaths associated with skin cancer. The treatment includes surgical removal of the tumor, adjuvant treatment, chemo and immunotherapy, or radiation therapy. According to IMS Health the worldwide Malignant Melanoma market is expected to grow from about $900 million in 2012 to $4.4 billion by 2022. Prostate Cancer Specific to men, prostate cancer is a form of cancer that develops in the prostate, a gland in the male reproductive system. The cancer cells may metastasize from the prostate to other parts of the body, particularly the bones and lymph nodes. Drug therapeutics for Prostate Cancer are expected to increase from $8.1 billion in 2012 to nearly $18.6 billion in 2017 according to BCC Research. Pancreatic Cancer - Pancreatic cancer is a malignant neoplasm of the pancreas. In the United States approximately 45,000 new cases of pancreatic cancer will be diagnosed this year and approximately 38,000 patients will die as a result of their cancer. Our market research leads us to believe that the market for the pharmaceutical treatment of pancreatic cancer will exceed $1.2 billion by 2015. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/BLNC_balance_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BLNC_balance_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..f301a29ddd9ff421c3c757f05310794613b78978 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/BLNC_balance_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including "Risk Factors", "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements, before making an investment decision. In this prospectus, the terms "Balance Labs" "Company," "we," "us" and "our", "our company" refer to Balance Labs, Inc. Overview Incorporated on June 5, 2014 under the laws of the State of Delaware, Balance Labs, Inc. ("Balance Labs") is a consulting firm that provides business development and consulting services to start up and development stage businesses. The company offers services to help businesses in various industries improve and fine tune their business models, sales and marketing plans and internal operations as well as make introductions to professional services such as business plan writing, accounting firms and legal service providers. We leverage our knowledge in developing businesses with entrepreneurs and start up companies management whereby we create a customized plan for them to overcome obstacles so that they can focus on marketing their product(s) and/or service(s) to their potential customers. On June 5, 2014, we issued 12,000,000 and 8,000,000 shares of common stock as "founder shares" to Balance Holdings, LLC ("Balance Holdings") and Shilo Security Solutions, Inc. ("Shilo") for services rendered in forming our company and pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Shilo subsequently distributed its equity holding in the Balance Labs, Inc. to its shareholders, pro rata, on January 5, 2015. Such shareholders are the selling shareholders identified in the section "Selling Security Holders" on page 18. Where You Can Find Us The Company's principal executive office and mailing address is 1111 Lincoln Road, 4th Floor, Miami Beach, FL 33139. Our telephone number is (305) 907-7600. Implications of Being an Emerging Growth Company We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include: A requirement to have only two years of audited financial statements and only two years of related MD Exemption from the auditor attestation requirement in the assessment of the emerging growth company s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; Reduced disclosure about the emerging growth company s executive compensation arrangements; and No non-binding advisory votes on executive compensation or golden parachute arrangements. We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a) (2)(B) of the Securities Act of 1933, as amended (the "Securities Act") for complying with new or revised accounting standards. We have elected not to use the extended transition period provided above. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission (the "SEC") becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION ON JUNE 5, 2015 BALANCE LABS, INC. 1,000,000 SHARES OF COMMON STOCK The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The common stock to be sold by the selling shareholders as provided in the "Selling Security Holders" section is common stock that are shares that have already been issued and are currently outstanding. We will not receive any proceeds from the sale of the common stock covered by this prospectus. Our common stock is presently not traded on any market or securities exchange. The selling security holders have not engaged any underwriter in connection with the sale of their shares of common stock. Common stock being registered in this registration statement may be sold by selling security holders at a fixed price of $0.25 per share for the duration of the offering. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ("FINRA"), nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares of the selling security holders. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and are subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 2 to read about factors you should consider before buying shares of our common stock. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is:_____________. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. The Offering Common stock offered by selling security holders 1,000,000 shares of common stock. This number represents 4.9 % of our current outstanding common stock. Common stock outstanding before the offering 20,400,000 shares of common stock. Common stock outstanding after the offering 20,400,000 shares of common stock. Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. The selling security holders will sell at a fixed price of $0.25 per share for the duration of the offering. Termination of the Offering The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act (iii) or we decide at any time to terminate the registration of the shares at our sole discretion. Trading Market There is currently no trading market for our common stock. We intend to apply soon for quotation on OTCQB. We will require the assistance of a market-maker to apply for quotation and there is no guarantee that a market-maker will agree to assist us. Use of proceeds We are not selling any shares of the common stock covered by this prospectus. As such, we will not receive any of the offering proceeds from the registration of the shares of common stock covered by this prospectus. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/BOTJ_bank-of_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/BOTJ_bank-of_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..9224c036375a7cf4dee33f36eb29a19b4cc17a48 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/BOTJ_bank-of_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY To understand this offering and its consequences to you, you should read the following summary along with the more detailed information and our consolidated financial statements and the notes to those statements set forth or incorporated by reference into this prospectus. Before making an investment decision, you should read the entire prospectus and the information incorporated into this prospectus, especially the information presented under the heading Risk Factors. General Bank of the James Financial Group, Inc. is a Virginia corporation organized to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956 and the Code of Virginia, 1950, as amended (the Code ), and to own and control all of the capital stock of Bank of the James. The Bank is a Virginia banking corporation organized under the laws of the Commonwealth of Virginia and opened for business on July 22, 1999. It is primarily engaged in the business of general retail and commercial banking and providing services related to banking including accepting demand deposits and savings deposits insured by the Federal Deposit Insurance Corporation (the FDIC ), and providing commercial, consumer and mortgage loans, principally in the City of Lynchburg, Virginia and its surrounding counties and, on a smaller scale, in the cities of Charlottesville, Harrisonburg, and Roanoke, Virginia, where we have recently expanded. Private Placement On December 3, 2015, we issued 1,000,000 shares of the Company s common stock to certain institutional investors for cash proceeds of approximately $11,520,000, at a price of $11.52 per share (the Private Placement ). In connection with the offering, we paid commissions in the aggregate amount of 6% of the offering. The Securities were offered and sold pursuant to an exemption from the registration requirements of the Securities Act in reliance on Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The price of the Securities was determined by us based on a variety of factors, including: the results of negotiations with investors in the Securities; an analysis of peer banks and other methodologies by the placement agents; the earnings per share and the per share book value of our common shares; the trading history of our common shares; our operating history and prospects for future earnings; our current performance; the prospects of the banking industry in which we compete; the general condition of the securities markets at the time of the Private Placement; and the prices of equity securities and equity equivalent securities of comparable companies. While current market price was a factor in the board s price setting determination, we noted that our shares are thinly traded and trades can artificially influence our share price in any one day. One of the most significant of the above factors was our negotiations with investors in the Private Placement. These were arms-length negotiations with independent, third parties that we believe provided definitive evidence of what a willing buyer is prepared to pay for our shares based on that buyer s evaluation of the Company. The gross proceeds to the Company from the Private Placement were $11,520,000. The Company intends to use $10,000,000 to prepay in full notes issued in 2012 (the 2012 Notes ). The 2012 Notes bear interest at the Table of Contents rate of 6% per year with quarterly payments of interest only. The 2012 Notes mature on April 1, 2017, but were called on or about December 4, 2015, and we expect to prepay them in full on or about January 5, 2016. The Company intends to use the remaining proceeds to pay related transaction fees and expenses and for general corporate purposes. We granted registration rights to the investors in the Private Placement, and are filing this registration statement to satisfy those rights. Corporate Information Our corporate headquarters is located at 828 Main Street, Lynchburg, Virginia 24504, and our telephone number is (434) 846-2000. Our website address is www.bankofthejames.com. The information on this website is not incorporated by reference into this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. Risk Factors Before investing, you should carefully consider the information set forth under Risk Factors for a discussion of the risks related to an investment in the Securities. Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus, including information included or incorporated by reference in this document, contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the Securities Act ) and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act ). Forward-looking statements may relate to our financial condition, results of operation, plans, objectives, or future performance. These statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words may, would, could, should, will, expect, anticipate, predict, project, potential, believe, continue, assume, intend, plan, and estimate, as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ from those anticipated in our forward-looking statements include, but are not limited, to the following: our anticipated strategies for growth and sources of new operating revenues; risks and uncertainties related to continuing to list our shares on a national securities exchange; our expectations regarding our operating revenues, expenses, effective tax rates, and other results of operations; our current and future products and services and plans to develop and promote them; risks and uncertainties related to capital expenditures and our estimates regarding our capital expenditures; increased cybersecurity risks, potential business disruptions or financial losses and changes in technology; risks and uncertainties related to our ability to comply with regulations; risks and uncertainties related to changes in economic conditions; risks and uncertainties related to our liquidity, working capital requirements and access to funding; risks and uncertainties related to credit losses; the rate of delinquencies and amount of loans charged-off; risks and uncertainties related to allowances for loan losses and loan loss provisions; decreases in loan growth; our ability to attract and retain key personnel; risks and uncertainties related to our ability to retain our existing customers; increases in competitive pressure in the banking and financial services industries; adverse changes in asset quality and resulting credit risk related losses and expenses; changes in the interest rate environment, business conditions, inflation and changes in monetary and tax policies; changes in political, legislative or regulatory conditions; loss of consumer confidence and economic disruptions resulting from terrorist activities or other military actions; changes in deposit flows; changes in accounting policies and practices; and other risks and uncertainties detailed in our annual reports on Form 10-K and, from time to time, in our other filings with the SEC. Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/CFG-PI_citizens_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CFG-PI_citizens_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..df8fe83dc54a2f22ea6aec929bb23576169ea920 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/CFG-PI_citizens_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in the notes. Therefore, you should read the entire prospectus carefully, including the section entitled Risk Factors in this prospectus and the documents incorporated by reference in this prospectus as well as the audited consolidated financial statements and unaudited interim consolidated financial statements and related notes included in the documents incorporated by reference in this prospectus, before making an investment decision to invest in the notes. Company Overview We were the 13th largest retail bank holding company in the United States as of March 31, 2015, according to SNL Financial, with total assets of $136.5 billion. Headquartered in Providence, Rhode Island, we deliver a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Our approximately 17,800 employees strive to meet the financial needs of customers and prospects through approximately 1,200 branches and approximately 3,200 automated teller machines operated in an 11-state footprint across the New England, Mid-Atlantic and Midwest regions and through our online, telephone and mobile banking platforms. We also maintain over 100 retail and commercial non-branch offices located both in our banking footprint and in eleven other states and the District of Columbia. As of March 31, 2015, our 11-state branch banking footprint contained approximately 30 million households and 3.1 million businesses according to SNL Financial, and approximately 75% of our loans were to customers located in our footprint. We conduct our banking operations through our two wholly-owned banking subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania. As of March 31, 2015, we had loans and leases and loans held for sale of $94.9 billion, deposits of $99.0 billion and stockholders equity of $19.6 billion, and we generated revenues of $1.2 billion for the three months ended March 31, 2015. We operate our business through two operating segments: Consumer Banking and Commercial Banking. As of March 31, 2015, the contributions of Consumer Banking and Commercial Banking to the loans and leases and loans held for sale in our operating segments were approximately 55% and 45%, respectively. Consumer Banking serves retail customers and small businesses with annual revenues of up to $25 million. Consumer Banking products and services include deposit products, mortgage and home equity lending, student loans, auto financing, credit cards, business loans and wealth management and investment services. Commercial Banking primarily targets companies and institutions with annual revenues of $25 million to $2.5 billion and strives to be the lead bank for its clients. Commercial Banking offers a full range of wholesale banking products and services, including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance. Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. Preliminary Prospectus (Subject to Completion) Dated July 28, 2015 $250,000,000 % Subordinated Notes due 2025 We are offering $250,000,000 aggregate principal amount of our % subordinated notes due 2025 (the notes ). Interest on the notes will be payable semi-annually in arrears on January 30 and July 30 of each year, commencing on January 30, 2016. Prior to July 1, 2025, the notes may not be redeemed. At any time on or after July 1, 2025 (30 days prior to their maturity date), the notes may be redeemed, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date. The notes will be our unsecured and subordinated obligations and will rank junior in right of payment to all of our existing and future indebtedness that is not by its terms subordinate to or equal in right of payment to the notes, equal in right of payment to all of our existing and future indebtedness that is issued on a pari passu basis and senior in right of payment to all of our existing and future indebtedness that is by its terms subordinate to the notes. None of our existing or future subsidiaries will guarantee our obligations under the notes, and the notes will be structurally subordinated to all existing and future liabilities of our existing and future subsidiaries. We do not intend to apply for the listing of the notes on any securities exchange or for quotation of the notes on any automated dealer quotation system. The notes are not deposits or other obligations of a bank and are not insured by the Federal Deposit Insurance Corporation ( FDIC ) or any other governmental agency. Investing in the notes involves risk. Before buying any notes, you should consider the risks that we have described in Risk Factors beginning on page 11 of this prospectus and on page 26 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the 2014 Form 10-K ) incorporated by reference herein. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Notes Per Note Total Price to public(1) % $ Underwriting discounts and commissions % $ Proceeds to us(1) % $ (1) Plus accrued interest, if any, from , 2015. The underwriters expect to deliver the notes to purchasers in book-entry form only through The Depository Trust Company ( DTC or Depositary ), for the benefit of its participants, including Clearstream Banking, S.A. ( Clearstream ) and Euroclear Bank S.A./N.V. ( Euroclear ), on or about , 2015. See Book-Entry; Delivery and Form. Global Coordinator and Joint Book-Running Manager BofA Merrill Lynch Joint Book-Running Managers Citigroup Credit Suisse Mizuho Securities RBS Prospectus dated , 2015 Table of Contents The following table presents certain financial information for our segments as of and for the three months ended March 31, 2015 and as of and for the year ended December 31, 2014: As of and for the Three Months Ended March 31, 2015 As of and for the Year Ended December 31, 2014 Consumer Banking Commercial Banking Other(1) Consolidated Consumer Banking Commercial Banking Other(1) Consolidated (dollars in millions) Total loans and leases and loans held for sale (average) $ 50,260 $ 40,241 $ 3,784 $ 94,285 $ 47,745 $ 37,683 $ 4,316 $ 89,744 Total deposits and deposits held for sale (average) 67,518 21,932 6,195 95,645 68,214 19,838 4,513 92,565 Net interest income 533 276 27 836 2,151 1,073 77 3,301 Noninterest income 219 100 28 347 899 429 350 1,678 Total revenue $ 752 $ 376 $ 55 $ 1,183 $ 3,050 $ 1,502 $ 427 $ 4,979 Net income $ 61 $ 147 $ 1 $ 209 $ 182 $ 561 $ 122 $ 865 (1) Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets and liabilities, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, equity, revenues, provision for credit losses and expenses not attributed to the Consumer Banking or Commercial Banking segments. For a description of non-core assets, see Management s Discussion and Analysis of Financial Condition and Results of Operations Analysis of Financial Condition in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the 2014 Form 10-K ) and Quarterly Report on Form 10-Q for the three months ended March 31, 2015 (the Q1 2015 Form 10-Q ), each incorporated by reference in this prospectus. Repurchase Transaction We have agreed to repurchase approximately $250 million of our common stock directly from the RBS Group at a purchase price per share equal to the price per share of common stock to the public sold by the selling stockholder in a registered offering of our common stock (the Repurchase Transaction ). The completion of the Repurchase Transaction will be subject to various conditions, including the completion of this offering and the common stock offering by the selling stockholder. Recent Developments (Preliminary and Unaudited) On July 21, 2015, we announced our preliminary financial results for the quarter ended June 30, 2015. Such financial results were included in our Current Report on Form 8-K filed with the SEC on July 28, 2015 ( Q2 Form 8-K ) and are incorporated by reference in this prospectus. The financial results included in the Q2 Form 8-K are preliminary and may change as a result of the completion of our financial closing procedures or any adjustments that may result from the completion of the review of our consolidated financial statements. Accordingly, these unaudited results may materially differ from the actual results that will be reflected in our consolidated financial statements for the quarter ended June 30, 2015, when they are completed and publicly filed with the SEC on our Quarterly Report for the quarter ended June 30, 2015. The Q2 Form 8-K should be read in conjunction with Selected Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, and our historical consolidated financial statements and the notes thereto in our 2014 Form 10-K and our Q1 2015 Form 10-Q each incorporated by reference in this prospectus. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/CIK0000044689_gyrodyne_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000044689_gyrodyne_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bbf8efcfb9d867cb7101bbd8be6106f1ef2bfc9 --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/CIK0000044689_gyrodyne_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding whether to exercise your subscription rights. You should carefully read this entire prospectus, including the information under the heading Risk Factors . In this prospectus, all references to the Company, Gyrodyne we, us and our refer to Gyrodyne Company of America, Inc., a New York corporation, and its subsidiaries and predecessors, unless the context otherwise requires or where otherwise indicated. Gyrodyne Company of America, Inc. Gyrodyne, a self-managed and self-administered real estate investment trust (or REIT) formed under the laws of the State of New York, manages a diversified portfolio of real estate properties comprising office, industrial and service-oriented properties primarily in the New York metropolitan area. Prior to the payment of the First Special Dividend issued in December 2013 and described below, Gyrodyne owned a 68 acre site approximately 50 miles east of New York City on the north shore of Long Island, which includes industrial and office buildings and undeveloped property that is the subject of development plans and is referred to in this proxy statement/prospectus as Flowerfield. Prior to payment of the First Special Dividend described below, Gyrodyne also owned medical office buildings in Port Jefferson Station, New York, Cortlandt Manor, New York and Fairfax, Virginia. As part of the First Special Dividend as described below, the foregoing properties were transferred to GSD, a subsidiary of Gyrodyne, and all of the outstanding shares of GSD were then distributed to the shareholders of Gyrodyne. Gyrodyne is also a limited partner in Callery Judge Grove, L.P., the only assets of which consist of potential future payments upon the achievement of certain development benchmarks by the purchaser in the 2013 sale by the partnership of an undeveloped 3,700 plus acre property in Palm Beach County, Florida. As of March 31, 2015, Gyrodyne has an investment in mortgage loans and line of credit both due to it from GSD of $12,645,754 and $4,952,914, with both loans eliminated in consolidation. On December 24, 2014, Gyrodyne and GSD executed a management services agreement, pursuant to which Gyrodyne s taxable REIT subsidiary, Flowerfield Properties Inc ( FPI ), continues to provide GSD with acquisition and disposition services, asset management services, accounting and other administrative services, property management services and shareholder services. In consideration for these services, GSD reimburses FPI for 85% of FPI s general and administrative expenses and pays FPI a fee equal to 8.5% of such reimbursed amount; reimburses FPI for all rental expenses, whether value added (such as contractor and consultant expenses) or non-value added (such as utilities and taxes) paid by FPI in respect of the properties; pays FPI a fee equal to 8.5% of all value added rental expenses paid by FPI in respect of the properties (but no fee in respect of non-value added rental expenses); reimburses FPI for 100% (without mark-up) of any bonuses paid by FPI to its employees and directors and related payroll taxes on account of any sales of GSD properties; and pays interest to Gyrodyne at the rate of 5.0% per annum on any funds advanced by Gyrodyne to GSD pursuant to a liquidity facility, currently of up to $5.5 million, made available to GSD by Gyrodyne. The shares of common stock of Gyrodyne, par value $1.00 per share, are traded on NASDAQ under the symbol GYRO. Gyrodyne s principal executive offices are located at One Flowerfield, Suite 24, Saint James, New York 11780 and its telephone number is (631) 584-5400. Strategic Process In July 2012, Gyrodyne received $167,501,657 from the State of New York in payment of the judgments in Gyrodyne s favor in its condemnation litigation with the State, which consisted of $98,685,000 in additional damages, $1,474,941 in costs, disbursements and expenses and $67,341,716 in interest. In August 2012, Gyrodyne announced that it was undertaking a strategic review to maximize shareholder value through one or more potential cash distributions and/or through a potential sale, merger, reinvestment or other strategic combination, consistent with Gyrodyne s previously announced goal of providing one or more tax efficient liquidity events to its shareholders. On September 12, 2013, following Gyrodyne s receipt of a private letter ruling from the Internal Revenue Service (the 2013 PLR ) (as described below), our board of directors concluded that it was in the best interests of Gyrodyne and its shareholders to liquidate Gyrodyne for federal income tax purposes and adopted a Plan of Liquidation and Dissolution (the Plan of Liquidation ). In adopting the Plan of Liquidation for federal income tax purposes, our board of directors also determined to pursue the actual disposition of our remaining assets in an orderly manner designed to obtain the best value reasonably available for such assets. The completion of the Merger would complete the liquidation of Gyrodyne for federal income tax purposes within the two year period from the adoption of the Plan of Liquidation, as provided by Section 562(b)(1)(B) of the Internal Revenue Code of 1986, as amended (the Code ) even though the actual disposition of the properties within the same period had not necessarily occurred. Our board of directors believed that the prompt completion of the Tax Liquidation by means of the Merger while permitting a longer period to dispose of the remaining assets would help obtain better values by enabling the sales to take place without the potential timing constraints created by completing the Merger as promptly as practicable. In addition, the ability to extend the time of holding the properties would permit Gyrodyne to seek enhancements of the value of Flowerfield including by pursuing various development or zoning opportunities. In this prospectus, we refer to such liquidation as the Tax Liquidation. On September 13, 2013, our board of directors declared the First Special Dividend, in the amount of $98,685,000, or $66.56 per Gyrodyne share, of which approximately $68,000,000, or $45.86 per share, was to be paid in cash. In connection with the First Special Dividend, our board of directors requested the opinion of Valuation Research Corporation ( Valuation Research ) as to the solvency of Gyrodyne after giving effect to the First Special Dividend. On September 13, 2013, at a meeting of our board of directors, Valuation Research delivered its opinion that, immediately after the completion of the First Special Dividend, (i) the fair value and the present fair saleable value of our aggregate assets exceeds the sum of our total liabilities, (ii) we will be able to pay our debts as such debts mature or otherwise become absolute or due, and (iii) we do not have unreasonably small capital. On December 19, 2013, our board of directors determined that the non-cash portion of the First Special Dividend would be paid by a distribution of all of the outstanding shares in GSD, a subsidiary of Gyrodyne into which all of Gyrodyne s real estate assets were previously contributed as part of an internal restructuring. We refer to such properties as the Contributed Properties. Our board also determined that, after consideration of a management presentation regarding the fair market value of the properties to be transferred to GSD, the aggregate value of the outstanding equity interests of GSD ( GSD Interests ) distributed in the First Special Dividend was $30,685,000 (an amount determined by our board of directors to be equal to the estimated fair market value of the properties, net of all liabilities encumbering such properties, including mortgage loans payable to a subsidiary of Gyrodyne in the aggregate amount of $13,840,889 as of December 31, 2013). The First Special Dividend was paid on December 30, 2013 to shareholders of record as of November 1, 2013. As required by NASDAQ rules governing special dividends of this magnitude, the ex-dividend date was set one business day following the payment date. The transfer of the Contributed Properties by Gyrodyne to GSD resulted in the recognition of approximately $28.4 million of capital gain income by Gyrodyne in 2013. Giving effect to offsetting deductions, Gyrodyne determined that it would have approximately $18 million in REIT income for 2013. In order to satisfy applicable REIT distribution requirements, on December 20, 2013, Gyrodyne declared an additional dividend (the Second Special Dividend ), payable to Gyrodyne shareholders of record as of December 31, 2013 on January 31, 2014. The Second Special Dividend was paid in the form of uncertificated interests in a global dividend note due June 30, 2017 (the Dividend Note ) aggregating $16,150,000 ($10.89 per share) in principal amount. The Dividend Note bears interest at 5.0% per annum, payable semi-annually on June 15 and December 15 of each year, commencing June 15, 2014, and may be payable in cash or in the form of additional notes. On June 16, 2014, the initial semi-annual interest payment on the Dividend Note was paid in kind in the form of uncertificated interests in a global 5% subordinated note due June 30, 2017 in the principal amount of $302,813 that otherwise is identical to the Dividend Note other than as to the initial semi-annual interest payment date thereunder. On December 15, 2014, the second semi-annual interest payment on the original Dividend Note was paid in kind in the form of uncertificated interests in a global 5% subordinated note due June 30, 2017 in the principal amount of $403,750 that otherwise is identical to the Dividend Note other than as to the initial semi-annual interest payment date thereunder. The initial interest due of $7,570 on the note issued on June 16, 2014 was paid in cash on December 15, 2014. The following table shows information with respect to all distributions made by Gyrodyne to its shareholders since November 2005, the time of the taking by New York State of 245.5 acres of our Flowerfield property. The values indicated for the non-cash distributions (GSD Interests and interests in notes) are stated values as of the time of the respective distributions made in good faith by the board. There can be no assurance that such values represent actual market values or that any shareholders could realize those values now or at any time in the future. Ex-Div. Date/ Interest Payment Date Distributions per Share Consideration 3/22/2007 $ 4.00 Cash Dividend 12/17/2012 $ 38.30 Cash Dividend 12/27/2013 $ 10.89 Interests in Dividend Note 12/31/2013 $ 66.56 $45.86 cash, $20.70 in GSD Interests 6/16/2014 $ 0.20 Interests in PIK Note 9/24/2014 $ 0.46 Interests in Dividend Note 12/15/2014 $ 0.27 Interests in PIK Note Total Distributions per Share $ 120.68 On September 15, 2014, our board declared a special supplemental dividend in the amount of $682,033 or $0.46 per share of Gyrodyne common stock. The dividend was paid in the form of non-transferrable uncertificated interests in a dividend note on December 31, 2014 to all shareholders of record as of September 26, 2014 (the 2014 Dividend Note ). The dividend is intended to distribute Gyrodyne s undistributed 2013 REIT taxable income. During the second quarter of 2014, our board of directors approved the hiring of real estate brokers to facilitate the sale of the Cortlandt Manor Medical Center and Fairfax Medical Center. In early 2015, the Company became aware that various aspects of the plaintiff s claims in a putative class action lawsuit against the Company, members of the Company s board of directors, GSD and Gyrodyne, LLC were interfering with the aforementioned proposed sale of such properties. As stated in the 2014 Form 10-K under Item 3. Legal Proceedings--Putative Class Action Lawsuit , the defendants believe the lawsuit is without merit. The Company will vigorously defend such action and take steps to seek to eliminate the issues created by the pending action that are impeding the sale. The Company believes that the issues will be resolved in the Company s favor and that it will be able to liquidate the properties proposed to be sold with no impact to fair value, assuming the market itself does not materially change during the period the Company needs to resolve such issues. As a result of this interference in the sale process, however, the Company believes that as of December 31, 2014, it no longer met the requirements for such assets and liabilities to qualify as assets and liabilities as held for sale and discontinued operations and therefore has reclassified them to operating assets and liabilities and continuing operations and is not reporting discontinued operations for the year ended December 31, 2014. Rights Offering The following summary describes the principal terms of the rights offering, but is not intended to be complete. See The Rights Offering for a more detailed description of the terms and conditions of the rights offering. Securities Offered We are distributing, at no charge, to holders of our common stock non-transferable subscription rights to purchase up to 2,224,020 shares of our common stock. You will receive three subscription rights for each two shares of common stock held of record, as of 5:00 p.m., New York City time, on May 6, 2015. Subscription Price $2.75 per share Basic Subscription Privilege Under the basic subscription privilege, for each subscription right you will be entitled to purchase one share of our common stock at a subscription price of $2.75 per full share. The number of subscription rights you may exercise appears on your rights certificate. Over-Subscription Privilege If you exercise your basic subscription privilege in full and other shareholders do not exercise their basic subscription privilege in full, you will also have an over-subscription privilege to purchase any shares that our other subscription rights holders do not purchase under their basic subscription privilege, subject to proration of available shares. The subscription price for shares purchased pursuant to the over-subscription privilege will be the same as the subscription price for the basic subscription privilege. If you are not allocated the full amount of shares for which you over-subscribe, you will receive a refund of the subscription price, without interest or penalty, that you delivered for those shares of our common stock that are not allocated to you. The subscription agent will mail such refunds as soon as practicable after the completion of the offering. No fractional shares of common stock will be issued. Any fractional rights resulting from the share allocation process specified above will be rounded to the nearest whole number, with halves rounded down. Amount of Proceeds Assuming we receive valid subscriptions for the full 2,224,020 shares, the gross proceeds to us will be $6,115,055 and the net proceeds to us, after deducting estimated offering expenses, will be approximately $5,606,000. However, there is no minimum amount of proceeds required to complete the rights offering. Limitation on the Purchase of Shares In no event may a shareholder exercise subscription and over-subscription privileges to the extent that any such exercise would result in the shareholder, without the approval of our board of directors, owning 20% or more of our issued and outstanding common stock, the limit under our shareholder rights plan, after giving effect to such shareholder s purchase under the basic subscription privilege and the over-subscription privilege. Subscription and over-subscription privileges will also be subject to proportionate cutbacks to the extent that any such exercises would result in five or fewer shareholders owning in the aggregate in excess of 50% of the value of our shares. Record Date May 6, 2015 Expiration Date The subscription rights will expire at 5:00 p.m., New York City time, on June 17, 2015, unless the expiration date is extended. We reserve the right to extend the subscription rights period at our sole discretion for a period not to exceed 30 days, although we do not presently intend to do so. Procedure for Exercising Subscription Rights The subscription rights may be exercised at any time during the subscription period, which commences on May 18, 2015. To exercise your subscription rights, you must take the following steps: If you are a registered holder of our shares of common stock, you may deliver payment and a properly completed rights certificate to the subscription agent before 5:00 p.m., New York City time on June 17, 2015, unless the expiration date is extended. You may deliver the documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf and deliver all documents and payments before 5:00 p.m., New York City time, on June 17, 2015, unless the expiration date is extended Use of Proceeds We intend to use the net proceeds received from the rights offering to pay accrued interest and principal on certain outstanding dividend and payment-in-kind notes, to meet current funding obligations of the pension plan resulting from its termination, to provide funding to GSD under the liquidity facility established pursuant to GSD s operating agreement, for pursuing development rights for the Flowerfield property, for necessary capital improvements in GSD s real estate portfolio which we manage and for general working capital. See Use of Proceeds. However, there is no minimum number of shares required to complete the rights offering, and the gross and net proceeds could be considerably less than the $6,116,055 and $5,606,000, respectively, we would receive assuming full subscription. Non-Transferability of Subscription Rights The subscription rights may not be sold, transferred or assigned to anyone else and will not be listed for trading on the NASDAQ Capital Market or any other stock exchange or market or on the OTC Bulletin Board. No Revocation All exercises of subscription rights are irrevocable, even if you later learn information about us that you consider unfavorable to the exercise of your subscription rights, or even in the event we extend the rights offering. However, if we extend the rights offering for a period of more than 30 days or make a fundamental change to the terms set forth in this prospectus, you may cancel your subscription and receive a refund of any money you have advanced. You should not exercise your subscription rights unless you are certain that you wish to purchase the shares of common stock offered pursuant to this rights offering at a subscription price of $2.75 per share. Extension; Cancellation; Amendment We have the option to extend the rights offering and the period for exercising your subscription rights, although we do not presently intend to do so. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., New York City time, on the next business day after the most recently announced expiration of the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in this rights offering. If we elect to extend the rights offering for a period of more than 30 days, then holders who have subscribed for rights may cancel their subscriptions and receive a refund of all money advanced. Our board of directors also reserves the right to cancel the rights offering at any time prior to the expiration date for any reason. If the rights offering is canceled, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable to those persons who subscribed for shares in the rights offering. Our board of directors also reserves the right to amend or change the terms of the rights offering. If we should make any fundamental changes to the terms set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel such subscriptions and issue a refund of any money advanced by such shareholder and recirculate an updated prospectus after the post-effective amendment is declared effective by the SEC. In addition, upon such event, we may extend the expiration date of this rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to this rights offering and the new expiration date. Although we do not presently intend to do so, we may choose to change the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such changes may include a change in the subscription price although no such change is presently contemplated. The terms of the rights offering cannot be changed after the expiration date of the rights offering. No Board Recommendation Our board of directors is making no recommendations regarding your exercise of the subscription rights. You are urged to make your own decision whether or not to exercise your subscription rights based on your own assessment of our business and the rights offering. See the section of this prospectus entitled Risk Factors for a discussion of some of the risks involved in investing in our common stock. Director Participation All Gyrodyne directors (who are also shareholders) have indicated that they will purchase shares that are subject to their subscription rights, and that they will exercise their over-subscription privilege (if available), at the same subscription price offered to our shareholders. If they do so, their ownership percentage may increase significantly if shareholders do not exercise basic subscription privileges with respect to a significant number of shares. Nevertheless, these shareholders have not executed agreements to purchase shares and there is no guarantee or commitment that they will subscribe for shares in the offering. Issuance of Common Stock If you purchase shares in the rights offering by submitting a rights certificate and payment, we will mail you a stock certificate as soon as practicable after the completion of the rights offering. If your shares as of the record date were held by a custodian bank, broker, dealer or other nominee, and you participate in the rights offering, you will not receive stock certificates for your new shares. Your custodian bank, broker, dealer or other nominee will be credited with the shares of common stock you purchase in the rights offering as soon as practicable after the completion of the rights offering Listing of Common Stock Our common stock trades on the NASDAQ Capital Market under the symbol GYRO , and we expect the shares to be issued in connection with the rights offering will also be listed on the NASDAQ Capital Market under the same symbol. Certain Material U.S. Federal Income Tax Considerations The receipt and exercise of your subscription rights will generally not be taxable under U.S. federal income tax laws. You are urged to seek specific tax advice from your personal tax advisor in light of your personal tax situation and as to the applicability and effect of any tax laws. See Certain Material U.S. Federal Income Tax Considerations. Subscription Agent Computershare Trust Company, N.A. Information Agent MacKenzie Partners, Inc. Shares of Common Stock Outstanding Before the Rights Offering As of May 6, 2015, 1,482,680 shares of our common stock were outstanding. Shares of Common Stock Outstanding After Completion of the Rights Offering We will issue 2,224,020 shares of common stock in the rights offering, assuming the full number of subscription rights are exercised. Based on the number of shares of common stock outstanding as of May 6, 2015, if we issue all 2,224,020 shares of common stock available in this rights offering, we would have 3,706,700 shares of common stock outstanding following the completion of the rights offering. However, there is no minimum number of shares required to complete the rights offering. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2015/CIK0000820600_omagine_prospectus_summary.txt b/parsed_sections/prospectus_summary/2015/CIK0000820600_omagine_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..12779e83666cbcae5bb8ce9022572c76cd09539f --- /dev/null +++ b/parsed_sections/prospectus_summary/2015/CIK0000820600_omagine_prospectus_summary.txt @@ -0,0 +1,76 @@ +Prospectus Summary + 5 + + Risk Factors + 8 + + Special Note Regarding Forward-Looking Statements + 15 + + Use Of Proceeds + 16 + + Selling Stockholder + 16 + + Plan of Distribution + 17 + + Description Of Securities To Be Registered + 18 + + Description Of Preferred Stock And Warrants + 19 + + Legal Matters + 22 + + Experts + 22 + + Description of Business + 22 + + Description of Property + 38 + + Legal Proceedings + 38 + + Market for Common Shares and Related Stockholder Matters + 38 + + Financial Statements + 38 + + Selected Financial Data and Supplementary Financial Information + 38 + + Management's Discussion and Analysis of Financial Condition and Results of Operations + 38 + + Changes in and Disagreements with Accountants on Accounting and Financial Disclosure + 49 + + Quantitative and Qualitative Disclosures about Market Risk + 49 + + Directors and Executive Officers + 49 + + Executive Compensation + 51 + + Security Ownership of Certain Beneficial Owners and Management + 63 + + Certain Relationships and Related Transactions and Director Independence + 64 + + Disclosure of Commission Position on Indemnification for Securities Act Liabilities + 65 + + Where You Can Find More Information + 66 + +OFFERING SUMMARY + +Issuer +AXIM Biotechnologies, Inc. + + + + +Common stock that may be +offered by the Company +50,000,000 shares of common stock. + + + + +Common stock outstanding before +this offering (as of May 22, 2023) +227,649,403 shares. + + + + +Common stock to be outstanding +immediately after this offering +277,649,403 shares.(1) + + + + +Use of proceeds +The shares of common stock to be offered and sold using this prospectus will be offered and sold by the selling stockholder named in this prospectus. Accordingly, we will not receive any proceeds from any sale of shares of our common stock in this offering. We will receive proceeds from the sales, if any, of shares of our common stock to Cross under the Equity Line. Cross has committed to purchase up to $20,000,000 worth of shares of our common stock over a period of time terminating on the earlier of the date on which Cross shall have purchased an aggregate of $20,000,000 worth of shares of common stock under the Equity Purchase Agreement or June 1, 2026. + +Cross will pay a purchase price equal to 87.5% of the Market Price, which is defined as the lowest traded price on the OTCQB Marketplace, as reported by Bloomberg Finance L.P., during the ten consecutive trading days including and immediately prior to the Put Date, or the date on which the applicable put notice is delivered to Cross (the Pricing Period ). In order to exercise the put, certain conditions must be met at each put notice date, including but not limited to the following: (i) we must have an effective registration statement; (ii) our common stock must be deposit/withdrawal at custodian ( DWAC ) eligible; (iii) the minimum price must exceed $0.01 per share; and (iv) the number of shares to be purchased by Cross may not exceed the number of shares that, when added to the number of shares of our common stock then beneficially owned by Cross, would exceed 4.99% of our shares of common stock issued and outstanding. + +We intend to use the net proceeds from the sale of shares to Cross for working capital and general corporate purposes, including, without limitation, development of our product candidates and general and administrative expenses, or for other purposes that our board of directors, in its good faith, deems to be in the best interest of the Company. See Use of Proceeds. + + +Plan of Distribution +The selling stockholder may, from time to time, sell any or all of their shares of common stock on the stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. + +For further information, see Plan of Distribution. + + + + +Risk factors +You should read the Risk Factors section of this prospectus starting on page 10 and the other information in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock. + + +Market Symbol and trading +Our common stock is quoted on the OTCQB Marketplace under the symbol AXIM. + + + +(1) +Assumes the full sale and issuance of the 50,000,000 shares offered under this prospectus, which shares are issuable to Cross under the Equity Purchase Agreement with Cross. + + + +9 + +Table of Contents + +RISK FACTORS + +Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and Management s Discussion and Analysis of Financial Condition and Results of Operations, before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, operating results, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. + +Risks Related to Our Financial Position and Capital Requirements + +We are an early stage company subject to significant risks and uncertainties, including the risk that we or our partners may never develop, obtain regulatory approval or market certain of our product candidates or generate product related revenues. + +We are primarily an early stage biotechnology company that began operating in 2010, but did not commence research and development activities with respect to our current business segments until in 2019 or later. Medical device development is a highly speculative undertaking and involves a substantial degree of risk. There is no assurance that certain of our product candidates in development will be suitable for diagnostic or therapeutic use, or that we will be able to identify and isolate therapeutic product candidates, or develop, market and commercialize these candidates. Even if we are able to commercialize our product candidates, there is no assurance that these candidates would generate revenues or that any revenues generated would be sufficient for us to become profitable or thereafter maintain profitability. + +The Axim Eye System is currently our only FDA approved product. We anticipate launching sales in the United States in the second or third quarter of 2023 to those reference and physician operated laboratories with Clinical Laboratory Improvement Act ( CLIA ) Class II certifications. Although the Axim Eye System has received all necessary regulatory approvals in the United States, it may never be successfully commercialized. If the Axim Eye System or any of our other products are not successfully commercialized, we may not be able to generate enough revenue to become profitable or continue our operations. Any failure of the Axim Eye System to be successfully commercialized in the United States could have a material adverse effect on our business, operating results, financial condition and cash flows and could result in a substantial decline in the price of our common stock. + +We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future. + +As of December 31, 2022 and 2021, we had an accumulated deficit related to our continuing operations of $64,125,176 and $57,882,227, respectively. We continue to incur significant research and development and other expenses related to our ongoing operations. We have incurred operating losses since our inception, expect to continue to incur significant operating losses for the foreseeable future, and we expect these losses to continue as we (i) identify and advance other product candidates; (ii) incur higher salary, lab supply and infrastructure costs incurred in connection with supporting all of our programs; (iii) expand our corporate, development and manufacturing infrastructure; (iv) support our subsidiaries , including Sapphire s, pre-clinical development and commercialization efforts; and (v) the acquisition and further development of the eye care tests. As such, we are subject to all risks incidental to the development of new biopharmaceutical products and related companion diagnostics, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders equity and working capital. + +We will require substantial additional funding, which may not be available to us on acceptable terms, if at all. If we fail to raise the necessary additional capital, we may be unable to complete the development and commercialization of our product candidates or continue our development programs. + +Our operations have consumed substantial amounts of cash since inception. We expect to significantly increase our spending to advance our product candidates and launch and commercialize any product candidates for which we may receive regulatory approval. We will require additional capital for the further development and commercialization of our product candidates, as well as to fund our other operating expenses and capital expenditures. + + +10 + +Table of Contents + +As a result of our recurring losses from operations, recurring negative cash flows from operations and substantial cumulative losses, there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern. If we are unsuccessful in our efforts to raise additional capital, we may be required to significantly reduce or cease operations. The report of our independent registered public accounting firm on our audited financial statements for the years ended December 31, 2022 and 2021 included a going concern explanatory paragraph indicating that our recurring losses from operations, negative working capital, recurring negative cash flows from operations and substantial cumulative net losses raise substantial doubt about our ability to continue as a going concern. + +We cannot be certain that additional funding will be available on acceptable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. We may also seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available. Any of these events could significantly harm our business, financial condition and prospects. + +Our future capital requirements will depend on many factors, including: + + + +the commercial acceptance of our two FDA cleared diagnostic tests for dye eye disease; + + +the need to preform clinical studies for FDA clearance of our new MMP-9 test; + + +the number of product candidates we pursue; + + +the time and costs involved in obtaining regulatory approvals; + + +the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims; + + +our plans to establish sales, marketing and/or manufacturing capabilities; + + +the effect of competing technological and market developments; + + +the terms and timing of any collaborative, licensing and other arrangements that we may establish; + + +general market conditions, including related to securities offerings by clinical stage biopharmaceutical companies specifically; + + +the success of our commercial partnership with Vers a Ophthalmics, LLC ( Vers a ); + + +our ability to establish, enforce and maintain selected strategic alliances and activities required for product commercialization; + + +our obligations under our debt arrangements; + + +the time and costs involved in defending and enforcing our rights in various litigation matters; + + +the long and short term effects of the COVID-19 pandemic, the military operation in Ukraine, current uncertainties regarding the banking systems in the United States, a potential economic recession, amongst other things; and + + +our revenues, if any, from successful development and commercialization of our product candidates. + +In order to carry out our business plan and implement our strategy, we anticipate that we will need to obtain additional financing from time to time and may choose to raise additional funds through strategic collaborations, licensing arrangements, joint ventures, public or private equity or debt financing, asset sales, government grants or other arrangements, such as the commercial partnership that we have entered into with Vers a. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us, or at all. Furthermore, any additional equity or equity-related financing may be dilutive to our stockholders, and debt or equity financing, if available, may subject us to restrictive covenants and significant interest costs. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to certain of our product candidates or marketing territories. + +Our inability to raise capital when needed would harm our business, financial condition and results of operations, and could cause our stock price to decline or require that we wind down our operations altogether. + + +11 + +Table of Contents + +We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions. + +U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business. + +Additionally, the recent military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds. + +Although our business has not been materially impacted by the ongoing military conflict between Russian and Ukraine to date, it is impossible to predict the extent to which our operations, or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus. + +Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations. + +Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. For example, in March 2023, Silicon Valley Bank and Signature Bank were closed and taken over by the Federal Deposit Insurance Corporation ( FDIC ) as receiver, and subsequently in May 2023 First Republic Bank was taken over by the FDIC and a substantial portion of it sold to JPMorgan Chase. Although we did not have any cash or cash equivalent balances on deposit with Silicon Valley Bank, Signature Bank or First Republic Bank, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations. + +We may be adversely affected by the effects of inflation. + +Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost inflation is incurred. + + +12 + +Table of Contents + +Risks Related to Our Business and Industry + +We will face challenges in bringing the Axim Eye System to market in the United States and may not succeed in executing our business plan. + +There are numerous risks and uncertainties inherent in the development of new medical technologies. In addition to our requirement for additional capital, our ability to bring the Axim Eye System to market in the United States and to execute our business plan successfully is subject to the following risks, among others: + + + +Our clinical trials may not succeed. Clinical testing is expensive and can take longer than originally anticipated. The outcomes of clinical trials are uncertain, and failure can occur at any stage of the testing. We could encounter unexpected problems, which could result in a delay in efforts to complete clinical trials supporting our commercialization efforts. + + + +The Axim Eye System is rated as a CLIA Class II medical device, which requires our customers to be certified under CLIA requirements, including certain parallel state requirements. If our customers are unwilling or unable to comply with such requirements, it could have an adverse effect on our ability to market the Axim Eye System in the United States. + + + +Our suppliers, Vers a (our commercial partner) and we will be subject to numerous FDA requirements covering the design, testing, manufacturing, quality control, labeling, advertising, promotion and export of the Axim Eye System and other matters. If our suppliers, Vers a or we fail to comply with these regulatory requirements, the Axim Eye System could be subject to restrictions or withdrawals from the market and we could become subject to penalties. + + + +Even though we were successful in obtaining the sought-after FDA approvals, Vers a and us may be unable to commercialize the Axim Eye System successfully in the United States. Successful commercialization will depend on a number of factors, including, among other things, achieving widespread acceptance of the Axim Eye System among physicians, establishing adequate sales and marketing capabilities, addressing competition effectively, the ability to obtain and enforce patents to protect proprietary rights from use by would-be competitors, key personnel retention and ensuring sufficient manufacturing capacity and inventory to support commercialization plans. + + +Our business is subject to health care industry and government cost-containment measures that could result in reduced sales of our Axim Eye System. + +We expect that most of our customers will rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all of the cost of the procedures which use our Axim Eye System. The continuing efforts of governmental authorities, insurance companies, and other health care payers to contain or reduce these costs could lead to patients being unable to obtain approval for payment from these third-party payers. If patients cannot obtain third-party payer payment approval, the use of our Axim Eye System may decline significantly and our customers may reduce or eliminate the use of our system. The cost-containment measures that health care providers are instituting, both in the U.S. and internationally, could harm our ability to operate profitably. For example, managed care organizations successfully negotiate volume discounts for medical products, may choose not to reimburse certain products or reimburse products and a low amount sometimes below our selling price. This could result in lower prices to our customers from their customers and, in turn, reduce the amounts we can charge our customers for our products. + +In addition to general health care industry cost-containment, the Centers for Medicare and Medicaid Services ( CMS ) released its final rule implementing section 216(a) of the Protecting Access to Medicare Act of 2014 ( PAMA ) that requires reporting entities to report private payer rates paid to laboratories for tests, which will be used to calculate Medicare payment rates. Reporting entities, which are primarily certain qualifying customers in the U.S. that derive a certain percentage and volume of their revenue from laboratory tests from Medicare, report private payer rates for our laboratory tests which will serve under the act as a baseline for future reimbursement. + +If we are subject to regulatory enforcement action as a result of our failure to comply with regulatory requirements, our commercial operations would be harmed. + +Although we have received 510(k) clearance for our Axim Eye System, we are subject to significant ongoing regulatory requirements, and if we fail to comply with these requirements, we could be subject to enforcement action by the FDA or state agencies, including: + + + +adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties; + + +repair, replacement, refunds, recall or seizure of our product; + + +operating restrictions or partial suspension or total shutdown of production; + + +delay or refusal of our requests for 510(k) clearance or premarket approval of new products or of new intended uses or modifications to our existing product; + + +refusal to grant export approval for our products; + + +withdrawing 510(k) clearances, CLIA waiver or premarket approvals that have already been granted; and + + +criminal prosecution. + + +13 + +Table of Contents + +If the government initiated any of these enforcement actions, our business could be harmed. + +We are required to demonstrate and maintain compliance with the FDA s Quality System Regulation, or the QSR. The QSR is a complex regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of our products. The FDA must determine that the facilities which manufacture and assemble our products that are intended for sale in the United States, as well as the manufacturing controls and specifications for these products, are compliant with applicable regulatory requirements, including the QSR. The FDA enforces the QSR through periodic unannounced inspections. The FDA has not yet inspected our facilities, and we cannot assure you that we will pass any future FDA inspection. Our failure, or the failure of our suppliers, to take satisfactory corrective action in response to an adverse QSR inspection could result in enforcement actions, including a public warning letter, a shutdown of our manufacturing operations, a recall of our product, civil or criminal penalties or other sanctions, which would significantly harm our available inventory and sales and cause our business to suffer. + +If we are unable to fully comply with federal and state fraud and abuse laws, we could face substantial penalties, which may adversely affect our business, financial condition and results of operations. + +We are subject to various laws pertaining to health care fraud and abuse, including the U.S. Anti- Kickback Statute, physician self-referral laws (the Stark Law ), the U.S. False Claims Act, the U.S. False Statements Statute, the Physician Payment Sunshine Act, and state law equivalents to these U.S. federal laws, which may not be limited to government-reimbursed items and may not contain identical exceptions. Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, civil and criminal penalties, damages, fines, exclusion from participation in U.S. federal and state health care programs, including Medicare and Medicaid, and the curtailment or restructuring of operations. Any action against us for violation of these laws could have a significant impact on our business. In addition, we are subject to the U.S. Foreign Corrupt Practices Act. Any action against us or our agents or distributors of this act could have a significant impact on our business. + +We may face future product liability claims. + +The testing, manufacturing, marketing and sale of therapeutic and diagnostic products entail significant inherent risks of allegations of product liability. Our use of the Axim Eye System and/or any of our products that are currently in development and commercial sale thereof could also expose us to liability claims. All of such claims might be made directly by patients, health care providers or others selling our products. We plan to purchase product liability insurance to cover certain claims that could arise during the commercial use of our products. Any coverage obtained in the future, may be inadequate to protect us in the event of successful product liability claims, and we may not increase the amount of such insurance coverage or even renew it. A successful product liability claim could materially harm our business. In addition, substantial, complex or extended litigation could result in the incurrence of large expenditures and the diversion of significant resources. + +If we do not introduce new commercially successful products in a timely manner, our products may become obsolete over time, customers may not buy our products and our revenue and profitability may decline. + +Demand for our products may change in ways we may not anticipate because of: + + + +evolving customer needs; + + +the introduction of new products and technologies; and + + +evolving industry standards. + + +14 + +Table of Contents + +Without the timely introduction of new commercially successful products and enhancements, our products may become obsolete over time, in which case our sales and operating results would suffer. The success of our new product offerings will depend on several factors, including our ability to: + + + +properly identify and anticipate customer needs; + + +commercialize new products in a cost-effective and timely manner; + + +manufacture and deliver products in sufficient volumes on time; + + +obtain and maintain regulatory approval for such new products; + + +differentiate our offerings from competitors offerings; + + +achieve positive clinical outcomes; and + + +provide adequate medical and/or consumer education relating to new products. + +Moreover, innovations generally will require a substantial investment in research and development before we can determine the commercial viability of these innovations and we may not have the financial resources necessary to fund these innovations. In addition, even if we successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce revenue in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features. + +We rely on a limited number of suppliers of each of the key components of the Axim Eye System and are vulnerable to fluctuations in the availability and price of our suppliers products and services. + +We purchase each of the key components of the Axim Eye System from a limited number of third-party suppliers. Our suppliers may not provide the components or other products needed by us in the quantities requested, in a timely manner or at a price we are willing to pay. This is of particular concern currently due to global supply chain and inflationary pressures that companies in our fields have recently faced. In the event we are unable to renew our agreements with our suppliers or they become unable or unwilling to continue to provide important components in the required volumes and quality levels or in a timely and cost effective manner, or if regulations affecting the components change, we may be required to identify and obtain acceptable replacement supply sources. We may not be able to obtain alternative suppliers or vendors on a timely basis, or at all, which could disrupt or delay, or halt altogether, our ability to manufacture or deliver the Axim Eye System or our other products currently in development. If any of these events should occur, our business, financial condition, cash flows and results of operations could be materially adversely affected. + +We face intense competition, and our failure to compete effectively could have a material adverse effect on our results of operations. + +We face intense competition in the markets for ophthalmic products and these markets are subject to rapid and significant technological change. We have numerous potential competitors in the United States and abroad. We face potential competition from industry participants marketing conventional technologies for the measurement of dye eye and other in-lab-testing technologies, and commercially available methods, such as the Schirmer Test and ocular surface staining. Many of our potential competitors have substantially more resources and a greater marketing scale than we do. If we are unable to develop and produce or market our products to effectively compete against our competitors, our operating results will materially suffer. + +We are heavily dependent on the success of our technologies and product candidates, and we cannot give any assurance that certain of our product candidates will receive regulatory approval, which is necessary before such products can be commercialized, or that we will be able to successfully commercialize those products that we have secured regulatory approval for or do not need further regulatory approval for. + +To date, we have invested a significant portion of our efforts and financial resources in the acquisition and development of our product candidates. As an early stage biotechnology company that has recently made significant changes to its operations, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical area. Our future success is substantially dependent on our ability to successfully develop, obtain regulatory approval for (to the extent required), and then successfully commercialize our product candidates. Although we have secured FDA approval of our Axim Eye System, many of our product candidates are currently in preclinical development or in clinical trials. Our business depends entirely on the successful development and commercialization of our product candidates, which may never occur. + + +15 + +Table of Contents + +The successful development, and any commercialization, of our technologies and any product candidates would require us to successfully perform a variety of functions, including: + + + +seeking and obtaining intellectual property and/or proprietary rights to our technology and/or the technology of others; + + +identifying, developing, manufacturing and commercializing product candidates; + + +entering into successful licensing and other arrangements with product development partners; + + +participating in regulatory approval processes, to the extent required; + + +formulating and manufacturing products; and + + +conducting sales and marketing activities. + +Certain of our product candidates will require additional preclinical or clinical development; management of preclinical, clinical and manufacturing activities; regulatory approval in multiple jurisdictions; obtaining manufacturing supply; building of a commercial organization; and significant marketing efforts before we generate any revenues from product sales. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA, or comparable foreign regulatory authorities, and we may never receive such regulatory approval for such product candidates. In addition, certain of our product development programs contemplate the development of companion diagnostics. Companion diagnostics are subject to regulation as medical devices and must themselves be approved for marketing by the FDA, or certain other foreign regulatory agencies before we may commercialize our product candidates. + +If we fail to comply with manufacturing regulations, our financial results and financial condition will be adversely affected. + +We currently manufacture some of our materials in-house. In addition, we may enter into collaboration and license agreements with certain collaborators, pursuant to which we may, among other things, agree to carry out manufacturing of our collaborators material and product candidates. However, we only recently began manufacturing such materials and do not have significant prior experience manufacturing preclinical or product candidates. Before we can begin commercial manufacture of our or any potential collaborators materials or product candidates, regulatory authorities must approve marketing applications that identify manufacturing facilities operated by us or our contract manufacturers that have passed regulatory inspection and manufacturing processes that are acceptable to the regulatory authorities. + +Due to the complexity of the processes used to manufacture our product candidates and our potential collaborators product candidates, we may be unable to continue to pass or initially pass federal or international regulatory inspections in a cost-effective manner. For the same reason, any potential third-party manufacturer of our product candidates may be unable to comply with cGMP regulations in a cost-effective manner and may be unable to initially or continue to pass a federal or international regulatory inspection. + +If we, or third-party manufacturers with whom we contract, are unable to comply with manufacturing regulations, we may be subject to delay of approval of our product candidates, warning or untitled letters, fines, unanticipated compliance expenses, recall or seizure of our products, total or partial suspension of production and/or enforcement actions, including injunctions, and criminal or civil prosecution. These possible sanctions would adversely affect our financial results and financial condition. + +The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, which include difficulties with production costs and yields, quality control and assurance and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. The third-party manufacturers we may contract with may not perform as agreed or may terminate their agreements with us. Any of these factors could cause us to delay or suspend any future clinical trials, regulatory submissions, required approvals or commercialization of one or more of our drug candidates, entail higher costs and result in our being unable to effectively commercialize products. + + +16 + +Table of Contents + +Materials necessary to manufacture product candidates may not be available on commercially reasonable terms, or at all, which may delay the development and commercialization of product candidates. + +There are a limited number of suppliers for raw materials that we use to manufacture our products and product candidates and there may be a need to assess alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for clinical trials, and if approved, ultimately for commercial sale. We do not have any control over certain elements of the process or timing of the acquisition of these raw materials by us. We typically do not have any written agreements for the commercial production of these raw materials. Any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to obtain or replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates. If we are unable to purchase these raw materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply, which would impair our ability to generate revenues from the sale of our product candidates. + +We may not be able to manufacture our products or product candidates in commercial quantities, which would prevent us from commercializing our products and product candidates. + +We are largely dependent on our third-party manufacturers to conduct process development and scale-up work necessary to support greater clinical development and commercialization requirements for our products and product candidates. Carrying out these activities in a timely manner, and on commercially reasonable terms, is critical to the successful development and commercialization of our products and product candidates. We expect our third-party manufacturers are capable of providing sufficient quantities of our products and product candidates to meet anticipated clinical and full-scale commercial demands; however, if third parties with whom we currently work are unable to meet our supply requirements, we will need to secure alternate suppliers or face potential delays or shortages. While we believe that there are other contract manufacturers with the technical capabilities to manufacture our products and product candidates, we cannot be certain that identifying and establishing relationships with such sources would not result in significant delay or material additional costs. + +If we are unable to successfully commercialize our products, our business, financial condition and results of operations will be materially and adversely affected. + +We are currently building our sales and marketing organization. We currently anticipate that, we may rely on third parties, such as Vers a, to sell our product candidates in the U.S. and/or in international markets. If we enter into arrangements with third parties to sell and market our products, we would likely receive less revenue than if we sold our products directly. In addition, although we would intend to use due diligence in monitoring the activities of our third-party sales and marketing partners, we may have little or no control over the sales efforts of those third parties. In the event we are unable to develop our own sales force or collaborate with third parties to sell our product candidates, we may not be able to successfully commercialize our product candidates, which would negatively impact our ability to generate revenue. In the event that we elect to market our own products, we will also have to compete with other pharmaceutical and biotechnology companies to recruit, hire and train sales and marketing personnel. + +Our failure to successfully discover, acquire, develop and market additional product candidates or approved products would impair our ability to grow. + +As part of our growth strategy, we intend to develop and market additional products and product candidates. We are pursuing various therapeutic opportunities through our product pipeline. We may spend several years completing our development of any particular current or future internal product candidate, and failure can occur at any stage. The product candidates to which we allocate our resources may not end up being successful. In addition, because our internal research capabilities are limited, we may be dependent upon pharmaceutical and biotechnology companies, academic scientists and other researchers to sell or license products or technology to us. The success of this strategy depends partly upon our ability to identify, select, discover and acquire promising pharmaceutical product candidates and products. Failure of this strategy would impair our ability to grow. + +The process of proposing, negotiating and implementing a license or acquisition of a product candidate or approved product is lengthy and complex. Other companies, including some with substantially greater financial, marketing and sales resources, may compete with us for the license or acquisition of product candidates and approved products. We have limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into our current infrastructure. Moreover, we may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to realize the anticipated benefits of such efforts. We may not be able to acquire the rights to additional product candidates on terms that we find acceptable, or at all. + + +17 + +Table of Contents + +In addition, future acquisitions may entail numerous operational and financial risks, including: + + + +disruption of our business and diversion of our management s time and attention to develop acquired products or technologies; + + +incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions; + + +higher than expected acquisition and integration costs; + + +difficulty in combining the operations and personnel of any acquired businesses with our operations and personnel; + + +increased amortization expenses; + + +impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; + + +impairment of our ability to obtain intellectual property rights or rights to commercialize additional product candidates, or increased cost to obtain such rights; + + +inability to motivate key employees of any acquired businesses; and + + +assumption of known and unknown liabilities. + +Further, any product candidate that we acquire may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. + +Our business is subject to risks arising from epidemic diseases, such as the recent COVID-19 pandemic. + +The occurrence of regional epidemics or a global pandemic such as COVID-19 may adversely affect our operations, financial condition, and results of operations. The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices over the last three years, and may continue to have impacts in the future. The extent to which global pandemics, including COVID-19, impact our business going forward will depend on various factors such as the duration and scope of the pandemic; governmental, business, and individuals actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. + +Measures taken by the governments of countries affected by COVID-19 and/or future pandemics could adversely impact our business, financial condition, or results of operations. Potential disruptions may include, without limitations, delays in processing registrations or approvals by applicable state or federal regulatory bodies, delays in product development efforts, and additional government requirements or other incremental mitigation efforts that may further impact our capacity to manufacture, commercialize and support our products. + +Healthcare reform measures could hinder or prevent our product candidates commercial success. + +In both the U.S. and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably. The U.S. government and other governments have shown significant interest in pursuing healthcare reform. In particular, the Medicare Modernization Act of 2003 revised the payment methodology for many products under the Medicare program in the U.S. This has resulted in lower rates of reimbursement. In 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the Healthcare Reform Law ), was enacted. The Healthcare Reform Law substantially changed the way healthcare is financed by both governmental and private insurers. Such government-adopted reform measures may adversely impact the pricing of healthcare products and services in the U.S. or internationally and the amount of reimbursement available from governmental agencies or other third-party payors. + +There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. For example, there have been public announcements by members of the U.S. Congress regarding their plans to repeal and replace the Healthcare Reform Law and Medicare, and the Biden administration has announced plans to amend and expand the scope of the Healthcare Reform Law. Although we cannot predict the ultimate content or timing of any healthcare reform legislation, potential changes resulting from any amendment, repeal, replacement or expansion of these programs, including any reduction in the future availability of healthcare insurance benefits, could adversely affect our business and future results of operations. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect the demand for any product candidates for which we may obtain regulatory approval, as well as our ability to set satisfactory prices for our products, to generate revenues, and to achieve and maintain profitability. + + +18 + +Table of Contents + +Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics could harm our long-term development strategy. + +As one of the key elements of our clinical development strategy, we seek to identify patients within a disease category or indication who may derive selective and meaningful benefit from the product candidates we are developing. As such, we plan to develop, or partner with third parties to develop, companion diagnostics to help us to more accurately identify patients within a particular category or indication, both during our clinical trials and in connection with the commercialization of certain of our product candidates. + +Companion diagnostics are subject to regulation by the FDA and comparable foreign regulatory authorities as medical devices and require separate regulatory approval prior to commercialization. We and our collaborators may encounter difficulties in developing and obtaining approval for the companion diagnostics, including issues relating to selectivity/specificity, analytical validation, reproducibility or clinical validation. Any delay or failure by our collaborators to develop or obtain regulatory approval of the companion diagnostics could delay or prevent approval of our product candidates. In addition, our collaborators may encounter production difficulties that could constrain the supply of the companion diagnostics, and both they and we may have difficulties gaining acceptance of the use of the companion diagnostics in the clinical community. If such companion diagnostics fail to gain market acceptance, it would have an adverse effect on our ability to derive revenues from sales of our products. In addition, any diagnostic company with whom we contract may decide to discontinue selling or manufacturing the companion diagnostic that we anticipate using in connection with development and commercialization of our product candidates or our relationship with such diagnostic company may otherwise terminate. In such instances, we may not be able to enter into arrangements with another diagnostic company to obtain supplies of an alternative diagnostic test for use in connection with the development and commercialization of our product candidates or do so on commercially reasonable terms, which could adversely affect and/or delay the development or commercialization of our product candidates. + +We may seek to establish collaborations and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans. + +From time to time we may engage in efforts to enter into licensing, distribution and/or collaboration agreements with one or more pharmaceutical or biotechnology companies, like the license and distribution agreement we have in place with Vers a, to assist us with development and/or commercialization of our other product candidates. If we are successful in entering into such agreements, we may not be able to negotiate agreements with economic terms similar to those negotiated by other companies. We may not, for example, obtain significant upfront payments, substantial royalty rates or milestones. If we fail to enter into any such agreements in a timely manner or at all, our efforts to develop and/or commercialize our product candidates may be undermined. In addition, if we do not raise funds through any such agreements, we will need to rely on other financing mechanisms, such as sales of debt or equity securities, to fund our operations. Such financing mechanisms, if available, may not be sufficient or timely enough to advance our programs forward in a meaningful way in the short-term. + +We may not be successful in entering into additional collaborations as a result of many factors, including the following: + + + +competition in seeking appropriate collaborators; + + +a reduced number of potential collaborators due to recent business combinations in the pharmaceutical industry; + + +inability to negotiate collaborations on acceptable terms; + + +inability to negotiate collaborations on a timely basis; + + +a potential collaborator s evaluation of our product or product candidates; + + +a potential collaborator s resources and expertise; and + + +restrictions due to an existing collaboration agreement. + +If we are unable to enter into collaborations, we may have to curtail the commercialization or the development of any product candidate on which we are seeking to collaborate, reduce or delay its development program or those for other of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to develop or commercialize our product candidates. + + +19 + +Table of Contents + +Even if we enter into collaboration agreements and strategic partnerships or license our intellectual property, we may not be able to maintain them or they may be unsuccessful, which could delay our timelines or otherwise adversely affect our business. + +We, as well as any collaborators or licensees of our technologies and services, will not be able to commercialize our product candidates if preclinical studies do not produce successful results or clinical trials do not demonstrate safety and efficacy in humans. + +Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and have an uncertain outcome. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results. We, as well as any licensees and collaborators, may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent the commercialization of product candidates based on our technologies, including the following: + + + +Preclinical or clinical trials may produce negative or inconclusive results, which may require additional preclinical testing, additional clinical trials or the abandonment of projects that we, our licensees or our collaborators expect to be promising. For example, promising animal data may be obtained about the anticipated efficacy of a product candidate and then human tests may not result in such an effect. In addition, unexpected safety concerns may be encountered that would require further testing even if the product candidate produced an otherwise favorable response in human subjects. + + +Initial clinical results may not be supported by further or more extensive clinical trials. For example, we or a licensee may obtain data that suggest a desirable response from a product candidate in a small human study, but when tests are conducted on larger numbers of people, the same extent of response may not occur. If the response generated by a product candidate is too low or occurs in too few treated individuals, then the product candidate will have no commercial value. + + +Enrollment in any of our or any of our licensees or collaborators clinical trials may be slower than projected, resulting in significant delays. The cost of conducting a clinical trial increases as the time required to enroll adequate numbers of human subjects to obtain meaningful results increases. Enrollment in a clinical trial can be a slower-than-anticipated process because of competition from other clinical trials, because the study is not of interest to qualified subjects, or because the stringency of requirements for enrollment limits the number of people who are eligible to participate in the clinical trial. + + +We, our licensees or our collaborators might have to suspend or terminate clinical trials if the participating subjects are being exposed to unacceptable health risks. Animal tests do not always adequately predict potential safety risks to human subjects. The risk of any product candidate is unknown until it is tested in human subjects, and if subjects experience adverse events during the clinical trial, the trial may have to be suspended and modified or terminated entirely. + + +Regulators or institutional review boards may suspend or terminate clinical research for various reasons, including safety concerns or noncompliance with regulatory requirements. + + +Any regulatory approval ultimately obtained may be limited or subject to restrictions or post-approval commitments that render the product not commercially viable. + + +The effects of our technology-derived or technology-enhanced product candidates may not be the desired effects or may include undesirable side effects. + +Significant clinical trial delays could allow our competitors to bring products to market before we, any of our licensees or our collaborators do and impair our ability to commercialize our technologies and product candidates based on our technologies. Poor clinical trial results or delays may make it impossible to license a product candidate or so reduce its attractiveness to prospective licensees that we will be unable to successfully develop and commercialize such a product candidate. + + +20 + +Table of Contents + +Because our development activities are expected to rely heavily on sensitive and personal information, an area which is highly regulated by privacy laws, we may not be able to generate, maintain or access essential patient samples or data to continue our research and development efforts in the future on reasonable terms and conditions, which may adversely affect our business. + +Although we are not subject to the Health Insurance Portability and Accountability Act of 1996 ( HIPAA ), as we are neither a Covered Entity nor Business Associate (as defined in HIPAA and the Health Information Technology and Clinical Health Act (the HITECH Act ), we may have access to very sensitive data regarding patients whose tissue samples are used in our studies. This data will contain information that is personal in nature. The maintenance of this data is subject to certain privacy-related laws, which impose upon us administrative and financial burdens, and litigation risks. In the U.S., numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws and federal and state consumer protection laws govern the collection, use, disclosure and protection of health-related and other personal information. For instance, the rules promulgated by the Department of Health and Human Services under HIPAA create national standards to protect patients medical records and other personal information in the U.S. These rules require that healthcare providers and other covered entities obtain written authorizations from patients prior to disclosing protected health care information of the patient to companies. If the patient fails to execute an authorization or the authorization fails to contain all required provisions, then we will not be allowed access to the patient s information and our research efforts can be substantially delayed. Furthermore, use of protected health information that is provided to us pursuant to a valid patient authorization is subject to the limits set forth in the authorization (i.e., for use in research and in submissions to regulatory authorities for product approvals). As such, we are required to implement policies, procedures and reasonable and appropriate security measures to protect individually identifiable health information we receive from covered entities, and to ensure such information is used only as authorized by the patient. Any violations of these rules by us could subject us to civil and criminal penalties and adverse publicity and could harm our ability to initiate and complete clinical trials required to support regulatory applications for our product candidates. In addition, HIPAA does not replace federal, state, or other laws that may grant individuals even greater privacy protections. + +California recently enacted the California Consumer Privacy Act ( CCPA ), which took effect on January 1, 2020 and was amended and expanded by the California Privacy Rights Act, or CPRA, which took effect on January 1, 2023. The CCPA, as amended by the CPRA, creates new individual privacy rights for California consumers and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA, as amended by the CPRA, requires covered companies to provide new disclosure to consumers about such companies data collection, use and sharing practices, provide such consumers new ways to opt-out of certain sales or transfers of personal information, and provide consumers with additional causes of action. The CCPA, as amended by the CPRA, among other things, requires covered companies to provide disclosures to California consumers concerning the collection and sale of personal information, and will give such consumers the right to opt-out of certain sales of personal information. The CCPA, as amended by the CPRA, may increase our Company s compliance costs and potential liability. + +International data protection laws, including Regulation 2016/679, known as the General Data Protection Regulation ( GDPR ), may also apply to health-related and other personal information obtained outside of the United States. The GDPR went into effect on May 25, 2018. The GDPR strengthened data protection requirements in the European Union, as well as potential fines for noncompliant companies of up to the greater of 20 million or 4% of annual global revenue. The regulation imposes numerous new requirements for the collection, use, storage and disclosure of personal information, including more stringent requirements relating to consent and the information that must be shared with data subjects about how their personal information is used, the obligation to notify regulators and affected individuals of personal data breaches, extensive new internal privacy governance obligations and obligations to honor expanded rights of individuals in relation to their personal information, including the right to access, correct and delete their data. In addition, the GDPR includes restrictions on cross-border data transfers. The GDPR increased our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Further, the United Kingdom s exit from the European Union, often referred to as Brexit, has created uncertainty with regard to data protection regulation in the United Kingdom. In particular, it is unclear how data transfers to and from the United Kingdom will be regulated. + +Failure to comply with data protection laws and regulations could result in government enforcement actions, which may involve civil and criminal penalties, private litigation and/or adverse publicity and could negatively affect our operating results and business. Claims that we have violated individuals privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business. + +We can provide no assurance that future legislation will not prevent us from generating or maintaining personal data or that patients will consent to the use of their personal information, either of which may prevent us from undertaking or publishing essential research. These burdens or risks may prove too great for us to reasonably bear and may adversely affect our ability to achieve profitability or maintain profitably in the future. + + +21 + +Table of Contents + +We may be exposed to liability claims associated with the use of hazardous materials and chemicals. + +Our research and development activities may involve the controlled use of hazardous materials and chemicals. Although we believe that our safety procedures for using, storing, handling and disposing of these materials comply with federal, state and local laws and regulations, we cannot eliminate the risk of accidental injury or contamination from these materials. In the event of such an accident, we could be held liable for any resulting damages and any liability could materially adversely affect our business, financial condition and results of operations. We do not currently maintain hazardous materials insurance coverage. In addition, the federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive materials and waste products may require us to incur substantial compliance costs that could materially harm our business. + +If we are unable to retain and recruit qualified scientists and advisors, or if any of our key executives, key employees or key consultants discontinues his or her employment or consulting relationship with us, it may delay our development efforts or otherwise harm our business. + +We may not be able to attract or retain qualified management and scientific and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the San Diego, California area. Our industry has experienced a high rate of turnover of management personnel in recent years. If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the successful development of any product candidates, our ability to raise additional capital and our ability to implement our overall business strategy. In addition, our CMO operations will depend, in part, on our ability to attract and retain an appropriately skilled and sufficient workforce to operate our development and manufacturing facilities. The facilities are located in a growing biotechnology hub and competition for skilled workers will continue to increase as the industry undergoes further growth in the area. + +We are highly dependent on key members of our management and scientific staff, especially John W. Huemoeller II., Chairman of the Board, Chief Executive Officer and President; Catalina Valencia, Sapphire s Chief Executive Officer; and Sergei Svarovsky, our Chief Science Officer. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel. The loss of any of our executive officers, key employees or key consultants and our inability to find suitable replacements could impede the achievement of our research and development objectives, and potentially harm our business, financial condition and prospects. Furthermore, recruiting and retaining qualified scientific personnel to perform research and development work in the future is critical to our success. We may be unable to attract and retain personnel on acceptable terms given the competition among biotechnology, biopharmaceutical and health care companies, universities and non-profit research institutions for experienced scientists. Certain of our current officers, directors, scientific advisors and/or consultants or certain of the officers, directors, scientific advisors and/or consultants hereafter appointed may from time to time serve as officers, directors, scientific advisors and/or consultants of other biopharmaceutical or biotechnology companies. We do not maintain key man insurance policies on any of our officers or employees. All of our employees are employed at will and, therefore, each employee may leave our employment at any time. + +We may not be able to attract or retain qualified management and scientific personnel in the future due to the intense competition for a limited number of qualified personnel among biopharmaceutical, biotechnology, pharmaceutical and other businesses. Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than what we have to offer. If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can develop and commercialize product candidates will be limited. + +We plan to grant stock options or other forms of equity awards in the future as a method of attracting and retaining employees, motivating performance and aligning the interests of employees with those of our stockholders. If we are unable to implement and maintain equity compensation arrangements that provide sufficient incentives, we may be unable to retain our existing employees and attract additional qualified candidates. If we are unable to retain our existing employees, including qualified scientific personnel, and attract additional qualified candidates, our business and results of operations could be adversely affected. + + +22 + +Table of Contents + +Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business. + +We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we have established, comply with federal and state health-care fraud and abuse laws and regulations, comply with laws and regulations (including, but not limited to the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. 78dd-1 ( FCPA )) and internal policies restricting payments to government agencies and representatives, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions. + +We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties. + +If we obtain FDA approval for any of our product candidates and begin commercializing those products in the U.S., our operations may be directly, or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include: + + + +the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; + + +federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent; + + +HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; + + +HIPAA, as amended by the HITECH Act, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; and + + +state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. + +If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. + + +23 + +Table of Contents + +If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates. + +We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk for the commercialization of any products, including SPX-009. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates, if approved. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in: + + + +decreased demand for our product candidates or products that we may develop; + + +injury to our reputation; + + +withdrawal of clinical trial participants; + + +initiation of investigations by regulators; + + +restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls; + + +costs to defend the related litigation; + + +a diversion of management s time and our resources; + + +substantial monetary awards to trial participants or patients; + + +product recalls, withdrawals or labeling, marketing or promotional restrictions; + + +loss of revenues from product sales; and + + +the inability to commercialize our product candidates. + +Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We currently carry product liability insurance and errors and omissions insurance that we believe is appropriate for our Company. Although we maintain product liability insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have insufficient or no coverage. If we have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, we may not have, or be able to obtain, sufficient capital to pay such amounts. In addition, insurance coverage is becoming increasingly expensive, and we may not be able to maintain insurance coverage at a reasonable cost. We also may not be able to obtain additional insurance coverage that will be adequate to cover product liability risks that may arise. Consequently, a product liability claim may result in losses that could be material to our business, financial condition and results of operations. + +We will need to increase the size of our Company and may not effectively manage our growth. + +Our success will depend upon growing our business and our employee base. Over the next 12 months, we plan to add additional employees to assist us with research and development and our commercialization efforts. Our future growth, if any, may cause a significant strain on our management, and our operational, financial and other resources. Our ability to manage our growth effectively will require us to implement and improve our operational, financial and management systems and to expand, train, manage and motivate our employees. These demands may require the hiring of additional management personnel and the development of additional expertise by management. Any increase in resources devoted to research and product development without a corresponding increase in our operational, financial and management systems could have a material adverse effect on our business, financial condition, and results of operations. + + +24 + +Table of Contents + +Any disruption in our research and development facilities could adversely affect our business, financial condition and results of operations. + +Our principal executive offices, which house our research and development programs, are in San Diego, California. Our facilities may be affected by natural or man-made disasters. Earthquakes are of particular significance since our facilities are located in an earthquake-prone area. We are also vulnerable to damage from other types of disasters, including power loss, attacks from extremist organizations, fires, floods and similar events. If our facilities are affected by a natural or man-made disaster, we may be forced to curtail our operations and/or rely on third-parties to perform some or all of our research and development activities. Although we believe we possess adequate insurance for damage to our property and the disruption of our business from casualties, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In the future, we may choose to expand our operations in either our existing facilities or in new facilities. If we expand our worldwide manufacturing locations, there can be no assurance that this expansion will occur without implementation difficulties, or at all. + +Our business and operations would suffer in the event of system failures. + +Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, cybersecurity attacks or hacking, natural disasters, terrorism, war and telecommunication and electrical failures. In addition, we may face increased cybersecurity risks due to our reliance, and the reliance of our CROs, contractors and consultants reliance, on internet technology and the number of our employees, and employees of our CROs, contractors and consultants, many of whom are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability, damage to our reputation, suffer loss or harm to our intellectual property rights and the further research, development and commercial efforts of our products and product candidates could be delayed. If we are held liable for a claim against which we are not insured or for damages exceeding the limits of our insurance coverage, whether arising out of cybersecurity matters, or from some other matter, that claim could have a material adverse effect on our results of operations. + +Further, a cybersecurity attack, data breach or privacy violation that leads to disclosure or modification of, or prevents access to, patient information, including personally identifiable information or protected health information, could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, resulting in increased costs or loss of revenue. Portions of our information technology systems may experience interruptions, delays or cessations of service or produce errors in connection with ongoing systems implementation work. Cybersecurity attacks in particular are evolving and include, but are not limited to, threats, malicious software, ransom ware, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, misappropriation of confidential or otherwise protected information and corruption of data. If we are unable to prevent such cybersecurity attacks, data security breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated information, including sensitive patient data. In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. + +Comprehensive tax reform legislation could adversely affect our business and financial condition. + +Our effective income tax rate in the future could be adversely affected by a number of factors, including: changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the outcome of income tax audits in various jurisdictions. We regularly assess all of these matters to determine the adequacy of its tax provision, which is subject to significant discretion. + + +25 + +Table of Contents + +Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses. + +There have been changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act ), the Sarbanes-Oxley Act of 2002 ( Sarbanes-Oxley ), new regulations promulgated by the SEC and rules promulgated by the national securities exchanges. The Dodd-Frank Act, enacted in July 2010, expanded federal regulation of corporate governance matters and imposes requirements on public companies to, among other things, provides stockholders with a periodic advisory vote on executive compensation and also adds compensation committee reforms and enhanced pay-for-performance disclosures. While some provisions of the Dodd-Frank Act were effective upon enactment, others have been and will be implemented upon the SEC s adoption of related rules and regulations. The scope and timing of the adoption of such rules and regulations is uncertain and, accordingly, the cost of compliance with the Dodd-Frank Act is also uncertain. Areas subject to potential change, amendment or repeal include the Dodd-Frank Act, including 619 (12 U.S.C. 1851) known as the Volcker Rule and various swaps and derivatives regulations, the authority of the Federal Reserve and the Financial Stability Oversight Council, and renewed proposals to separate banks commercial and investment banking activities. + +These new or changed laws, regulations and standards are, or will be, subject to varying interpretations in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Members of our board of directors and our principal executive officer and principal financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business. If the actions we take in our efforts to comply with new or changed laws, regulations and standards differ from the actions intended by regulatory or governing bodies, we could be subject to liability under applicable laws or our reputation may be harmed. + +We cannot provide assurance that our commercialization agreement with Vers a Ophthalmics, LLC will be successful. + +On September 19, 2022, we announced that we had signed an exclusive global commercialization agreement with Vers a Ophthalmics, LLC, a business division of Vers a Holdings, Inc.. We cannot provide assurances that this agreement will be successful and the loss of this key distributor could have a material adverse effect on our business, revenues and operating results. + +Risks Related to Acquisitions + +We have acquired, and may in the future acquire, assets, businesses and technologies as part of our business strategy. If we acquire companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value, and adversely affect our operating results and the value of our common stock. + +As part of our business strategy, we may acquire, enter into joint ventures with, or make investments in complementary or synergistic companies, services, and technologies in the future. Acquisitions and investments involve numerous risks, including without limitation: + + + +difficulties in identifying and acquiring products, technologies, proprietary rights or businesses that will help our business; + + +difficulties in integrating operations, technologies, services, and personnel; + + +diversion of financial and managerial resources from existing operations; + + +the risk of entering new development activities and markets in which we have little to no experience; + + +risks related to the assumption of known and unknown liabilities; + + +risks related to our ability to raise sufficient capital to fund additional operating activities; and + + +the issuance of our securities as partial or full payment for any acquisitions and investments could result in material dilution to our existing stockholders. + +As a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, we may incur costs in excess of what we anticipate, and management resources and attention may be diverted from other necessary or valuable activities. + + +26 + +Table of Contents + +Any acquisitions we make could disrupt our business and seriously harm our financial condition. + +We have in the past made (and may, from time to time, consider) acquisitions of complementary companies, products or technologies. Acquisitions involve numerous risks, including difficulties in the assimilation of the acquired businesses, the diversion of our management s attention from other business concerns and potential adverse effects on existing business relationships. In addition, any acquisitions could involve the incurrence of substantial additional indebtedness. We cannot assure you that we will be able to successfully integrate any acquisitions that we pursue or that such acquisitions will perform as planned or prove to be beneficial to our operations and cash flow. Any such failure could seriously harm our business, financial condition and results of operations. + +Risks Related to Our Intellectual Property + +Our ability to protect our intellectual property rights will be critically important to the success of our business, and we may not be able to protect these rights in the U.S. or abroad. + +Our success, competitive position and future revenues will depend in part on our ability to obtain and maintain patent protection for our product candidates, methods, processes and other technologies, to prevent third parties from infringing on our proprietary rights, exclude others from using our technology and to operate without infringing upon the proprietary rights of third parties. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We attempt to protect our proprietary position by maintaining trade secrets and by filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. The first of the patent applications related to our ongoing business operations was issued in 2020, and we continue to file additional patent applications for our product candidates and technology. + +We have commenced generating a patent portfolio to protect each product candidate in our pipeline. However, the patent position of biopharmaceutical companies involves complex legal and factual questions, and therefore we cannot predict with certainty whether any patent applications that we have filed or that we may file in the future will be approved, will cover our products or product candidates or that any resulting patents will be enforced. In addition, third parties may challenge, seek to invalidate, limit the scope of or circumvent any of our patents, once they are issued. Thus, any patents that we own or license from third parties or joint venture or development partners may not provide any protection against competitors. Any patent applications that we have filed or that we may file in the future, or those we may license from third parties or joint venture or development partners, may not result in patents being issued. Moreover, disputes between our licensing or joint development partners and us may arise over license scope, or ownership, assignment, inventorship and/or rights to use or commercialize patent or other proprietary rights, which may adversely impact our ability to obtain and protect our proprietary technology and products. Also, patent rights may not provide us with adequate proprietary protection or competitive advantages against competitors with similar technologies or products. + +In addition, the laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the U.S. If we fail to apply for intellectual property protection or if we cannot adequately protect our intellectual property rights in these foreign countries, our competitors may be able to compete more effectively against us, which could adversely affect our competitive position, as well as our business, financial condition and results of operations. + +Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the PTO and various foreign patent offices at various points over the lifetime of our patents and/or applications. We have systems in place to remind us to pay these fees, and we rely on our outside counsel or service providers to pay these fees when due. Additionally, the PTO and various foreign patent offices require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on our business. In addition, we are responsible for the payment of patent fees for patent rights that we have licensed from other parties. If any licensor of these patents does not itself elect to make these payments, and we fail to do so, we may be liable to the licensor for any costs and consequences of any resulting loss of patent rights. + + +27 + +Table of Contents + +We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful. + +Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks. + +Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. + +Our long-term success depends on intellectual property protection; if our intellectual property rights are invalidated or circumvented, our business will be adversely affected. + +Our long-term success depends on our ability to continually discover, develop and commercialize innovative new pharmaceutical products. Without strong intellectual property protection, we may be unable to generate the returns necessary to support the enormous investments in research and development and capital as well as other expenditures required to bring new drugs to the market and for commercialization. + +Intellectual property protection varies throughout the world and is subject to change over time. In the U.S., for small molecule drug products, such as SPX-009 (which is held by our subsidiary, Sapphire), the Hatch-Waxman Act provides generic companies powerful incentives to seek to invalidate our pharmaceutical patents. As a result, we expect that our U.S. patents on major pharmaceutical products will be routinely challenged, and there can be no assurance that our patents will be upheld. We face generic manufacturer challenges to our patents outside the U.S. as well. In addition, competitors or other third parties may claim that our activities infringe patents or other intellectual property rights held by them. If successful, such claims could result in our being unable to market a product in a particular territory or being required to pay damages for past infringement or royalties on future sales. + + +28 + +Table of Contents + +If any of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer. + +Our success also depends upon the skills, knowledge and experience of our scientific and technical personnel and our consultants and advisors, as well as our licensors. To help protect our proprietary know-how and our inventions for which patents may be unobtainable or difficult to obtain, or prior to seeking patent protection, we rely on trade secret protection and confidentiality agreements. Unlike some of our competitors, in addition to certain manufacturing processes, we maintain our proprietary libraries for ourselves as trade secrets. To this end, we require all our employees, consultants, advisors and contractors to enter into agreements which prohibit the disclosure of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. These agreements may not provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure or the lawful development by others of such information. If any of our trade secrets, know-how or other proprietary information is disclosed, the value of our trade secrets, know-how and other proprietary rights would be significantly impaired and our business and competitive position would suffer. Moreover, our third-party licensing partners may retain rights in some of our proprietary or joint trade secrets, know-how, patented inventions or other proprietary information, including rights to sublicense and rights of publication, which may adversely impact our ability to obtain patents and protect trade secrets, know-how or other proprietary information. In addition, the U.S. government may retain rights in some of our patents or other proprietary information. + +In addition, many of the formulations used and processes developed by us in manufacturing any of our collaborators products are subject to trade secret protection, patents or other intellectual property protections owned or licensed by such collaborator. While we make significant efforts to protect our collaborators proprietary and confidential information, including requiring our employees to enter into agreements protecting such information, if any of our employees breaches the non-disclosure provisions in such agreements, or if our collaborators make claims that their proprietary information has been disclosed, our reputation may suffer damage and we may become subject to legal proceedings that could require us to incur significant expenses and divert our management s time, attention and resources. + +Claims that we infringe upon the rights of third parties may give rise to costly and lengthy litigation, and we could be prevented from selling products, forced to pay damages, and defend against litigation. + +Third parties may assert patent or other intellectual property infringement claims against us or our strategic partners or licensees with respect to our technologies and product candidates or potential product candidates. If our products, methods, processes and other technologies infringe upon the proprietary rights of other parties, we could incur substantial costs and we may have to: + + + +obtain licenses, which may not be available on commercially reasonable terms, if at all, and may be non-exclusive, thereby giving our competitors access to the same intellectual property licensed to us; + + +redesign our products or processes to avoid infringement; + + +stop using the subject matter validly claimed in the patents held by others; + + +pay damages; and + + +defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our valuable management resources. + +Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations. Furthermore, as a result of a patent infringement suit brought against us or our strategic partners or licensees, we or our strategic partners or licensees may be forced to stop or delay developing, manufacturing or selling technologies, product candidates or potential products that are claimed to infringe a third party s intellectual property unless that party grants us or our strategic partners or licensees rights to use its intellectual property. Ultimately, we may be unable to develop some of our technologies or potential products or may have to discontinue development of a product candidate or cease some of our business operations as a result of patent infringement claims, which could severely harm our business. + +In addition, our collaborators products may be subject to claims of intellectual property infringement and such claims could materially affect our business if their products cease to be manufactured and they have to discontinue the use of the infringing technology which we may provide. Any of the foregoing could affect our ability to compete or could have a material adverse effect on our business, financial condition and results of operations. + + +29 + +Table of Contents + +Our position as a relatively small company may cause us to be at a significant disadvantage in defending our intellectual property rights and in defending against infringement claims by third parties. + +Litigation relating to the ownership and use of intellectual property is expensive, and our position as a small company in an industry dominated by very large companies may cause us to be at a significant disadvantage in defending our intellectual property rights and in defending against claims that our technology infringes or misappropriates third party intellectual property rights. However, we may seek to use various post-grant administrative proceedings, including new procedures created under the America Invents Act, to invalidate potentially overly-broad third party rights. Even if we can defend our position, the cost of doing so may adversely affect our ability to grow, generate revenue or become profitable. In the course of the ongoing litigation or any future additional litigation to which we may be subject, we may not be able to protect our intellectual property at a reasonable cost, or at all. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities or otherwise affect our legal, contractual or intellectual property rights, which could have a significant adverse effect on our business. + +Third-party claims of intellectual property infringement may prevent or delay our drug discovery and development efforts. + +Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. + +There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including PTO administrative proceedings, such as inter parties reviews, and reexamination proceedings before the PTO or oppositions and revocations and other comparable proceedings in foreign jurisdictions. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others. + +Despite safe harbor provisions, third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents, of which we are currently unaware, with claims to materials, formulations, methods of doing research or library screening, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent published applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtain a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license, limit our uses, or until such patent expires or is finally determined to be held invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. + +Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys fees for willful infringement, obtain one or more licenses from third parties, cease marketing our products or developing our product candidates, limit our uses, pay royalties or redesign our infringing product candidates, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our product candidates, which could harm our business significantly. + +We may not be able to protect our intellectual property rights throughout the world. + +Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. + + +30 + +Table of Contents + +Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. + +If we breach any of the agreements under which we license commercialization rights to our product candidates from third parties, we could lose license rights that are important to our business. + +We license the use, development and commercialization rights for some of our product candidates and may enter into similar licenses in the future. Under each of our existing license agreements we are subject to commercialization and development, diligence obligations, milestone payment obligations, royalty payments and other obligations. If we fail to comply with any of these obligations or otherwise breach our license agreements, our licensing partners may have the right to terminate the license in whole or in part. + +Generally, the loss of any one of our current licenses or other licenses in the future could materially harm our business, prospects, financial condition and results of operations. + +Intellectual property rights do not necessarily address all potential threats to our competitive advantage. + +The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative: + + + +Others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; + + +We or our licensors or strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed; + + +We or our licensors or strategic partners might not have been the first to file patent applications covering certain of our inventions; + + +Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; + + +Our pending patent applications may not lead to issued patents; + + +Issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; + + +Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; + + +We may not develop additional proprietary technologies that are patentable; and + + +The patents of others may have an adverse effect on our business. + +Should any of these events occur, they could significantly harm our business, results of operations and prospects. + + +31 + +Table of Contents + +Risks Related to Ownership of Our Common Stock + +The market price of our common stock may fluctuate significantly, and investors in our common stock may lose all or a part of their investment. + +The market prices for securities of biotechnology and pharmaceutical companies have historically been highly volatile, and the market has from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. For example, from January 1, 2022 to December 31, 2022, our closing stock price ranged from $0.027 to $0.399 per share. The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as: + + + +actual or anticipated adverse results or delays in our clinical trials; + + +our failure to commercialize our product candidates, if approved; + + +unanticipated serious safety concerns related to the use of any of our product candidates; + + +adverse regulatory decisions; + + +changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals; + + +legal disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our product candidates, government investigations and the results of any proceedings or lawsuits, including, but not limited to, patent or stockholder litigation; + + +our decision to initiate a clinical trial, not initiate a clinical trial or to terminate an existing clinical trial; + + +our dependence on third parties, including CROs; + + +announcements of the introduction of new products by our competitors; + + +market conditions in the pharmaceutical and biotechnology sectors; + + +announcements concerning product development results or intellectual property rights of others; + + +future issuances of common stock or other securities; + + +the addition or departure of key personnel; + + +failure to meet or exceed any financial guidance or expectations regarding development milestones that we may provide to the public; + + +actual or anticipated variations in quarterly operating results; + + +our failure to meet or exceed the estimates and projections of the investment community; + + +overall performance of the equity markets and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies; + + +conditions or trends in the biotechnology and biopharmaceutical industries; + + +introduction of new products offered by us or our competitors; + + +announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; + + +issuances of debt or equity securities; + + +sales of our common stock by us or our stockholders in the future; + + +trading volume of our common stock; + + +ineffectiveness of our internal controls; + + +publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; + + +failure to effectively integrate the acquired companies operations; + + +general political and economic conditions; + + +effects of natural or man-made catastrophic events; + + +effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic; and + + +other events or factors, many of which are beyond our control. + +Further, the equity markets in general have recently experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility of our common stock might worsen if the trading volume of our common stock is low. The realization of any of the above risks or any of a broad range of other risks, including those described in these Risk Factors, could have a dramatic and material adverse impact on the market price of our common stock. + +We have never paid cash dividends and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock. + +We have never paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. We currently anticipate that we will re-invest any funds that we receive into the business to further our business strategy, and not to pay dividends. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if the common stock price appreciates. + + +32 + +Table of Contents + +A sale of a substantial number of shares of the common stock may cause the price of our common stock to decline. + +If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, substantial amounts of our common stock in the public market, including shares issued in connection with the exercise of outstanding options or warrants, the market price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management s attention and harm our business. + +The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices for the common stock of biotechnology and biopharmaceutical companies. These broad market fluctuations may cause the market price of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of our securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. We may become involved in this type of litigation in the future. Litigation often is expensive and diverts management s attention and resources, which could adversely affect our business. + +Our quarterly operating results may fluctuate significantly. + +We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including: + + + +variations in the level of expenses related to our development programs; + + +the addition or termination of clinical trials; + + +any intellectual property infringement lawsuit in which we may become involved; + + +regulatory developments affecting our product candidates; and + + +our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements. + +If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially. + +Existing stockholders interest in us may be diluted by additional issuances of equity securities and raising funds through acquisitions, lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights. + +We may issue additional equity securities to fund future expansion and pursuant to equity incentive or employee benefit plans. We may also issue additional equity for other purposes. These securities may have the same rights as our common stock or, alternatively, may have dividend, liquidation or other preferences to our common stock. The issuance of additional equity securities will dilute the holdings of existing stockholders and may reduce the share price of our common stock. + +If we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish potentially valuable rights to our product candidates, potential products or proprietary technologies, or grant licenses on terms that may not be favorable to us. If adequate funds are not available, our ability to achieve profitability or to respond to competitive pressures would be significantly limited and we may be required to delay, significantly curtail or eliminate the development of our product candidates. + +Our investors could experience substantial dilution of their investments as a result of subsequent exercises of our outstanding options, including the CEO Performance Award, or the grant of future equity awards by us. + +As of December 31, 2022, 40 million shares of our common stock were authorized for issuance under our 2015 Stock Incentive Plan, of which 19,860,715 shares of our common stock were subject to options outstanding at such date at a weighted-average exercise price of $0.49 per share. To the extent outstanding options are exercised, our existing stockholders may incur dilution. + +We rely on equity awards to motivate current employees and to attract new employees. The grant of future equity awards by us to our employees and other service providers may further dilute our stockholders. + + +33 + +Table of Contents + +We rely on equity awards to motivate current employees and to attract new employees. The grant of future equity awards by us to our employees and other service providers may further dilute our stockholders. + +Our articles of incorporation, as amended, and amended and restated bylaws provide for indemnification of officers and directors at our expense and limits their liability, which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of our officers and/or directors. + +Our articles of incorporation, as amended ( Charter ), amended and restated bylaws ( Bylaws ) and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person s promise to repay us, therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we will be unable to recover. + +We have issued preferred stock. + +Our Charter authorizes the issuance of up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by our Board of Directors. As of December 31, 2022, of the 5,000,000 preferred shares authorized: (i) 1,000,000 shares were designated as Series A Convertible Preferred Stock, of which none were issued and outstanding, (ii) 500,000 shares were designated as Series B Convertible Preferred Stock, of which none were issued and outstanding, and (iii) 500,000 shares were designated as Series C Convertible Preferred Stock ( Series C Preferred Stock ), of which 500,000 shares were issued and outstanding. The holders of our Series C Preferred Stock have voting control of the Company. Our Board of Directors is empowered, without stockholder approval, to designate and issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. The issuance of additional shares of preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. + + +34 + +Table of Contents + +CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS + +This prospectus may contain certain forward-looking statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the registrant s expectations or beliefs, including but not limited to, statements concerning the registrant s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as may, will, expect, believe, anticipate, intend, could, estimate, might, plan, predict, project, target, potential, continue, could, should, or will or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the registrant s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and its subsidiaries, volatility of stock price, commercial viability of our product candidates and any other factors discussed in this and other registrant filings with the Securities and Exchange Commission. + +These risks and uncertainties and other factors include, but are not limited to those listed in the Risk Factors section of this prospectus. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this prospectus or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus. + +The forward-looking statements included in this prospectus include, among other things, statements regarding: + + + +availability of capital to satisfy our working capital requirements; + + +our current and future capital requirements and our ability to raise additional funds to satisfy our capital needs; + + +accuracy of our estimates regarding expense, future revenue and capital requirements, including the level of expenses related to our preclinical and clinical development programs; + + +our ability to continue operating as a going concern; + + +we have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future as we continue research and development of our products and product candidates; + + +regulatory or legal developments in the United States and other countries; + + +results of our pre-clinical and clinical trials, as well as regulatory approval of our product candidates, both in the United States and in other countries; + + +the performance of our third-party CRO(s) and other third-party non-clinical and clinical development collaborators and regulatory service providers; + + +the size of the potential markets for our products and product candidates, market acceptance of our products and products candidates, and our ability to serve those markets; + + +the success of competing products and product candidates in development by others that are or become available for the indications that we are pursuing; + + +developments or disputes concerning patent applications, issued patents or other proprietary rights; + + +potential acquisitions or other strategic transactions; and + + +other risks and uncertainties, including those listed in the Risk Factors section of this prospectus and the documents incorporated by reference herein. + +Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under Risk Factors and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur. We caution you not to place undue reliance on these forward-looking statements. In addition to the information expressly required to be included in this prospectus, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading. + + +35 + +Table of Contents + +USE OF PROCEEDS + +We will not receive any proceeds from the sale of the common stock by the selling stockholder. However, we will receive proceeds from the sales, if any, of shares of our common stock to Cross under the Equity Purchase Agreement. Cross has committed to purchase up to $20,000,000 worth of shares of our common stock over a period of time terminating on the earlier of the date on which Cross shall have purchased an aggregate of $20,000,000 shares of common stock under the Equity Purchase Agreement or June 1, 2026. See the section of this prospectus entitled The Offering for additional information regarding the terms of the Equity Purchase Agreement. + +We intend to use the net proceeds, if any, from the sale and issuance of shares to Cross under the Equity Purchase Agreement for working capital and general corporate purposes, including, without limitation, development of our product candidates and general and administrative expenses, or for other purposes that our board of directors, in its good faith, deems to be in the best interest of the Company. Our management will have broad discretion as to the allocation of the net proceeds from the sale and issuance of shares to Cross under the Equity Purchase Agreement, and could use them for purposes other than those contemplated at the time of commencement of this offering. We have agreed to bear the expenses relating to the registration of the offer and resale by the selling stockholder of the shares of our common stock being offered under this prospectus. + +THE OFFERING + +The selling stockholder may offer and resale of up to 50,000,000 shares of our common stock, par value $0.0001 per share, pursuant to this prospectus. All of such shares represent shares that Cross has agreed to purchase from us pursuant to the terms and conditions of the Equity Purchase Agreement, which are described below. + +Equity Purchase Agreement with Cross & Company + +Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to put, or sell, up to $20,000,000 worth of shares of our common stock to Cross. Unless terminated earlier, Cross purchase commitment will automatically terminate on the earlier of the date on which Cross shall have purchased an aggregate of $20,000,000 shares of common stock under the Equity Purchase Agreement or June 1, 2026. We have no obligation to sell any shares of common stock under the Equity Purchase Agreement. This arrangement is also sometimes referred to herein as the Equity Line. + +As provided in the Equity Purchase Agreement, we may require Cross to purchase shares of our common stock from time to time by delivering a put notice to Cross specifying the total number of shares to be purchased (such number of shares multiplied by the purchase price described below, the Investment Amount ); provided there must be a minimum of ten trading days between delivery of each put notice. We may determine the Investment Amount, provided that such amount may not be more than 300% of the average daily trading volume in dollar amount for our common stock during the ten trading days preceding the date on which we deliver the applicable put notice, unless waived by Cross in its sole discretion. Additionally, such amount may not be lower than $10,000 or higher than $250,000. Cross will have no obligation to purchase shares under the Equity Line to the extent that such purchase would cause Cross to own more than 4.99% of our issued and outstanding shares of common stock. + +For each share of the our common stock purchased under the Equity Line, Cross will pay a purchase price equal to 87.5% of the Market Price, which is defined as the lowest closing traded price on the OTCQB Marketplace, as reported by Bloomberg Finance L.P., during the ten consecutive trading days including and immediately prior to the settlement date of the sale, which in most circumstances will be the trading day immediately following the Put Date, or the date that a put notice is delivered to Cross (the Pricing Period ). On the settlement date, Cross will purchase the applicable number of shares, subject to satisfaction of customary closing conditions, including, without limitation, a requirement that a registration statement remain effective registering the resale by Cross of the shares to be issued under the Equity Line. The Equity Purchase Agreement is not transferable and any benefits attached thereto may not be assigned. + + +36 + +Table of Contents + +The Equity Purchase Agreement contains covenants, representations and warranties of us and Cross that are typical for transactions of this type. In addition, we and Cross have granted each other customary indemnification rights in connection with the Equity Purchase Agreement. The Equity Purchase Agreement may be terminated by us at any time. + +In connection with the Equity Purchase Agreement, we agreed to prepare and file a registration statement registering the resale by Cross of those shares of our common stock to be issued under the Equity Line. In accordance with this obligation, on June 2, 2023, we filed the registration statement of which this prospectus is a part, registering the resale by Cross of up to 50,000,000 shares that may be issued and sold to Cross under the Equity Line. + +The 50,000,000 shares of our common stock being offered pursuant to this prospectus by Cross will represent approximately 28.9% of the shares of our common stock issued and outstanding and held by non-affiliates of our Company and 22.0% of all of the shares of our common stock issued and outstanding overall as of the date of this prospectus, assuming the offering is fully subscribed. + +The foregoing description of the terms of the Equity Purchase Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the agreement itself, a copy of which is filed as an exhibit here to the registration statement of which this prospectus is a part and incorporated into this prospectus by reference. The benefits and representations and warranties set forth in Equity Purchase Agreement are not intended to, and do not, constitute continuing representations and warranties of the Company or any other party to persons not a party thereto. + +We intend to periodically sell shares of our common stock to Cross under the Equity Purchase Agreement and Cross may, in turn, sell such shares to investors in the market at the market price or at negotiated prices. This may cause our stock price to decline, which would require us to issue increasing numbers of our common shares to Cross in order to raise the intended amount of funds. + +Likelihood of Accessing the Full Amount of the Equity Line + +Notwithstanding that the Equity Line is in an amount of $20,000,000, we anticipate that the actual likelihood that we will be able access the full amount of the Equity Line is low due to several factors, including that our ability to access the Equity Line is impacted by our average daily trading volume, which may limit the maximum dollar amount of each put we deliver to Cross, and the share price of our common stock. Our use of the Equity Line will continue to be limited and restricted if our share trading volume and/or the market price of our stock continue at their current levels or decrease further in the future from the volume and stock prices reported over the past year. Our ability to issue shares in excess of the 50,000,000 shares covered by the registration statement of which this prospectus is a part will be subject to our filing a subsequent registration statement with the SEC and the SEC declaring it effective. + +Accordingly, because our ability to deliver puts to Cross under the Equity Purchase Agreement is subject to a number of conditions, there is no guarantee that we will receive all or any portion of the $20,000,000 that is available to us under the Equity Line. + + +37 + +Table of Contents + +PLAN OF DISTRIBUTION + +The selling stockholder or its permitted transferees may, from time to time, sell any or all of shares of our common stock covered by this prospectus on the OTCQB Marketplace operated by the OTC Markets Group, Inc., or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. The selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. The selling stockholder may use any one or more of the following methods when selling securities: + + + +ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; + + +block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; + + +purchases by a broker-dealer as principal and resale by the broker-dealer for its account; + + +an exchange distribution in accordance with the rules of the applicable exchange; + + +privately negotiated transactions; + + +in transactions through broker-dealers that agree with the selling stockholder to sell a specified number of such securities at a stipulated price per security; + + +through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; + + +a combination of any such methods of sale; or + + +any other method permitted pursuant to applicable law. + +The selling stockholder may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus. + +Broker-dealers engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, provided such amounts are in compliance with FINRA Rule 2121. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of common stock will be paid by the selling stockholder and/or the purchasers. + +Cross is an underwriter within the meaning of the Securities Act and any broker-dealers or agents that are involved in selling the shares may be deemed to be underwriters within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Because Cross is an underwriter within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act. + +Pursuant to applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholder or any other person. We will make copies of this prospectus available to the selling security holders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale. + +Although Cross has agreed not to enter into any short sales of our common stock, sales after delivery of a put notice of a number of shares reasonably expected to be purchased under a put notice shall not be deemed a short sale. Accordingly, Cross may enter into arrangements it deems appropriate with respect to sales of shares of our common stock after it receives a put notice under the Equity Purchase Agreement so long as such sales or arrangements do not involve more than the number of put shares reasonably expected to be purchased by Cross under such put notice. + + +38 + +Table of Contents + +SELLING STOCKHOLDER + +This prospectus covers the resale by the selling stockholder or its permitted transferees of 50,000,000 shares of our common stock that may be sold and issued by us to Cross under the Equity Purchase Agreement. Cross is an underwriter within the meaning of the Securities Act in connection with its resale of our common stock pursuant to this prospectus. The selling stockholder has not had any position or office with us or any of our affiliates over the past three years. In the past three years, we have sold approximately 28,545,091 shares of our common stock to Cross pursuant to arrangements similar to the Equity Line. The following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholder as of June 1, 2023 and the number of shares of our common stock being offered pursuant to this prospectus. + +Name of selling +stockholder + +Number of shares of +common stock beneficially +owned as of the date +of this prospectus (1) + +Number of shares +of common stock to be +sold pursuant to this +prospectus offered +Number of shares of common stock +to be beneficially owned and +percentage of beneficial +ownership after the offering (1)(2) + + + + + +Number of +Shares + +Percentage +of class (3) + + +Cross & Company (4) + +3,704,909 + + 50,000,000 + + 3,704,909 + +1.3 +% + + + +(1) +Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment power with respect to shares of common stock. Shares of common stock subject to options and warrants currently exercisable, or exercisable within 60 days, are counted as outstanding for computing the beneficial ownership percentage of the person holding such options or warrants but are not counted as outstanding for computing the beneficial ownership percentage of any other person. + + + + + + +(2) +The amount and percentage of shares of our common stock that will be beneficially owned by the selling stockholder after completion of the offering assumes that the selling stockholder will sell all shares of our common stock being offered pursuant to this prospectus. + + + + + + +(3) +Based on 227,649,403 shares of our common stock issued and outstanding as of May 22, 2023, and assuming that Cross has sold all shares of common stock being offered pursuant to this prospectus (50,000,000 shares). All shares of our common stock being offered pursuant to this prospectus by the selling stockholder are counted as outstanding for computing the percentage beneficial ownership of such selling stockholder. The percentage set forth in this column does not give effect to the 4.99% beneficial ownership limitation set forth in the Equity Purchase Agreement. + + + + + + +(4) +James Arabia is the president and possesses sole voting and investment control over shares owned by Cross & Company. Cross & Company is wholly-owned by the spouse of James R. Arabia. + + + +39 + +Table of Contents + +DESCRIPTION OF CAPITAL STOCK + +The following information provides a description of our capital stock and the provisions of our Charter and Bylaws. This description is only a \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/BAYAR_bayview_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/BAYAR_bayview_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..ba4a43a2f1a09593a9bff0ebaed46d960f543b9a --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/BAYAR_bayview_prospectus_summary.txt @@ -0,0 +1 @@ +summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, or the context otherwise requires, references to: "amended and restated memorandum and articles of association" are to our memorandum and articles of association to be in effect upon completion of this offering. "company" or "our company" "we," "us," "are to Bayview Acquisition Corp, a Cayman Islands exempted company; "Companies Act" are to the Companies Act (Revised) of the Cayman Islands as the same may be amended from time to time; "equity-linked securities" are to any securities of our company which are convertible into or exchangeable or exercisable for, ordinary shares of our company, including but not limited to a private placement of equity or debt. "founder shares" are to our ordinary shares initially purchased by our sponsors for an aggregated price of $25,000 in a private placement prior to this offering; "founders" are to members of our management team; "initial shareholders" are to holders of our founder shares prior to this offering and holders of our private units upon the consummation of this offering, which include our sponsors, officers and directors and/or their designees; "management" or our "management team" are to our officers and directors; "ordinary shares" are to our ordinary shares, par value $0.0001 per share; "private rights" are to the rights underlying private units issued to our sponsors in a private placement simultaneously with the closing of this offering, which are identical to the public rights sold in this offering with certain exceptions; "private shares" are to our ordinary shares underlying private units issued to our sponsors in a private placement simultaneously with the closing of this offering, which are identical to the public shares sold in this offering with certain exceptions; "private units" are to the units issued to our sponsors in a private placement simultaneously with the closing of this offering which are identical to the units sold in this offering with certain exceptions; "public rights" are to the rights to receive one-tenth of one ordinary share upon the consummation of an initial business combination sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); 1 "public shares" are to our ordinary shares sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); "public shareholders" are to the holders of our public shares, including our initial shareholders and management team to the extent our initial shareholders and/or members of our management team purchase public shares, provided that each initial shareholder s and member of our management team s status as a "public shareholder" shall only exist with respect to such public shares; "rights" are to the rights to receive one-tenth of one ordinary share upon the consummation of an initial business combination, which includes the public right as well as the private right and any rights included in private units issued upon conversion of working capital loans; "sponsors" is to Bayview Holding LP, a Delaware limited partnership business company and Peace Investment Holdings Limited, a British Virgin Island company; and Registered trademarks referred to in this prospectus are the property of their respective owners. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. Any forfeiture of shares described in this prospectus will take effect as a surrender of shares for no consideration of such shares as a matter of Cayman Islands law. Any share dividends described in this prospectus will take effect as a share capitalization as a matter of Cayman Islands law. 2 Our Company We are a blank check company incorporated on February 16, 2023 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have generated no revenues to date and we do not expect that we will generate operating revenues at the earliest until we consummate our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. While a majority of our executive officers and directors are located in or have significant ties to the People s Republic of China, including, solely for purposes of this prospectus, Hong Kong, Taiwan and Macau, which we refer to throughout this prospectus collectively as the "PRC," a majority of our executive officers and directors are citizens of the United States or Canada. Our Chief Executive Officer, Xin Wang, is a Canadian citizen and our Chief Financial Officer, David Bamper, is a United States citizen and two of our directors are United States citizens, resulting in three of our six executive officers and directors being United States citizens. Our Sponsors, Bayview Holding LP and Peace Investment Holdings Limited are each located in New York, NY, USA and Dongguan, Guangdong Province, People s Republic of China, respectively. While a majority of our executive officers and directors are citizens of the United States or Canada, our ties to China present legal and operational risks to us and our investors, including significant risks related to actions that may be taken by China in the areas of regulatory, liquidity and enforcement, which exist and are independent of the legal and operational risks that ties to China or Hong Kong may present in connection with effecting an initial business combination. For example, if these ties were to cause China to view us as subject to their regulatory authority, China could take actions that could materially hinder or prevent our offering of securities to investors, materially change our operations and/or the value of the securities we are registering, and cause the value of such securities to significantly decline or be worthless. In addition, our executive officers and directors ties to China may make us a less attractive partner to potential target companies outside the PRC than a non-PRC related SPAC. As a result, we are more likely to acquire a company based in China in an initial business combination. If we decide to consummate our initial business combination with a target business based in and primarily operating in China, the combined company may face various legal and operational risks and uncertainties after the business combination. In order to reduce or limit such risks, we will not consider or undertake an initial business combination with any company with financial statements audited by an accounting firm that the PCAOB has been unable to inspect for two consecutive years. Further, due to (i) the risks associated with acquiring and operating a business in the PRC and/or Hong Kong, and (ii) the fact that our executive officers and directors are located in or have significant ties to China, it may make us a less attractive partner to certain potential target businesses, including non-China- or non-Hong Kong-based target companies. In the event that we determine to pursue a business combination with a target company based in China or Hong Kong, we may become subject to legal and operational risks resulting from Chinese laws and regulations that are sometimes vague and uncertain, and which may therefore, present risks that may result in a material change in the combined company s principal operations in China, significant depreciation of the value of the combined company s securities, or which may materially hinder or prevent the offering of securities by the combined company to investors and cause the value of such securities to significantly decline or be worthless. The PRC government has significant authority to exert influence on the ability of a China-based company to conduct its business, make or accept foreign investments or list on a U.S. stock exchange. For example, if we enter into a business combination with a target business operating in China, the combined company may face risks associated with regulatory approvals of the proposed business combination between us and the target, offshore offerings, anti-monopoly regulatory actions, cybersecurity and data privacy, as well as the lack of PCAOB inspection of its auditors or the auditors of the target business. In addition, the combined company may be subject to legal and operational risks associated with having substantially all of its operations in China, including risks related to the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or United States regulations, which risks could result in a material change in the combined company s operations and/or the value of the securities of the combined company. As indicated above, while we intend to focus our search on businesses in Asia, we are not limited to a particular industry or geographic region for purposes of consummating an initial business combination. Because our management team has a substantial network in the PRC, we may pursue a business combination with a company doing business in China, which may have legal and operational risks associated with such a decision. These risks could result in a material change in the target company s post-combination operations or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. However, we will not consummate our initial business combination with an entity or business with China operations consolidated through a VIE structure. Since a majority of our executive officers and directors are located in or have significant ties to the PRC, we may be a less attractive partner to potential target companies outside the PRC, thereby limiting our pool of acquisition candidates. This would impact our search for a target company and make it harder for us to complete an initial business combination with a non-China-based target company. For example, a combination with a U.S. target company may be subject to review by a U.S. government entity or may ultimately be prohibited. Furthermore, the additional time that could be required for governmental review of the transaction or complete prohibition of the transaction could prevent us from completing an initial business combination and require us to liquidate. In the event of liquidation, investors would lose their investment opportunity in potential target companies, any price appreciation in a combined company, and their financial investment in the rights, which would expire worthless. See "Risk Factors — Risks Related to our Search for, Consummation of, or Inability to Consummate, a Business Combination — Our ability to complete a business combination may be impacted by the fact that some of our officers and directors are located in or have significant ties to the People s Republic of China, including, Hong Kong, Taiwan and Macau. This may make us a less attractive partner to potential target companies outside the PRC, thereby limiting our pool of acquisition candidates and making it harder for us to complete an initial business combination with a non-China-based target company. For example, we may not be able to complete an initial business combination with a U.S. target company since such initial business combination may be subject to U.S. foreign investment regulations and review by a U.S. government entity, such as the Committee on Foreign Investment in the United States (CFIUS), or ultimately prohibited." We believe our management team is well positioned to identify attractive risk-adjusted returns in the marketplace and that our professional contacts and transaction sources, ranging from industry executives, private owners, private equity funds, family offices, commercial and investment bankers, lawyers and other financial sector service providers and participants, in addition to the geographical reach of our affiliates, will enable us to pursue a broad range of opportunities. Our management believes that its collective ability to identify and implement value creation initiatives has been an essential driver of past performance and will remain central to its differentiated acquisition strategy. 3 Our Competitive Advantages We seek to create compelling shareholder value through the extensive experience and demonstrated success of our management team in investing in, operating and transforming businesses, with a particular combination of competitive advantages such as: Leadership of an Experienced Management Team and Board of Directors Our management team is led by our Chairperson of the Board of Directors, Yuk Man Lau, Chief Executive Officer and Director, Xin Wang, Chief Financial Officer and Director, David Bumper, and Independent Director nominees, Dajiang Guo, John DeVito and Guohan Li. Xin Wang, our Chief Executive Officer and director, has served as Managing Partner of Bohai Harvest RST (Shanghai) Equity Investment Management Co., Ltd., since January 2015. Previously, Ms. Wang was an associate at two international law firms. Ms. Wang has also served as a director of Atomic47 since April 2019. Ms. Wang received her Bachelor s degree in Commerce from McGill University and a Juris Doctor from Boston University School of Law. David Bamper, our Chief Financial Officer, has overseen the accounting operations, financial planning and analysis and tax functions at Lineup Media Group and Atomic 47 since January 2016. Atomic 47 owns and operated ePlata USA, a digital wallet and online payment platform. Lineup Media Group owns Ultimate Gaming Championship, which operates an online platform for eSports. Prior to joining Lineup Media Group, from April 2003 to August 2015, David served as chief financial officer at Simmons Hanly Conroy, one of the nation s leading plaintiffs law firms. David earned his Bachelor of Arts in Accountancy from Southern Illinois University, Edwardsville and is a certified public accountant. Yuk Man Lau, our chairperson, has served as Partner at Guoxing Capital Co., Ltd since 2016 and as General Manager of Oriental Infinite Culture Communication Co., Ltd since 2006 to 2016. Ms. Lau previously served as a director of Longevity Acquisition Corp from January 2020 to October 2020. Ms. Lau received her Bachelor s degree in Japanese from Dalian University. Dajiang Guo, our director nominee, has served as a Managing Director and Head of Investment Banking at Revere Securities LLC since October 2021. Dr. Guo has also served as Chief Executive Officer of AlphaTime Acquisition Corp since December 2022. Before joining Revere, Dr. Guo served as a Partner at Tiger Securities, developing the institutional securities business of investment banking, sales, and trading from 2019 to 2021. From 2017 to 2019, Dr. Guo served as a Partner at China Bridge Capital in financial advisory and private equity. From 2016 to 2017, he served as the Chief Strategy Officer at China Renaissance, where he was responsible for strategic planning, international expansion, and strategic investments. Dr. Guo served as the CEO of CITIC Securities International USA, COO at CITIC Securities Investment Banking Division, and Head of CITIC Securities Strategy and Planning, from 2011 to 2016. He has also held several executive positions at CICC HK/US from 2009 to 2011. Before venturing into cross border financial services, Dr. Guo worked more than ten years for Citigroup Global Markets from 2004 to 2009, RBS Greenwich Capital Markets from 2001 to 2004, and the Centre Re of Zurich Financial Services from 1996 to 2001, where he specialized in securitization and derivatives. In addition to his work in the private sector, Dr. Guo has taught at St. John s University s College of Insurance and the University of Guelph and published many academic articles in peer-reviewed financial journals. Dr. Guo earned his Ph.D. in Financial Economics at the University of Toronto. He holds a CFA Charter and the Series 7, 24, 63, and 79 licenses. Guohan Li, our director nominee, is an experienced professional with over ten years of experience in accounting and auditing. Mr. Li has served as Partner of Shenzhen Yida Certified Public Accountants Co., Ltd. And Shenzhen Yida Shanhe Certified Public Tax Agent Co. Ltd. Since 2011. From 2004 to 2011, Mr. Li served as a Senior Manager of Shenzhen Zhengda Huaming Accounting Firm. Mr. Li received his Bachelor s degree in Accounting from Shenzhen University. Mr. Li is a CICPA charter holder. John DeVito, our director nominee, has served as Proprietary Trader at T3 Trading Group since 2018 where is manages all aspects of multi-strategy long-short, option portfolio using in depth research. Prior to joining T3 Trading Group, Mr. DeVito served as a financial adviser at Merrill Lynch Wealth Management from 2015 to November 2017. Mr. DeVito received his Bachelor s degree from Saint John s University. 4 Established Deal Sourcing Network We believe that our management team s strong background and track record will provide us with access to high quality companies. In addition, we believe that we, through our management team, have contacts and sources from which to generate acquisition opportunities and possibly seek complementary follow-on business arrangements. These contacts and sources include those in government, private and public companies, private equity and venture capital funds, investment bankers, attorneys, and accountants. Status as a Publicly Listed Acquisition Company We believe that we will be an attractive business combination partner to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional initial public offering process. We believe that some of our target businesses will favor this alternative, which is more cost effective, while offering greater certainty of execution, than a traditional initial public offering process. Once public, we believe that the target business would have greater access to capital and additional means of creating management incentives that are better aligned with shareholders interests than it would as a private company. It can offer further benefits by augmenting a company s profile among potential new customers and vendors and aid in attracting talented management staff. With respect to the foregoing examples and descriptions, past performance by our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. Potential investors should not rely upon the historical record of our management as indicative of future performance. Business Strategy We will seek to capitalize on the strength of our management team. Our team consists of experienced financial services, accounting, and legal professionals, and senior operating executives of companies operating in multiple jurisdictions. Collectively, our officers and directors have decades of experience in mergers and acquisitions and operating companies. We believe that their accomplishments, and specifically, their current activities, will be critical in identifying attractive acquisition opportunities. In turn, the businesses that we identify, will be able to benefit from accessing the U.S. capital markets and the expertise and network of our management team. However, there is no assurance that we will complete a business combination. Our officers and directors have no prior experience consummating a business combination for a "blank check" company. There are no restrictions on the geographic location of targets we can pursue, although we intend to initially prioritize Asia. In particular, we intend to focus our search for an initial business combination on private companies in Asia that have compelling economics and clear paths to positive operating cash flow, significant assets, and successful management teams that are seeking access to the U.S. public capital markets. However, we will not consummate our initial business combination with an entity or business with China operations consolidated through a VIE structure. As an emerging market, Asia has experienced remarkable growth. Economies in Asia have experienced sustained expansion in recent years. We believe that Asia is entering a new era of economic growth, which we expect will result in attractive initial business combination opportunities for us. We believe that the growth will primarily be driven by private sector expansion, technological innovation, increasing consumption by the middle class, structural economic and policy reforms and demographic changes in Asia. 5 Acquisition Criteria Our management team intends to focus on creating shareholder value by leveraging its experience in the management, operation, and financing of businesses to improve the efficiency of operations while implementing strategies to scale revenue organically and/or through acquisitions. We have identified the following general criteria and guidelines, which we believe are important in evaluating prospective target businesses. While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we see justification to do so. Strong Management Team that Can Create Significant Value for Target Business. We will seek to identify companies with strong and experienced management teams that will complement the operating and investment abilities of our management team. We believe that we can provide a platform for the existing management team to leverage the experience of our management team. We also believe that the operating expertise of our management team is well suited to complement many potential targets management teams. Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of both existing and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in increased operating leverage. Potential for Strong Free Cash Flow Generation. We will seek to acquire one or more businesses that have the potential to generate strong, stable, and increasing free cash flow, particularly businesses with predictable revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value. Benefit from Being a Public Company. We intend to only acquire a business or businesses that will benefit from being publicly traded and which can effectively utilize access to broader sources of capital and a public profile that are associated with being a publicly traded company. These criteria do not intend to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors, and criteria that our sponsors and management team may deem relevant. In the event that we decide to enter into an initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy solicitation or tender offer materials, as applicable, that we would file with the U.S. Securities and Exchange Commission, or the SEC. Initial Business Combination We will have up to 9 months from the closing of this offering to consummate an initial business combination. However, if we anticipate that we may not be able to consummate our initial business combination within 9 months, we may, by resolution of our Board of Directors, if requested by our sponsor, extend the period of time we will have to consummate an initial business combination up to three times, each by an additional three months (for a total of up to 18 months from the closing of this offering), provided that, pursuant to the terms of our amended and restated memorandum and articles of association and the trust agreement to be entered into between us and American Stock Transfer & Trust Company on the date of this prospectus, in order for the time available for us to consummate our initial business combination to be extended, our sponsors or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account $500,000 (or $0.10 per share) for each extension, on or prior to the date of the applicable deadline. Our public shareholders will not be entitled to vote or redeem their shares in connection with any such extension. In the event that our sponsors elect to extend the time to complete a business combination, pay the additional amounts per each extension, and deposit the applicable amount of money into trust, the sponsors will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit and payment that will not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account to do so. In the event that we receive notice from our sponsors five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our sponsors and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination. To the extent that some, but not all, of our sponsor s affiliates or designees, decide to extend the period of time to consummate our initial business combination, such affiliates or designees may deposit the entire amount required. If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than 10 business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account, including a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us to pay our taxes, and then seek to dissolve and liquidate. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public shareholders. In the event of our dissolution and liquidation, the private units will expire and be worthless. 6 Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding deferred underwriting commissions payable to Chardan and taxes payable) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority ("FINRA"), or an independent accounting firm with respect to the satisfaction of such criteria. Our shareholders may not be provided with a copy of such opinion, nor will they be able to rely on such opinion. The net proceeds of this offering and the sale of the private units released to us from the trust account upon the closing of our initial business combination may be used as consideration to pay the sellers of a target business with which we complete our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may use the balance of the cash released to us from the trust account following the closing for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. In addition, we may be required to obtain additional financing in connection with the closing of our initial business combination to be used following the closing for general corporate purposes as described above. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop agreements we may enter into following consummation of this offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise. None of our founders is required to provide any financing to us in connection with or after our initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. Our amended and restated memorandum and articles of association will provide that, following this offering and prior to the consummation of our initial business combination, we will be prohibited from issuing additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated memorandum and articles of association to (x) extend the time we have to consummate a business combination beyond 9 months from the closing of this offering (or up to 18 months, if we extend the time to complete a business combination as described in this prospectus) or (y) amend the foregoing provisions, unless (in connection with any such amendment to our amended and restated memorandum and articles of association) we offer our public shareholders the opportunity to redeem their public shares. 7 Our Acquisition Process We will utilize the diligence, rigor, and expertise of our managements respective platforms to evaluate potential targets strengths, weaknesses, and opportunities to identify the relative risk and return profile of any potential target for our initial business combination. We currently do not have any specific business combination under consideration. Our officers and directors have not individually selected a target business. Our management team is continuously made aware of potential business opportunities, one or more of which we may desire to pursue for a business combination, but we have not (nor has anyone on our behalf) had any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities including other special purpose acquisition companies, or SPACs pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. Our management team is continuously made aware of potential investment opportunities, one or more of which we may desire to pursue for a business combination. Our amended and restated memorandum and articles of association will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Our founders, including Yuk Man Lau, Xin Wang and David Bamper may not become an officer or director of any other special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, before we enter into a binding agreement regarding our initial business combination or we have failed to complete our initial business combination within 9 months from the closing of this offering (or up to 18 months, if we extend the time to complete a business combination as described in this prospectus). Private Placement On February 23, 2023, our sponsor, Bayview Holding LP acquired 1,437,500 founder shares for an aggregate purchase price of $25,000, of which Bayview Holding LP owns 474,375 ordinary shares and Peace Investment Holdings Limited owns 963,125 ordinary shares. These founder shares include an aggregate of up to 187,500 founder shares that are subject to forfeiture to the extent that the underwriters over-allotment option is not exercised in full or in part, so that founder shares will represent 25% of our issued and outstanding shares after this offering (excluding the sale of the private units and the Unit Purchase Option ("UPO") and assuming our founders do not purchase public shares in this offering). None of our founders has indicated any intention to purchase public shares in this offering. In addition, our sponsors have committed to purchase from us up to an aggregate of 212,500 units, or "private units," (or up to 227,500 private units if our underwriters exercise the over-allotment option) at $10.00 per unit for a total purchase price of $2,125,000 (or up to $2,275,000 if our underwriters exercise the over-allotment option). The private units are identical to the units sold as part of the units in this offering, subject to limited exceptions. The founder shares and shares underlying private units, or "private shares", are identical to the public shares. However, our initial shareholders have agreed (A) to vote their founder shares and private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, prior to and unrelated to an initial business combination, an amendment to our articles of association that would affect the substance or timing of our redemption obligation to redeem all public shares if we cannot complete an initial business combination within 9 months from the closing of this offering (or up to 18 months, if we extend the time to complete a business combination as described in this prospectus), unless we provide public shareholders an opportunity to redeem their public shares in conjunction with any such amendment, (C) not to redeem any shares, including founder shares and private shares into the right to receive cash from the trust account in connection with a shareholder vote to approve our proposed initial business combination or sell any shares to us in any tender offer in connection with our proposed initial business combination, and (D) that the founder shares and private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. 8 On the date of closing of this offering, the founder shares and private units will be placed into an escrow account maintained by American Stock Transfer & Trust Company acting as escrow agent. The founder shares and private units (and underlying securities) will not, subject to certain exceptions, be transferred, assigned, sold or released from escrow in the case of (i) 50% of the founder shares and private units (and underlying securities) until the earlier to occur of: (A) six months after the date of the consummation of our initial business combination, or (B) the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) the remaining 50% of the founder shares and private units (and underlying securities) until six months after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a subsequent liquidation, merger, share exchange or other similar transaction which results in all of our shareholders having the right to exchange their shares for cash, securities or other property. We refer to such transfer restrictions throughout this prospectus as the lock-up. The proceeds from the private placement of the private units will be added to the proceeds of this offering and placed in a trust account in the United States maintained by American Stock Transfer & Trust Company, as trustee. If we do not complete our initial business combination within 9 months from the closing of this offering (or up to 18 months, if we extend the time to complete a business combination as described in this prospectus), the proceeds from the sale of the private units will be included in the liquidating distribution to the holders of our public shares. Risks Related to Our Possible Business Combination in China While we intend to focus our search on businesses in Asia, we are not limited to a particular industry or geographic region for purposes of consummating an initial business combination. Because our management team has a substantial network in the PRC, we may pursue a business combination with a company doing business in China, which may have legal and operational risks associated with such a decision. These risks could result in a material change in the target company s post-combination operations or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. However, we will not consummate our initial business combination with an entity or business with China operations consolidated through a VIE structure. The ownership of our securities by U.S. investors may limit the pool of acquisition candidates we may acquire in China, in particular, due to the relevant PRC laws and regulations against foreign ownership of and investment in certain assets and industries, known as restricted industries. The governing PRC laws and regulations are sometimes vague and uncertain, and therefore, the vagueness and uncertainties may result in a material change in our operations and the value of our shares if we complete our business combination with a target in China. Additionally, the PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews and expanding the efforts in anti-monopoly enforcement. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our ability to acquire or merge with a company with major operations in China, accept foreign investments, and list on a U.S. or other foreign exchange. For a detailed description of the risks relating to doing business in the PRC, see "Risk Factors — Risks Related to Acquiring and Operating a Business Outside of the United States." 9 Potential Legal and Operational Risks Associated with Acquiring a Company that does Business in China Although we currently do not have any PRC subsidiary or China operations, our executive officers and directors are located in, or have significant ties to, China, which may make us a less attractive partner to potential target companies outside the PRC than a non-PRC related SPAC. As a result, we are more likely to acquire a company based in China through subsidiaries in an initial business combination. If we decide to consummate our initial business combination with a target business based in and primarily operating in China, the combined company may face various legal and operational risks and uncertainties after the business combination. In order to reduce or limit such risks, we will not consider or undertake an initial business combination with any company which financial statements are audited by an accounting firm that the PCAOB is unable to inspect for two consecutive years. Due to (i) the risks associated with acquiring and operating a business in the PRC and/or Hong Kong and (ii) the fact that our executive officers and directors are located in or have significant ties to China, it may make us a less attractive partner to certain potential target businesses, including non-China- or non-Hong Kong-based target companies and may also make it more difficult for us to consummate a business combination with a PRC- or Hong Kong-based target business. In the event that we determine to pursue a business combination target company based in China or Hong Kong, because our executive officers and directors are located in or have significant ties to China, we may become subject to legal and operational risks resulting from Chinese laws and regulations that are sometimes vague and uncertain, and which may therefore, present risks that may result in a material change in its principal operations in China, significantly depreciation of the value of the combined company s securities, or materially hinder or prevent the offering of securities by the combined company to investors and cause the value of such securities to significantly decline or be worthless. The PRC government has significant authority to exert influence on the ability of a China-based company to conduct its business, make or accept foreign investments or list on a U.S. stock exchange. For example, if we enter into a business combination with a target business operating in China, the combined company may face risks associated with regulatory approvals of the proposed business combination between us and the target, offshore offerings, anti-monopoly regulatory actions, cybersecurity and data privacy, as well as the potential lack of PCAOB inspection of its auditors or the auditors of the target business. In addition, the combined company may be subject to legal and operational risks associated with having substantially all of its operations in China, including risks related to the legal, political and economic polies of the Chinese government, the relations between China and the United States, or Chinese or United States regulations, which risks could have a material adverse effect on the combined company s operations and/or the value of the securities of the combined company. The PRC government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding any industry that could adversely affect our potential business combination with a PRC operating business and the business, financial condition and results of operations of the combined company. The PRC government also recently initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. For example, according to the New Measures effective on February 15, 2022, network platform operators with personal information of more than one million users must apply for cyber security review to the Cyber Security Review Office when they go public abroad, and accordingly these companies may not be willing to list on a U.S. stock exchange or enter into a definitive business combination agreement with us. If we enter into a business combination with a target business operating in China, the combined company may face risks associated with regulatory approvals of the proposed business combination between us and the target, offshore offerings, anti-monopoly regulatory actions, and cybersecurity and data privacy. The PRC government may also intervene with or influence the combined company s operations as the government deems appropriate to further regulatory, political and societal goals. Any such action, once taken by the PRC government, could make it more difficult and costly for us to consummate a business combination with a target business operating in China, result in material changes in the combined company s post-combination operations and cause the value of the combined company s securities to significantly decline, or in extreme cases, become worthless or completely hinder the combined company s ability to offer or continue to offer securities to investors. If we acquire a company based in China, to the extent that the combined company in the future seeks to fund the business through distribution, dividends or transfer of funds among and between holding company and subsidiaries, any such transfer of funds within and among the subsidiaries will be subject to PRC regulations. Specifically, investment in Chinese companies is governed by the Foreign Investment Law, the dividends and distributions from a PRC subsidiary are subject to regulations and restrictions on dividends and payment to parties outside of China, and any transfer of funds among the PRC subsidiaries are allowed under and subject to regulations on private lending. Additionally, the PRC government may impose controls on the conversion of Renminbi into foreign currencies and the remittance of currencies out of the PRC. In order for the combined company to pay dividends to its shareholders, the combined company will rely on payments made from the PRC subsidiaries of the combined company and the distribution of such payments to the combined company as dividends from the PRC subsidiaries of the combined company. If we are to acquire a China-based operating company, the dividends and distributions from a PRC subsidiary are subject to regulations and restrictions on dividends and payment to parties outside of China and the combined company may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from its subsidiaries, if any. 10 Pursuant to the Holding Foreign Companies Accountable Act, or the HFCA Act, the PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in (1) mainland China of the PRC because of a position taken by one or more authorities in mainland China and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition, the PCAOB s report identified the specific registered public accounting firms which are subject to these determinations. On December 15, 2022, the PCAOB announced that PCAOB has secured complete access to inspect and investigate public accounting firms headquartered in mainland China and Hong Kong, and vacated previous determinations to the contrary. However, uncertainties exist with respect to the implementation of this framework and there is no assurance that the PCAOB will be able to execute, in a timely manner, its future inspections and investigations in a manner that satisfies the Statement of Protocol. Should PRC authorities obstruct or otherwise fail to facilitate the PCAOB s access – in any way and at any point in the future – the Board of PCAOB will act immediately to consider the need to issue a new determination. Our auditor, UHY LLP, is a United States accounting firm based in New York City and is subject to regular inspection by the PCAOB. UHY LLP is not headquartered in mainland China or Hong Kong and was not identified in the Determination Report as a firm subject to the PCAOB s determinations. As a special purpose acquisition company, our current business activities only involve preparation of this offering and will involve searching for targets and consummation of a business combination following this offering. In addition, we will affirmatively exclude any target company the financial statements of which are audited by an accounting firm that the PCAOB has identified in the Determination Report or that the PCAOB has otherwise been unable to inspect for two consecutive years at the time of our business combination. Notwithstanding the foregoing, in the event that we decide to consummate our initial business combination with a target business based in or primarily operating in China, if there is any regulatory change which prohibits the independent accountants from providing audit documentations located in mainland China or Hong Kong to the PCAOB for inspection or investigation or the PCAOB expands the scope of the Determination Report so that the target company or the combined company is subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S capital markets and trading of our securities on a national securities exchange or in the over-the-counter trading market in the U.S. may be prohibited, under the HFCAA. Additionally, in June 2021, the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, reduced the time period for the delisting of foreign companies under the HFCAA to two consecutive years instead of three years. On December 29, 2022, President Joseph Biden signed the Consolidated Appropriations Act, 2023, which, among other things, amended the HFCAA to reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the SEC must impose an initial trading prohibition on the issuer s securities from three years to two years. Therefore, once an issuer is identified as a Commission-Identified Issuer for two consecutive years, the SEC is required under the HCFAA to prohibit the trading of the issuer s securities on a national securities exchange and in the over-the-counter market. If the combined company s auditor cannot be inspected by the PCAOB for two consecutive years, the trading of the securities on any U.S. national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited. Furthermore, there may be difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us based on foreign laws. A majority of our current executive officers and directors are located in, or have significant ties to, China. Also, if we decide to consummate our initial business combination with a target business based in and primarily operating in China, it is possible that substantially all or a significant portion of combined company s assets may be located outside of the United States and some of the combined company s officers and directors may reside outside of the United States. As a result, it may be difficult to effect service of process upon these officers and directors who reside outside of the United States. Even with effective service of process, it may also be difficult to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against the officers and directors. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against the officers and directors predicated upon the civil liability provisions of the securities laws of the United States or any state. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment by us against the officers or directors or the future combined company if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or the public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. No PRC legal counsel has been retained for purpose of this offering and consequently the Company did not rely on the advice of PRC counsel. The above discussion is based on our management s understanding of the current PRC laws, rules, regulations and local market practices and we cannot assure you that our management s understanding is correct. If we begin our business combination process with a China-based target, we expect to retain a PRC legal counsel who will advise us and provide its opinion of counsel relating to the enforceability of civil liabilities and we cannot assure you that the PRC legal counsel will reach the same conclusion as our management s assessment above. Furthermore, there would be added costs and issues with bringing an original action in foreign courts against the combined company or the officers and directors to enforce liabilities based upon the U.S. Federal securities laws, and they still may be fruitless. 11 Permission, Licenses or Approvals Required from the PRC Authorities for this Offering and a Business Combination We are a Cayman Islands company with no operations in China. We also currently do not hold any equity interest in any PRC company. As a result, we are currently not required to obtain permission, licenses or approvals from any of the PRC authorities to operate and issue our securities to foreign non-PRC investors. However, we cannot guarantee whether permission or any licenses or approvals will be required from the PRC authorities if the relevant PRC government agencies reach a different conclusion or in the course of our business combination if we acquire or merge with a company with major operations in China. We could be required to obtain such approvals in connection with a potential business combination. If it is determined in the future that such permission, licenses or approvals or other procedural requirements are required to be met for and prior to this offering, it is uncertain whether we can or how long it will take us to obtain such permission, licenses or approvals or complete such procedures and any such permission, licenses or approvals could be rescinded. Any failure to obtain or delay in obtaining such permission, licenses or approvals or completing such procedures for our initial business combination with companies in China, or a rescission of any such permission, licenses or approvals, could significantly limit or completely hinder our ability to search for or complete an initial business combination, and subject us to sanctions by the relevant PRC governmental authorities. Our ability to use the proceeds from this offering and to capitalize or otherwise fund our PRC operations may also be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors (the "M&A Rules"), adopted by six PRC regulatory agencies in 2006 and amended in 2009, require an offshore special purpose vehicle formed for the purpose of an overseas listing of securities in a PRC company to obtain the approval of the China Securities Regulatory Commission (the "CSRC") prior to the listing and trading of such special purpose vehicle s securities on an overseas stock exchange. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the "Opinions," which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirements in the future. Given the current regulatory environment in the PRC, if we proceed with a target company having major operations in China, we will be subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice. While the application of the M&A Rules remains unclear, no official guidance and related implementation rules have been issued in relation to the Opinions. The interpretation and implementation of the Opinions also remains unclear at this stage, based on our understanding of the current PRC laws and regulations in effect. No prior permission is required under the M&A Rules or the Opinions from any PRC governmental authorities (including the CSRC) for consummating this offering by the Company. If it is determined in the future that the approval of the CSRC, The Cyberspace Administration of China (the "CAC") or any other regulatory authority is required for this offering, we or our post-business combination company may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities. The CSRC, the CAC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our Units. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC, the CAC or other regulatory PRC agencies later promulgate new rules or explanations requiring that we obtain their permission, licenses or approvals for filings, registrations or other kinds of authorizations for our initial business combination, we cannot assure you that we can obtain the permission, licenses or approvals, or complete required procedures or other requirements in a timely manner, or at all, or obtain a waiver of the requisite requirements if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities. See "Risk Factors —Risks Associated with Acquiring and Operating a Business in China — The PRC governmental authorities may take the view now or in the future that an approval from them is required for an overseas offering by a company affiliated with Chinese businesses or persons or a business combination with a target business based in and primarily operating in China." Additionally, on February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the "Trial Measures"), which took effect on March 31, 2023. The Trial Measures supersede the Draft Rules and clarified and emphasized several aspects, which include but are not limited to: (1) comprehensive determination of the "indirect overseas offering and listing by PRC domestic companies" in compliance with the principle of "substance over form" and particularly, an issuer will be required to go through the filing procedures under the Trial Measures if the following criteria are met at the same time: (a) 50% or more of the issuer s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year comes from PRC domestic companies, and (b) the main parts of the issuer s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China; (2) exemptions from immediate filing requirements for issuers that (a) have already been listed or registered but not yet listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Measures, (b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or the overseas stock exchange, and (c) whose such overseas securities offering or listing shall be completed before September 30, 2023, provided however that such issuers shall carry out filing procedures as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas, such as (a) issuers whose listing or offering overseas has been recognized by the State Council of the PRC as a possible threat to national security, (b) issuers whose affiliates have been recently convicted of bribery and corruption, (c) issuers under ongoing criminal investigations, and (d) issuers under major disputes regarding equity ownership; (4) issuers compliance with web security, data security, and other national security laws and regulations; (5) issuers filing and reporting obligations, such as the obligation to file with the CSRC after it submits an application for initial public offering to overseas regulators, and the obligation after offering or listing overseas to report to the CSRC material events including a change of control or voluntary or forced delisting of the issuer; and (6) the CSRC s authority to fine both issuers and their shareholders between 1 and 10 million RMB for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and misrepresentation. 12 Transfer of Cash to and from Our Post-Combination Organization If We Acquire a Company Based in China If we enter into a business combination with a target business operating in China, cash proceeds raised from overseas financing activities, including this offering, may be transferred by us to our PRC subsidiaries via capital contribution or shareholder loans, as the case may be, through intermediate holding companies subject to compliance with relevant PRC foreign exchange control regulations. As of the date of this prospectus, we have not pursued an initial business combination, there have not been any capital contribution or shareholder loans by us to any PRC entities, we do not yet have any subsidiaries, and (except as described in this prospectus) we have not received, declared, or made any dividends or distributions. After the business combination, the combined company s ability to pay dividends, if any, to the shareholders and to service any debt it may incur will depend upon dividends paid by its PRC subsidiaries. Under PRC laws and regulations, PRC companies are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to offshore entities. In particular, under the current PRC laws and regulations, dividends may be paid only out of distributable profits. Distributable profits are the net profit as determined under Chinese accounting standards and regulations, less any recovery of accumulated losses and appropriations to statutory and other reserves required to be made. Current PRC regulations permit the PRC target company s indirect PRC subsidiaries to pay dividends to an overseas subsidiary, for example, a subsidiary located in Hong Kong, only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the PRC target company s subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. The PRC government also imposes foreign exchange controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. In such circumstances, approval from or registration with competent government authorities or its authorized banks is required. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if the PRC target company s subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. Cash dividends, if any, on our ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10.0%. The PRC government may take measures at its discretion from time to time to restrict access to foreign currencies for current account or capital account transactions. If the foreign exchange control regulations prevent the PRC subsidiaries of the combined company from obtaining sufficient foreign currencies to satisfy their foreign currency demands, the PRC subsidiaries of the combined company may not be able to pay dividends or repay loans in foreign currencies to their offshore intermediary holding companies and ultimately to the combined company. We cannot assure you that new regulations or policies will not be promulgated in the future, which may further restrict the remittance of RMB into or out of the PRC. We cannot assure you, in light of the restrictions in place, or any amendment to be made from time to time, that the PRC subsidiaries of the combined company will be able to satisfy their respective payment obligations that are denominated in foreign currencies, including the remittance of dividends outside of the PRC. See "Risk Factors — Risks Related to Acquiring and Operating a Business Outside of the United States — PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or any future PRC subsidiaries to liability or penalties, limit our ability to inject capital into any PRC subsidiaries, limit any PRC subsidiary s ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us," "Risk Factors — Risks Associated with Acquiring and Operating a Business Outside of the United States — Exchange controls that exist in the PRC may restrict or prevent us from using the proceeds of this offering to acquire a target company in PRC and limit our ability to utilize our cash flow effectively following our initial business combination," "Risk Factors — Risks Associated with Acquiring and Operating a Business Outside of the United States — The cash-flow structure of a post-acquisition company based or Hong Kong poses additional risks including, but not limited to, restrictions on foreign exchange and restrictions on our ability to transfer cash between entities, across borders, and to U.S. investors" and "Risk Factors — If we merge with a China-based operating company, then PRC regulation on loans to, and direct investment in, PRC entities by offshore holding companies and governmental control in currency conversion may delay or prevent us from making loans to or making additional capital contributions to our PRC entity, if any, which could materially and adversely affect our liquidity and our ability to fund and expand our business." 13 Furthermore, the transfer of funds among PRC subsidiaries are subject to the Provisions of the Supreme People s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Revision, the "Provisions on Private Lending Cases"), which was issued by the Supreme People s Court of the People s Republic of China on August 25, 2015, and amended on August 19, 2020 and December 29, to regulate the financing activities between natural persons, legal persons and unincorporated organizations in the PRC. The Provisions on Private Lending Cases do not apply to the disputes arising from relevant financial services such as loan disbursement by financial institutions and their branches established upon approval by the financial regulatory authorities to engage in lending business. The Provisions on Private Lending Cases set forth that private lending contracts will be deemed invalid under the circumstance that (i) the lender swindles loans from financial institutions for relending; (ii) the lender relends the funds obtained by means of a loan from another profit-making legal person, raising funds from its employees, or illegally taking deposits from the public; (iii) the lender who has not obtained the lending qualification according to the law lends money to any unspecified object of the society for the purpose of making profits; (iv) the lender lends funds to a borrower when the lender knows or should have known that the borrower intended to use the borrowed funds for illegal or criminal purposes; (v) the lending is in violation of public orders or good morals; or (vi) the lending violates mandatory provisions of laws or administrative regulations. The Provisions on Private Lending Cases also set forth that the People s Court shall support the interest rates not exceeding four times the market interest rate quoted for a one-year loan at the time the private lending contracts were entered into. It is our management s understanding that the Provisions on Private Lending Cases do not prohibit using cash generated from one subsidiary to fund another subsidiary s operations. We are not aware of any other restriction which could limit our PRC subsidiaries ability to transfer cash between entities. Implication of Holding Foreign Companies Accountable Act The HFCAA was enacted on December 18, 2020. The HFCAA states that if the SEC determines that an issuer s audit reports issued by a registered public accounting firm have not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such issuer s securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established by the SEC. In June 2021, the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if signed into law, would reduce the time period for the delisting of foreign companies under the HFCAA to two consecutive years instead of three years. If our auditor cannot be inspected by the PCAOB for two consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On November 5, 2021, the SEC approved the PCAOB s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law. The Statement of Protocol gives the PCAOB sole discretion to select the firms, audit engagements and potential violations it inspects and investigates and put in place procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed. In addition, the Statement of Protocol grants the PCAOB direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates. While significant, uncertainties still exist as to how the Statement of Protocol will be implemented and whether the applicable parties will comply with the framework. 14 On December 29, 2022, the President Joseph Biden signed the Consolidated Appropriations Act, 2023, which, among other things, amended the HFCAA to (a) reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the SEC must impose an initial trading prohibition on the issuer s securities from three years to two years, and (b) clarify that any foreign authority impeding PCAOB inspections or investigations can trigger the provisions of the act. The HFCAA requires that, every year, the SEC identify any public companies ("Commission-Identified Issuers" or "CIIs") that file annual reports with financial statements audited by an auditor located in a foreign jurisdiction where the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by a foreign authority (a "PCAOB-identified jurisdiction"). Under the amended HFCAA, once a company is identified as a CII for two consecutive years, the SEC must apply certain trading prohibitions to that CII s securities. In addition, all CIIs are listed on the SEC website at www.sec.gov/HFCAA, and each CII must provide certain disclosures to investors and the SEC for each year it is identified as a CII. For foreign issuers that are CIIs, the required disclosures include the percentage of shares owned by foreign government entities, whether government entities in the foreign jurisdiction control the issuer, identification of all Chinese Communist Party ("CCP") officials who are on the board of the issuer or the operating entity for the issuer, and whether the issuer s articles of incorporation contain any "charter" of the CCP. Therefore, once an issuer is identified as a Commission-Identified Issuer for two consecutive years, the SEC is required under the HCFAA to prohibit the trading of the issuer s securities on a national securities exchange and in the over-the-counter market. Our auditor is subject to inspection by the PCAOB on a regular basis with the last inspection report dated June 28, 2021. As such, as of the date of this prospectus, our auditor is not subject to the determinations announced by the Consolidated Appropriations Act, 2023 on December 29, 2022. As of the date of the prospectus, our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. While the Company s auditor is based in the U.S. and is registered with the PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company s auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company s securities. We expressly exclude any target company whose financial statements have been audited by an accounting firm that is not subject to PCAOB inspection. However, if we decide to consummate our initial business combination with a target business based in and primarily operating in China, auditors of the combined company and their workpapers may be located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the PRC authorities. Therefore, trading in our securities may be prohibited under the HFCAA if the PCAOB determines that it cannot inspect or fully investigate the auditor of a company with which we consummate our initial business combination and the combined company s securities may be delisted from a national securities exchange in the U.S. A prohibition in the trading of our securities would be expected to have a negative impact on the Company as well as on the value of our securities. See "Risk Factors – Risks Related to Acquiring and Operating a Business Outside of the United States – The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering." Enforcement of Civil Liabilities Guohan Li is a resident of mainland China. Yuk Man Lau, is a resident of Hong Kong. As a result, legal claims against us or our executive officers and directors may be difficult or impossible for investors to pursue in U.S. courts. Moreover, even if an investor obtains a judgment in a U.S. court against one of our directors or officers, the investor may be unable to enforce such judgment on these directors and officers. It will equally be difficult to effect service of process upon us or those persons inside the PRC. PRC courts may only recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between the PRC and the country where the judgment is made or on principles of reciprocity between jurisdictions. This is reflected in a number of bilateral treaties signed by the PRC, which provide that lack of jurisdiction of the judgment court can be a ground for refusal. Further, a foreign judgment cannot be recognized and enforced in the PRC if a Chinese court has rendered a judgment on the same subject matter or recognized and enforced another foreign judgment or arbitral award on the same subject matter. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. The PRC has no treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. As a result, it may be difficult for investors to effect service of process within the United States upon us or to our executive officers and directors who are residents of the PRC, or to enforce judgments in the PRC (including Hong Kong and Macau) that are obtained in U.S. courts against us or such individuals, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Even with proper service of process, the enforcement of judgments obtained in U.S. courts or foreign courts based on the civil liability provisions of the U.S. federal securities laws would be extremely difficult given the PRC Civil Procedures Law and the lack of a treaty or principles of reciprocity providing for the recognition and enforcement of U.S. judgments. Furthermore, there would be added costs and issues with bringing an original action in foreign courts to enforce liabilities based on the U.S. federal securities laws against us or our officers and directors, and they still may be fruitless. 15 Corporate Information Our executive offices are located at 420 Lexington Ave Suite 2446, New York, NY 10170 and our telephone number is (347) 627-0058. We are a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Act. As an exempted company, we have applied for and received a tax exemption certificate from the Financial Secretary of the Cayman Islands that, in accordance with Section 6 of the Tax Concessions Act (Revised) of the Cayman Islands, for a period of 20 years commencing on March 8, 2023, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us. We are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Additionally, we are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the end of that year s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of that year s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 16 The Offering In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team and advisors, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section of this \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/BTMD_biote-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/BTMD_biote-corp_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/BTMD_biote-corp_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/BTMWW_bitcoin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/BTMWW_bitcoin_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..1bb930731fb7d1ecc3e32670ec858f2f61acdc12 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/BTMWW_bitcoin_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth in the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires, we use the terms Bitcoin Depot, Company, we, us and our in this prospectus to refer to Bitcoin Depot Inc. and our consolidated subsidiaries. Overview We help power the digital economy for users of cash, operating the largest network of Bitcoin ATMs ( BTMs ) in North America. Our mission is to Bring Crypto to the Masses . Digital means and systems dominate the way that consumers send money, make purchases, and invest; however, we believe that many people utilize cash as their primary means of initiating a transaction, either as a necessity or as a preference. These individuals have largely been excluded from the digital financial system and associated technological advancements in our global and digitally interconnected society. Our simple and convenient process to convert cash into Bitcoin via our BTMs and feature-rich mobile app enables not only these users, but also the broader public, to access the digital financial system. As of June 30, 2023, our offerings included approximately 6,350 BTMs in retailer locations throughout the U.S. and Canada, our BDCheckout product, which is accepted at 5,195 retail locations, and our mobile app. We maintain a leading position among cash-to-Bitcoin BTM operators in the U.S. and Canada. As of June 30, 2023, we operated the largest cash-to-Bitcoin BTM network in the U.S. representing an approximate 20% market share. Our BTMs offer one-way exchange of cash-to-Bitcoin, with the limited exception of 31 BTMs (representing less than 1% of our total kiosks as of June 30, 2023) which also provide customers the ability to sell Bitcoin to us in exchange for cash. We do not currently have plans to expand the ability of our users to sell Bitcoin to us in exchange for cash. We have also recently acquired a leading BTM operating system provider, BitAccess, to build out our BDCheckout product and our other software and operational capabilities. The Business Combination On August 24, 2022, GSRM entered into the Transaction Agreement (as amended by the First Amendment, dated as of February 13, 2023, as further amended by the Second Amendment, dated as of April 4, 2023, as further amended by the Third Amendment, dated as of May 11, 2023, and as further amended by the Fourth Amendment, dated as of June 7, 2023), pursuant to which (among other things) the following occurred on June 30, 2023 (the Closing Date ): GSRM filed a Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, pursuant to which GSRM changed its name to Bitcoin Depot Inc. and the number of authorized shares of our Common Stock was increased to 2,272,250,000 shares, consisting of (i) 800,000,000 shares of Class A common stock, (ii) 20,000,000 shares of Class B common stock, (iii) 300,000,000 shares of Class M common stock, (iv) 800,000,000 shares of Class O common stock, (v) 300,000,000 shares of Class V common stock, (vi) 2,250,000 shares of Class E common stock, consisting of three series: (a) 750,000 shares of Class E-1 common stock, (b) 750,000 shares of Class E-2 common stock and (c) 750,000 shares of Class E-3 common stock, and (vii) 50,000,000 shares of Preferred Stock; Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated August 29, 2023 PRELIMINARY PROSPECTUS BITCOIN DEPOT INC. Up to 83,747,027 Shares of Class A Common Stock Up to 43,848,750 Shares of Class A Common Stock Underlying Warrants Up to 12,223,750 Warrants to Purchase Class A Common Stock This prospectus relates to the issuance by us of up to 43,848,750 shares of Class A common stock, par value $0.0001 per share (the Class A common stock ), of Bitcoin Depot Inc. (the Company ) consisting of (i) up to 12,223,750 shares of our Class A common stock issuable upon the exercise of warrants (the Private Placement Warrants ) that were originally issued in a private placement to GSR II Meteora Sponsor LLC, a Delaware limited liability company ( Sponsor ); and (ii) up to 31,625,000 shares of our Class A common stock issuable upon the exercise of warrants (the Public Warrants and, together with the Private Placement Warrants, the Warrants ) that were originally issued as part of the units sold by GSR II Meteora Acquisition Corp., a Delaware corporation ( GSRM ) in its initial public offering. We will receive the proceeds from any exercise of any Warrants for cash. This prospectus also relates to the offer and sale from time to time by the selling securityholders named in this prospectus or their permitted transferees (the Selling Securityholders ) of the following: (i) up to 83,747,027 shares of Class A common stock consisting of: (a) up to 657,831 shares of Class A common stock held by former stockholders of GSRM, of which (i) 203,481 shares were issued pursuant to certain Voting and Non-Redemption Agreements (as defined below) at an effective purchase price of $0.00 per share and (ii) 454,350 shares were issued pursuant to certain Non-Redemption Agreements (as defined below) at an effective purchase price of $3.00 per share; (b) up to 5,769,185 shares of Class A common stock held by certain third parties and affiliates of Sponsor and former directors of GSRM, in each case that were issued at Closing in exchange for an equivalent number of shares of Class B common stock of GSRM that were originally purchased for approximately $0.004 per share; (c) up to 1,075,761 shares of Class A common stock issuable upon the vesting and conversion of the Company s Class E common stock, par value $0.0001 per share (the Class E common stock ), held by certain third parties and affiliates of Sponsor and former directors of GSRM, in each case that were issued at Closing in exchange for an equivalent number of shares of Class B common stock of GSRM that were originally purchased for approximately $0.004 per share; (d) up to 59,100,000 shares of Class A common stock underlying the following securities held by BT Assets as of the Closing (which in each case were issued as consideration in the Business Combination based on a value of $10.00 per share): (i) 15,000,000 BT HoldCo Earnout Units, consisting of (A) 5,000,000 Class 1 Earnout Units of BT HoldCo, (B) 5,000,000 Class 2 Earnout Units of BT HoldCo, and (C) 5,000,000 Class 3 Earnout Units of BT HoldCo, and (ii) 44,100,000 BT HoldCo Common Units (which correspond to 44,100,000 shares of Class V common stock); (e) up to 4,300,000 shares of Class A common stock issuable upon conversion of the Company s Series A Convertible Preferred Stock, par value $0.0001 per share (the Series A Preferred Stock ), which were purchased for $10.00 per share and issued at Closing and are held by the PIPE Subscribers pursuant to that certain PIPE Agreement, dated as of June 23, 2023 (the PIPE Agreement ), by and among GSRM, Lux Vending, LLC dba Bitcoin Depot ( BT OpCo ), and the subscribers set forth therein (the PIPE Subscribers ); Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/BWET_amplify_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/BWET_amplify_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/BWET_amplify_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CAVA_cava_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CAVA_cava_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..e0d01442985e81ef7041f9585877720b1eccec23 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CAVA_cava_prospectus_summary.txt @@ -0,0 +1 @@ +This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including Risk Factors and our financial statements included elsewhere in this prospectus, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our Mission To Bring Heart, Health, And Humanity To Food CAVA Defining A Category CAVA is the category-defining Mediterranean fast-casual restaurant brand, bringing together healthful food and bold, satisfying flavors at scale. Rooted in our rich Mediterranean heritage, we bring a timeless approach to modern wellness through our authentic cuisine and vibrant brand experience. Guided by our mission, we believe food is a unifier for a more diverse and inclusive world for our guests, Team Members, and our grower and rancher partners, where all are welcome at our table. We believe that consumers should not have to choose between taste and health our innovative cuisine appeals to a wide variety of preferences, satisfying the modern consumer s desires for flavorful, craveable, and nutritious food without compromise. Over the past 12 years, we have established ourselves as the only national player at scale in the fast-growing Mediterranean category, with more than twice the number of restaurants compared to our next largest competitor in the category. Our brand and our opportunity transcend the Mediterranean category to compete in the large and growing limited-service restaurant sector as well as the health and wellness food category. CAVA serves guests across gender lines, age groups, and income levels and benefits from generational tailwinds created by consumer demand for healthy living and a demographic shift towards greater ethnic diversity. We meet consumers desire to engage with convenient, authentic, purpose-driven brands that view food as a source of self-expression. The broad appeal of our food combined with these favorable industry trends drive our vast opportunity for continued growth. We have assembled an experienced and passionate team and made significant investments in differentiated digital and manufacturing infrastructure to drive powerful national growth and unit economics. Our strong results reflect our broad appeal and are highlighted by having Driven total revenue from $45.4 million in fiscal 2016 to $564.1 million in fiscal 2022, a 52.2% compound annual growth rate ( CAGR ), and from $159.0 million in the first quarter of 2022 to $203.1 million in the first quarter of 2023, an increase of 27.7% Driven CAVA Revenue from $41.2 million in fiscal 2016 to $448.6 million in fiscal 2022, a 49.0% CAGR, and from $112.0 million in the first quarter of 2022 to $196.8 million in the first quarter of 2023, an increase of 75.7% Achieved CAVA Same Restaurant Sales Growth for fiscal 2022 of 14.2% (when compared to fiscal 2021) and 23.6% (when compared to fiscal 2019), and 28.4% for the first quarter of 2023 (when compared to the first quarter of 2022) Delivered net loss of $59.0 million in fiscal 2022 compared to $37.4 million in fiscal 2021, and $2.1 million in the first quarter of 2023 compared to $20.0 million in the first quarter of 2022, and delivered Adjusted EBITDA of $12.6 million in fiscal 2022 compared to $14.6 million in fiscal 2021, and $16.7 million in the first quarter of 2023 compared to $(1.6) million in the first quarter of 2022 and Proven portability across 22 states and Washington, D.C., with a 82% suburban, 14% urban, and 4% specialty location mix as of April 16, 2023. Number of CAVA Restaurants Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 12, 2023 PRELIMINARY PROSPECTUS 14,444,444 Shares CAVA GROUP, INC. Common Stock This is CAVA Group, Inc. s initial public offering of our common stock ( common stock ). We are offering 14,444,444 shares of common stock. Prior to this offering, there has been no public market for our common stock. We expect that the initial public offering price of our common stock will be between $19.00 and $20.00 per share. Our common stock has been approved for listing on the New York Stock Exchange (the NYSE ) under the symbol CAVA. See Risk Factors beginning on page 23 to read about factors you should consider before buying shares of our common stock. We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the Securities Act ), and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and may elect to do so in future filings. Neither the Securities and Exchange Commission (the SEC ) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per shareTotal Initial public offering price$$ Underwriting discounts and commissions(1) $$ Proceeds, before expenses, to us$$ __________________ (1)See Underwriting for additional information regarding underwriting compensation. At our request, the underwriters have reserved 5% of the shares of common stock offered by this prospectus for sale, at the initial public offering price, to certain tiers of eligible CAVA Rewards members, certain suppliers, certain individuals identified by our executive team and other certain individuals affiliated with us. See Underwriting. We have granted the underwriters the right, for a period of 30 days from the date of this prospectus, to purchase up to 2,166,666 additional shares of common stock from us at the initial public offering price less the underwriting discount. One or more funds managed by Capital International Investors, one or more funds managed by Capital Research Global Investors, and certain funds and accounts advised by T. Rowe Price Investment Management, Inc. (collectively, the cornerstone investors ) have, severally and not jointly, indicated an interest in purchasing up to an aggregate of $100.0 million in shares of our common stock in this offering at the initial public offering price. The shares of common stock to be purchased by the cornerstone investors will not be subject to a lock-up agreement with the underwriters. Because these indications of interest are not binding agreements or commitments to purchase, the cornerstone investors may determine to purchase more, less or no shares in this offering or the underwriters may determine to sell more, less or no shares to the cornerstone investors. The underwriters will receive the same discount on any of our shares of common stock purchased by the cornerstone investors as they will from any other shares of common stock sold to the public in this offering. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2023. J.P. MorganJefferiesCitigroup Morgan StanleyPiper Sandler BairdStifelWilliam Blair Capital One SecuritiesBlaylock Van, LLCDrexel Hamilton , 2023 Table of Contents INDUSTRY AND MARKET DATA Within this prospectus, we reference information and statistics regarding the industry in which we operate. We have obtained this information and statistics from various independent third-party sources, independent industry publications, reports by market research firms and other independent sources. Some data and other information contained in this prospectus are also based on management s estimates and calculations, which are derived from our review and interpretation of internal surveys and independent sources, including the CAVA Brand Health Survey. The information is as of its original publication dates (and not as of the date of this prospectus). Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share within these industries. While we believe such information is reliable, we have not independently verified any third-party information. While we believe our internal company research, data and estimates are reliable, such research and estimates have not been verified by any independent source. In addition, assumptions and estimates of our and our industry s future performance are subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Risk Factors. These and other factors could cause our future performance to differ materially from our assumptions and estimates. See Forward-Looking Statements. As a result, you should be aware that market, ranking, and other similar industry data included in this prospectus, and estimates and beliefs based on that data may not be reliable. Neither we nor the underwriters can guarantee the accuracy or completeness of any such information contained in this prospectus. TRADEMARKS, SERVICE MARKS, TRADENAMES, AND COPYRIGHTS We own a number of registered and common law trademarks and pending applications for trademark registrations in the United States. Unless otherwise indicated, all trademarks, service marks, trade names, and copyrights appearing in this prospectus are proprietary to us, our affiliates, and or licensors. This prospectus also contains trademarks, tradenames, service marks, and copyrights of third parties, which are the property of their respective owners. Solely for convenience, the trademarks, tradenames, service marks, and copyrights referred to in this prospectus may appear without the , , , or symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, tradenames, service marks, and copyrights. We do not intend our use or display of other parties trademarks, tradenames, service marks, or copyrights to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. BASIS OF PRESENTATION The following terms are used in this prospectus and have the following meanings unless otherwise noted or indicated by the context Adjusted EBITDA is defined as net income (loss) adjusted to exclude interest expense (income), net, provision for (benefit from) income taxes, and depreciation and amortization, further adjusted to exclude equity-based compensation, other income, net, impairment and asset disposal costs, and restructuring and other costs Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue Cash on Cash Returns is defined as CAVA Restaurant-Level Profit for the second full year of operations of new CAVA restaurant openings, excluding conversions of Zoes Kitchen locations, divided by their cash build-out expenses, net of landlord incentives and excluding pre-opening costs CAVA Average Unit Volume or CAVA AUV represents total revenue of operating CAVA Restaurants that were open for the entire trailing thirteen periods and includes sales from CAVA digital kitchens for such period, divided by the number of operating CAVA Restaurants that were open for the entire trailing thirteen periods Table of Contents Total Revenue and Net Loss ($ in millions) __________________ (1)For fiscal 2019, fiscal 2020, fiscal 2021, fiscal 2022, first quarter 2022, and first quarter 2023, less than 1%, 1.1%, 9.1%, 30.8%, 23.0%, and 44.5%, respectively, of total revenue was attributable to CAVA Restaurants that were converted from a Zoes Kitchen location. CAVA Revenue ($ in millions) __________________ (1)For fiscal 2019, fiscal 2020, fiscal 2021, fiscal 2022, first quarter 2022, and first quarter 2023, less than 1%, 2.4%, 16.4%, 38.7%, 32.7%, and 45.9%, respectively, of CAVA Revenue was attributable to CAVA Restaurants that were converted from a Zoes Kitchen location. CAVA Restaurant-Level Profit and Margin ($ in millions) Table of Contents CAVA Brand Health Survey refers to CAVA s brand health survey of approximately 2,500 survey participants that was conducted in summer of 2022 and administered by Kantar CAVA digital kitchen is defined to include kitchens used for third-party marketplace and native delivery, digital order pickup and or centralized catering production, and that has neither in-restaurant dining nor customer-facing make lines CAVA Digital Revenue Mix represents the portion of CAVA revenue related to digital orders as a percentage of total CAVA revenue CAVA hybrid kitchen is defined to include kitchens that have enhanced kitchen capabilities to support centralized catering production and that also have in-restaurant dining and customer-facing make lines CAVA Restaurant-Level Profit, a segment measure of profit and loss, represents CAVA Revenue in the specified period less food, beverage, and packaging, labor, occupancy, and other operating expenses, excluding depreciation and amortization, in the period. CAVA Restaurant-Level Profit excludes pre-opening costs CAVA Restaurant-Level Profit Margin represents CAVA Restaurant-Level Profit as a percentage of CAVA Revenue CAVA Restaurants is defined to include all CAVA restaurants, including converted Zoes Kitchen locations and CAVA hybrid kitchens, that are open as of the end of the specified period. CAVA Restaurants exclude one restaurant operating under a license agreement and CAVA digital kitchens CAVA Revenue is defined to include all revenue attributable to CAVA restaurants in the specified period, excluding one restaurant operating under a license agreement CAVA Same Restaurant Sales Growth is defined as the period-over-period sales comparison for CAVA restaurants that have been open for 365 days or longer (including converted Zoes Kitchen locations that have been open for 365 days or longer after the completion of the conversion to a CAVA restaurant) the Company, we, us, and our mean the business of CAVA Group, Inc. and its subsidiaries CPG means Consumer Packaged Goods digital orders means orders made through catering, digital channels, such as the CAVA app and the CAVA website. Digital orders include orders fulfilled through third-party marketplace and native delivery and digital order pick-up eNPS represents Employee Net Promoter Score, a measurement regarding the strength of employees commitment to their organization guest traffic means the number of entrees ordered in-restaurant and through digital orders Mediterranean category means restaurants serving food that is based on traditional cuisine from Greece and the Levant region Net New CAVA Restaurant Openings is defined as new CAVA restaurant openings (including CAVA restaurants converted from a Zoes Kitchen location) during a specified reporting period, net of any permanent CAVA restaurant closures during the same period preferred stock refers to our Series A Preferred Stock, $0.0001 par value, Series B Preferred Stock, $0.0001 par value, Series C Preferred Stock, $0.0001 par value, Series D Preferred Stock, $0.0001 par value, Series E Preferred Stock, $0.0001 par value, and Series F Preferred Stock, $0.0001 par value and specialty locations include college campuses and transit hubs. Table of Contents The CAVA Experience What Makes Us Unique We believe that our guests should not have to make sacrifices to eat better. With the variety and choice we provide, every order is built upon a unique combination of fresh flavors and textures, customized to suit our guests tastes and preferences, with no compromises in health, flavor, or satisfaction. No Compromises Where Taste and Health Unite Vibrant Mediterranean Flavors to Discover and Crave CAVA offers something for every palate and preference. Whether our guests are looking for indulgent and hearty or healthful and flavorful meals, our authentic Mediterranean cuisine delivers. Our offerings are well-suited for multiple dayparts and occasions, from an everyday option at lunch to a hearty dinner and to catered meals, all of which can be conveniently delivered as our food travels well. This drives a balanced daypart split of 55% 45% between lunch and dinner and a diversified channel mix of 65% 35% between in-restaurant and digital for fiscal 2022. We source 85% of our ingredients (based on total spend for fiscal 2022) directly from growers, ranchers, and producers to provide our guests with high-quality ingredients while maintaining high standards for quality, sustainability, and transparency. Rooted in a sustainable sourcing ethos, we use ingredients that are clean label and in certain products, such as our CPG hummus, are certified organic. Our proprietary dips and spreads are centrally produced to provide our guests with a delicious and consistent offering. Table of Contents We operate on a 52-week or 53-week fiscal year that ends on the last Sunday of the calendar year. In a 52-week fiscal year, the first fiscal quarter contains sixteen weeks and the second, third, and fourth fiscal quarters each contain twelve weeks. In a 53-week fiscal year, the first fiscal quarter contains sixteen weeks, the second and third fiscal quarters each contain twelve weeks, and the fourth fiscal quarter contains thirteen weeks. References to any year and quarter mean fiscal year and fiscal quarter, respectively, unless the context requires otherwise. References to fiscal 2023, fiscal 2022, fiscal 2021, fiscal 2020, fiscal 2019, and fiscal 2016 relate to our fiscal years ended December 31, 2023, December 25, 2022, December 26, 2021, December 27, 2020, December 29, 2019, and December 25, 2016, respectively, unless the context otherwise requires. References to first quarter of 2022 refers to the sixteen weeks ended April 17, 2022 and first quarter of 2023 refers to the sixteen weeks ended April 16, 2023. References to thirteen periods are to the 13 accounting periods we have in each fiscal year, with each accounting period being four weeks, except in a 53-week fiscal year which will contain one accounting period of five weeks. Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. NON-GAAP FINANCIAL MEASURES This prospectus contains non-GAAP financial measures that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States ( GAAP ). Specifically, we make use of the non-GAAP financial measures Adjusted EBITDA and Adjusted EBITDA Margin. We present Adjusted EBITDA and Adjusted EBITDA Margin in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our operating performance. Management believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide. Adjusted EBITDA and Adjusted EBITDA Margin are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or net income (loss) margin as measures of financial performance or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be measures of free cash flow available for management s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. For a discussion of the use of these measures and a reconciliation of the most directly comparable GAAP measures, see Summary Summary Historical Financial and Other Data. Table of Contents We believe food is an outlet for self-expression, so we offer endless customization. With 38 thoughtfully curated, high-quality ingredients presented to guests in a walk-the-line format, approximately 80% of our guests opt for a custom meal option. We also offer chef-curated selections for our guests. From our colorful Harissa Avocado Bowl to seasonal favorites like our Roasted White Sweet Potato + Feta Bowl, we meet our guests desire for an effortlessly delicious and nutritious meal while introducing them to new flavor experiences. Broad Appeal with Diversity at Our Core We believe the attractiveness and diversity of our food, flavors, and formats result in a differentiated, broad guest appeal. CAVA is a destination of choice across incomes, ages, geographies, and walks of life, from time-starved professionals to families enjoying a meal together. Our menu fulfills a broad range of dietary preferences, Table of Contents from hearty and indulgent to vegan, vegetarian, gluten-free, dairy-free, paleo, keto, and nut-free diets. The attractive pricing of our food, when combined with generous portions, provides substantial value to our guests. The broad appeal of the CAVA experience underpins the rich diversity of our guests. Our guests span gender lines and age groups, with a strong Millennial and a growing Gen Z contingent, as well as all income brackets __________________ (1)As measured from February 4, 2022 to February 3, 2023. (2)The underlying survey excludes individuals 18 years and younger. Scalable Multi-Channel and Digitally Connected Experience Our multi-channel strategy is built around our guest experience and is continually evolving to meet guests where, when, and how they want CAVA. We have developed an extensive multi-channel experience that consists of in-restaurant dining, digital pick-up, drive-thru pick-up, delivery, catering, and CPG offerings fully supported by our robust digital infrastructure. The foundation of this infrastructure is a micro-services platform that is designed to easily scale with current and future growth. Our success across channels is reflected in our 51% growth in digital sales in fiscal 2022 and a 27% higher average guest check for digital orders compared to in-restaurant orders. Moreover, our digital guests typically engage with us in more than one channel. Inviting And Efficient In-Restaurant Experience We individually design our restaurants for their communities, while maintaining our brand essence. Our dining rooms are oriented to encourage community gathering, while the aesthetic of our open kitchens stimulates our guests senses, creating an inviting, transparent, and memorable culinary experience. Our restaurant operating model supports high volumes with speed through our labor-efficient walk-the-line production format. We are focused on continually enhancing our restaurant operations and reducing complexity to maximize efficiency while delivering an exceptional guest experience. Table of Contents Established, Flexible Off-Premises Platform Our robust digital platform supports our guest demand for convenience. We enable delivery, digital pick-up, drive-thru pick-up, and catering powered by dedicated, second digital make lines in all restaurants. We also operate CAVA digital kitchens to further optimize off-premises production in select markets and trade areas. Using the CAVA app or website, our guests can effortlessly customize their favorite dish and choose to either pick it up from their local CAVA restaurant or have it delivered. A scalable digital infrastructure and an extensive network of fully integrated delivery partners back our simple and intuitive guest experience. Personalized In-App Experience Our CAVA app, which includes our patented technology, merges our in-restaurant and digital experience to create a personalized guest experience. We have designed our interfaces to provide a feeling of digital hospitality, including a visual bowl and pita builder bridging the digital and physical experience. These tools create a highly visual experience with easy navigation, allowing users to utilize the walk-the-line ordering process they experience at our restaurants. From quick reordering of favorite meals to in-app delivery to streamlined payment options, the app enhances the on-the-go CAVA experience. In fiscal 2022, we increased the monthly active users on the CAVA app by 63%. In addition, between January 2022 and August 2022, the CAVA app was the third fastest year-over-year growing quick-service restaurant app by monthly active users according to an independent third-party publication. Integrated Loyalty Program Our loyalty program creates a value-added experience for guests both in-restaurant and through our digital channels, enabling them to earn rewards as they purchase. Our payment and loyalty pass is integrated, including the ability to use digital wallets such as Apple Pay, creating greater utility and convenience for our guests. As of April 16, 2023, we had approximately 3.7 million loyalty members, representing a 56% year over year increase in loyalty membership. Scalable Data-Driven Growth Engine Our flexible and scalable data architecture, together with our data analytics, position us to better understand guests preferences, connecting that insight to digital experiences to develop a personalized relationship, incentivize habituation, and drive growth. We have designed our guest user interfaces to leverage our data architecture for dynamic merchandising based on a wide range of variables to surface highly relevant and impactful content. Our significant investments in data infrastructure allow us to continuously improve the guest experience to drive deeper engagement. Added Access with Consumer Packaged Goods Our CPG offering acts as an extension of the CAVA brand, allowing our guests to take the essence of CAVA home with them. We offer a full line of dips and spreads, ranging from Crazy Feta to Traditional Hummus to Tzatziki, as well as dressings, such as Lemon Herb Tahini and Yogurt Dill. A range of our dips and spreads are sold nationally through grocery stores, including Whole Foods Markets, and our dressings are available at grocery stores in select markets. Devoted Team Members Driving Culture and Hospitality Inspired by the Mediterranean Way and defined by a genuine expression of hospitality and warmth, we want our Team Members who carry on the CAVA culture every day to build a career and not merely find employment. We continuously nurture our talent-rich pipeline by offering a clear promotional track for Team Members to become General Managers, with a goal of filling more than 75% of General Manager positions through internal promotions. We invest in programs to support our Team Members personally and professionally, from our Employee Assistance Program and mental health benefits for all Team Members to our CAVAYou Continuing Education Program and our non-profit Goodness Fund, which we created to support our Team Members in times of need. The Table of Contents results of these initiatives are evidenced by our eNPS score in the 71st percentile, which indicates a high level of commitment according to Denison Consulting, which conducted our 2022 Team Member engagement survey. In addition, on average, we rank in the top quintile within the diversity and inclusion category, based on our Team Members responses to our 2022 Team Member engagement survey. Embodying the CAVA ethos of hospitality, our devoted Team Members deliver positive guest experiences, as reflected in our Yext score, an analytical tool measuring customer reviews, of 4.3, which reflects 88% of our restaurants performing in the top quartile of similar Yext businesses. Experienced, Founder-Led Management Team Our highly experienced and passionate team is inspired by our Co-Founders, Ike Grigoropoulos, Chef Dimitri Moshovitis, and Ted Xenohristos, our Chief Concept Officer, and led by our Chief Executive Officer and Co-Founder Brett Schulman, in creating a powerful culture that serves as a strong foundation for our shared success, grounded in the Mediterranean Way. We have assembled an accomplished and talented senior management team with extensive experience, including Tricia Tolivar (Chief Financial Officer), Jennifer Somers (Chief Operations Officer), Chris Penny (Chief Manufacturing Officer), Kelly Costanza (Chief People Officer), and Rob Bertram (Chief Legal Counsel). Our senior team contributes deep industry insights and expertise from years of industry experience at leading restaurant and consumer companies such as Taco Bell, Mattel, AutoZone, and Ollie s Bargain Outlet. Our Co-Founders and senior management team have transformed CAVA into a nationwide concept, seamlessly managing the integration of our Zoes Kitchen acquisition in 2018, and agilely growing the Company through the COVID-19 pandemic to where it is today. Strong Financial Results Driven By Powerful Unit Economics Our category-defining brand, authentic offering, and attractive business model are supported by powerful unit economics that drive our strong performance. We increased the number of CAVA Restaurants from 22 as of the end of fiscal 2016 to 263 as of April 16, 2023, representing a CAGR of 49%. We have steadily grown CAVA Revenue each year since 2016, except for a slight decline in fiscal 2020 as a result of the COVID-19 pandemic. Since the Zoes Kitchen acquisition, through April 16, 2023, we have successfully converted 145 Zoes Kitchen locations into CAVA restaurants, in addition to opening 51 new CAVA restaurants during such period. At the same time, we have successfully managed through the mid-to-high-single digit inflationary environment and were able to expand CAVA Restaurant-Level Profit Margin to 20.3% in fiscal 2022, despite only increasing our in-restaurant menu price by less than 5%. Table of Contents We have meaningfully grown CAVA Same Restaurant Sales each fiscal quarter for the past nine fiscal quarters. We will continue to focus on maximizing the potential of our existing CAVA restaurants to drive CAVA Same Restaurant Sales Growth. CAVA Same Restaurant Sales Growth __________________ (1)CAVA Same Restaurant Sales Growth was materially impacted in fiscal 2021 due to the temporary impacts of the COVID-19 pandemic on CAVA Revenue during fiscal 2020. (2)For purposes of calculating CAVA Same Restaurant Sales Growth compared to the corresponding period in fiscal 2019, we only include CAVA restaurants that were open as of the beginning or during the corresponding period in fiscal 2019. We have demonstrated the ability to drive strong unit economics alongside rapid growth. Over the course of hundreds of new restaurant openings and conversions, our team has worked continuously to refine every aspect of our restaurant opening playbook. We have developed a clear framework and significant operating expertise, enabling us to confidently expand in new and existing markets. We aim to grow average unit volumes ( AUV ) and restaurant-level profit margins as we increase CAVA s brand awareness. The following chart sets forth our target economics for new CAVA restaurant openings, excluding conversions of Zoes Kitchen locations Target Average New Unit Economics ($ in millions) AUV(1) $2.3 CAVA Restaurant-Level Profit Margin(1) 20% Net Capital Expenditures(2) $1.3 Cash On Cash Returns(1) 35% __________________ (1)Reflects targets for the second full year of operations. (2)Reflects capital expenditures incurred to open a restaurant, net of tenant allowances. Our target new unit economics are substantiated by our strong track record of AUV growth and our aggregate Cash on Cash Returns of approximately 40%, which is calculated on a combined basis for all CAVA restaurants opened prior to fiscal 2018 to exclude the impact of the COVID-19 pandemic. In addition, in fiscal 2022 and the first quarter of 2023, we achieved CAVA AUV of $2.4 million and $2.5 million, respectively, with CAVA Restaurant-Level Profit Margin of 20.3% and 25.4%, respectively. Table of Contents We have achieved success across 22 states and Washington, D.C. with strong AUV across regions and across formats in suburban, urban, and specialty locations. With proven portability across diverse market types and geographies, we see further opportunities to leverage our trade areas and further penetrate our existing markets. CAVA Restaurants by Geography(1) CAVA Restaurants by Format(1) ($ in millions)RestaurantsAverage Age(2) CAVA AUV(3) ($ in millions)RestaurantsCAVA AUV(3) Mid-Atlantic595.0$2.6Suburban137$2.5 West154.8$2.9Urban31$2.8 Northeast244.3$3.3Specialty7$2.5 Southeast352.3$2.2 Southwest422.0$2.3 __________________ (1)For CAVA restaurants open for at least thirteen periods as of April 16, 2023. (2)Average age represents, as of April 16, 2023, the period of years that CAVA restaurants have been open to guests. (3)For the trailing thirteen periods ended April 16, 2023. Our strong financial results, proven portability, and broad appeal of our brand are further evidenced by substantial diversity across geographies and formats and revenue diversity across dayparts and channels, as shown in the charts below. __________________ (1)Based on CAVA Revenue for fiscal 2022. (2)Based on CAVA Restaurant count as of April 16, 2023. Significant Market Opportunity Supported By Accelerating Consumer Trends We compete in the large and growing U.S. limited service restaurant industry, which was estimated to be more than $325 billion in 2021. We believe that our differentiated offerings and broad appeal provides us with significant whitespace opportunity in the Mediterranean and health and wellness food category, and we also expect to benefit from several strong and emerging trends Evolving Consumer Preferences for Authentic and Ethnic Cuisine The ethnic diversity of the U.S. population continues to increase with approximately 48% of Gen Z consumers identifying as members of a minority group, as compared to 39% of Millennials. This melting pot of cultures fuels the ever-growing consumer interest in exploring new and exciting cuisines, and we believe CAVA is optimally positioned to capitalize on this generational shift. The Mediterranean category, which was estimated to be almost $40 billion in 2021, is a notable growth area within the restaurant industry as the American palate becomes more drawn to unique and exciting flavors while still focusing on health. As the first and only Mediterranean brand at scale, CAVA shapes and defines the category we believe Mediterranean cuisine is growing significantly as consumers become more familiar with our brand and our strong, authentic, craveable, on-trend flavors. Increased Focus on Health and Wellness Consumers across various age groups are focused on improving their health and wellness, with 70% wanting to be healthier and approximately 50% placing healthy eating as a top priority according to an independent third-party survey. This focus on health and wellness has allowed the global health and wellness food category to grow to approximately $840 billion in 2022. Table of Contents The Mediterranean diet has been ranked the #1 best diet overall by U.S. News World Report for six years in a row. We believe that the health and nutrition of our food, together with our walk-the-line model, enables our guests to customize and optimize their well-being and meet their specific health and dietary needs while enjoying the flavors they crave, and allows us to compete effectively in the health and wellness food category, where we believe we have significant whitespace opportunity. Emphasis on Combined Quality and Convenience Modern consumers expect to be able to customize where, when, and how they enjoy their food, without compromising the quality of their food or experience. Whether it is an in-restaurant order, an order picked up in-restaurant, a drive-thru pick-up order or a delivery order, CAVA s easy and quick access has been key to our success and is expected to strengthen as we further enhance channels of access for our guests. The rise and focus on digital channels have been reinforced by the impact of COVID-19 on the restaurant industry. For example, CAVA Digital Revenue Mix was 35% in fiscal 2022, compared to 13% pre-pandemic. Our Growth Opportunities We intend to expand our business and passion for the Mediterranean Way by executing the following growth strategies New Restaurants A Substantial Whitespace Opportunity We are in the early stages of fulfilling our total restaurant potential. We have driven strong and consistent performance across our diverse base of restaurants, with more than 80% of our restaurants in suburban locations and the remainder in high-footfall city center and specialty locations throughout the continental United States from Lancaster, PA, to Los Angeles, CA, and from Back Bay in Boston, MA to Birmingham, AL. As of April 16, 2023, we had 263 restaurants across 22 states and Washington, D.C. We anticipate having 34 to 44 Net New CAVA Restaurant Openings in the remainder of fiscal 2023, which includes opening the remaining 8 conversions of Zoes Kitchen locations that we expect to complete by the fall of 2023. Based on our internal analysis and third-party research, we believe there is potential to have more than 1,000 CAVA restaurants in the United States by 2032. We currently have a strong new restaurant pipeline with 100 new sites for which we have signed letters of intent as of April 16, 2023, which is well in excess of our planned new restaurant openings in 2023 and 2024. These new openings are expected to be in both existing markets where there is unfulfilled consumer demand and new markets waiting to experience CAVA. For example, in 2024, we intend to enter and develop attractive new geographies, such as the Midwest. Grow Within Existing Markets The lines at our restaurants, the continued increase in digital adoption, and the historical and recent research we have obtained through the CAVA Brand Health Survey confirm the significant demand for CAVA in existing markets. We believe there is an opportunity to increase density within our existing markets while continuing to grow AUV in those markets. Historically in certain markets, the restaurants we subsequently open after the fourth restaurant opening achieve higher starting AUV as compared to the initial restaurants opened in those markets. Furthermore, we expect the 59 and 73 restaurants that we opened in fiscal 2021 and 2022, respectively, will continue to grow and generate higher AUV as they mature. When a new CAVA restaurant is opened, we generally observe significant organic sales growth over time, driven by the excitement around the novelty of our brand and sustained by the broad appeal of our offering. Enter and Scale New Markets We have demonstrated the relevance and portability of the CAVA brand as evidenced by success in 22 states and Washington, D.C. as of April 16, 2023. We believe the whitespace for CAVA extends nationwide, underpinned by our brand strength, well-developed pipeline of talent across key functional and operating areas, corporate infrastructure, new restaurant opening playbook, and attractive unit economic model supporting the execution of our new market growth strategy. Before entering new markets, we develop a comprehensive market plan that plots a Table of Contents clear path for future development. In addition, when determining new locations, we use a data-driven approach to heat-map demographic and psychographic data and identify trends that historically correlate with a trade area s revenue potential to meet our unit-level returns criteria. Drive Culinary Innovation We believe the excitement we build around our menu will attract more traffic to our restaurants and across our digital channels. We are focused on menu innovation to continue delighting our guests with vibrant Mediterranean flavors and healthful food. We intend to introduce new and unique items to our core staples like Harissa Honey Chicken, while also offering limited-time menu items through seasonal innovation such as our White Sweet Potato + Feta Bowl. Our culinary innovation engine will continue to keep our passionate fans engaged and constantly excited to experience CAVA. Leverage our Digitally Enabled Multi-Channel Offering Our digital platform has been an important contributor to our growth. We will continue to enhance our channel offerings in order to maximize our value proposition to our guests while making it easy to engage with CAVA. We intend to leverage our interconnected physical and digital ecosystem to continue to increase convenience and access to our brand while enhancing our adaptability across trade areas. Format Flexibility to Drive Growth We are introducing new formats, such as CAVA digital kitchens, CAVA hybrid kitchens and drive-thru pick-up lanes, to better suit evolving consumer demands and to tailor to our guests preferred channels. We are currently piloting CAVA digital kitchens in select markets to serve as centralized production hubs, and we are also currently piloting CAVA hybrid kitchens in select markets where we believe there is strong demand for our catering services. In addition, we have seen success since our initial launch of restaurants with drive-thru pick-up locations in 2019. Restaurants with drive-thru pick-up capabilities generally achieve higher sales compared to other restaurants. We currently expect that a significant portion of our new restaurants opening in fiscal 2023 and beyond will have drive-thru pick-up capabilities. We plan to continue driving growth with new and improved formats and convenience channels tailored to our guest preferences. Improved Digital Customization Our digital strategy is a key element to our future growth as consumers evolve and look for more convenient and personalized ways to engage with CAVA. Our ability to dynamically surface content across various modes of engagement, whether through the CAVA app, website, or in-restaurant, has allowed effortless navigation and personalized experiences. For example, leveraging our in-restaurant digital menu boards and CAVA app, we plan to highlight top trending mixes and provide our guests with loyalty program rewards when they select those combinations. We continue to make targeted digital investments that provide a personalized end-to-end guest experience guided by data. We also have several initiatives, such as in-restaurant one-tap loyalty and pay, loyalty program enhancements, and catering customer relationship management ( CRM ), in development. Enhanced Loyalty Offering Our approximately 3.7 million loyalty members represented 25% of our sales for the first quarter of 2023. We see a large growth opportunity in driving new and existing guests to join our loyalty program. We intend to leverage our in-house data architecture to engage with our guests in effective ways as we continue to refine and evolve our loyalty program, including introducing menu exclusives to drive adoption, enhancing targeting capabilities to amplify conversion, and instituting engagement challenges to motivate frequency and rekindle lapsing guest relationships. In addition, we plan to adopt a more tailored approach to our loyalty program by providing unique personalized digital content in the CAVA app powered by our digital ecosystem, offering physical items such as merchandise, and making cross-channel offers to develop a richer emotional connection with our guests. Table of Contents Broaden our Catering Offering We are currently in the early stages of our catering program and plan to expand our catering capabilities to more CAVA locations around the country by leveraging our kitchen production. We believe this will help to drive CAVA Same Restaurant Sales across our restaurant base. Grow Consumer Packaged Goods We have built a well-established CPG business consisting of CAVA dips, spreads, and dressings. Our CPG offerings are currently sold in more than 650 grocery stores nationwide, including Whole Foods Markets across the country. We will continue to innovate in this highly attractive category by increasing our SKUs as well as channels of distribution. Increase Brand Awareness Each new restaurant we open increases our brand awareness and allows us to introduce the Mediterranean Way to, and reach, more guests. With our focus on hospitality and our ability to execute at a high-level, the expansion of our restaurant base is an effective and cost-efficient way of marketing our purpose-driven, authentic brand, in addition to being an important growth driver. Based on our CAVA Brand Health Survey, our aided brand awareness has grown from 41% in the first half of fiscal 2021 to 44% in the second half of fiscal 2022, with significant runway to further increase brand awareness and guest engagement in both our existing and new markets, which will allow us to create, capture, and retain new demand. To further increase brand awareness, we will also focus on the following Local Community Engagement As we enter into new markets, we tailor our marketing, media, and outreach to engage each local market. For example, we host Community Days when we open a new restaurant, where we provide free meals to all who come through our doors. We suggest and match donations received on Community Days to benefit local nonprofit partners that focus on underserved neighborhoods. This increases our brand awareness while simultaneously supporting our mission by bringing heart, health, and humanity to food in each new community we enter. Amplify our Brand Expression Through Collaborations We have recently tapped into a new mode of guest engagement through brand collaborations with genuine CAVA fans. Our first campaign with top influencer, Emma Chamberlain, in 2022 drove incremental traffic, increased brand awareness with the Gen Z audience, and helped CAVA be voted for the first time as one of upper income female Gen Z s top five favorite restaurant brands in a third-party survey. We see opportunities to build upon this success and execute other brand collaborations to fortify our brand awareness across attractive demographics. Grow our Social Community A core strength of our brand is our passionate fan base that engages on social media. With hundreds of thousands of followers across our social communities and over 2.6 million engaged likes on TikTok, these channels allow us a deeper way to engage our guests and reinforce our brand essence. We intend to continue to use dynamic content, relevant cultural moments, micro-influencer partnerships, and other partnerships to grow our community and drive brand awareness. Leverage our CPG Offerings Our Consumer Packaged Goods, sold in over 650 grocery stores nationwide, give us an opportunity to engage with consumers through multiple, high-value touchpoints that amplify brand awareness. Whether on a grocery store shelf or in a refrigerator in a guest s home, this channel allows for increased awareness of the CAVA brand. Table of Contents Capitalizing on our Significant Investments in Infrastructure We have made significant investments in our infrastructure across critical areas of our business to support our future growth and provide operating leverage, including the following Technology Infrastructure Our robust infrastructure, including a unified data warehouse and master data management platform, allows for clean, consistent, and actionable data across the enterprise. Digital Platform We have built a fully integrated digital platform based on an agile, flexible, and scalable micro-services architecture, including dynamic content management and order flow throttling capabilities. Catering Our proprietary catering CRM supports our channel growth opportunity. Manufacturing We currently operate a 30,000-square-foot production facility in Maryland and recently commenced building a state-of-the-art production facility in Virginia. Our proprietary dips and spreads are centrally produced to enable our restaurants to focus on all other aspects of food preparation. We expect that our production facilities will support at least 750 restaurants, as well as our CPG business, with the potential to add additional capacity over time. Supply Chain We have established a direct sourcing model comprised of trusted grower, rancher, and producer partners who will enable us to maintain the quality and consistency of our ingredients as we scale. People We have made significant hires across key functional and operational areas. We believe these investments will continue to enable consistent, cost-effective production while deepening our competitive advantage and extending our leadership in the Mediterranean category. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CBSTF_cannabist_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CBSTF_cannabist_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..056f786889ca0d0c95176a9d302551bec302e447 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CBSTF_cannabist_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and the documents that we incorporate by reference. It is not complete and does not contain all of the information that you should consider before making an investment decision. For a more complete understanding of the Company s business and this offering and before making any investment decision, you should read the entire prospectus and the documents incorporated by reference, including the section entitled Risk Factors commencing on page 9 of this Prospectus and the Risk Factors section contained in our Annual Report on Form 10-K for the year ended December 31, 2022. General The Company s Common Shares are listed on Cboe Canada (the Cboe ) under the symbol CBST and are quoted on the OTCQX Best Market (the OTCQX ) under the symbol CBSTF and on the Frankfurt Stock Exchange under the symbol 3LP . The Company s principal business activity is the production and sale of cannabis as regulated by the regulatory bodies and authorities of the jurisdictions in which it operates. The Company, through its subsidiaries, currently owns or manages interests in several state-licensed medical and/or adult use marijuana businesses in Arizona, California, Colorado, Delaware, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Utah, Virginia, Washington, D.C. and West Virginia. The Company has exited its prior operations in the Missouri, European Union and Puerto Rico markets and intends to exit Utah. The registered office of the Company is 666 Burrard St., #1700, Vancouver, BC V6C 2X8. The head office is located at 680 Fifth Ave., 24th Floor, New York, New York 10019. The Company s telephone number is (212) 634-7100. History of the Company The Company was incorporated under the Business Corporations Act (Ontario) (the OBCA ) on August 13, 2018 under the name Canaccord Genuity Growth Corp. as a special purpose acquisition corporation for the purpose of effecting an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization or any other similar business combination. On October 17, 2018, the Company announced that it had entered into a letter of intent with Columbia Care LLC ( Old Columbia Care ) to exclusively negotiate a business combination between the two companies. On November 21, 2018, the Company announced that it had entered into a definitive agreement (the Transaction Agreement ) with Old Columbia Care pursuant to which, among other things, the Company would acquire all of the membership interests of Old Columbia Care by way of a merger between Old Columbia Care and a newly-formed Delaware subsidiary of the Company (the Business Combination ). The Business Combination constituted the Company s qualifying transaction. The Business Combination was completed on April 26, 2019, at which point Old Columbia Care became a 100% wholly-owned subsidiary of the Company. In connection with the closing of the Business Combination, the Company was continued out of the jurisdiction of Ontario under the OBCA and into the jurisdiction of British Columbia under the Business Corporations Act (British Columbia) ( BCBCA ). Table of Contents Recent Developments September 2023 Private Placement On September 18, 2023, the Company entered into subscription agreements with institutional investors (the Investors ) for the purchase and sale of 22,244,210 units of the Company (the September 2023 Units ) at a price of C$1.52 per Unit (the Issue Price ) pursuant to a private placement (the September 2023 Offering ), for aggregate gross proceeds of approximately C$33.8 million or approximately $25 million (the Initial Tranche ). Each Unit consists of one Common Share (or one September 2023 Pre-Funded Warrant) and one half of one September 2023 Warrant. Each September 2023 Warrant entitles the holder to acquire one Common Share of the Company at a price of C$1.96 per share, a 29% premium to issue, for a period of 3 years following the closing of the Initial Tranche and the Investor Option (as defined below), as applicable. The Initial Tranche consisted of an aggregate of 21,887,240 Common Shares, 11,122,105 September 2023 Warrants and 356,970 September 2023 Pre-Funded Warrants. Each September 2023 Pre-Funded Warrant represents the right to purchase one Common Share at an exercise price of C$0.0001 per share. The September 2023 Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the September 2023 Pre-Funded Warrants are exercised in full. The September 2023 Offering closed on September 21, 2023. ATB Capital Markets Inc. acted as sole placement agent for the Offering. The Company intends to use the proceeds from the September 2023 Offering to reduce its outstanding indebtedness and for general corporate purposes. The Investors will have the option to purchase $25 million in additional September 2023 Units at a price equal to the Issue Price, upon written notice to the Company at any time up to November 2, 2023 (the Investor Option ). In connection with the transaction, the Company and the Investors entered into a customary registration rights agreement. The September 2023 Units are subject to limited lock-up requirements. The Company issued the September 2023 Units pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company is relying on this exemption from registration based in part on the nature of the transaction and the various representations made by the Investors. Name Change Effective September 19, 2023, the Company changed its name from Columbia Care Inc. to The Cannabist Company Holdings Inc. (the Name Change ). To effect the Name Change, the Company filed a Notice of Alteration with the British Columbia Registrar of Companies (the Registrar ), pursuant to which the Registrar issued a new Notice of Articles and a Certificate of Change of Name to the Company. Other than the Name Change, no other changes were made to the Company s Articles. Copies of the Articles and the Certificate of Change of Name are attached hereto as Exhibits 3.1 and 3.2, respectively. In connection with the Name Change, on September 21, 2023, the Company s Common Shares and warrants began trading under the ticker symbols CBST and CBST.WT , respectively, on the Cboe Canada. The Company s Common Shares began trading under ticker symbol CBSTF on the OTCQX on September 26, 2023. In connection with the Name Change, the Company launched a new corporate website: www.cannabistcompany.com. The Company s investor relations information, including press releases and links to the Company s filings with the Securities and Exchange Commission, will now be found on this website. The Company s SEC filings and the Company s corporate governance documents are available on this website. Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CETY_clean_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CETY_clean_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..3871289313b91c09099dd9cb324007b87653c8b1 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CETY_clean_prospectus_summary.txt @@ -0,0 +1,515 @@ +PROSPECTUS +SUMMARY + + + +This +summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider +in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including +our financial statements and the related notes and the information set forth under the headings Risk Factors and Management s +Discussion and Analysis of Financial Condition and Results of Operations in each case included elsewhere in this prospectus. + + + +Unless +the context otherwise requires, references to we, our, us, or the Company in +this prospectus mean Clean Energy Technologies, Inc. on a consolidated basis with its wholly-owned subsidiaries. + + + +Overview + + + +We +develop renewable energy products and solutions and establish partnerships in renewable energy that make environmental and economic sense. +Our mission is to be a leader in the Zero Emission Revolution by offering recyclable energy solutions, clean energy fuels +and alternative electric power for small and mid-sized projects in North America, Europe, and Asia. We target sustainable energy solutions +that are profitable for us, profitable for our customers and represent the future of global energy production. + + + +Waste +Heat Recovery Solutions we recycle wasted heat produced in manufacturing, waste to energy and power generation facilities +using our patented Clean CycleTM generator to create electricity which can be recycled or sold to the grid. + + + +Waste +to Energy Solutions - we convert waste products created in manufacturing, agriculture, wastewater treatment plants and other industries +to electricity, renewable natural gas ( RNG ), hydrogen and bio char which are sold or used by our customers. + + + +Engineering, +Consulting and Project Management Solutions we have expanded our legacy electronics and manufacturing business and plan to +manufacture component parts for our Waste Heat Recovery and Waste to Energy business and to provide consulting services to municipal +and industrial customers and Engineering, Procurement and Construction (EPC) companies so they can identify, design and incorporate clean +energy solutions in their projects. + + + +CETY +HK + + + +Clean Energy Technologies +(H.K.) Limited ( CETY HK ) consists of two business ventures in mainland China:(i) our natural gas ( NG ) +trading operations sourcing and suppling NG to industries and municipalities. The NG is principally used for heavy +truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots +at fixed prices which are prepaid for in advance at a discount to market. We sell the NG to our customers at prevailing daily +spot prices for the duration of the contracts; and (ii) our planned joint venture with a large state-owned gas enterprise in China called +Shenzhen Gas (Hong Kong) International Co. Ltd. ( Shenzhen Gas ), acquiring natural gas pipeline operator facilities, primarily +located in the southwestern part of China. Our planned joint venture with Shenzhen Gas plans to acquire, with financing +from Shenzhen Gas, natural gas pipeline operator facilities with the goal of aggregating and selling the facilities to Shenzhen Gas in +the future. According to our Framework Agreement with Shenzhen Gas, we will be required to contribute $8 +million to the joint venture which plans to raise in future rounds of financing. The terms +of the joint venture are subject to the execution of definitive agreements. + + + +Our +Business Strategy + + + +Our +strategy is focused on further developing our existing Waste Heat Recovery business while expanding into the rapidly growing markets +for Waste to Energy Solutions and clean energy engineering, consulting and project management services. + + + + 3 + + + + + + + +Our +strategy focuses on three main elements: + + + + + + + Expanding + our Waste Heat Recovery product line to include waste heat recovery ORC systems producing over 1 MW of power so we can qualify for + midsized and large heat recovery projects in the United States, China, Southeast Asian and other Pacific Rim countries. + + + + + + + + + + Establishing + a Waste to Energy business by selling our ablative thermal processing products based on proprietary High Temperature Ablative Pyrolysis + ( HTAP ) technology and developing small and mid-sized waste to energy power plants producing electricity and RNG for + the grid and methane, hydrogen and biochar for resale. + + + + + + + + + + Leveraging + our engineering, procurement and manufacturing experience in Waste Heat Recovery and Waste to Energy to assist companies and EPCs + incorporate clean energy solutions into energy and industrial construction projects. + + + + +We +intend to implement this strategy through: + + + + + + + Adding + a new ORC system manufactured by Enertime for Waste Heat Recovery that will enable us to implement projects in the U.S. markets producing + between 1 MW and 10 MW of electricity. + + + + + + + + + + Taking + advantage of federal investment tax credits and state incentives that now include waste heat recover as a recognized clean energy + source making our Clean Cycle Generator and ORC systems more profitable to install. On December 21, 2020, Congress passed the Consolidated + Appropriations Act, 2021 enacted waste energy recovery Sec. 48 Investment Tax Credit, which extended Investment Tax Credit of 26% + including Waste Heat to Power providing a dollar-for-dollar offset against current liability. In addition, Congress passed the + Inflation Reduction Act on August 16, 2022 which increased the investment tax credit to up to 40%. + + + + + + + + + + Benefiting + from higher energy costs which provide higher returns on our Waste Heat Recovery and Waste to Energy products and projects. + + + + + + + + + + Improving + our balance sheet and capital position to permit us to invest in more products and projects. + + + + + + + + + + Establishing + HTAP manufacturing facilities in Turkey for our Waste to Energy products and developing new patent protection on the proprietary + technology. + + + + + + + + + + Leveraging + our existing marketing channels to sell HTAP Waste to Energy products to industrial companies and government agencies. + + + + + + + + + + Working + with clean energy project development and finance companies to establish Waste to Energy power plants producing electricity, RNG, + hydrogen, methane and biochar from biomass, municipal waste, timber waste and other biomass and while retaining an equity interest + in these facilities to provide re-occurring revenue. + + + + + + + + + + Sourcing + NG and selling it to privately owned pipeline companies in China through our newly formed NG Trading company to participate in + the rapidly growing clean energy market. + + + + + + + + + + Acquiring + natural gas pipeline operators into our planned joint venture with Shenzhen Gas who will hold 51% of the joint venture and agreed + to finance these acquisitions pursuant to a framework agreement. + + + + + + + + + + Participate + in other minority investments in medium to large clean energy projects being developed in China that may be sourced by our majority + stockholder in Hong Kong. + + + + + + + + + + Leveraging + the NG trading and investment relationships to create opportunities for us to sell our Waste Recovery and Waste to Energy products + in China and to provide engineering, consulting and project management services. + + + + + + + + + + Expanding our NG trading operations in China by acquiring + more customers and developing the planned joint venture with Shenzhen Gas by acquiring natural gas pipeline operators facilities. + + + + +Recent +Developments + + + + On +January 18, 2023, the Company received approval from FINRA to conduct reverse stock split of the Company s issued and outstanding shares of common stock, par value +$0.001 per share (the Common Stock ), at a ratio of one (1) share of common stock for every forty (40) shares of common +stock (the Reverse Stock Split ). The Company filed an Amendment to Articles of Incorporation (the + Amendment ) with the Secretary of State of the State of Nevada to effectuate the Reverse Stock Split on January 9, +2023. On September 26, 2022, the Board of Directors of the Company and approximately 71% of the shareholders of the Company approved +a reverse stock split in the range of 1:10 1:125. On January 6, 2023, the reverse split ratio was fixed at 1:40, by the +unanimous vote of the Board of Directors and approval by approximately 71% of the Company s shareholders. The Reverse Stock +Split was effective as of the opening of trading on January19, 2023 (the Effective Time ) and the Company s +common stock continued trading on the OTCQB market on a post-split basis when the market opened on January 19, 2023, under the symbol + CETYD for 20 days after which time the symbol will revert to CETY. Fractional shares will not be +issued and the final number of shares will be rounded up to the next whole share. + + + +Company +History + + + +We +were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 +under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs) +of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean +Energy HRS, or CE HRS , our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric +International. In November 2015, we changed our name to Clean Energy Technologies, Inc. + + + + 4 + + + + + + + +Our +Corporation and Subsidiaries + + + + + +Listing +on the Nasdaq Capital Market + + + +Our +common stock is currently quoted on the OTCQB under the symbol CETY. In connection with this Underwritten Offering, we +plan to apply to list our common stock on the Nasdaq Capital Market ( Nasdaq ) under the symbol CETY. If our +listing application is approved, we expect to list our common stock on Nasdaq upon consummation of the Underwritten Offering, at which +point our common stock will cease to be traded on the OTCQB. No assurance can be given that our listing application will be approved. +Nasdaq listing requirements include, among other things, a stock price threshold. As a result, prior to effectiveness, we will need to +take the necessary steps to meet Nasdaq listing requirements. + + + + 5 + + + + + + + +Risk +Factors Summary + + + +Our +business is subject to a number of risks. You should be aware of these risks before making an investment decision. These risks are discussed +more fully in the section of this registration statement titled Risk Factors . These risks include, among others, the following: + + + + + + + Our + independent accountants have issued a going concern opinion and if we cannot obtain additional financing and/or reduce our operating + costs sufficiently, we may have to curtail operations and may ultimately cease to exist. + + + + + + + + + + Our + business, results of operations and financial condition may be adversely affected by public health epidemics, including the ongoing + coronavirus or covid-19. + + + + + + + + + + We + have not made a payment under a material contract, which could result in adverse impacts on our operations and financial results. + + + + + + + + + + We + operate in a highly competitive market. If we do not compete effectively, our prospects, operating results, and financial condition + could be adversely affected. + + + + + + + + + + Our + international operations subject us to risks, which could adversely affect our operating results. + + + + + + + + + + Our + sales and contract fulfillment cycles can be long, unpredictable and vary seasonally, which can cause significant variation in revenues + and profitability in a particular quarter. + + + + + + + + + + The + implementation of our waste to energy joint ventures depends on us finding funding for the projects, which is not guaranteed. + + + + + + + + + + Our + waste to energy products have not been tested in the United States and we will need to establish a highly sponsored program in + order to gain data and acceptance in the market. + + + + + + + + + + If + the spot price of NG in China drops below the purchase price our traders negotiate with our suppliers, we may not be able to sell + our NG or may have to sell it at a loss. + + + + + + + + + + Our + sales and profitability are dependent on the price of oil, natural gas and electricity, which has been significantly volatile recently. + + + + + + + + + + We + have issued a substantial amount of convertible securities which if converted will substantially dilute all of our stockholders. + + + + + + + + + + Our + operating results and share price may be volatile and the market price of our common stock after this offering may drop below the + price you pay. + + + + +Corporate +Information + + + +Our +principal executive offices are located at 2990 Redhill Avenue, Costa Mesa, CA 92626. Our telephone number is (949) 273-4990. + + + +Our +internet website address is www.cetyinc.com and our subsidiary s web site is www.heatrecoverysolutions.com. Information +on our websites is not incorporated by reference into this registration statement, and you should not consider information on our websites +to be part of this registration statement + + + + 6 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0000719274_gresham_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0000719274_gresham_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0000719274_gresham_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0000855787_truleum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0000855787_truleum_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..869be8e7307942405c27db19f163483ba30e2252 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0000855787_truleum_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our securities. You should carefully read the entire prospectus, including the risks associated with an investment in our company discussed in the Risk Factors section of this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See the section titled Cautionary Statement Regarding Forward-Looking Statements. Overview We are an independent oil and natural gas producer. Our goal is to acquire and develop crude oil and natural gas properties. We principally are seeking to restart, rework and/or recomplete production from historic working interest/net revenue interest sites developed by others who have discontinued their operations due to economic conditions or costs, A working interest represents the percentage of costs that a producer is obligated to pay and net revenue interest represents the percentage of revenue that we will earn from production. Our focus of operation is in the Mid-Continent and Rocky Mountain regions. During March 2022 well bores and related assets including production equipment acquired from Progressive Well Service, LLC established our initial revenue production (the Logan Project ). In most cases we are responsible for 100% of the cost and are entitled to receive between 75% and 78% of the production revenue, with the remainder going to the lessor as an overriding royalty interest per standard oil and natural gas lease terms. The purchase price for the Logan Project consisted of $600,000 cash plus 3% of the net revenue from new wells drilled until the seller receives $350,000. The acquired leases comprise approximately 2,080 gross acres of developed and undeveloped proven production in the Cherokee Uplift in central Oklahoma, including 34 well bores. Several of the bores began producing revenue during the third quarter of 2022. On October 3, 2023, we entered into an agreement with Wrangler Energy Holdings, LLC for various additional sections of the Logan Project adding approximately 400 gross acres under 9 well bores to our oil and gas properties. Strategy Our strategy is to acquire and develop properties we can restart, rework, and/or recomplete which optimally also have proven un-drilled potential to produce oil and natural gas. In this manner, we target acquiring existing infrastructure where there has been historic operations. Deployment of current modern technology in previously undeveloped or underdeveloped areas for production is also part of our strategy in order to enhance the value of acquired properties. We are currently modernizing our operations at the Logan Project and restarting, reworking and/or recompleting certain of the existing wells while seeking additional acquisitions. Prior to the Logan Project our efforts at seeking to acquire properties to restart, rework and/or recomplete had not provided us with a meaningful revenue source. We intend to use the proceeds from the offering principally to make new acquisitions and restart, rework and/or recomplete wells at the Logan Project and to acquire and develop new locations. Our management possess many years of experience and knowledge of the oil and natural gas industry and believes that there are an abundance of additional acquisition candidates where historic operations were suspended during downturns in the market or where assets were foreclosed by lenders. Management believes that these properties have largely been overlooked by larger companies. In the process of identifying new acquisition prospects, we will utilize the expertise of our team and outsource to contract engineering firms the reviews needed to evaluate and develop new prospects. Certain Terminology As used in this prospectus: Restart - To restart production is to perform any necessary repairs of surface equipment in order to bring an idle well back into production. Rework To rework a well is to repair or replace any necessary equipment down in the borehole and/or perform additional treatments or stimulation of existing perforated zones to bring an idle well back into production. Recomplete To recomplete an existing well that may or may not be active or any action or methodology to re-enter the well to restore it or improve it. Recompletion is differentiated from restarting or reworking inasmuch as recompletion means opening a previously untapped behind pipe zone for production. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. Corporate History and Information We were formed on September 26, 2013 as a Colorado corporation. On April 27, 2023, the Company amended its articles of incorporation to change its name from Alpha Energy, Inc. to Truleum, Inc. Our address is 14143 Denver West Parkway, suite 100, Golden, CO 80401. Our telephone number is (800) 819-0604. Our website address is https://truleum.com/. The reference to our website is an inactive textual reference only and information contained in, or that can be accessed through, our website or any other website cited in this registration statement is not part hereof. The Offering Common shares to be offered: shares of Common Stock. Common stock outstanding prior to offering: 21,736,178 Shares Common shares to be outstanding after this offering: shares (or shares if the underwriters exercise their option to purchase additional shares in full) (based on Assumed Offering Price of $ ). Option to purchase additional shares: We have granted the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to additional shares of our Common Stock, an amount equal to 15% of the number of shares offered hereby, on the same terms and conditions as set forth herein, to cover over-allotments, if any. Use of proceeds: We currently plan to use the net proceeds of this offering primarily for drilling and development, restart/rework/recomplete costs, selling, general and administrative, capital expenditures, new acquisitions, repayment of short-term indebtedness, and general working capital (including repayment of advances, if any, under the Company s convertible credit line). \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0000910267_titan_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0000910267_titan_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0000910267_titan_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0000931059_rennova_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0000931059_rennova_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0000931059_rennova_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0001043894_wolf_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0001043894_wolf_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..76b49aefac6e3543359a39670ae00fbaefbfb736 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0001043894_wolf_prospectus_summary.txt @@ -0,0 +1 @@ +Table of Contents PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 Other Other Transaction Transaction Historical Adjustments Adjustments Pro Forma (1) ASSETS CURRENT ASSETS Cash $ 342,705 $ - $ - $ 342,705 Accounts receivable 53,038 - - 53,038 Prepaid expenses and other current assets 999,500 - - 999,500 Current assets of discontinued operations 114,049 - - 114,049 Total current assets 1,509,292 - - 1,509,292 NON-CURRENT ASSETS Property and equipment, net 1,071,938 - - 1,071,938 Intangible assets, net 1,523,601 - - 1,523,601 Goodwill 4,900,873 - - 4,900,873 Right of use asset - operating leases 316,271 - - 316,271 Non-current assets of discontinued operations 16,913 - - 16,913 Total non-current assets 7,829,596 - - 7,829,596 TOTAL ASSETS $ 9,338,888 $ - $ - $ 9,338,888 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 169,105 $ - $ - 169,105 Accrued liabilities 1,553,408 - - 1,553,408 Current portion of lease liability - operating leases 72,319 - - 72,319 Notes payable 938,232 - - 938,232 Current liabilities of discontinued operations 314,100 - 314,100 Total current liabilities 3,047,164 - - 3,047,164 NON-CURRENT LIABILITIES Lease liability - operating leases, net of current portion 244,852 - - 244,852 Non-current liabilities of discontinued operations 150,000 - - 150,000 394,852 - - 394,852 Total liabilities 3,442,016 - - 3,442,016 STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, par value - - - - Common stock, par value 78,268 - - 78,268 Additional paid-in capital 14,869,041 - - 14,869,041 Accumulated deficit (9,050,437 ) - - (9,050,437 ) Total stockholders' equity (deficit) 5,896,872 - - 5,896,872 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,338,888 $ - $ - $ 9,338,888 Table of Contents Fair Value Measurements ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy: Level 1 inputs: Quoted prices for identical instruments in active markets. Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 inputs: Instruments with primarily unobservable value drivers. The carrying values of the Company s financial instruments such as cash, accounts payable, and accrued expenses approximate their respective fair values because of the short-term nature of those financial instruments. Impairment of Long-lived Assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Earnings (Loss) Per Share of Common Stock Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings (loss) per share ( EPS ) include additional dilution from common stock equivalents, such as convertible notes. The Company as of and for the nine months ended December 31, 2022 and 2021 had no common stock equivalents. Recently Issued Accounting Standards The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. F- Table of Contents On August 23, 2022 Ecoark and Banner entered into a Share Exchange Agreement (the Agreement ) with the Company. The Agreement provided that, upon the terms and subject to the conditions set forth therein, Ecoark shall acquire 51,987,832 shares of the Company s common stock in exchange for all the capital stock of Banner owned by Ecoark, which represents 100% of the issued and outstanding shares of the Company (the Exchange ). Upon closing of the Agreement, Banner will continue as a wholly owned subsidiary of the Company. On September 7, 2022, the Exchange was completed, and Banner became a wholly owned subsidiary of the Company via a reverse merger. As a result, the historical financial information of the company is that of Banner. The acquisition of Banner was considered a reverse merger. In accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (Wolf Energy Services, Inc.) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (Banner Midstream Corp.), with one adjustment, which is to retroactively adjust the accounting acquirer s legal capital to reflect the legal capital of the accounting acquiree (Wolf Energy Services, Inc.). That adjustment is required to reflect the capital of the legal parent. Comparative information presented in the consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent. Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the capital structure, as follows: (a) The assets and liabilities of the legal subsidiary recognized and measured at their precombination carrying amounts; (b) The assets and liabilities of the legal parent recognized and measured in accordance with the guidance in this topic applicable to business combinations (ASC 805); (c) The retained earnings and other equity balances of the legal subsidiary before the business combination;(d) The amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary outstanding immediately before the business combination to the fair value of the legal parent determined in accordance with the guidance in ASC 805 applicable to business combinations. However, the equity structure reflects the equity structure of the legal parent, including the equity interests the legal parent issued to affect the combination. Accordingly, the equity structure of the legal subsidiary is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent issued in the reverse acquisition. On September 7, 2022, the Company completed its acquisition of Banner. As a result of this transaction, which is accounted for as a reverse merger, Banner is a wholly owned subsidiary of the Company (the Merger ). In accordance with the terms of the Merger, at the effective time of the Merger, each outstanding share of the common stock of Banner was exchanged for the 51,987,832 shares of common stock of the Company. This exchange of shares and the resulting controlling ownership of Wolf Energy Services, Inc. constitutes a reverse acquisition resulting in a recapitalization of Banner and purchase accounting being applied to Wolf Energy Services Inc. under ASC 805 due to Banner being the accounting acquirer and Wolf Energy Services, Inc., being deemed an acquired business. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of Banner and to include the consolidated results for Wolf Energy Services Inc. and subsidiaries from September 7, 2022 forward. The primary reasons Banner consummated the merger with Wolf Energy Services Inc. were the opportunity to immediately become a public company without the process of doing its own initial public offering, thereby affording it the opportunity to more quickly raise capital and provide liquidity options to its stockholders, and at the same time acquiring the infrastructure required of a public company run by people experienced in investor relations and the public company regulatory compliance issues and filings required by virtue of appointing certain of Ecoark s executive officers as executive officers of the Company. The previously existing businesses of Wolf Energy Services Inc. at the time of the Merger, consisting of Florida Precision Aerospace, Inc., were determined by Management to be sold as soon as practicable. The unaudited pro forma condensed consolidated financial statements have been prepared to include other transaction adjustments to reflect the financial condition and results of operations as if Banner were operating as a public company for all the periods presented. Our historical financial statements included cost allocations from Ecoark as noted below. Management does not believe there are any transaction accounting or autonomous entity adjustments necessary to be included in the unaudited pro forma information presented herein. We have identified four transaction adjustments as noted below. Additionally, we have provided a presentation of management adjustments that we believe are necessary to enhance an understanding of the pro forma effects of the transaction. Banner has included in their historical columns certain operating expenses and other income (expense) from Ecoark that have been allocated to them in the year ended March 31, 2022, which are part of the Condensed Consolidated Statement of Operations for the year ended March 31, 2022. Commencing April 1, 2022, Banner included in their historical financial statements, all expenses that were previously allocated to them. The allocations represented charges incurred by Ecoark for certain corporate, infrastructure and shared services expenses, including legal, human resources, payroll, finance and accounting, employee benefits, insurance, information technology, telecommunications, treasury, and other expenses. Where possible, these charges were allocated based on direct usage, with the remainder allocated on a pro rata basis of headcount, asset, or other allocation methodologies that are considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented pursuant to SAB Topic 1.B.1. The allocations may not, however, reflect the expense Banner would have incurred as a standalone company for the periods presented. These costs also may not be indicative of the expenses that Banner will incur in the future or would have incurred if Banner had obtained these services from a third party. The unaudited pro forma condensed financial information is for informational purposes only and does not purport to represent what our financial position and results of operations actually would have been had the reverse merger of Banner not occurred, or to project our financial performance for any future period. Our historical financial statements have been derived from our historical accounting records and reflect certain allocation of expenses as noted above. The unaudited pro forma condensed financial information reported below should be read in conjunction with the Management s Discussion and Analysis of Financial Condition and Results of Operations, the historical financial statements and the corresponding notes included elsewhere in this prospectus. Table of Contents NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Transaction Accounting Adjustments: There were no transaction accounting adjustments identified by Management. Autonomous Entity Adjustments: There were no autonomous entity adjustments identified by Management. Other Transaction Adjustments: We anticipate no tax adjustments as a result of the transactions reflected herein. Management Adjustments: Management adjustments are optional to include. Management determined the following items to be significant to enhance the understanding of the Banner business will have on our financial statements. (1) Pursuant to the Employment Agreement with the Company's CEO, Jimmy Galla dated November 15, 2022, the Company agreed to pay Mr. Galla $250,000 annually, and granted 10,000,000 restricted stock units that vest quarterly for 20 consecutive quarters (500,000 per quarter). The Company has expensed $281,250 ($18,750 is included in the historical column) in these restricted stock units for the nine months ended December 31, 2022, and $400,000 for the year ended March 31, 2022. Mr. Galla had no compensation expense for Wolf Energy Services, Inc. other than the $18,750 in stock-based compensation related to the restricted stock units in December 2022, in either of the periods provided herein. We believe there are no other material adjustments that need to be made to the unaudited pro forma condensed financial statements to enhance an understanding of the pro forma effects of the proposed transaction. The adjustments are limited to the effect of such synergies and dis-synergies on the historical financial statements that form the basis for the pro forma statements of operations as if the synergies and dis-synergies existed as of the beginning of the fiscal year presented. The pro forma financial information reflects all Management s Adjustments that are, in the opinion of management, necessary to a fair statement of the pro forma financial information presented. A reconciliation between pro forma net loss and net loss after management adjustments is as follows. The numbers in the table refer to the notes above. For the year ended March 31, 2022: Pro forma net income $ 4,806,042 Adjustment(1) (400,000 ) Net income after management adjustments $ 4,406,042 For the nine months ended December 31, 2022: Pro forma net loss $ (6,291,662 ) Adjustment(1) (281,250 ) Net loss after management adjustments $ (6,572,912 ) Earnings (Loss) Per Share: The pro forma weighted average number of shares outstanding of our common stock used to compute basic earnings per share are as follows for both the nine months ended December 31, 2022 and year ended March 31, 2022. EPS Reconciliations: For the nine months ended December 31, 2022: Historical weighted average shares outstanding 61,253,204 Adjustment to reflect the acquisition of Banner 17,015,128 Pro forma weighted average shares outstanding 78,268,332 For the year ended March 31, 2022: Historical weighted average shares outstanding 51,987,832 Adjustment to reflect the acquisition of Banner 22,280,500 Pro forma weighted average shares outstanding 74,268,332 Table of Contents NOTE 2: REVERSE MERGER In accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (Wolf Energy Services Inc.) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (Banner), with one adjustment, which is to retroactively adjust the accounting acquirer s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent. Comparative information presented in the consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent. Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the capital structure, as follows: a. The assets and liabilities of the legal subsidiary recognized and measured at their precombination carrying amounts; b. The assets and liabilities of the legal parent recognized and measured in accordance with the guidance in this topic applicable to business combinations (ASC 805); c. The retained earnings and other equity balances of the legal subsidiary before the business combination; d. The amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary outstanding immediately before the business combination to the fair value of the legal parent determined in accordance with the guidance in ASC 805 applicable to business combinations. However, the equity structure reflects the equity structure of the legal parent, including the equity interests the legal parent issued to affect the combination. Accordingly, the equity structure of the legal subsidiary is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent issued in the reverse acquisition. Wolf Energy Services Inc, (formerly Enviro Technologies U.S., Inc.) issued Ecoark Holdings, Inc. 51,987,832 shares of common stock valued at $5,328,753 in the reverse merger transaction. On September 7, 2022, the Company completed the reverse merger transaction of Banner Midstream. As a result of this transaction, which is accounted for as a reverse merger, Banner is a wholly owned subsidiary of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc). In accordance with the terms of the Merger, at the effective time of the Merger, each outstanding share of the common stock of Banner was acquired by the Company in consideration of 51,987,832 shares of Common Stock of the Company. This exchange of shares and the resulting controlling ownership of Banner constitutes a reverse acquisition resulting in a recapitalization of Banner and purchase accounting being applied to Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) under ASC 805 due to Banner being the accounting acquirer and Wolf Energy Services, Inc. (formerly Enviro Technologies U.S., Inc.) being deemed an acquired business as they were not a shell corporation. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of Banner and to include the consolidated results for Wolf Energy Services (formerly Enviro Technologies U.S., Inc.) from September 7, 2022, forward. The primary reason Banner consummated the Merger with Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) was the opportunity for the Banner subsidiary previously wholly owned by Ecoark to immediately become a standalone public company without the process of doing its own initial public offering, affording it the opportunity to raise capital more quickly. Following the closing of the Merger, management of the Company determined to discontinue the historical and existing business of Wolf Energy Services (formerly Enviro Technologies U.S., Inc.) The estimated allocation of the purchase price of the assets acquired and liabilities assumed for the acquisition by Banner of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) via the reverse acquisition are set forth below in accordance with the guidance under ASC 805: Purchase Price Allocation of Wolf Energy Services, Inc. (formerly Enviro Technologies U.S., Inc.) Current assets $124,760 Fixed assets 6,912 Right of use assets 128,755 Other non-current assets 10,000 Notes payable (436,471) Lease liabilities (128,755) Accounts payable and accrued expenses (1,034,594) Goodwill 3,613,144 Purchase price $2,283,751 This allocation is based on management s estimated fair value of the Wolf Energy Services (formerly Enviro Technologies U.S., Inc.) assets and liabilities as of September 7, 2022, utilizing the guidance in ASC 820-10-35 which included the measurement based on a known level one input regarding the applicable share price as well as the level of activity in the Company. Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) net liabilities were derived from a total value of $2,283,751, based on 22,280,500 shares of common stock on September 7, 2022, and the price of $0.10 per share which was a price on September 6, 2022. The Company impaired the goodwill effective with the Exchange on September 7, 2022, as they had decided at that time to sell the FPA business. The following pro forma balance sheet reflects the details of the March 31, 2022 consolidated balance sheet as presented in the Company s financial statements as a result of the reverse merger. F- Table of Contents THE SPIN-OFF Background Ecoark plans to effect a Spin-Off, which will be a distribution of the 51,987,823 shares of Wolf Energy common stock held by it, which are referred to herein as the Spin-Off Shares, pursuant to this Prospectus. The Ecoark Board has fixed the Record Date for the Spin-Off at September 30, 2022. The ratio, based on 51,987,832 Spin-Off Shares divided by the 32,614,151 shares of Ecoark common stock outstanding and underlying the outstanding Ecoark convertible preferred stock (without taking into account the beneficial ownership limitations in the Ecoark preferred stock) as of the Record Date, is 1.594 Wolf Energy Spin-Off Shares per Ecoark share of common stock. The estimated distribution date for the Spin-Off is June 30, 2023 (the Distribution Date ). However, because of a 4.99% beneficial ownership blocker (the Blocker ) applicable to the holder of the Ecoark convertible preferred stock, not all of the shares that otherwise would have been distributable will be issued on the Distribution Date; the balance will be distributed to the Ecoark preferred stockholder in the future in compliance with the Blocker. See below under Number of Shares Ecoark Stockholders Will Receive. Completion of the Spin-Off is subject to the satisfaction, or the Ecoark Board s waiver, to the extent permitted by law, of a number of conditions. In addition, Ecoark may at any time, until the distribution, decide to abandon the distribution or modify or change the terms of the distribution. For a more detailed discussion, see below under Conditions to the Spin-Off. We have not entered into any agreements with Ecoark that would govern the relationship between the Company and Ecoark after the Spin-Off. Reasons for the Spin-Off The Ecoark Board has reviewed various factors, including the company s portfolio and capital allocation options with the goal of enhancing long-term stockholder value and determined that the Spin-Off is in the best interests of Ecoark and its stockholders. The potential benefits considered by the Ecoark Board in making the determination to consummate the Spin-Off include the following: Greater Focus and Enhanced Operational Agility. The Spin-Off will permit both us and Ecoark and the respective management teams to more effectively focus on pursuing their own distinct operating priorities and strategies. Separate Capital Structures and Allocation of Financial Resources. Each of Ecoark and Wolf Energy has different cash flow structures and capital requirements. The separation will permit each company to allocate its financial resources to meet the unique needs of its businesses and intensify the focus on its distinct operating and strategic priorities. The separation will also give each business its own capital structure and allow it to manage capital allocation and adopt distinct capital return strategies. Further, the separation will eliminate internal competition for capital between the two businesses which are under common management control and enable each business to implement a capital structure tailored to its strategy and business needs. Improved Alignment of Management Incentives and Performance. The separation will allow each company to more effectively recruit, retain and motivate employees, including through the use of equity-based compensation that more closely reflects and aligns management and employee incentives with specific business objectives, financial goals and business attributes. To the extent that the separate equity awards are more attractively valued, this would further benefit each company. Enhanced Strategic Opportunities. The separation will provide each of Ecoark and Wolf Energy with its own capital structure and asset base that can be used to facilitate capital raising and to pursue potential acquisitions, strategic transactions and other opportunities that are more closely aligned with each company s strategic goals and expected growth opportunities. To the extent that the separate attributes are more attractively valued and aligned with the respective goals of each company, this would further increase these benefits to each company. Changes to Ecoark. Ecoark has publicly disclosed that it intends to spin-off each of its operating subsidiaries, although it may not spin-off of Agora Digital Holdings, Inc., which previously was a Bitcoin mining company until it ceased operations when the Bitcoin market crashed earlier in 2022, or Zest Labs, Inc. which holds technology and intellectual property rights which are the subject of ongoing litigation. Either prior to or after the Distribution Date, Ecoark expects to enter into a reverse merger with Ault Alliance, Inc. [NYSE: AULT] ( Ault ). On June 8, 2022, Ecoark raised $12 million from the sale of convertible preferred stock to a subsidiary of Ault. Ault is receiving 5,749,810 shares from the Spin-Off subject to the effect of the Blocker. Clearer Investment Identities. The separation will allow investors to more clearly understand the separate business models, financial profiles and investment identities of the two companies and to invest in each based on a better appreciation of these characteristics. Each company may appeal to different types of investors who may differ from Ecoark s current investors. Following the separation, the separate management teams of each of the two companies are expected to be better positioned to implement goals and evaluate strategic opportunities in light of the expectations of the specific investors in that individual company s market. Table of Contents PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 2022 Historical Wolf Banner Other Other Energy Midstream Transaction Transaction ASSETS Services Inc. Corp. Adjustments Adjustments Pro Forma (1) (2) CURRENT ASSETS Cash $10,879 $99,452 $- $(10,879) $99,452 Accounts receivable 6,397 164,388 - (6,397) 164,388 Prepaid expenses and other current assets 2,679 382,373 - (2,679) 382,373 Inventory 114,614 - - (114,614) - Current assets held for sale - - - - - Total current assets 134,569 646,213 - (134,569) 646,213 NON-CURRENT ASSETS Property and equipment, net 7,119 2,506,738 - (7,119) 2,506,738 Intangible assets, net - 1,716,331 - - 1,716,331 Right of use asset - financing leases - 301,126 - - 301,126 Right of use asset - operating leases 141,388 64,094 - (141,388) 64,094 Other assets 10,143 - - (10,143) - Goodwill - 4,900,873 - - 4,900,873 Non-current assets held for sale - - - - - Total non-current assets 158,650 9,489,162 - (158,650) 9,489,162 TOTAL ASSETS $293,219 $10,135,375 $- $(293,219) $10,135,375 LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $358,859 $373,697 $- $(358,859) $373,697 Accrued expenses - related party 840,565 1,116,698 - (840,565) 1,116,698 Current portion of lease liability - financing leases - 145,174 - - 145,174 Current portion of lease liability - operating leases 51,835 45,004 - (51,835) 45,004 Current portion of long-term debt - 572,644 - - 572,644 Due to Ecoark Holdings - - - - - Loans payable, current portion 114,155 - - (114,155) - Loans payable - related parties 53,000 - - (53,000) - Current liabilities held for sale - - - - - Total current liabilities 1,418,414 2,253,217 - (1,418,414) 2,253,217 NON-CURRENT LIABILITIES Long-term debt, net of current portion - 67,511 - - 67,511 Loan payable, net of current portion 147,816 - - (147,816) - Lease liability - financing leases, net of current portion - 149,884 - - 149,884 Lease liability - operating leases, net of current portion 89,553 22,519 - (89,553) 22,519 Non-current liabilities held for sale - - - - - 237,369 239,914 - (237,369) 239,914 Total liabilities 1,655,783 2,493,131 - (1,655,783) 2,493,131 STOCKHOLDERS EQUITY (DEFICIT) Preferred stock, $0.001 par value - - - - - Common stock, $0.001 par value 22,288 2,228 27,472 - 51,988 Additional paid-in capital 15,373,836 10,398,789 (16,786,160) 1,362,564 10,349,029 Accumulated deficit (16,758,688) (2,758,773) 16,758,688 - (2,758,773) Total stockholders equity (deficit) (1,362,564) 7,642,244 - 1,362,564 7,642,244 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $293,219 $10,135,375 $- $(293,219) $10,135,375 Adjustments: (1) To reflect the retained earnings and other equity balances of Banner Midstream Corp., recombination with Wolf Energy Services Inc. (2) To reclassify assets held for sale of FPA. F- Table of Contents When and How You Will Receive Our Shares Ecoark will distribute to its common and preferred stockholders, as a pro rata dividend, 1.594 shares of our common stock for every share of Ecoark common stock outstanding on a fully diluted basis as of September 30, 2022, the Record Date for the Spin-Off. Prior to the Spin-Off, Ecoark will deliver the Spin-Off Shares of our common stock to the distribution agent. Worldwide Stock Transfer, LLC will serve as distribution agent in connection with the distribution and as transfer agent and registrar for our common stock. Because the 51,987,832 shares of our common stock is in excess of the number of shares of Ecoark common stock entitled to receive our shares on a fully diluted basis, Ecoark stockholders will receive our shares at a ratio of 1.594. However, as more fully described below under Treatment of Fractional Shares, any fractional shares that would have otherwise been distributable to Ecoark stockholders in the Spin-Off by virtue of that ratio will instead be rounded down and may be returned to the status of unauthorized and unissued shares of our common stock, or may be held by us as treasury shares, as may be determined by our Board. If you own Ecoark common stock or preferred stock as of the close of business on the Record Date, the shares of our common stock that you are entitled to receive in the Spin-Off will be issued to your account as follows: Registered stockholders. If you own your shares of Ecoark common stock or preferred stock directly through Ecoark s transfer agent, you are a registered stockholder. In this case, the distribution agent will credit the shares of our common stock you receive in the distribution by way of direct registration in book-entry form to a new account with our transfer agent. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to stockholders, as is the case in the distribution. You will be able to access information regarding your book-entry account for our shares at ecoark.info or by calling 1-800-762-7293. Commencing on or shortly after the Distribution Date, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name. We expect it will take the distribution agent up to two weeks after the Distribution Date to complete the distribution of the shares of our common stock and mail statements of holding to all registered stockholders. Street name or beneficial stockholders. If you own your shares of Ecoark common stock or preferred stock beneficially through a bank, broker or other nominee, the bank, broker or other nominee holds the shares in street name and records your ownership on its books. In this case, your bank, broker or other nominee will credit your account with the shares of our common stock that you receive in the distribution on or shortly after the Distribution Date. We encourage you to contact your bank, broker or other nominee if you have any questions concerning the mechanics of having shares held in street name. If you sell any of your shares of Ecoark stock on or before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the Ecoark shares you sold. See Trading Prior to the Distribution Date for more information. We are not asking Ecoark stockholders to take any action in connection with the Spin-Off. We are not asking you for a proxy and request that you not send us a proxy. We are also not asking you to make any payment or surrender or exchange any of your shares of Ecoark common stock or preferred stock for shares of our common stock. The number of outstanding shares of Ecoark common stock or preferred stock will not change as a result of the Spin-Off. Number of Shares Ecoark Stockholders Will Receive On the Distribution Date, each record holder of Ecoark common stock will be entitled to receive 1.594 shares of our common stock for every share of Ecoark common stock held as of the Record Date. Table of Contents With respect to the Ecoark convertible preferred stockholder, because of the 4.99% beneficial ownership limitation contained in the Certificate of Designation for that series of preferred stock, the holder will initially only receive approximately 2,897,542 shares of our common stock, and the remaining approximately 4,176,902 shares of our common stock to which it is or may become entitled will be held by us or the distribution agent in abeyance until the earlier to occur of (i) such time as the preferred stockholder s receipt of all or any portion of those shares would not cause it to exceed the 4.99% beneficial ownership limitation, in which case the additional shares will not cause the holder to exceed that percentage, and (ii) such time as the preferred stockholder as provided us and Ecoark with 61 days notice of its intent to increase its beneficial ownership to up to 9.99%, in which case the additional shares receivable by the holder on or after the end of the 61 day-period will not cause the holder exceed that increased percentage. Treatment of Fractional Shares Because the 51,987,832 Spin-Off Shares of our common stock issuable to Ecoark upon conversion of the Series A is in excess of the number of shares of Ecoark common stockholders are entitled to receive on a fully diluted basis, Ecoark stockholders will receive our shares at a ratio of 1.594-for-one. By virtue of this ratio, some or most of the Spin-Off Shares would have needed to be divided into fractions to affect that Spin-Off ratio for some of the Ecoark stockholders. However, inside of dividing and distributing fractional Spin-Off Shares, any fractions of Spin-Off Shares that would have otherwise been distributable to Ecoark stockholders in the Spin-Off by virtue of that ratio will instead be rounded down and may be returned to the status of unauthorized and unissued shares of our common stock, or may be held by us as treasury shares, as may be determined by our Board. Ecoark has informed us that in lieu of distributing fractional shares, it intends to pay each Ecoark stockholder who would have otherwise received the fractions of shares a cash amount equal to the product of (i) $0.10 multiplied by (B) the fraction of a share that each such Ecoark stockholder would have otherwise received in the Spin-Off. Results of the Spin-Off After the Spin-Off, we will continue as an independent, publicly traded company. We will continue to have approximately 78,268,332 shares of our common stock outstanding. This amount does not give effect to 10,000,000 RSUs, options to purchase 40,000 shares of common stock and 56,371,000 shares issuable upon conversion of convertible promissory notes in the aggregate principal amounts of $845,565 held by our former directors. Following the distribution, the equity value of Ecoark will no longer reflect the value of the Wolf Energy capital stock it held prior to the Spin-Off, including any value that may have been ascribed to that amount based on the Company s business. Although Ecoark believes that the Spin-Off offers its stockholders greater long-term value, there can be no assurance that the combined trading prices of the Ecoark common stock and the Company s common will equal or exceed what the trading price of Ecoark common stock would have been in absence of the Spin-Off. Trading Prior to the Distribution Date It is possible that a when-issued market in our common stock may develop prior to the Distribution Date. When-issued trading refers to a sale or purchase made conditionally on or before the Distribution Date because the securities of the spun-off entity have not yet been distributed. If you own shares of Ecoark common stock or preferred stock at the close of business on the Record Date, you will be entitled to receive shares of our common stock in the Distribution. You may trade this entitlement to receive our Shares, without the shares of Ecoark common stock or preferred stock you own, on the when-issued market. We expect when-issued trades of our common stock to settle within two trading days after the Distribution Date. On the first trading day following the Distribution Date, we expect that any when-issued trading of our common stock will end and regular-way trading will begin. We also anticipate that if a when-issued market develops prior to the Distribution Date, there may be two markets in Ecoark common stock: a regular-way market and an ex-distribution market. Shares of Ecoark common stock that trade on the regular-way market will trade with an entitlement to receive shares of our common stock in the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to receive shares of our common stock in the distribution. Therefore, if you sell shares of Ecoark common stock in the regular-way market up to and including the Distribution Date, you will be selling your right to receive shares of our common stock in the distribution. However, if you own shares of Ecoark common stock at the close of business on the Record Date and sell those shares on the ex-distribution market up to and including the Distribution Date, you will still receive the shares of our common stock that you would otherwise be entitled to receive in the distribution. Table of Contents If when-issued trading occurs, the quotation for our common stock is expected to be under a trading symbol different from our regular-way trading symbol. We will announce our when-issued trading symbol when and if it becomes available. If the Spin-Off does not occur, all when-issued trading will be null and void. Conditions to the Spin-Off We expect that the Spin-Off will be effective on the Distribution Date (although there may be a delay in the delivery of the spun-off shares to Ecoark stockholders), provided that the following conditions shall have been satisfied or waived by the Ecoark Board (if any such waiver permitted by law): The Ecoark Board shall have approved the Distribution and not withdrawn such approval and shall have declared the dividend of our common stock to Ecoark stockholders. The Registration Statement, of which this Prospectus is a part, shall be effective under the Securities Act, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC. No order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution shall be in effect, and no other event outside the control of Ecoark shall have occurred or failed to occur that prevents the consummation of the distribution. No other events or developments shall have occurred prior to the distribution that, in the judgment of the Ecoark Board, would result in the distribution having a material adverse effect on Ecoark or its stockholders. Any of the above conditions may be waived by the Ecoark Board to the extent such waiver is permitted by law. If the Ecoark Board waives any condition prior to the effective date of this Registration Statement, of which the Prospectus forms a part, or change the terms of the Distribution, and the result of such waiver or change is material to Ecoark stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Prospectus accordingly. In the event that Ecoark waives a condition or changes the terms of the distribution after the Registration Statement becomes effective and such waiver or change is material to Ecoark stockholders, we expect Ecoark would communicate such waiver or change to Ecoark s stockholders by filing a Current Report on Form 8-K with the SEC and/or a press release describing the waiver or change. The fulfillment of the above conditions will not create any obligation on Ecoark s part to complete the Spin-Off. We are not aware of any material federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, in connection with the distribution. Ecoark may, at any time until the distribution, decide to abandon the distribution or modify or change the terms of the distribution. Consequences to U.S. Holders of Ecoark Capital Stock The following is a summary of the material U.S. federal income tax consequences to holders of Ecoark capital stock in connection with their receipt of shares of our common stock in the Spin-Off. This summary is based on the Internal Revenue Code of 1986 (the Code ), the Treasury Regulations promulgated under the Code and judicial and administrative interpretations of those laws, in each case as in effect and available as of the date of this Prospectus and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below. This summary is limited to holders of Ecoark capital stock that are U.S. Holders, as defined immediately below, that hold their Ecoark capital stock as a capital asset. A U.S. Holder is a beneficial owner of Ecoark capital stock that is, for U.S. federal income tax purposes: an individual who is a citizen or a resident of the United States; a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia; Table of Contents an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust if (1) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (2) in the case of a trust that was treated as a domestic trust under law in effect before 1997, a valid election is in place under applicable Treasury Regulations. This summary is for general information only and is not tax advice. It does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, such as: dealers or traders in securities or currencies; tax-exempt entities; banks, financial institutions or insurance companies; real estate investment trusts, regulated investment companies or grantor trusts; persons who acquired Ecoark capital stock pursuant to the exercise of employee stock options or otherwise as compensation; stockholders who own, or are deemed to own, 10% or more, by voting power or value, of Ecoark equity; stockholders owning Ecoark capital stock as part of a position in a straddle or as part of a hedging, conversion, synthetic security, integrated investment, constructive sale transaction or other risk reduction transaction for U.S. federal income tax purposes; persons who are subject to the alternative minimum tax; persons whose functional currency is not the U.S. dollar; certain former citizens or long-term residents of the United States; persons who are subject to special accounting rules under Section 451(b) of the Code; persons who own Ecoark capital stock through partnerships or other pass-through entities; or persons who hold Ecoark capital stock through a tax-qualified retirement plan. This summary is not a complete analysis or description of all potential U.S. federal income tax consequences of the distribution. It does not address any tax consequences arising under the Medicare tax on net investment income or the Foreign Account Tax Compliance Act (including the Treasury Regulations promulgated thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith). In addition, it does not address any U.S. state or local or foreign tax consequences or any estate, gift or other non-income tax consequences of the distribution. If a partnership, or any other entity treated as a partnership for U.S. federal income tax purposes, holds Ecoark capital stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership is urged to consult its own tax advisor as to its tax consequences. EACH HOLDER OF ECOARK CAPITAL STOCK IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION. General Ecoark anticipates that the distribution of the Spin-Off Shares and any cash received in lieu of a fractional share will constitute a taxable transaction for U.S. federal income tax purposes. Neither the Company nor Ecoark expect to obtain a private letter ruling from the IRS, or an opinion of counsel, on whether the distribution will qualify for non-recognition of gain or loss under Section 355 and related provisions of the Code or any other provisions of the Code or Treasury Regulations. Table of Contents If the distribution is determined to be a taxable event, each U.S. Holder who receives our common stock in the distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in: a taxable dividend to the U.S. Holder to the extent of that U.S. Holder s pro rata share of Ecoark s current or accumulated earnings and profits; a reduction in the U.S. Holder s basis (but not below zero) in Ecoark capital stock to the extent the amount received exceeds the shareholder s share of Ecoark earnings and profits; and a taxable gain from the exchange of Ecoark capital stock to the extent the amount received exceeds the sum of the U.S. Holder s share of Ecoark s earnings and profits and the U.S. Holder s basis in its Ecoark capital stock. Further, if a U.S. Holder receives cash in lieu of a fractional share of common stock as part of the Spin-Off, the U.S. Holder will be treated as though it first received a distribution of the fractional share in the Spin-Off and then sold it for the amount of cash actually received. Provided the fractional share is considered to be held as a capital asset on the date of the Spin-Off, the U.S. Holder will generally recognize capital gain or loss measured by the difference between the cash received for such fractional share and the U.S. Holder s tax basis in that fractional share, as determined above. Such capital gain or loss will be long-term capital gain or loss if the U.S. Holder s holding period for the Ecoark capital stock is more than one year on the date of the Spin-Off. U.S. Holders that have acquired different blocks of Ecoark capital stock at different times or at different prices are urged to consult their tax advisors regarding the allocation of their aggregate adjusted tax basis among, and the holding period of, shares of our common stock distributed with respect to such blocks of Ecoark capital stock. Alternatively, if the distribution were determined to qualify as a tax-free distribution, then subject to the qualifications and limitations set forth herein, for U.S. federal income tax purposes: no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder as a result of the distribution, except with respect to any cash received in lieu of fractional shares; the aggregate tax basis of the Ecoark capital stock and our capital stock held by each U.S. Holder immediately after the distribution will be the same as the aggregate tax basis of the Ecoark capital stock held by the U.S. Holder immediately before the distribution, allocated between the Ecoark capital stock and our common stock in proportion to their relative fair market values on the date of the distribution (subject to reduction upon the deemed sale of any fractional shares); and the holding period of our common stock received by each U.S. Holder will include the holding period of their Ecoark capital stock, provided that such Ecoark capital stock is held as a capital asset on the date of the distribution. Information Reporting Treasury Regulations require each Ecoark shareholder that, immediately before the distribution, owned 5% or more (by vote or value) of the total outstanding stock of Ecoark or stockholders whose basis in their Ecoark capital stock equals or exceeds $1,000,000 to attach to such shareholder s U.S. federal income tax return for the year in which the distribution occurs a statement setting forth certain information related to the distribution. Consequences to Ecoark The following is a summary of the material U.S. federal income tax consequences to Ecoark in connection with the Spin-Off that may be relevant to holders of Ecoark capital stock. If the distribution is determined not to qualify for non-recognition of gain or loss under Section 355 and related provisions of the Code, then Ecoark will recognize gain equal to the excess of the fair market value of our common stock distributed to Ecoark stockholders over Ecoark s tax basis in our common stock. If the distribution were to qualify for non-recognition of gain or loss under Section 355 and related provisions of the Code, no gain or loss would be recognized by Ecoark as a result of the distribution (other than income or gain arising from any imputed income or other adjustment to Ecoark, us or our respective subsidiaries if and to the extent that the Spin-Off is determined to have terms that are not at arm s length). Table of Contents As discussed above, Ecoark has not received a private letter ruling from the IRS or an opinion of counsel concerning the tax consequences of the distribution. BUSINESS Pinnacle Frac Through Pinnacle Frac, the Company provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Our transportation services entail using third party drivers who assist in transporting sand and related materials to customers locations for the customers hydraulic fracturing, or fracking. The logistics services Pinnacle Frac provides for its customers fracking and drilling enterprises, include the operation of a 24/7 dispatch service center based in Texas through which we dispatch the trucks for hauling frac sand and related equipment. Pinnacle Frac uses independent third-party owner-operators of trucks to service its customers in their fracking operations by transporting materials, mainly frac sand. Our transportation and logistics services operations are primarily centered in the Southern United States, although we also occasionally service fracking operations in the Northeastern United States. Pinnacle Frac uses a third party s licensed software known as Sandbox to monitor and execute its transportation and logistics operations. Use of this service offers the following benefits for customers and other industry participants: Reduced road traffic. Reduced personnel on frac site. Eliminate silica dust particles. By operating a call center and using specialized licensed software to meet customers demand for timely delivery and movement of fracking materials, Pinnacle Frac facilitates customers fracking operations through the life cycle of the drilling process. Business Model With time, Pinnacle has developed and plans to continue to develop the following business characteristics that we believe enable us to operate effectively and efficiently: Focused Business. We employ a focused business model that enables us to maintain a relatively narrow scope in terms of both the services we offer and our geographic reach. Our central location is in Kilgore, Texas, within relatively close proximity to multiple states in which a large proportion of U.S. oil and gas basins and drilling activities takes place, allows us to strategically deploy our contractors to meet customer demand and plan routes in a manner that efficiently manages limited time and resources. While our limited focus and scope limits our diversification and exposes us to potential risk, management believes at this stage of our business such a structure and focus also enhances our ability to meet our customers needs and maintain efficient and sustainable sources of revenue. This model is supplemented by our relatively low employee count, as we instead rely on outside third-party owner-operate truck drivers which are independent contractors to assist us in performing services. Long-Standing Relationships. As mentioned above, we rely on a network of independent contractors to provide quality and timely transportation services to our customers. We enter into contracts with these individuals what enable us to promptly call upon them to perform work when needed. Similarly, we have established long-term relationships with oil and gas companies and adjacent services providers who consistently give us revenue-producing work. We believe these relationships will enable us to create a brand and reputation as a reliable service provider who can consistently provide quality, compliant and timely transportation and delivery services. Because third party drivers supply the vehicles and equipment used to perform the services, we also believe this arrangement causes us to be relatively insulated from supply chain issues when compared to companies who depend on a steady supply of materials and equipment from that they purchase or lease directly. Any issues with shortages on the part of our contractors are frequently solved by the volume of available truck owner-drivers we have available to deploy. Table of Contents Industry Knowledge and Systems. Our personnel have gained valuable experience in operating an oil and gas transportation and logistics company, including an understanding of customers operations in the hydraulic fracturing and the energy industry and the roles we play within those processes. We have also developed an understanding of the transportation infrastructure we and our contractors use in the territory in which our operations are focused. Similarly, the certification and compliances processes impacting the transportation and oil and gas businesses in which we are involved are complex and require constant monitoring and awareness of the requirements and ramifications. Finally, our call center and technology systems that we use to provide these services as described elsewhere in this prospectus are an integral part of our operations and enable us to monitor and supply punctual and complete delivery services while servicing multiple clients and projects throughout the territories in which we provide those services. Business Strategy Our principal business objective is to deliver high-quality services that help enable our customers to unlock valuable sources of energy for the American people and economy. By contributing to our customers success, as well as those of the oil and gas drilling activities assisted thereby, we in turn position our Company to generate revenue and create opportunity for growth. We believe that by successfully deploying this strategy, we can establish and sustainable business model and enhance stockholder value. We maintain a focus on developing, managing, and growing mutually rewarding relationships with our current and prospective customers in the oil and gas space as well as our contractors and other personnel, and maintaining and improving upon cost-effective and efficient systems and customer-centric solutions. We plan to achieve these objectives through: developing and expanding our relationships with existing and new customers; continuing to focus on providing consistent quality, timing and safety performance; investing further in enhancing efficiencies and strategic growth initiatives; generating revenue organically and raising capital as needed to sustain and grow our operations; and evaluate potential opportunities to expand or enter into strategic alliances and transaction that strengthen our capabilities, increase our geographic scope and create stockholder value. As described above, we believe our focused business model, concentrating efforts on a single step in the oil and gas exploration and drilling process, limiting our scope to a small number of connected states, and nurturing existing operational relationships, positions us well for organic growth within an industry characterized with consistent demand, we also face challenges for some of the same reasons, as described in more detail elsewhere in this prospectus, particularly under Risk Factors. Navigating and overcoming these challenges will be critical to our ability to maintain and grow our operations, increase our revenue streams and establish new sources of income, and cultivate and build on value for our shareholders. Our Services and the Industry We Serve Our principal operations involve the provision of transportation services wherein we deploy truck drivers and trucks to transport materials, mainly frac sand, to productive drilling locations to enable customers to conduct their drilling activities there. We maintain an organized network of Company personnel and contractors to ensure we meet customer needs in a timely manner. Set forth below is a summary of the hydraulic fracturing process, which our customers conduct, and on which our services and the revenue we generate therefrom primarily depend. Hydraulic Fracturing Hydraulic fracturing, or fracking, is a process that creates fractures extending from the well bore into the rock formation to enable natural gas or oil contained in the rock to move more easily from the rock pores to a production conduit, or an opening at the surface designed to allow for extraction of the energy resource. The hydraulic fracturing technique is used to enable the extraction of natural gas or oil from shale and other forms of tight rock, or in other words, impermeable rock formations that lock in oil and gas and make fossil fuel production difficult. The process entails blasting water, chemicals, and sand into these formations at pressures high enough to crack the rock in which the targeted resources is embedded, allowing the once-trapped gas and oil to flow to the surface. Table of Contents NOTE 12: DISCONTINUED OPERATIONS In September, 2022, the Company s Board of Directors and management after the Share Exchange Agreement, determined that the FPA business will be sold. As this determination represents a strategic shift that will have a major effect on the Company s operations and financial results, in accordance with ASC 205-20-45-1E, the Company has reclassified FPA s assets and liabilities as held for sale and presented the results of operations of FPA as discontinued operations, and when FPA is sold, will recognize a gain or loss on disposal. Current assets as of December 31, 2022 and March 31, 2022 Discontinued Operations: December 31, March 31, 2022 2022 Cash $7,700 $- Accounts receivable 10,332 - Inventory 82,090 - Prepaid expenses 13,927 - $114,049 $ Non-current assets as of December 31, 2022 and March 31, 2022 Discontinued Operations: December 31, March 31, 2022 2022 Other assets $10,000 $- Property and equipment, net 6,913 - $16,913 $ Current liabilities as of December 31, 2022 and March 31, 2022 Discontinued Operations: December 31, March 31, 2022 2022 Accounts payable and accrued expenses $202,129 $- Current portion of long-term debt 111,971 - $314,100 $- F- Table of Contents Because the process is highly reliant on an ample supply of sand and other materials, Pinnacle Frac capitalizes on this demand by helping its customers timely supply the materials to the drilling site in sufficient quantities to complete the process. Our customers consist of oil and gas drilling to which we may be the prime contractor, and third-party contractors assisting with another party s drilling operation for which we serve as the subcontractor. Due to concerns surrounding health, safety and environmental, or HSE, impacts of hydraulic fracturing, Pinnacle Frac takes an active role in assessing occupational risk and finding methods to better manage these issues. To further these efforts, we have implemented an HSE program which consists of the following key features aimed at avoiding, preventing, detecting and mitigating certain hazards that are inherent in operating as a participant in the hydraulic fracturing field: Jobs Safety Analysis (JSA) Program Near-Miss Reporting System Accident Reporting System All programs are designed with the purpose of mitigating the risk of future safety incidents, while also ensuring that when rare instances occur when a safety incident does occur, that the Company has a plan to address in a consistent, formal manner to ensure the utmost safety for its employees and contractors. To enhance safety, each of our Pinnacle Frac employees and contractors are put through our safety program to meet the needs of our customers while maintaining adequate safety protocols. Through this system, workers gain knowledge of how to maintain optimum work conditions and be prepared for the variety of potential challenges that may arise. We monitor performance under our HSE program throughout the year to evaluate our goals are being met and to address any concerns in this regard should they arise. Key Contracts We enter into certain key contracts in our operations, which can generally be divided into two board categories: (i) contracts with independent contractor owner-operator truck drivers, and (ii) contracts with customers. Each of these categories of contracts and counter parties are summarized as follows: Truck Driver Agreements We enter into standard independent contractor agreements with owner-operate truck drivers, which are for-hire interstate motor carrier individuals or entities that employ such individuals. Under these agreements, we procure the driving services from the contractor while simultaneously leasing their vehicles for transporting frac materials in bulk to a specified destination. Under these agreements, we are given inspection rights with respect to the vehicles prior to commencement of the service, as well as the ability to determine whether a particular driver is qualified to perform the service. Thereafter the contractor/driver is responsible for determining the route, stops and other details of delivering the materials in transit at the agreed upon time. We compensate the contractors a percentage of the fees we receive for completion of the delivery. We also provide for the applicable insurance coverage in accordance with applicable law. These agreements generally have a one-year term and are subject to earlier termination and automatic renewal. Customer Agreements We enter into master services agreements with our customers which provide the general terms of our provision of transportation and logistics services to them. These agreements often vary in form and terms, but generally provide that we will provide transportation services with respect to moving frac materials (most commonly sand) from one location to another in the furtherance of oil and gas drilling activities. Our customers, the counter parties to these agreements, are either oil and gas drilling companies which we perform the work for directly, or other transportation and logistics services companies who serve the oil and gas industry through which we provide trucking assistance in the provision of services to a third-party oil and gas drill operator by our customer (in essence making us the subcontractor in such project). These agreements provide for us to transport frac materials from ne specified location to another under work orders. We perform our obligations under these agreements using the independent contractor agreements with owner-operator truck drivers described above. We typically submit invoices for customers under these agreements either on a periodic or on a per-project basis. Similar to the independent contractor agreements, we are generally required to maintain insurance under these agreements. Table of Contents Competition With respect to our frac sand transportation and logistics business, which constitutes substantially all of our revenue, we compete against other third-party services company as well as owners major global, national and regional oil and gas companies with vertically integrated operations which also provided similar services to other oil and gas companies. These competitors offer the transportation services we do, but also offer additional services we do not, including the equipment and labor needed to complete other steps in the hydraulic fracturing process. Similarly, as oil and gas companies which comprise our prospective market base grow, the often attempt to develop and deploy more of their activities using in-house personnel and assets, which diminishes our prospective market and could result in new sources of competition to us. Many of these competitors possess greater financial, technical, human and other resources than we do, and our financial resources are relatively limited when contrasted with those of many of these competitors. Sales and Marketing Through Banner and its subsidiaries, the Company sells and provides services to its customers via blanket master services agreements. Government Regulations Set forth below is an overview of the government regulations we presently face or could face as a result of our current and planned operations. As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Risk Factors. Transportation Regulation In connection with our operations, particularly the transportation and relocation of hydraulic fracking equipment and shipment of frac sand, the Company and its independent contractors operates trucks and other heavy equipment. As such, we operate as a motor carrier in providing our services and therefore are subject to regulation by the United States Department of Transportation ( DOT ) and by state agencies in the states in which we provide our services. These regulatory authorities exercise broad powers, governing activities such as the authorization to engage in motor carrier operations, driver licensing, insurance requirements, financial reporting and review of certain mergers, consolidations and acquisitions, and transportation of hazardous materials. Interstate motor carrier operations are subject to safety requirements prescribed by the DOT. To a large degree, intrastate motor carrier operations are subject to state safety regulations that mirror or supplement federal regulations. Matters such as the weight and dimensions of equipment are also subject to federal and state regulations. Certain motor vehicle operators require registration with the DOT. This registration requires an acceptable operating record. The DOT periodically conducts compliance reviews and may revoke registration privileges based on certain safety performance criteria that could result in a suspension of operations. Commonly, our contracts with customers require that we be registered with DOT and/or the Federal Carrier Safety Administration. We in turn impose similar requirements on the owner-operator truck drivers we utilize to provide services pursuant to our contractual arrangements with them. Table of Contents Occupational Health and Safety; Independent Contractors We are subject to the requirements of the federal Occupational Safety and Health Act, which is administered and enforced by the Occupational Safety and Health Administration, commonly referred to as OSHA, and of comparable state laws that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. By deploying truck drivers who transport materials used in hydraulic fracturing and related oil and gas exploratory and drilling activities over long distances, we and our personnel (including independent contractors we hire to perform services) are subject to health and safety risks that subject us to relatively high compliance requirements and costs. We believe that our operations are in compliance with the OSHA requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated substances. OSHA continues to evaluate worker safety and to propose new regulations, such as but not limited to, the new rule regarding respirable silica sand, which required the oil and gas industry to implement engineering controls and work practices to limit exposures below the new limits by June 23, 2021. As of the date of this prospectus, the applicability of proposed additions to the current regulatory framework to our operations and those of our current and prospective customers remains uncertain. We continue to monitor the regulatory landscape with respect to our personnel and operations to maintain compliance with applicable requirements. An additional factor as we continue and attempt to grow our operations will be ensuring we are appropriately categorizing and corresponding with our contractors and government entities in the jurisdictions in which we operate. For example, the tax treatment of independent contractors is unique to that of employees, such that if we fail to successfully react and adapt to regulatory developments and applicable requirements, it will expose us to potential non-compliance and liability. Some states are considering legislation and regulations to expand the scope of the definition of employee for these and other purposes. If this trend continues and/or we seek to expand into affected markets or jurisdictions in the future, the resulting laws and regulations could apply in a manner that raises our compliance costs or otherwise adversely impacts us. See the risk factor titled If owner-operators and drivers that we rely upon in our transportation business were to be classified as employees instead of independent contractors, our business would be materially and adversely affected for more information regarding the risks and uncertainties surrounding our use and characterization of independent contractors given these past and potential developments. Oil and Gas Industry Federal regulation of oil and gas is extensive. The recent increases in gasoline and other fuel costs is at least in part been driven by the Biden Administration s efforts to reduce oil drilling and transition away from fossil fuels. These efforts, including the regulatory developments described below, impact our operations either directly or by affecting our customers in the oil and gas industry. Since he took office in January 2021, President Biden has signed a series of executive orders seeking to adopt new regulations to address climate change and to suspend, revise, or rescind certain prior agency actions which were part of the Trump Administration s de-regulatory push, including oil drilling. The Biden Administration is expected to continue to aggressively seek to regulate the energy industry and has stated its goal to eliminate fossil fuels. The new executive orders include, among other things, orders requiring a review of current federal lands leasing and permitting practices, as well as a temporary halt of new leasing of federal lands and offshore waters available for oil and gas exploration, directing federal agencies to eliminate subsidies for fossil fuels, and to develop a plan to improve climate-related disclosures. Federal agencies including the Environmental Protection Agency ( EPA ) and the SEC have followed suit in pushing ahead with new regulations which will adversely affect our future business, as more particularly described below. In January 2021, President Biden also issued an executive order calling for methane emissions regulations to be reviewed and for the EPA to establish new standards by September 2021. This resulted in the EPA finalizing what it refers to as the most ambitious federal greenhouse gas emissions standards for passenger cars and light trucks ever in December 2021. The EPA has also adopted regulations under existing provisions of the Clean Air Act that, among other things, establish Prevention of Significant Deterioration (the PSD ), construction and Title V operating permit reviews for certain large stationary sources. Facilities required to obtain PSD permits for their greenhouse gas emissions also will be required to meet best available control technology standards that will be established on a case-by-case basis. The EPA also has adopted rules requiring the monitoring and reporting of greenhouse gas emissions from specified onshore and offshore natural gas and oil production sources in the United States on an annual basis, which include certain of our operations. Table of Contents In November 2021, the EPA released new proposed methane rules which would impose regulations on methane release at existing wells nationwide, although methane primarily affects gas production rather than oil which is our focus. These new rules, among other things, would implement a comprehensive monitoring program to require companies to find and fix leaks. Additionally, the new rules would require well operators to place gas that is produced in a pipeline to be sold, when possible, to prevent wasting the gas, which could force us or well operators on which we rely to sell the gas at lower prices and thereby reduce our revenues. As with most regulations, smaller participants like us will face more burdens due to the compliance and other costs and the limited revenue to absorb such costs. In November 2022, the EPA announced it intends to strengthen its proposed methane standards and cut methane and other harmful air pollution. While a recent U.S. Supreme Court case imposed limitations on the EPA s authority under the Clean Air Act, including by holding that the EPA s attempted energy generation shifting entailed an overly broad interpretation of the statute s delegation of authority, if the EPA adopts the above or other regulations and such regulations are held to be valid, the resulting new regulatory framework could impose additional restrictions and costs on our operations which could materially adversely affect our business. The regulations at issue in the recent case pertained to an attempt to shift a portion of U.S. energy production from coal to natural gas by an enumerated percentage by 2030. In February 2022, a federal judge blocked a Biden Administration executive order which used the social cost of carbon. The Interior Department responded by suspending permits for oil and gas drilling. Although Congress from time-to-time has considered legislation to reduce emissions of greenhouse gases, there has not been significant activity in the form of adopted legislation to reduce greenhouse gas emissions at the federal level in recent years. In the absence of such federal climate legislation, a number of states, including states in which we operate, have enacted or passed measures to track and reduce emissions of greenhouse gases, primarily through the planned development of greenhouse gas emission inventories and regional greenhouse gas cap-and-trade programs. Most of these cap-and-trade programs require major sources of emissions or major producers of fuels to acquire and surrender emission allowances, with the number of allowances available for purchase reduced each year until the overall greenhouse gas emission reduction goal is achieved. These reductions may cause the cost of allowances to escalate significantly over time. Additionally, the United States re-joined, effective February 19, 2021, the non-binding international treaty to reduce global greenhouse gas emissions (the Paris Agreement ), adopted by over 190 countries in December 2015. The Paris Agreement entered into force in November 2016 after more than 70 nations, including the United States, ratified or otherwise indicated their intent to be bound by the agreement. The United States had previously withdrawn from the Paris Agreement effective November 4, 2020. Following the United States re-joining the Paris Agreement, President Biden announced in April 2021 the United States pledge to achieve an approximately 50% reduction from 2005 levels in economy-wide net greenhouse gas emissions by 2030. To the extent that the United States implements this agreement or imposes other climate change regulations on the oil and natural gas industry, or that investors insist on compliance regardless of legal requirements, it could have an adverse effect on our business, operating results and future growth. Independent Contractors Because we deploy independent contractor owner-operate truck drivers for our transportation operations, we depend on the classification of those individuals as independent contractors under applicable federal and state laws and regulations to conduct our business. While we strive to operate in a manner consistent with these requirements, these laws or regulations may be altered, supplemented or interpreted in a manner that is inconsistent with our present understanding of their applicability or scope. For more information about the regulations impacting our truck drivers and transportation operations, see Risk Factors and specifically the risk factor titled If owner-operators and drivers that we rely upon in our transportation business were to be classified as employees instead of independent contractors, our business would be materially and adversely affected. Environmental Compliance Our operations are or may become subject to numerous laws and regulations relating to environmental protection and climate change. These laws and regulations change frequently, and the effect of these changes is often to impose additional costs or other restrictions on our operations. We cannot predict the occurrence, timing, nature or effect of these changes. We also operate under a number of environmental permits and authorizations. The issuing agencies may take the position that some or all of these permits and authorizations are subject to modification, suspension, or revocation under certain circumstances, but any such action would have to comply with applicable procedures and requirements. Table of Contents While we are currently not experiencing any material expenses related to the environmental compliance, we may become subject to requirements of environmental or other related laws and regulations in the future, which may result from a number of causes, including potentially new regulations being considered. Please review the Risk Factors in this prospectus and the paragraph that follows with regard to potential environmental and other compliance expenses. On March 21, 2022, the SEC released proposed rule changes on climate-related disclosure. The proposed rule changes would require registrants including the Company to include certain climate-related disclosures in registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on the registrant s business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks also would include disclosure of a registrant s greenhouse gas emissions, information about climate-related targets and goals, and transition plan, if any, and requires extensive attestation requirements. The proposed new rules would also require companies to disclose multiple levels of climate impact, including primary direct impacts from the registrant s own operations, as well as secondary and tertiary effects of the operations and uses by contractors that the registrant utilizes and end-users of the registrant s products and/or services. If adopted as proposed, the rule changes will result in material additional compliance and reporting costs, including monitoring, collecting, analyzing and reporting the new metrics and implementing systems and procuring additional internal and external personnel with the requisite skills and expertise to serve those functions. We expect that the rules will be adopted in large part at least, and our compliance costs will be material. However, following a June 2022 U.S. Supreme Court administrative decision, we expect a court challenge to any SEC Rule. We cannot predict the outcome of any challenge. Seasonality Our business experiences a certain level of seasonality due to our transportation and logistics business which is dependent upon the oil and gas drilling operations of our customers. Demand for oil, on which our operations largely depend through our services to oil and gas company customers, is typically higher in the third and fourth quarters resulting in higher prices. But higher fuel costs may adversely affect our transportations business. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results that may be realized on an annual basis. Seasonal weather conditions, including the annual flooding of coastal properties, and lease stipulations can limit our trucking business. These seasonal anomalies can pose challenges for our customers and drivers and can increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay operations, thus, lowering the demand for trucking services. Also, the volatility of commodities prices and supply chain issues can potentially delay customers drilling projects and in turn our provision of services to and receipt of revenue from those customers. Dependence on Major Customers From time-to-time we have had and may continue to have customers generating 10 percent or more of the Company s consolidated revenues, and loss of such customers could have a material adverse effect on the Company. In the fiscal year ended March 31, 2022, in our continuing operations, two of our customers accounted for a total of 88% of our accounts receivable, and two customers accounted for 96% of our total revenues. In the nine months ended December 31, 2022, in our continuing operations, two customers accounted for a total of 97% of our accounts receivable, and two customers accounted for 80% of our total revenues. Human Capital Resources As of the date of this prospectus, we have 13 full-time employees, 0 part-time employees and 62 owner-operator independent contractor truck drivers. Table of Contents Our ability to successfully execute our strategic initiatives is highly dependent on recruiting and retaining skilled personnel and qualified drivers. Our compensation philosophy is based on incentivizing and rewarding performance, with alignment of individual, corporate, and stockholder interests. Compensation includes salaries, benefits, and equity participation. Our owner operator drivers are not salaried employees. We believe our relations with our employees and drivers are satisfactory. PROPERTIES The Company s leases approximately 14,300 square feet of office and shop space in Kilgore, Texas commencing August 1, 2022, for a term of 5 years. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Banner Midstream has two operating subsidiaries: Pinnacle Frac Transport LLC ( Pinnacle Frac ) and Capstone Equipment Leasing LLC ( Capstone ). Pinnacle Frac provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Capstone procures and finances equipment to oilfield transportation service contractors. Pinnacle Frac provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Its transportation services entail using third party drivers who assist in transporting sand and related materials to customers locations for the customers hydraulic fracturing, or fracking. The logistics services Pinnacle Frac provides for its customers fracking and drilling enterprises, include the operation of a 24/7 dispatch service center based in Texas through which Banner Midstream dispatches the trucks for hauling frac sand and related equipment. Pinnacle Frac uses independent third-party owner-operators of trucks to service its customers in their fracking operations by transporting materials, mainly frac sand. Its transportation and logistics services operations are primarily centered in the Southern United States, although Banner Midstream also occasionally services fracking operations in the Northeastern United States. Pinnacle Frac uses a third party s licensed software known as Sandbox to monitor and execute its transportation and logistics operations. Use of this service offers the following benefits for customers and other industry participants: reduced road traffic; reduced personnel on frac site; and eliminate silica dust particles. By operating a call center and using specialized licensed software to meet customers demand for timely delivery and movement of fracking materials, Pinnacle Frac facilitates customers fracking operations through the life cycle of the drilling process. Hydraulic fracturing, or fracking, is a process that creates fractures extending from the well bore into the rock formation to enable natural gas or oil contained in the rock to move more easily from the rock pores to a production conduit, or an opening at the surface designed to allow for extraction of the energy resource. The hydraulic fracturing technique is used to enable the extraction of natural gas or oil from shale and other forms of tight rock, or in other words, impermeable rock formations that lock in oil and gas and make fossil fuel production difficult. The process entails blasting water, chemicals, and sand into these formations at pressures high enough to crack the rock in which the targeted resources are embedded, allowing the once-trapped gas and oil to flow to the surface. Because the process is highly reliant on an ample supply of sand and other materials, Pinnacle Frac capitalizes on this demand by helping its customers timely supply the materials to the drilling site in sufficient quantities to complete the process. Banner Midstream s customers consist of oil and gas drilling to which Banner Midstream may be the prime contractor, and third-party contractors assisting with another party s drilling operation for which Banner Midstream serves as the subcontractor. Due to concerns surrounding health, safety and environmental, or HSE, impacts of hydraulic fracturing, Pinnacle Frac takes an active role in assessing occupational risk and finding methods to better manage these issues. To further these efforts, Banner Midstream has implemented an HSE program which consists of the following key features aimed at avoiding, preventing, detecting and mitigating certain hazards that are inherent in operating as a participant in the hydraulic fracturing field: Jobs Safety Analysis (JSA) Program; Near-Miss Reporting System; and Accident Reporting System. All programs are designed with the purpose of mitigating the risk of future safety incidents, while also ensuring that when rare instances occur when a safety incident does occur, that Banner Midstream has a plan to address in a consistent, formal manner to ensure the utmost safety for its employees and contractors. To enhance safety, each of Pinnacle Frac employee and contractor are put through a safety program to meet the needs of its customers while maintaining adequate safety protocols. Through this system, workers gain knowledge of how to maintain optimum work conditions and be prepared for the variety of potential challenges that may arise. Pinnacle Frac monitors performance under its HSE program throughout the year to evaluate its goals are being met or address any concerns in this regard should they arise. Going Concern For the year ended March 31, 2022 and 2021, the Company had a net (loss) income from operations (not including the provision for income taxes) of $4,891,042 and ($7,558,472), respectively, has a working capital deficit of $1,607,004 and $5,496,522, and has an accumulated deficit as of March 31, 2022 of ($2,758,773). The report of our independent registered public accounting firm on our consolidated financial statements for the year ended March 31, 2022, filed as an exhibit to this registration statement, contains an explanatory paragraph regarding our ability to continue as a going concern based upon our working capital deficit, accumulated deficit and negative cash flows from operations. For the nine months ended December 31, 2022 and 2021, the Company had a net (loss) income from continuing operations (not including the provision for income taxes) of ($6,224,455) and $4,060,056, respectively, has a working capital deficit of $1,537,872 and $1,607,004 as of December 31, 2022 and March 31, 2022, and has an accumulated deficit as of December 31, 2022 of ($9,050,437). These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances the Company will be successful in our efforts to raise capital, develop a source of revenues, report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company. Table of Contents Results of Operations The Company has included in its historical consolidated financial statements certain operating expenses and other income (expense) from Ecoark that have been allocated to them in the years ended March 31, 2022 and 2021, and for the nine months ended December 31, 2022 (prior to the sale to the Company on September 7, 2022) and 2021, which are part of the Condensed Consolidated Statements of Operations for each of these periods. The allocations represented charges incurred by Ecoark for certain corporate, infrastructure and shared services expenses, including legal, human resources, payroll, finance and accounting, employee benefits, insurance, information technology, telecommunications, treasury, and other expenses. Where possible, these charges were allocated based on direct usage, with the remainder allocated on a pro rata basis of headcount, asset, or other allocation methodologies that are considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented pursuant to SAB Topic 1.B.1. The allocations may not, however, reflect the expense the Company would have incurred as a standalone company for the periods presented. These costs also may not be indicative of the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third party. RESULTS OF OPERATIONS FOR CONTINUING OPERATIONS FOR THE YEAR ENDED MARCH 31, 2022 AND 2021 Revenue The following table shows the Company s revenues for the year ended March 31: 2022 2021 Revenue: Transportation Services $ 18,457,567 $ 12,318,309 Fuel Rebate 251,877 243,961 Equipment Rental and other 40,609 148,780 $ 18,750,053 $ 12,711,050 Revenues for the year ended March 31, 2022 (FY 2022) were $18,750,053 as compared to $12,711,050 year ended March 31, 2021 (FY 2021). The increase of 48% was primarily due to an increase in load counts and higher fuel surcharges as fuel costs increased. Cost of Revenues and Gross Profit The following table shows the costs of revenues for the year ended March 31: 2022 2021 Total $ 13,447,203 $ 9,173,850 Cost of revenues for FY 2022 were $13,447,203 as compared to $9,173,850 for FY 2021. Costs were higher primarily due to costs related to independent third-party owner-operator trucks, insurance, and higher fuel costs. Gross margins remained constant at 28% year over year. Table of Contents Operating Expenses The following table shows operating expenses for the year ended March 31: 2022 2021 Operating Expenses: Salaries and salary related costs $ 2,494,942 $ 3,039,661 Professional and consulting fees 309,825 794,462 Selling, general and administrative 7,471,525 4,337,823 Depreciation, amortization, and impairment 783,324 694,703 Total $ 11,059,616 $ 8,866,649 Total operating costs increased by approximately 25% for the year ended March 31, 2022 compared to prior year. The increase was primarily due to $3,133,702 higher selling, general and administrative expenses ( SG&A ), offset by $544,719 lower salary and salary related costs and $484,637 professional and consulting fees expenses. Selling, General and Administrative The following table shows SG&A expenses for the year ended March 31: 2022 2021 Selling, General and Administrative Expenses: Insurance $ 2,559,116 $ 1,096,441 Capital raising expense 1,603,346 455,760 Repairs and maintenance 663,920 366,503 Legal and professional 634,757 812,384 Equipment rental 600,432 73,597 Factoring expense 417,338 317,609 Rents 221,872 218,606 Taxes and licenses 207,302 107,975 Research and development - 445,280 Other 563,442 443,668 Total $ 7,471,525 $ 4,337,823 Total SG&A costs increased $3,133,702 from the year ended March 31, 2022 primarily due to higher insurance, capital raising expense related to a registered direct offering in August 2021, and equipment rental expenses due to increased load counts in current year as compared to prior year, offset by lower research and development and legal and professional costs. Depreciation and Amortization The following table shows depreciation and amortization expenses for the year ended March 31: 2022 2021 Depreciation and Amortization Expense: Depreciation of frac sand transportation equipment $ 434,510 $ 409,848 Amortization of intangible assets 348,814 284,855 Total $ 783,324 $ 694,703 Total depreciation and amortization expense was $783,324 for the year ended March 31, 2022, compared to $694,703 for the same period last year. The change was primarily due to higher amortization of the customer relationship intangible assets. Other Income (Expense) The following table shows other income (expense) for the year ended March 31: 2022 2021 Change in fair value of derivative liabilities $ 10,975,737 $ (10,923,265 ) Gain on exchange of warrants for common stock - 12,436,594 Loss on conversion of long-term debt and accrued expenses and forgiveness of debt - (1,984,425 ) Loss on disposal of fixed assets (6,770 ) (104,938 ) Interest expense, net of interest income (321,159 ) (1,652,989 ) Total $ 10,647,808 $ (2,229,023 ) Total other income was $10,647,808 for the year ended March 31, 2022, compared to total other (expense) of ($2,229,023) in same period of prior year. Change in fair value of derivative liabilities for the year ended March 31, 2022 was a non-cash income of $10,975,737 as compared to a non-cash expense of ($10,923,265) for prior year. As noted, the changes in the derivative liability in 2022 and 2021 were for a derivative liability recognized on Ecoark s books as it was indexed to their common stock. The Company recorded the advances received from their former parent, Ecoark Holdings as additional paid in capital in the share exchange with Wolf Energy. Table of Contents For the year ended March 31, 2021 there was a non-cash gain from the exchange of warrants when converted to shares of common stock of Ecoark of $12,436,594. In additions there was a loss of ($1,984,425) on the conversion of debt and other liabilities to shares of common stock. There were no such items in year ended March 31, 2022. For the year ended March 31, 2022 there was a (loss) on disposal of fixed assets of $(6,770), compared to a loss of ($104,938) in prior year as a result of a disposal of assets worth $188,000 that had a net value of $147,938 for cash proceeds of $43,000. Interest expense, net of interest income, for the year ended March 31, 2022 was ($321,159) as compared to ($1,652,989) for prior year. The decrease in interest expense was the result of the expense incurred on the debt assumed in the Banner Midstream acquisition as well as the value related to the granting of warrants for interest in the prior year. LIQUIDITY AND CAPITAL RESOURCES: Cash at March 31, 2022 was $99,452 as compared to $295,416 at March 31, 2021. Our working capital deficit at March 31, 2022 was $1,607,004 as compared to a working capital deficit at March 31, 2021 of $5,496,522. At March 31, 2022, the Company had an accumulated deficit of $2,758,773. Our current assets decreased by 39% at March 31, 2022 as compared to March 31, 2021, which reflects decreases in prepaid expenses, accounts receivable, and cash. Our current liabilities decreased by 66% at March 31, 2022 as compared to March 31, 2021, which reflects $3,743,435 reduction in accrued liabilities, primarily allocated costs, and current portion of long-term debt, offset by higher accounts payable. The Company does not have any external sources of liquidity and does not have any capital commitments. Summary of cash flows The following table summarizes our cash flows: 2022 2021 Cash flow data: Cash provided by operating activities $ 1,562,371 $ 7,245,365 Cash provided by investing activities - 22,550 Cash used in financing activities 1,758,335 7,158,528 Net cash provided in operating activities in the year ended March 31, 2022 was primarily attributable to our net income for the period and an increase in home office allocation expense offset in part by change in derivative liabilities and lower accounts payable and accrued expenses. Net cash provided in operating activities in the year ended March 31, 2021 was primarily attributable to the change in the derivative liabilities, an increase in home office allocation expenses, and an increase in due to parent liabilities, offset by our net loss for the period and the loss on conversion of debt and liabilities to common stock and forgiveness of debt. Net cash provided in investing activities during the year ended March 31, 2022 was zero. Net cash provided in investing activities during the year ended March 31, 2021 was due to the next proceeds from the sale of fixed assets compared to purchase of fixed assets. Net cash used in financing activities during the year ended March 31, 2022 was primarily due to repayments of long-term debt on equipment and payments made to reduce lease liabilities. Net cash used in financing activities during the year ended March 31, 2021 was primarily attributable to the repayment of the equipment note payable and repayment of related party debt. Our ability to generate future revenues, generate sufficient cash flow to pay our operating expenses and report profitable operations in future periods will depend on several factors, many of which are beyond our control. Our independent auditors have included in their audit report an explanatory paragraph that states that our working capital deficits and accumulated deficit raises substantial doubt about our ability to continue as a going concern. If the Company fails to achieve profitability on a quarterly or annual basis, or to raise additional funds when needed, or does not have sufficient cash flows from sales, we may be required to scale back operations. As a result of the above, there is substantial doubt about the ability of the Company to continue as a going concern and the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. Table of Contents RESULTS OF OPERATIONS FOR CONTINUING OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021 Revenue The following table shows revenues for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, Revenue from continuing operations: 2022 2021 Transportation Services $ 15,401,105 $ 13,754,732 Fuel Rebate 175,819 195,944 Equipment Rental and Other 17,500 40,812 Total $ 15,594,424 $ 13,991,488 Revenues for the nine months ended December 31, 2022 were $15,594,424 as compared to $13,991,488 for the nine months ended December 31, 2021. The increase of 11% was primarily due to an increase in load counts and higher fuel surcharges. Cost of Revenues and Gross Profit The following table shows the costs of revenues for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Total $ 12,380,959 $ 10,043,981 Cost of revenues for nine months ended December 31, 2022 were $12,380,959 as compared to $10,043,981 for same period in prior year. Costs were higher primarily due to costs related to independent third-party owner-operator trucks, insurance, and higher fuel costs. These increased costs drove a decrease in gross profit margins to 21% in the nine months ended December 31, 2022 compared to 28% in the nine months ended December 31, 2021. Operating Expenses The following table shows operating expenses for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Operating Expenses: Salaries and salary related costs $ 812,148 $ 1,801,027 Professional and consulting fees 9,060 $ 314,841 Selling, general and administrative 3,510,124 4,488,967 Depreciation, amortization, and impairment 3,950,513 588,789 Total $ 8,281,845 $ 7,193,624 Total operating costs increased by approximately 15% for the nine months ended December 31, 2022 compared to same period of prior year. The increase was primarily due to $3,613,144 impairment costs of goodwill on the effective date of the Exchange on September 7, 2022, offset by $978,843 lower selling, general and administrative expenses ("SG&A") primarily related to the home office allocations in prior year and none in current year and $988,879 lower salary and salary related costs. Table of Contents Selling, General and Administrative The following table shows SG&A expenses for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Selling, General and Administrative Expenses: Insurance $ 1,753,674 $ 1,362,725 Equipment rental 413,627 270,326 Factoring expense 273,608 318,817 Repairs and maintenance 217,424 535,201 Rents 129,129 163,410 Taxes and licenses 72,665 187,919 Legal and professional 205,928 16,251 Home office allocation - 1,107,535 Other 444,069 526,783 Total $ 3,510,124 $ 4,488,967 Total SG&A costs decreased $978,843 from nine months ended December 2021 primarily due to lower home office allocations in current year as compared to prior year, offset by higher insurance costs. Depreciation, Amortization, and Impairment The following table shows depreciation, amortization, and impairment expenses for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Depreciation of frac sand transportation equipment $ 144,640 $ 327,178 Amortization of intangible assets 192,729 261,611 Impairment of Goodwill 3,613,144 - Total $ 3,950,513 $ 588,789 Total depreciation, amortization, and impairment expense was $3,950,513 for the nine months ended December 31, 2022, compared to $588,789 for the same period last year. The change was primarily due to the sale of several trucks and trailers in our sand frac transportation business in the period ended June 30, 2022 and the impairment of goodwill on the effective date of the Exchange on September 7, 2022. Other Income (Expense) The following table shows other income (expense) for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Change in fair value of derivative liabilities $ - $ 7,647,407 Loss on disposal of fixed assets (971,251 ) - Interest expense, net of interest income (28,776 ) (341,234 ) Total $ (1,000,027 ) $ 7,306,173 Total other (expense) was ($1,000,027) for the nine months ended December 31, 2022, compared to total other income of $7,306,173 in same period of prior year. Change in fair value of derivative liabilities for nine months ended December 31, 2021 was a non-cash income of $7,647,407 as compared to zero for same period of current year. As noted, the changes in the derivative liability in 2021 was for a derivative liability recognized on Ecoark s books as it was indexed to their common stock. The Company recorded the advances received from their former parent, Ecoark Holdings as additional paid in capital in the share exchange with Wolf Energy. For the nine months ended December 31, 2022 there was a (loss) on disposal of fixed assets of $(971,251) as a result of the sale of multiple company owned tractors and trailers. Proceeds from the sales of fixed assets were $580,000. Many of the trucks/trailers were non-operating. There was no corresponding gain or loss in the prior year. Interest expense, net of interest income, for the nine months ended December 31, 2022 was ($28,776) as compared to ($341,234) for same period of prior year. The decrease in interest expense was the result of the expense related to the granting of warrants for interest in the prior year. Table of Contents MANAGEMENT The table below sets forth certain information concerning our executive officers and directors, including their names, ages, and positions with us. Name Age Position(s) Jimmy R. Galla 55 Chief Executive Officer, Chief Financial Officer and Director Jimmy JD Reedy 53 Director and Chief Operating Officer of Banner Midstream The following information pertains to the members of our Board and executive officers, their principal occupations and other public company directorships for at least the last five years and information regarding their specific experiences, qualifications, attributes and skills: Jimmy R. Galla. He has served as our Chief Executive Officer, Chief Financial Officer and director since September 2022. He has served as Ecoark s Chief Accounting Officer since October 22, 2020. He had previously served as Ecoark s Director of Financial Reporting since July 20, 2020, and prior to that he served as an accounting consultant to Ecoark from January 2017 to March 2020. From October 2017 to July 2020, Mr. Galla served as VP, Financial Accounting Lead Analyst, Deputy Controller Department of Citibank, Inc. JD Reedy has served as our director since September 2022. He has served as Chief Operating Officer of Banner Midstream since April 2019. During the two years prior to that he was GM of Pinnacle Frac since April 2017. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the board increases the number of directors, the board may fill any vacancy by a vote of a majority of the directors then in office, although less than a quorum exists. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the removal of directors without cause may only be filled by vote of the shareholders. CORPORATE GOVERNANCE Appointment of Officers Each executive officer serves at the discretion of our Board and holds office until his successor is duly elected and qualified or until his earlier resignation or removal. Code of Business Conduct and Ethics During the year ended December 31, 2003 we adopted a code of ethics. The code of ethics was filed with the Company s Form 10-KSB annual report for the year ended December 31, 2003. The code of ethics may be obtained by contacting the Company s executive offices. The code applies to our officers and directors. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations; (iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code. Board of Directors Our business and affairs are managed under the direction of our Board. We currently have two directors. Director Independence Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment, and affiliations, our Board has determined that each of our directors has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is not independent as that term is defined under the applicable rules and regulations of the SEC and the Nasdaq listing standards. Family Relationships There are no family relationships between any of our executive officers or directors. Board leadership structure and board s role in risk oversight The board of directors is comprised of two members of our management. Given the size of our company, our Board believes the current leadership structure is appropriate for our company. As our company grows, we expect to expand our board of directors through the appointment of independent directors. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks we face and have responsibility for the oversight of risk management in their dual roles as directors. Committees of the board of directors; stockholder nominations; audit committee financial expert We have not established any committees comprised of members of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committee performing similar functions. The functions of those committees are being undertaken by our board of directors as a whole. Table of Contents We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors. While there have been no nominations of additional directors proposed by our shareholders, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board. Jim Galla, a member of our board of directors, is an audit committee financial expert within the meaning of Item 401(e) of Regulation S-K. In general, an audit committee financial expert is an individual member of the audit committee or board of directors who: understands generally accepted accounting principles and financial statements; is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves; has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements; understands internal controls over financial reporting; and understands audit committee functions. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include independent directors, nor are we required to establish or maintain an Audit Committee or other committee of our board of directors. EXECUTIVE COMPENSATION Summary Compensation Table Name and Year Salary Bonus Stock Option Non-Equity Inventive Plan Compensation All Other Total Principal Position (b) ($)(c) ($)(d) Awards Awards ($)(g) Non-Qualified Deferred Compensation Earnings Compensation ($)(j) (a) ($)(e) ($)(f) ($)(h) ($)(i) Jimmy Galla (1) 2022 - - - Chief Executive Officer Banner Midstream 2021 - - - John A. DiBella 2022 210,000 - 17,291 227,291 Former Chief Executive Officer, President and Chief Financial Officer (2) 2021 210,000 - 25,936 235,936 Jimmy JD Reedy 2022 118,000 - 118,000 Chief Operating Officer Banner Midstream 2021 118,000 - 389,000 507,000 Jay Puchir 2022 - - - - - - - - Former Chief Executive Officer of Banner Midstream (1) (3) 2021 - - - - - - - - (1) For amounts paid, earned or accrued for services provided to Ecoark and paid or payable by Ecoark, see below under Ecoark Compensation Information. (2) Mr. DiBella resigned as officer of the Company effective September 6, 2022 and as a director of the Company on October 10, 2022. (3) Mr. Puchir resigned as an officer of Banner Midstream on September 20, 2022. Table of Contents Ecoark Compensation Information Until September 2022, the Named Executive Officers below were solely compensated by Ecoark. Beginning November 15, 2022, the additional compensation for Mr. Galla over his Ecoark salary has been allocated to Wolf Energy. The following is an overview of amounts paid to or accrued or earned by each of the Named Executive Officers as of March 31, 2022 by Ecoark: Jimmy Galla: 2022: $120,000 in salary and $40,000 in bonuses for a total of $160,000. 2021: $84,167 in salary and $30,000 in bonuses for a total of $114,167. Jay Puchir: 2022: $238,333 in salary and $625,000 in stock awards. 2021: $183,750 in salary. Outstanding Equity Awards at Fiscal Year End As of March 31, 2022, we did not have outstanding any unexercised options, stock or other equity incentive plan awards that were held by our Named Executive Officers. Equity Compensation Plan Information The following table contains information about the Company's outstanding equity awards as of March 31, 2022. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by stockholders: - - - - - - Equity compensation not approved by stockholders (1) 40,000 $ 0.25 - Total 40,000 $ 0.25 - (1) Represents stock options not granted under any existing equity compensation plans. Table of Contents Agreements with Executive Officers On November 15, 2022 the Company entered into a five year Employment Agreement with Jimmy Galla, the Company s Chief Executive Officer and Chief Financial Officer. Mr. Galla will receive an annual base salary of $250,000, or $210,000 for services as only the Chief Financial Officer of the Company. In addition to the annual base salary, Mr. Galla shall be eligible to earn an annual bonus of up to 100% of the annual base salary based on terms and conditions, including the financial performance of the Company, as well as individual performance goals, as set forth in a bonus plan that is to be determined by the Company s Board of Directors. Pursuant to the Employment Agreement, Mr. Galla also received a grant of 10,000,000 shares of restricted common stock pursuant to Restricted Stock Units. The shares of restricted stock shall vest in 20 equal quarterly increments based on 5% or 500,000 shares vesting each fiscal quarter, beginning on the first fiscal quarter anniversary on December 31, 2022, subject to continued employment on each applicable vesting date. In addition, in the event the Employment Agreement is terminated by Mr. Galla for Good Reason or upon a Change of Control (as such terms are defined under the agreement) or at the end of the term after the Company provides notice of non-renewal, the grant shall fully vest. The Employment Agreement contains customary non-compete and confidentiality provisions. In addition, pursuant to the Employment Agreement the Company and Mr. Galla entered into an Indemnification Agreement. The Company compensates JD Reedy, the Chief Operating Officer of Banner Midstream under an oral agreement whereby Mr. Reedy receives an annual base salary of $118,000 for services as the Chief Operating Officer of Banner Midstream Corp. Director Compensation Our Board compensation plan effective for non-management directors prior to the Exchange consisted of a $1,000 monthly cash payment. The Company currently does not compensate its directors. Equity Incentive Plans The Company has not adopted any equity incentive plan. Table of Contents MARKET FOR REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information Our common stock issued is quoted on the OTCQB under the symbol WOEN. On March 8, 2023, the last reported sale price of our common stock on the OTCQB was $0.02. Stockholders As of March 10, 2023, there were an estimated 795 holders of record of our common stock. A total of 8,459,072 shares of common stock are held in street name and are held by additional beneficial owners. Dividends We have never paid a cash dividend on our common stock since inception. The payment of dividends may be made at the discretion of our Board, and will depend upon, but not limited to, our operations, capital requirements, and overall financial condition. We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the Board may consider relevant. We intend to follow a policy of retaining all of our earnings to finance the development and execution of our strategy and the expansion of our business. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates. Table of Contents RELATED PARTY TRANSACTIONS Set forth below is a brief description of the Banner Midstream (and us since September 7, 2022) transactions since April 1, 2020 in excess of the lesser of $120,000 and one percent of the average of the Company s total assets at year-end for the last two completed fiscal years, in which we or Banner Midstream was a participant and in which any director or executive officer of the Company, any known 5% or greater stockholder of the Company or any immediate family member of any of the foregoing persons, had a direct or indirect material interest as defined in Item 404(a) of Regulation S-K. As permitted by the SEC rules, discussion of employment relationships or transactions involving the Company s executive officers and directors, and compensation solely resulting from such employment relationships or transactions, or service as a director of the Company, as the case may be, has been omitted to the extent disclosed in the sections of this Prospectus titled Executive Compensation or Director Compensation , as applicable. Pursuant to the Exchange on August 23, 2022, Wolf Energy Services Inc. (formerly Enviro) issued John A. DiBella and Raynard Veldman 6% unsecured convertible promissory notes in the principal amount of $815,565 and $90,000, respectively, convertible at the option of the holder at $0.015 per share, with a maturity date of 12 months from the Exchange in satisfaction of all of their accrued payroll and consulting fees and Mr. Veldman s advances to the Company prior to the Exchange. On December 29, 2022, $60,000 of Mr. DiBella s note has been converted into 4,000,000 shares of common stock. In addition, at the closing of the Exchange the Company issued John A. DiBella a 6% unsecured promissory note in the principal amount of $139,000, as amended, in satisfaction of Mr. DiBella s advances to the Company prior to the Exchange. Jimmy R. Galla, our chief executive officer and chief financial officer, currently serves as Chief Accounting Officer of Ecoark, our largest shareholder. Banner Midstream historically relied upon advances from Ecoark which totaled $ 8,777,545 and $ 6,614,217 respectively, on March 31, 2022, and 2021. There was no interest charged on this amount. The sum due on September 7, 2022 was reclassified to additional paid in capital as a contribution upon entering into the share exchange agreement with Wolf Energy. PRINCIPAL STOCKHOLDERS The following table sets forth certain information with respect to the beneficial ownership of our common stock as of the date of this Prospectus for: each of our directors; each of our executive officers; all of our current directors and executive officers as a group; and each person, entity or group, who beneficially owned more than 5% of each of our classes of securities. For the pre-Offering and post-Offering columns, we have based our calculations of the percentage of beneficial ownership on 78,268,332 shares of our common stock outstanding as of March 10, 2023. This amount does not give effect to any exercises, conversions or delivery under any options, warrants, notes, restricted sock units or other derivative instruments ( Derivative Securities ). We have deemed shares of our common stock subject to Derivative Securities that are currently exercisable, convertible or deliverable into shares of common stock within 60 days of the date of this Prospectus to be outstanding and to be beneficially owned by the person holding the Derivative Securities for the purpose of computing the percentage ownership of that person. Unless otherwise indicated, the principal business address for each of the individuals and entities listed below is our offices in 408 State Hwy 135N, Kilgore, Texas 75662. The information provided in the table is based on our records, and information provided to us, except where otherwise noted. The post-Offering shares beneficially owned and percentages give effect to the distribution of Spin-Off Shares to the extent disclosed in this Prospectus. Name Shares of Common Stock Beneficially Owned Pre-Offering Percentage of Common Stock Beneficially Owned Post- Offering Beneficial Ownership of Common Stock Post-Offering Percentage of Common Stock Beneficially Owned Directors and Named Executive Officers: Jimmy R. Galla (1) 1,000,000 1.3 % 1,000,000 1.3 % Jimmy JD Reedy (2) 0 --- 0 --- All directors and executive officers as a group (2 persons) (1) 1,000,000 1.3 % 1,000,000 1.3 % 5% Stockholders: John A. DiBella (3) 60,876,848 47.3 % 60,876,848 47.3 % Raynard Veldman (4) 8,156,576 9.7 % 8,156,576 9.7 % Ecoark Holdings, Inc. (5) 51,987,832 66.4 % 0 --- Table of Contents (1) Jimmy R. Galla, our Chief Executive Officer, also currently serves as Chief Accounting Officer of Ecoark. Mr. Galla disclaims any beneficial ownership in the shares held by Ecoark. Includes 500,000 shares of unissued restricted common stock which vested on December 31, 2022 and 500,000 shares of restricted common stock which vest on March 31, 2023 issued pursuant to Restricted Stock Units Agreement dated December 8, 2022 (the RSUs ). Excludes 9,000,000 restricted shares subject to vesting under the RSUs, which vest in equal quarterly increments on the last day of each calendar quarter, subject to Mr. Galla s continued employment with the Company. (2) Mr. Reedy is a director of the Company and Chief Operating Officer of Banner Midstream Corp., a wholly owned subsidiary of the Company. (3) Mr. DiBella is the sole officer of Florida Precision Aerospace, Inc., a wholly owned subsidiary of the Company. Includes 60,000 shares held by his minor children. Also includes up to 50,371,000 shares of common stock issuable upon conversion of a 6% unsecured convertible promissory note in the principal amount of $755,656. Address is 1543 Deer Path, Mountainside, NJ 07092. (4) Includes up to 6,000,000 shares of common stock issuable upon conversion of a 6% unsecured convertible promissory note in the principal amount of $90,000. Also includes shares of common stock held by Veldman Consulting Group, an entity in which Mr. Veldman services as sole officer and is the sole shareholder. Address is P.O. Box 841, Bellaire, TX 77402 (5) Randy May is the Chief Executive Officer of Ecoark and may be deemed to beneficially own the shares held by Ecoark. DESCRIPTION OF OUR SECURITIES Capital Stock Our authorized capital stock consists of 1,000,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of blank check preferred stock, par value $0.001 per share. As of the date of this Prospectus, 78,268,332 shares of our common stock and no shares of preferred stock were issued and outstanding. The following description summarizes the material terms of our securities. Because it is only a summary, it may not contain all the information that is important to you. For a complete description, you should refer to our Articles of Incorporation, as amended, and our Bylaws, each of which are filed as an exhibit to the Registration Statement of which this Prospectus is a part, and to the applicable provisions of Florida law, including Chapter 607 of the Florida Business Corporation Act (the FBCA ). Common Stock Voting Rights Holders of our common stock are entitled to one vote for each share held on all matters properly submitted to a vote of stockholders on which holders of common stock are entitled to vote. Our Articles of Incorporation do not provide for cumulative voting with respect to the election of directors. The directors are elected by a plurality of the votes cast at the election. Dividend Rights Subject to applicable law and to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our Board, in its discretion, determines to declare and pay dividends and then only at the times and in the amounts that our Board may determine. Table of Contents Liquidation Rights If the Company becomes subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock. Other Rights and Preferences The holders of the common stock have no preemptive, conversion or subscription rights, and there is no redemption or sinking fund provisions applicable to the common stock. The rights, preferences, and privileges of the holders of the common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that the Board may designate and issue in the future. Preferred Stock Our board of directors, without further shareholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. The rights, preferences, limitations and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and other matters. Our board of directors may authorize the issuance of preferred stock, which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our board of directors can fix limitations and restrictions, if any, upon the payment of dividends on both classes of our common stock to be effective while any shares of preferred stock are outstanding. Options The Company has issued and outstanding options to purchase up to 40,000 shares of common stock, exercisable at $0.25 per share. The options expire November 2023. Anti-Takeover Effects of Certain Provisions of our Articles of Incorporation and Bylaws Our Articles of Incorporation and Bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of the Company or changing our Board and management. Set forth below is a summary of certain of these provisions. Blank Check Preferred Stock Under our Articles of Incorporation, the Board may authorize the issuance of one or more series of preferred stock with such rights, preferences and limitations as the Board may determine, including voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes could, under some circumstances, have the effect of delaying, deferring or preventing a change in control of the Company. Special Meeting Limitations Under our Bylaws, special meetings of the stockholders may be called only by the board of directors or holders of not less than 10% of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. Transfer Agent and Registrar Worldwide Stock Transfer, LLC, with an address of One University Plaza, Suite 505, Hackensack, NJ 07601, acts as the transfer agent with respect to our common stock. Table of Contents LEGAL MATTERS The validity of the securities being offered by this Prospectus will be passed upon for us by Nason, Yeager, Gerson, Harris & Fumero, P.A. EXPERTS The financial statements included in this Prospectus have been audited by RBSM LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION This Prospectus, which constitutes a part of the Registration Statement that we have filed with the SEC under the Securities Act, does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and the securities offered by this Prospectus, you should refer to the Registration Statement and the exhibits filed as part of that document. Statements contained in this Prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the Registration Statement. Each of these statements is qualified in all respects by this reference. We will be subject to the reporting requirements of the Exchange Act, and file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings, including the Registration Statement, are publicly available through the SEC s website at www.sec.gov. The information contained in, or that can be accessed through, our website is not part of this Prospectus. Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION We estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We will pay all the expenses with respect to the distribution, and such amounts, with the exception of the SEC registration fee, are estimates. SEC registration fee $ 200 Accounting fees and expenses $ 15,000 Legal fees and expenses $ 25,000 Transfer agent fees and expenses $ 10,000 Miscellaneous $ 1,000 Total $ 51,200 INDEMNIFICATION OF DIRECTORS AND OFFICERS The Florida Business Corporation Act permits the indemnification of directors, employees, officers and agents of Florida corporations. Our articles of incorporation, as amended, and our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by the Florida Business Corporation Act. The provisions of the Florida Business Corporation Act that authorize indemnification do not eliminate the duty of care of a director, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Florida law. In addition, each director will continue to be subject to liability for: violations of criminal laws, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful, deriving an improper personal benefit from a transaction, voting for or assenting to an unlawful distribution, and willful misconduct or conscious disregard for our best interests in a proceeding by or in the right of a shareholder. The statute does not affect a director s responsibilities under any other law, such as the federal securities laws. The effect of the foregoing is to require our company to indemnify our officers and directors for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. II-1 Table of Contents RECENT SALES OF UNREGISTERED SECURITIES Other than as set forth below, we did not sell any equity securities within the past three years that were not registered under the Securities Act of 1933, as amended (the Act ). On June 9, 2020, the holders of outstanding options to purchase 13,365,000 shares of common stock of the Company exercised such options in accordance with their terms. Exercising option holders included John A. DiBella, our former Chief Executive Officer and former member of the Board of Directors, Raynard Veldman, a former member of the Board of Directors and Adele DiBella, a principal shareholder, among other option holders. The total exercise price of $133,650 was offset by a reduction in the amounts owed to certain of the exercising option holders. The option holders were either accredited or sophisticated investors who had access to business and financial information on our Company, and the issuances were exempt from registration under the Securities Act of 1933, as amended, in reliance on exemptions provided by Section 3(a)(9) of the Act. On December 30, 2021, Mr. DiBella and Mr. Veldman entered into conversion agreements with the Company and agreed to accept a portion of their accrued salary and consulting fees, respectively, in shares common stock of the Company at a price of $0.25 per share, which reflects a price per share of 127% above the December 29, 2021 closing stock price of $0.11. Pursuant to the conversion agreements the Company issued an aggregate of 620,000 shares of restricted common stock in satisfaction of an aggregate of $155,000 of accrued salary and consulting fees payable to Mr. DiBella and Mr. Veldman. The issuances were exempt from registration under the Securities Act of 1933, as amended, in reliance on an exemption provided by Section 4(a)(2) of the Act. Effective September 6, 2022, the Company completed a Share Exchange Agreement with Banner Midstream Corp., a Delaware corporation ( Banner Midstream ) and Ecoark Holdings, Inc., a Nevada corporation, and the sole shareholder of Banner Midstream. The Company acquired 100% of the issued and outstanding shares of Banner Midstream in exchange for 51,987,832 shares of the Company s common stock. The issuance of the 51,987,832 shares of the Company s common stock described above is exempt from registration under Section 4(a)(2) of the Act. On August 23, 2022, the Company issued Mr. DiBella and Mr. Veldman 6% unsecured convertible promissory notes in the principal amount of $815,565 and $90,000, respectively, convertible at the option of the holder at $0.015 per share, with a maturity date of September 6, 2023 in satisfaction all of their accrued payroll and Mr. Veldman s advances to the Company (the Payroll Notes ). The issuances of the Payroll Notes are exempt from registration under Section 4(a)(2) of the Act. In addition, on September 6, 2022 the Company issued Mr. DiBella a 6% unsecured promissory note in the principal amount of $139,000, in satisfaction of Mr. DiBella s advances to the Company with a maturity date of December 6, 2022 (the Short Term Note ). The issuance of the Short-Term Note was exempt from registration under Section 4(a)(2) of the Act. Effective December 29, 2022 Mr. DiBella converted $60,000 of the principal amount of the Payroll Note for 1,000,000 shares of restricted common stock pursuant to the conversion terms of the Payroll Note (the Conversion Shares ), reducing the principal amount under the Payroll Note to $755,565. The issuance of the Conversion Shares was not registered under the Securities Act of 1933, as amended, in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act, in that (a) the Conversion Shares are being issued in connection with the partial conversion of the Payroll Note; (b) there was no additional consideration of value being delivered by Mr. DiBella in connection with the conversion; and (c) there are no commissions or other remuneration being paid by the Company in connection with the conversion. The Conversion Shares contain a legend restricting their transferability absent registration or applicable exemption. On November 15, 2022 the Company granted Jimmy Galla, the Company s Chief Executive Officer and Chief Financial Officer 10,000,000 shares of restricted common stock pursuant to a Restricted Stock Award pursuant to his Employment Agreement dated November 15, 2022. The restricted Stock Award was issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Act. On December 8, 2022, the Company and Jimmy Galla, the Company s Chief Executive Officer and Chief Financial Officer, agreed to cancel the Restricted Stock Awards dated November 15, 2022 granting Mr. Galla 10,000,000 shares of restricted common stock in exchange of an equal amount of Restricted Stock Units ( RSUs ) under a Restricted Stock Unit Agreement dated December 8, 2022. The RSUs are issued pursuant to the Employment Agreement by and between the Company and Mr. Galla dated November 15, 2022. The RSUs vest in 20 equal quarterly increments on the last day of each calendar quarter, beginning with December 31, 2022, subject to continued employment on each applicable vesting date. The RSUs were issued pursuant to the exemption from registration provided under Section 3(a)(9) of the Act and contain a legend restricting their transferability absent registration or applicable exemption. II-2 Table of Contents EXHIBITS Item 6. Exhibits Incorporated by Reference Filed or No. Exhibit Description Form Date Filed Exhibit Number Furnished Herewith 2.1 Share Exchange Agreement dated August 23, 2022 by and among Enviro Technologies U.S., Inc., Banner Midstream Corp. and Ecoark Holdings, Inc.* 8-K 8/29/2022 2.1 3.1 Certificate of Domestication and Articles of Incorporation filed in the State of Florida 8-K 12/28/20 3(v) 3.1(a) Articles of Amendment to Articles of Incorporation effective January 17, 2023 forward stock split 8-K 1/17/23 3.1 3.1(b) Articles of Amendment to Articles of Incorporation name change 8-K 2/1/23 3.1 3.2 Bylaws 10-K 3/31/21 3(ii) 5.1 Opinion of Nason, Yeager, Gerson, Harris & Fumero, P.A. Filed 10.1 Restricted Stock Unit Agreement by and between the Company and Jimmy Galla dated December 8, 2022+ 8-K 12/12/22 10.1 10.2 Employment Agreement by and between the Company and Jimmy Galla dated November 15, 2022+ 8-K 11/17/22 10.1 10.3 Indemnification Agreement by and between the Company and Jimmy Galla dated November 15, 2022+ 8-K 11/17/22 10.2 10.4 6% Unsecured Convertible Promissory Note dated August 23, 2022 payable to John A. DiBella 8-K 8/29/22 10.1 10.5 6% Unsecured Convertible Promissory Note dated August 23, 2022 payable to Raynard Veldman 8-K 8/29/22 10.2 10.6 6% Unsecured Promissory Note effective September 6, 2022 payable to John A. DiBella 8-K/A 9/12/22 10.3 10.7 Lease Agreement effective August 1, 2022 Filed 16.1 Letter from Liggett & Webb P.A. dated September 23, 2022 8-K 9/23/22 16.1 21.1 List of Subsidiaries Filed 23.1 Consent of RBSM LLP Filed 23.2 Consent of Nason, Yeager, Gerson, Harris & Fumero, P.A. (1) Furnished (1) 101.INS Inline XBRL Instance Document. Filed 101.SCH Inline XBRL Taxonomy Extension Schema Document. Filed II-3 Table of Contents 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. Filed 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. Filed 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. Filed 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. Filed 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Filed 107 Exhibit filing fees Filed (1) Contained in Exhibit 5.1 * Certain schedules and other attachments have been omitted. The Company undertakes to furnish the omitted schedules and attachments to the Securities and Exchange Commission upon request. + Management contract or compensatory plan or arrangement. UNDERTAKINGS (9) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any acts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement); and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2023/CIK0001062128_manuka-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2023/CIK0001062128_manuka-inc_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..0d0c52ac3c17504bff09bb102121b27d12a6b8b7 --- /dev/null +++ b/parsed_sections/prospectus_summary/2023/CIK0001062128_manuka-inc_prospectus_summary.txt @@ -0,0 +1,168 @@ +PROSPECTUS +SUMMARY + + + + + +This +summary highlights certain information contained in other parts of this prospectus. Because it is a summary, it does not contain all of +the information that you should consider in making your investment decision. Before investing in our Common Stock, you should read the +entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the +information set forth under the headings Risk Factors , Cautionary Note Regarding Forward-Looking Statements +and Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial data and +related notes. You should carefully read the documents incorporated by reference herein, which are described under Where You Can +Find More Information . + + + + +Company +Overview + + + +Until January 10, 2019, +we were engaged in the development of agents for the prevention and treatment of severe and potentially life-threatening infectious diseases. +On January 10, 2019, we received a notice regarding the immediate termination of a certain license agreement, dated May 31, 2016 (the + License Agreement ), executed by and between the Company, Hadasit Medical Research Services and Development Ltd. and the +Hong Kong University of Science and Technology R and D Corporation Limited. We relied primarily on the License Agreement with respect +to the development of Artemisone, our former lead product candidate. Upon the termination of the License Agreement, the Company ceased +having an operating business. + + + + + + From January 10, 2019 to June +30, 2022, we had no business operations and have been classified as a shell company, as such term is defined in Rule 405 +of the Securities Act and Rule 12b-2 of the Exchange Act. + + + + +On +March 6, 2022, we signed a Share Exchange Agreement, as amended (the Share Exchange Agreement ), with Manuka Ltd., a limited +liability company organized under the laws of the State of Israel, having an office for the transaction of business at 3 Eliezer Vardinon +St., Petach Tikva, 4959507, Israel ( Manuka ), pursuant to which Manuka became our wholly owned subsidiary. As the shareholders of +Manuka Ltd. received the largest ownership interest in the Company, Manuka Ltd. was determined to be +the accounting acquirer in the reverse recapitalization. As a result, the historical financial statements of +the Company were replaced with the financial statement of Manuka Ltd. for all periods presented, except for the adjustments +to reflect the legal capital of the Company. The transactions contemplated by the Share Exchange Agreement closed on June 30, 2022 (the + Closing ) and following the Closing, we adopted the business of Manuka. Pursuant to the terms of the Share Exchange Agreement, +we acquired all of the outstanding shares of Manuka (the Manuka Shares ) from Manuka s shareholders in exchange for +an aggregate amount of 33,791,641 shares of our Common Stock of and 110,000 shares of our Series D Preferred stock (convertible into 66,000,000 +shares of our Common Stock) (collectively, the Consideration Shares ), such that Manuka s shareholders held, immediately +following the closing, eighty-nine percent (89%) of our issued and outstanding share capital (including and assuming the full conversion +of the Series D Preferred stock). + + + +In addition, on June 30, 2022, we entered +into various debt forgiveness agreements with various existing stockholders, including Tonak Ltd. (formerly our largest shareholder), +for the forgiveness of an aggregate of $306,117 in outstanding debt in exchange for the issuance of 3,031,567 shares of our Common Stock. +On June 30, 2022, we entered into various warrant exchange agreements for the exchange of certain warrants to purchase shares of our Common +Stock, originally issued in October 2017, in exchange for an aggregate of 2,342,802 shares of our Common Stock. On June 30, 2022, we entered +into several debt forgiveness agreement and warrant exchange agreements, including: (i) a debt forgiveness agreement with Cutter Mill +Capital LLC, pursuant to which we agreed to issue 894,169 shares of our Common Stock. We also agreed to register all such shares of Common +Stock issued to Cutter Mill Capital, within the earlier of 60 days following the closing date of the Share Exchange Agreement (provided, +however that in the event we have not cleared comments with the SEC with respect to this filing relating to the transactions contemplated +by the Share Exchange Agreement, such date shall be 90 days following the date if the agreement) and the date that we file its next registration +statement, and agreed to obtain effectiveness within 90 days (or 120 days in the event of a full review by the SEC); (ii) a debt forgiveness +agreement with Tonak Ltd., pursuant to which we agreed to issue 1,573,582 shares of our Common Stock; (iii) a debt forgiveness agreement +with Hadasit Medical Research Services and Development Ltd., pursuant to which we agreed to issue 95,256 shares of our Common Stock; (iv) +warrant exchange agreements with Globis Capital Partners, LP and Globis International Investments LLC, pursuant to which we agreed to +issue 1,585,682 and 616,654 shares of our Common Stock, respectively; (v) warrant exchange agreements with Brian M. Culley and Amiad Solomon, +pursuant to which we agreed to issue to each 220,233 shares of our Common Stock; and (vi) an option exchange agreement with Chanan Morris, +pursuant to which we agreed to issue to each 780,934 shares of our Common Stock. + + + + + + +Since +its inception, Manuka s business activities primarily consisted of distributing M nuka honey +imported from New Zealand, developing and distributing supplements aimed at the beauty and skincare markets and, developing and manufacturing +skincare products based on New Zealand s M nuka honey and bee venom, among other natural ingredients. All three segments +of Manuka s products are to be marketed and sold solely on its websites. Manuka's skincare products are manufactured in Israel. + + + +Manuka +was organized under the laws of the State of Israel in March 2020. Manuka is a company with a limited operating history and may contend +with risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets, including capital and growth +expectations as well as fluctuations in operating results and revenues. + + + +The Company is in its early stages and has +limited capital. The Company s net loss totaled $330 thousand for the year ended December 31, 2021, compared to $68 for the period +from March 22, 2020 (Inception) to December 31, 2020. The Company s working capital totaled $305 thousand for the year ended December +31, 2021, a negative $4 thousand (deficit) for the period from March 22, 2020 (Inception) to December 31 December 2020 and its burn rate +is $61 thousand per month as of the date of this prospectus. Although the Company raised funds from an outside investor, such amount +is not sufficient to fund its operations for the period of twelve months from the date of approval of the financial statements, which +raises substantial doubts as to the Company s ability to continue as a going concern. Management s plans to alleviate such +doubts are mainly reliant on the following factors: (i) as detailed in our financial reports, one of our major stockholders is committed +and will continue to financially support the Company through December 2023, (ii) the Company plans to raise capital in the near term, +and (iii) based on the Company s current business activity, and according to prior experience, the Company is expected to increase +its sales turnover and become cash positive during the second quarter of 2023. Furthermore, the Company currently has no obligations for +additional support from any other sources such as shareholders, directors, or officers. + + + + + +Manuka s +current products are marketed and sold solely on its website in Israel, www.bmanuka.co.il, and to be marketed and sold +globally at www.bmanuka.com. + + + +Corporate +Information + + + +Our +mailing address is Manuka Ltd, 3 Eliezer Vardinon St., Petach Tikva, Israel 4959507, and our telephone number is +972-77-407-4700. Our +Israeli web site address is www.bmanuka.co.il, and our prospective global web site address +is www.bmanuka.com. The content of our website shall not be deemed incorporated by +reference in this prospectus. + + + +The Company s Common Stock is not listed on any national +stock exchange but is quoted on the OTC Pink under the symbol ATMS. Our management endeavors to establish a public +trading market for our Common Stock on the OTCQB or other trading systems. Currently our trading volume is limited and we are subject +to the Alternative Reporting Standard of the OTC Pink. Until such time as our Common Stock is quoted on the OTCQB or listed on any national +securities exchange or automated interdealer quotation system, the Common Shares covered by this prospectus will be sold by the Selling +Stockholders from time to time at a fixed price of $1.30 per share, representing the average of the high and low prices as reported on +the OTC Pink on December 19, 2022. + + + + + + + + + + + + + + +S +- 3 + + + + + + + + + + +