diff --git a/parsed_sections/prospectus_summary/2013/CIK0000864264_simon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000864264_simon_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that may be important to you. Therefore, you should carefully read this entire prospectus and other documents to which we refer herein before making a decision to invest in our common stock, including the risks discussed under the
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000889930_overland_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000889930_overland_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following is a summary of the information included in this prospectus. This summary does not contain all of the information that you should consider before making an investment decision with respect to our common stock. You should read this prospectus carefully, including the Risk Factors, together with any documents incorporated by reference before investing in our common stock. In this prospectus, unless otherwise indicated or the context otherwise requires, references to Overland, we, company, us, or our refer to Overland Storage, Inc. and its consolidated subsidiaries. Our Company We are a trusted global provider of unified data management and data protection solutions designed to enable small and medium enterprises, or SMEs, distributed enterprises, and small and medium businesses, or SMBs, to anticipate and respond to data storage requirements. Whether an organization s data is locally or globally based, our solutions consolidate and protect data for easy and cost-effective management of different tiers of information. We enable companies to expend fewer resources on information technology, or IT, allowing them to focus on being more responsive to the needs of their customers. We develop and deliver a comprehensive solution set of award-winning products and services for storing data throughout the organization and during the entire data lifecycle. Our SnapScale clustered network attached storage, or NAS products, allow customers to scale-out in capacity and performance as their storage needs grow. Our SnapServer products are unified NAS servers that integrate into businesses requiring simple. expandable block and file storage. Our SnapSAN products are storage area network, or SAN, arrays designed to ensure primary and secondary data is accessible and protected regardless of its location. Our SnapScale , SnapServer and SnapSAN solutions are available with backup, replication and mirroring software in highly scalable configurations. These solutions provide simplified disk-based data protection and maximum flexibility to protect mission critical data for both continuous local backup and remote disaster recovery. Our NEO SERIES and REO SERIES libraries are tape and virtual tape solutions designed to meet the need for cost-effective, reliable data storage for long-term archiving and compliance requirements. Our approach emphasizes long-term investment protection for our customers and reduces the complexities and ongoing costs associated with storage management. Moreover, most of our products are designed with a scalable architecture which enables companies to purchase additional storage as needed, on a just-in-time basis, and make it available instantly without downtime. End users of our products include SMEs, SMBs, distributed enterprise companies such as divisions and operating units of large multi-national corporations, governmental organizations, and educational institutions. Our products are used in a broad range of industries including financial services, video surveillance, healthcare, retail, manufacturing, telecommunications, broadcasting, research and development, and many others. We generate the majority of our revenue from sales of our data protection products. The balance of our revenue is provided by selling maintenance contracts and rendering related services. The majority of our sales are generated from sales of our branded products through a worldwide channel, which includes systems integrators and VARs. Corporate Information We were incorporated in California in 1980 as Overland Data, Inc., and changed our name to Overland Storage, Inc. in 2002. Our principal executive offices are located at 9112 Spectrum Center Boulevard, San Diego, Table of Contents California 92123 and our main telephone number is (858) 571-5555. Our internet address is www.overlandstorage.com. Except for the documents referred to under Where You Can Find Additional Information, which are specifically incorporated by reference into this prospectus, information contained on our website or that can be accessed through our website does not constitute a part of this prospectus. We have included our website address only as an interactive textual reference and do not intend it to be an active link to our website. This Offering Securities being offered: 14,518,830 shares of common stock. Of this amount, up to 10,192,304 shares of common stock are issuable upon the conversion of the Notes and 4,326,526 additional shares of common stock may be issued in the event of interest payments on the Notes in shares. Minimum number of securities to be sold in this offering: None. Common stock outstanding before this offering: 30,032,741(1) Common stock to be outstanding after this offering: 44,551,571(1)(2) Use of proceeds: We will not receive any of the proceeds from the sale or other disposition of the shares of common stock by the selling shareholders. Market for common stock: Our common stock is quoted on The NASDAQ Capital Market under the symbol OVRL. On May 21, 2013, the last reported sale price of our common stock on The NASDAQ Capital Market was $1.15.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0000922011_lustros_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0000922011_lustros_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights important information about this offering and our business. It does not include all information you should consider before investing in our common stock. Please review this prospectus in its entirety, including the risk factors and our financial statements and the related notes, before you decide to invest. Our Company References in this Prospectus to the "Company", "we", "us" or "our" refer to Lustros, Inc., a Utah corporation ("Lustros"), and its consolidated subsidiaries including, Bluestone, S.A, ("Bluestone"), Lustros Chile SpA ("Lustros Chile"), Mineraltus SA ("Mineraltus") and Sulfatos Chile, S.A., ("Sulfatos Chile"). The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this filing. We are a pre-revenue development stage company that intends to market and sell the high quality food-grade copper sulfate obtained by processing copper ores and tailings at Company-owned processing facilities in Chile. On March 9, 2012, Lustros acquired all of the outstanding capital stock and rights to acquire capital stock of Bluestone, S.A. a Chilean corporation ("Bluestone"), in exchange for 60,000,000 shares of its common stock (the "Bluestone Acquisition"). As of the closing, these shares represented 96.7% of Lustros' outstanding common stock. For financial reporting purposes, the Company has treated the Bluestone Acquisition as a reverse acquisition with Bluestone the acquiring entity and Lustros as the acquired entity. As a result, the Company's financial statements reflect the financial information of Bluestone prior to March 9, 2012 and the combined entity on and after March 9, 2012. Because Bluestone commenced operations in January 2012, there are no results of operations for Bluestone prior to that date. On February 15, 2012, Bluestone purchased a 60% equity interest in Sulfatos Chile, S.A. from Santa Teresa Minerals S.A., a Chilean corporation ("Santa Teresa Minerals"). The purchase price for the equity interest was: (a) a 20% interest in Bluestone; (b) $2.2 million, with $1.1 million paid by assumption of a demand loan payable by Santa Teresa Minerals to Angelique de Maison, and the balance of $1.1 million to be paid in monthly installments from time to time upon demand by Santa Teresa Minerals. As of December 31, 2012, the entire purchase price has been paid. On October 16, 2012 Angelique de Maison entered into an agreement with Santa Teresa Minerals pursuant to which Santa Teresa Minerals waived and released any claim to any Equity Interests in Bluestone or Lustros and their affiliated companies, with Bluestone and Lustros Inc. express third party beneficiaries of that waiver and release. As such, Santa Teresa Minerals' 20% interest in Bluestone has been cancelled, and Bluestone is a wholly owned subsidiary of Lustros. This acquisition has been treated as an "asset purchase" for financial reporting purposes. Because the acquisition was between related parties, the purchase price has been allocated to additional paid-in capital and the assets and liabilities were carried over at historical costs. Results of operations for Sulfatos have been reflected in the Company's financial statements from the closing date. On March 25, 2012, the Company sold the assets (including the "Power-Save" name) of its renewable energy and energy savings product business in which it had engaged prior to the Bluestone Acquisition, to the former management of the Company. The purchase price for the assets was the cancellation of obligations for unpaid salaries and other monies owed to prior management and the assumption by the buyer of certain liabilities of the Company related to the Power-Save business. Our Business We will process copper ore at our copper sulfate processing plant in Puerto Oscuro, Chile. We will obtain the copper ore from our 1,325 hectare Anica copper mine or by purchase from local artisanal miners. On July 25, 2013 the Company announced that Sulfatos Chile SpA, had begun pilot production of Pentahydrate Copper Sulfate at its multi-million dollar, state-of-the-art facility. The plant capacity is three times its original design and is capable of processing up to 15,000 tons of mineral per month. It is currently permitted at 5,000 tons per month and permit applications for increased production will be filed very shortly. Current production is expected to result in approximately 529,000 pounds (240,000 kilos) of Pentahydrate Copper Sulfate per month. The current plant capacity of 15,000 tons per month will occur upon receiving permits for unlimited production which we expect to receive in the fourth quarter of 2013 or first quarter of 2014. Cash flow from this first phase is expected to begin in the fourth quarter of 2013 or the first quarter of 2014 and will fund future expansion for an additional 25,000 ton processing plant. The Offering Common stock offered by the selling stockholders: Up to 26,808,386 shares of our common stock, par value $0.001 per share, are being offered by the selling stockholders. Offering prices: The shares offered by this prospectus may be offered and sold at prevailing market prices or such other prices as the selling stockholders may determine. Common stock outstanding: 97,169,346 shares as of December 27, 2013. Dividend policy: Dividends on our common stock may be declared and paid when and as determined by our board of directors. We have not paid and do not expect to pay dividends on our common stock. OTCQB: LSTS Use of proceeds: We are not selling any of the shares of common stock being offered by this prospectus and will receive no proceeds from the sale of the shares by the selling stockholders. All of the proceeds from the sale of common stock offered by this prospectus will go to the selling stockholders at the time they sell their shares.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001098415_eureka_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001098415_eureka_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001166338_ireland_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001166338_ireland_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..32eda68551b7f5e3455202823c30880bc920c7a8
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+S-1/A The information in this prospectus is not complete and may be changed. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUMMARY The following summary may not contain all the information that may be important to you. This Prospectus incorporates important business and financial information about us that is not included in, or delivered with this Prospectus. Before making an investment, you should read the entire Prospectus carefully. You should also carefully read the risks of investing discussed under
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001169652_channeladv_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001169652_channeladv_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..0f9bcde7dca1deec49029916d1489440fdad6415
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case included in this prospectus. Unless the context otherwise requires, we use the terms ChannelAdvisor, company, we, us and our in this prospectus to refer to ChannelAdvisor Corporation and, where appropriate, our consolidated subsidiaries. Company Overview We are a leading provider of software-as-a-service, or SaaS, solutions that enable our retailer and manufacturer customers to integrate, manage and optimize their merchandise sales across hundreds of online channels. Through our platform, we enable our customers to connect with new and existing sources of demand for their products, including e-commerce marketplaces, such as eBay, Amazon and Newegg, search engines and comparison shopping websites, such as Google, Microsoft s Bing, and Nextag, and emerging channels, such as Facebook and Groupon. Our suite of solutions, accessed through a standard web browser, provides our customers with a single, integrated user interface to manage their product listings, inventory availability, pricing optimization, search terms, data analytics and other critical functions across these channels. Our proprietary cloud-based technology platform delivers significant breadth, scalability and flexibility to our customers. In 2012, our customers processed over $3.5 billion in gross merchandise value, or GMV, through our platform. As of September 30, 2013, our customers managed over 130 million stock-keeping units, or SKUs, of their inventory on our platform. We serve customers across a wide range of industries and geographies. As of September 30, 2013, we had over 2,200 customers worldwide, including 27% of the top 500 U.S. Internet retailers, as ranked by Internet Retailer magazine based on 2012 sales, up from 16% of the top 500 U.S. Internet retailers, based on 2007 sales, as of December 31, 2007. Our customers include both traditional and online retailers, such as Ann Taylor, eBags.com, J&R Electronics and Jos. A. Bank Clothiers, as well as manufacturers of consumer goods, such as Dell, Dooney and Bourke, Lenovo, Sony and Under Armour. We derive revenue primarily from subscription fees paid to us by our customers for access to our cloud-based solutions. We generally structure our contracts to include both a fixed subscription fee and a variable subscription fee that allows us to participate in a share of our customers GMV processed through our platform. We believe this contract structure aligns our interests with those of our customers. The e-commerce market has grown significantly over the last several years, as consumers have increasingly shifted their retail purchases from traditional brick and mortar stores to online stores and marketplaces. This trend has created many opportunities for retailers and manufacturers, but at the same time has resulted in additional complexity and challenges. Retailers and manufacturers seeking new avenues to expand their online sales must manage product data and transactions across hundreds of highly fragmented online channels where data attributes vary, requirements change frequently and the pace of innovation is rapid and increasing. In response to these challenges, we offer retailers and manufacturers SaaS solutions that enable them to integrate, manage and optimize their merchandise sales across disparate online channels on a unified platform. As channels frequently update their product information requirements, policies, merchandising strategies and integration specifications, retailers and manufacturers must revise their online business strategies, product listings and attributes, and business rules, which can be resource-intensive and time-consuming. Through our SaaS platform, which is delivered using a single code base and multi-tenant architecture, our customers have real-time access to our most up-to-date capabilities for listing and managing their products on new and existing online channels. From 2010 to 2012, our total revenue increased from $36.7 million to $53.6 million, a compound annual growth rate of 20.9%. Our core revenue increased from $32.7 million in 2010 to $51.2 million in 2012, a compound annual growth rate of 25.1%. Our core revenue excludes revenue attributable to the products from two small acquisitions that we completed prior to 2008 and that are no longer part of our strategic focus, as discussed further in Management s Discussion and Analysis of Financial Condition and Results of Operations Key Operating and Financial Performance Metrics. For the nine months ended September 30, 2013 as compared to the same period in 2012, we grew our total revenue from $37.6 million to $47.5 million, an increase of 26.3%, and our core revenue from $35.8 million to $46.1 million, an increase of 28.8%. Our gross margin, based on total revenue, expanded from 66.8% in 2010 to 72.5% in 2012, and from 71.5% for the nine months ended September 30, 2012 to 72.7% for the nine months ended September 30, 2013. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001355616_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001355616_sungard_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..bf86544b2581f26f37b5017d9c72c042c04fa2af
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you in making your investment decision. You should read the entire prospectus, including the financial data and related notes and section entitled Risk Factors, before making an investment decision. Unless the context otherwise indicates, as used in this prospectus, the terms SunGard, we, our, us, and the company and similar terms refer to SunGard Data Systems Inc. and its subsidiaries on a consolidated basis. Some of the statements in this prospectus constitute forward-looking statements. See Forward-Looking Statements. Our Company We are one of the world s leading software and technology services companies. We provide software and technology services to financial services, education and public sector organizations. We also provide disaster recovery services, managed services, information availability consulting services and business continuity management software. We serve approximately 25,000 customers in more than 70 countries. Our high quality software solutions, excellent customer support and specialized technology services result in strong customer retention rates across all of our business segments and create long-term customer relationships. We operate our business in three segments: Financial Systems ( FS ), Availability Services ( AS ) and Public Sector & Education ( PS&E ), which is comprised of our Public Sector business ( PS ) and our K-12 Education business ( K-12 ). On January 19 and 20, 2012, the Company completed the sale of its Higher Education ( HE ) business, which is included in discontinued operations for purposes of this prospectus. FS provides mission-critical software and technology services to virtually every type of financial services institution, including buy-side and sell-side institutions, third-party administrators, wealth managers, retail banks, insurance companies, corporate treasuries and energy trading firms. Our broad range of complementary software solutions and associated technology services help financial services institutions automate the business processes associated with trading, managing portfolios and accounting for investment assets. AS provides disaster recovery services, managed services, information availability consulting services and business continuity management software to more than 8,000 customers in North America and Europe. With five million square feet of data center and operations space, AS assists IT organizations across virtually all industry and government sectors to prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime. Through direct sales and channel partners, AS helps organizations ensure their people and customers have uninterrupted access to the information systems they need in order to do business. PS&E (PS and K-12) provides software and technology services designed to meet the specialized needs of local, state and federal governments, public safety and justice agencies, public and private schools, utilities, nonprofits and other public sector institutions. We were acquired in August 2005 in a leveraged buy-out ( LBO ) by a consortium of private equity investment funds associated with Bain Capital Partners, The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co., Providence Equity Partners, Silver Lake and TPG (collectively, the Sponsors ). As a result of the LBO, we are highly leveraged and our equity is not publicly traded. Our Sponsors continually evaluate various strategic alternatives with respect to the Company. There can be no assurance that we will ultimately pursue any strategic alternatives with respect to any business segment, or, if we do, what the structure or timing for any such transaction would be. Table of Contents Table of Additional Registrant Guarantors Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices Advanced Portfolio Technologies, Inc. Delaware 22-3245876 340 Madison Avenue 8th Floor New York, NY 10173 Automated Securities Clearance LLC Delaware 22-3701255 545 Washington Blvd. 7th Floor Jersey City, NJ 07310 GL Trade Overseas, Inc. Delaware 06-1414402 340 Madison Avenue New York, NY 10173 Inflow LLC Delaware 84-1439489 680 E. Swedesford Rd. Wayne, PA 19087 Online Securities Processing Inc. Delaware 77-0589377 680 E. Swedesford Rd. Wayne, PA 19087 SIS Europe Holdings LLC Delaware 41-1511643 680 E. Swedesford Rd. Wayne, PA 19087 SRS Development Inc. Delaware 23-2746281 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Ambit LLC Delaware 04-2766162 100 High Street 19th Floor Suffolk, MA 02110 SunGard Asia Pacific Inc. Delaware 51-0370861 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard Availability Services LP Pennsylvania 23-2106195 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Availability Services Ltd. Delaware 23-3024711 680 E. Swedesford Rd. Wayne, PA 19087 SunGard AvantGard LLC California 95-3440473 23975 Park Sorrento 4th Floor Calabasas, CA 91302 SunGard Business Systems LLC Delaware 23-2139612 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Computer Services LLC Delaware 68-0499469 600 Laurel Road Voorhees, NJ 08043 SunGard Consulting Services LLC Delaware 87-0727844 10375 Richmond Suite 700 Houston, TX 77042 SunGard CSA LLC Delaware 20-4280640 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Development Corporation Delaware 23-2589002 680 E. Swedesford Rd. Wayne, PA 19087 Table of Contents Corporate Information SunGard Data Systems Inc. was incorporated under Delaware law in 1982. Our principal executive offices are located at 680 East Swedesford Road, Wayne, Pennsylvania 19087. Our telephone number is (484) 582-2000. Our corporate website is located at www.sungard.com. The information on, or accessible through, our corporate website is not a part of, or incorporated by reference in, this prospectus. Incorporation By Reference The SEC allows us to incorporate by reference the information we file with them into this prospectus. See Incorporation by Reference. Table of Contents Exact Name of Registrant Guarantor as Specified in its Charter State or Other Jurisdiction of Incorporation or Organization I.R.S. Employer Identification Number Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant Guarantor s Principal Executive Offices SunGard DIS Inc. Delaware 23-2829670 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Energy Systems Inc. Delaware 13-4081739 601 Walnut St. Suite 1010 Philadelphia, PA 19106 SunGard eProcess Intelligence LLC Delaware 13-3217303 600 Lanidex Plaza Parsippany, NJ 07054 SunGard Financial Systems LLC Delaware 23-2585361 3 Van de Graff Drive Burlington, MA 01803-5148 SunGard Investment Systems LLC Delaware 23-2115509 377 E. Butterfield Road Suite 800 Lombard, IL 60148 SunGard Investment Ventures LLC Delaware 51-0297001 680 E. Swedesford Road Wayne, PA 19087 SunGard iWORKS LLC Delaware 23-2814630 11560 Great Oaks Way Suite 200 Alpharetta, GA 30022 SunGard iWORKS P&C (US) Inc. Delaware 13-3248040 200 Business Park Dr. Armonk, NY 10504 SunGard Kiodex LLC Delaware 13-4100480 59 Maiden Lane, 32nd Floor New York, NY 10038-4624 SunGard NetWork Solutions Inc. Delaware 23-2981034 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Public Sector Inc. Florida 59-2133858 1000 Business Center Drive Lake Mary, FL 32746 SunGard Reference Data Solutions LLC Delaware 72-1571745 340 Madison Avenue 8th Floor New York, NY 10173 SunGard SAS Holdings Inc. Delaware 26-0052190 680 E. Swedesford Rd. Wayne, PA 19087 SunGard Securities Finance LLC Delaware 13-3799258 14 Manor Parkway Salem, NH 03079 SunGard Securities Finance International LLC Delaware 13-3809371 14 Manor Parkway Salem, NH 03079 SunGard Shareholder Systems LLC Delaware 23-2025519 2300 Main Street Suite 400 Kansas City, MO 64108 SunGard Software, Inc. Delaware 51-0287708 680 E. Swedesford Road Wayne, PA 19087 SunGard Systems International Inc. Pennsylvania 23-2490902 340 Madison Avenue 8th Floor New York, NY 10173 Table of Contents The Notes The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The sections captioned Description of Senior Notes Due 2018, Description of Senior Notes Due 2020 and Description of Senior Subordinated Notes in this prospectus contain a more detailed description of the terms and conditions of the notes. Issuer SunGard Data Systems Inc. Securities Offered 7 3/8% Senior Notes due 2018. 7 5/8% Senior Notes due 2020. 6.625% Senior Subordinated Notes due 2019. Maturity The senior notes due 2018 mature on November 15, 2018. The senior notes due 2020 mature on November 15, 2020. The senior subordinated notes mature on November 1, 2019. Interest Rate The senior notes due 2018 bear interest at a rate of 7 3/8% per annum. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum. The senior subordinated notes bear interest at a rate of 6.625% per annum. Interest Payment Dates We pay interest on the senior notes due 2018 and the senior notes due 2020 on May 15 and November 15 and on the senior subordinated notes on May 1 and November 1. Interest accrues from the most recent date to which interest has been paid or, if no interest has been paid, the issue date of the notes. Guarantees Each of our 100% owned domestic subsidiaries that guarantees the obligations under our senior secured credit facilities are initially jointly and severally, fully and unconditionally guaranteeing the senior notes on a senior unsecured basis and the senior subordinated notes on an unsecured senior subordinated basis. Ranking The senior notes are our senior unsecured obligations and: rank senior in right of payment to our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including the senior subordinated notes; rank equally in right of payment to all of our existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of our existing and future secured debt including obligations under our senior secured credit facilities and the 4.875% senior notes due 2014 (referred to in this prospectus as the senior secured notes ), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior notes. Table of Contents Similarly, the guarantees of the senior notes are senior unsecured obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior notes, including such guarantor s guarantee under the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior notes. The senior subordinated notes are our unsecured senior subordinated obligations and: rank senior in right of payment to our existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to any or all of our future senior subordinated debt; are subordinated in right of payment to all of our existing and future senior debt (including our senior secured credit facilities, the senior secured notes and the senior notes); and are effectively subordinated in right of payment to all of our existing and future secured debt (including our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of each of our subsidiaries that is not a guarantor of the senior subordinated notes. Similarly, the guarantees of the senior subordinated notes are unsecured senior subordinated obligations of the guarantors and: rank senior in right of payment to all of the applicable guarantor s existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes; rank equally in right of payment to all of the applicable guarantor s existing and future senior subordinated debt; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 31, 2013 PRELIMINARY PROSPECTUS SunGard Data Systems Inc. 7 3/8% Senior Notes due 2018 7 5/8% Senior Notes due 2020 6.625% Senior Subordinated Notes due 2019 The 7 3/8% Senior Notes due 2018 (the senior notes due 2018 ) were issued in exchange for the 7 3/8% Senior Notes due 2018 originally issued on November 16, 2010. The 7 5/8% Senior Notes due 2020 (the senior notes due 2020) were issued in exchange for the 7 5/8% Senior Notes due 2020 originally issued on November 16, 2010. The 6.625% Senior Subordinated Notes due 2019 (the senior subordinated notes ) were issued in exchange for the 6.625% Senior Subordinated Notes due 2019 originally issued on November 1, 2012. The senior notes due 2018, the senior notes due 2020 (collectively, the senior notes ) and the senior subordinated notes are collectively referred to herein as the notes, unless the context otherwise requires. The senior notes due 2018 bear interest at a rate of 7 3/8% per annum and mature on November 15, 2018. The senior notes due 2020 bear interest at a rate of 7 5/8% per annum and mature on November 15, 2020. Interest on the senior notes due 2018 and the senior notes due 2020 is payable on May 15 and November 15 of each year, beginning November 15, 2011. The senior subordinated notes bear interest at a rate of 6.625% per annum and mature on November 1, 2019. Interest on the senior subordinated notes due 2019 is payable on May 1 and November 1 of each year, beginning on November 1, 2013. We may redeem some or all of the notes at any time at the redemption prices set forth in this prospectus. The senior notes are our senior unsecured obligations and rank equal in right of payment to all of our existing and future senior indebtedness. The senior subordinated notes are our unsecured senior subordinated obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including the senior secured credit facilities, the existing senior notes and the senior notes offered hereby. Each of our 100% owned domestic subsidiaries that guarantees our senior secured credit facilities are initially unconditionally guaranteeing the senior notes with guarantees that rank equal in right of payment to all of the senior indebtedness of such subsidiary, and are initially unconditionally guaranteeing the senior subordinated notes with guarantees that are subordinated in right of payment to all existing and future senior indebtedness of such subsidiary. The notes and the guarantees are effectively subordinated to our existing and future secured indebtedness and that of the guarantors to the extent of the assets securing such indebtedness. This prospectus includes additional information on the terms of the notes, including redemption and repurchase prices, covenants and transfer restrictions. See Risk Factors beginning on page 11 for a discussion of certain risks that you should consider before investing in the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and other affiliates of The Goldman Sachs Group, Inc. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Such affiliates of The Goldman Sachs Group, Inc. may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2013. Table of Contents are subordinated in right of payment to all of the applicable guarantor s existing and future senior debt (including such guarantor s guarantee under our senior secured credit facilities, the senior secured notes and the senior notes) and other obligations that are not, by their terms, expressly subordinated in right of payment to the senior subordinated notes; and are effectively subordinated in right of payment to all of the applicable guarantor s existing and future secured debt (including such guarantor s guarantee under our senior secured credit facilities and the senior secured notes), to the extent of the value of the assets securing such debt, and are structurally subordinated to all obligations of any subsidiary of a guarantor if that subsidiary is not also a guarantor of the senior subordinated notes. As of March 31, 2013, (1) the notes and related guarantees ranked effectively junior to approximately $3,949 million of senior secured indebtedness (which includes $250 million face amount of our senior secured notes that are recorded at $247 million and $200 million under our receivables facility which is secured by accounts receivable of our subsidiaries that participate in the facility), (2) the senior notes and related guarantees ranked senior to the $1,000 million of senior subordinated notes, (3) the senior subordinated notes and related guarantees ranked junior to the senior indebtedness under the senior secured credit facilities, the senior secured notes, the senior notes, the receivables facility and $13 million of payment obligations relating to foreign bank debt and capital lease obligations, all of which totaled approximately $5,562 million, (4) we had an additional $828 million of unutilized capacity under our revolving credit facility, after giving effect to certain outstanding letters of credit and (5) our non-guarantor subsidiaries had approximately $211 million (of the $5,562 million described above), which relates to the receivables facility and payment obligations relating to foreign bank debt and capital lease obligations. Optional Redemption Prior to November 15, 2013, we have the option to redeem the senior notes due 2018, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2018 Optional Redemption. Beginning on November 15, 2013, we may redeem some or all of the senior notes due 2018 at the redemption prices listed under Description of Senior Notes Due 2018 Optional Redemption plus accrued and unpaid interest on the senior notes due 2018, if any, to the date of redemption. Prior to November 15, 2015, we have the option to redeem the senior notes due 2020, in whole or in part, at a price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium, as described under Description of Senior Notes due 2020 Optional Redemption. Table of Contents You should rely only on the information contained in this prospectus or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information from that contained in, or incorporated by reference into, this prospectus. The prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained or incorporated by reference herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus or incorporated by reference into this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date. TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001401670_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001401670_american_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..12a85783cd70176b75947f004c07708e5cfe693c
--- /dev/null
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our, us, or Dakota refer to Dakota Gold Corp., unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Corporate Background We were incorporated under the laws of the State of Florida on October 27, 2006 under the name Coastline Corporate Services, Inc. We were established to provide services to public companies requiring guidance and assistance in converting and filing their documents with the U.S. Securities and Exchange Commission. We were unable to raise sufficient capital to operate this business profitably and underwent a change of control and a number of changes in management. On August 17, 2012 we executed a property option agreement (the Agreement ) with MinQuest, Inc. ( MinQuest ) granting us the right to acquire 100% of the mining interests of a Nevada mineral exploration property currently controlled by MinQuest. The property known as the Crescent Fault Property is located in Eureka County, Nevada and currently consists of 33 unpatented claims (the Property ). Under the Agreement we are required to make aggregate option payments of $860,000 and incur certain property exploration expenditures of $3,100,000 by August 17, 2021. Herb Duerr, our principal executive officer, is also a Vice President of MinQuest. We are currently an exploration-stage company as defined by the U.S. Securities and Exchange Commission ( SEC ) and we are in the business of exploring and if warranted, advancing certain unpatented mineral properties to the discovery point where we believe maximum shareholder returns can be realized. Our auditors have issued an audit opinion which includes a statement describing substantial doubt about our ability to continue as a going concern. We are dependent upon making a gold deposit discovery at the Property for the furtherance of the Company. Should we be able to make an economic find at the Property, we would then be solely dependent upon the Property mining operation for our revenue and profits, if any. The Property claims presently do not have any mineral resources or reserves. There is no mining plant or equipment located within the property boundaries. Currently, there is no power supply to the mineral claims. The probability that ore reserves that meet SEC guidelines will be discovered on an individual hard rock prospect at the Property is undeterminable at this time. A great deal of work is required on the Property before a determination as to the economic and legal feasibility of a mining venture on it can be made. There is no assurance that a commercially viable deposit will be proven through the exploration efforts by us at the Property. We cannot assure you that funds expended on the Property or other properties that we may acquire in the future will be successful in leading to the delineation of ore reserves that meet the criteria established under SEC mining industry reporting guidelines. Current State of Exploration The Property claims presently do not have any mineral resources or reserves. We have begun reviewing the results of the historic drilling and sampling. There is no mining plant or equipment located within the Property boundaries. Currently, there is no power supply to the mineral claims. Our planned program includes compilation of all activities to the present with a follow-up reverse circulation drill program. However, this program is exploratory in nature and no minable reserves may ever be found. The Offering: Securities Being Offered Up to 30,000,000 shares of common stock, par value $0.001, with no minimum Offering Price $0.01 per share Securities Issued 2,345,998 shares of our common stock are issued and outstanding as of the date of this prospectus. Securities Issued After This Offering 32,345,998 shares issued and outstanding if we sell all 30,000,000 shares being offered hereby Market for the Common Shares Our common stock is traded on the Over The Counter Bulletin Board ( OTCBB ) under the symbol DAKO. To date there has only been a very limited trading market for our securities. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of Proceeds We intend to use the net proceeds of this offering for undertaking a drill program on our Property and for general corporate purposes. Termination of the Offering The earlier of: (i) the date when the sale of all 30,000,000 shares is completed, or (ii) 180 days from the effective date of this registration statement, which date may be extended by us in our discretion for an additional 90 days. Terms of the Offering Our directors and officers will sell our stock upon effectiveness of this prospectus on a self-underwritten basis. Summary Financial Information The following presents our summary financial information for the periods indicated and should be read in conjunction with the information contained in Management's Discussion and Analysis or Plan of Operations and our financial statements and related notes appearing elsewhere in this prospectus. Statement of Operations Data Six Months Ended October 31, 2012 (unaudited) Year Ended April 30, 2012 Year Ended April 30, 2011 Period from August 1, 2010 (inception of exploration stage) to October 31, 2012 (unaudited) Operating revenues $ - $ - $ - $ - Income (loss) from operations $ (27,077 ) $ (96,705 ) $ (83,452 ) $ (137,340 ) Net income (loss) $ (34,433 ) $ (96,705 ) $ (83,452 ) $ (202,479 ) Balance Sheet Data October 31, 2012 April 30, 2012 April 30, 2011 Working capital $ (82,715 ) $ (48,282 ) $ (51,577 ) Total assets $ 27,968 $ 39,154 $ 31,556 Total liabilities $ 110,683 $ 87,346 $ 81,133 Stockholders (Deficit) Equity $ (82,715 ) $ (48,282 ) $ (51,577 )
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001408351_cardinal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001408351_cardinal_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..26010c74c82ba6ec5c82942f33c197aa8fd90885
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@@ -0,0 +1,46 @@
+PROSPECTUS SUMMARY
+
+ 
+
+This summary highlights certain information
+contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing
+in our common stock. You should carefully read the entire prospectus, including the section entitled "Risk Factors"
+and our financial statements and related notes, before you decide whether to invest in our common stock. If you invest in our common
+stock, you are assuming a high degree of risk. See the section entitled "Risk Factors." References to "our,"
+"our company," "us," or "the Company" refer to Cardinal Energy Group, Inc. and its subsidiaries,
+unless the context indicates otherwise.
+
+ 
+
+About Us
+
+ 
+
+We were incorporated
+in the State of Nevada on January 19, 2007 under the name Koko Ltd. for the purpose of developing, manufacturing and
+selling a steak timer. On September 28, 2012, we changed the focus of our business when we acquired all of the ownership
+interests of Cardinal Energy Group, LLC, an Ohio Limited Liability Company which is engaged in the business of exploring,
+purchasing, developing and operating oil and gas leases. We changed our name to Cardinal Energy Group, Inc. on October 10,
+2012 in connection with this acquisition.
+
+ 
+
+We intend to acquire additional producing and
+non-producing oil and gas properties in future. On July 3, 2013 we completed the acquisition of an 85%
+working interest in producing oil and gas leases located in Shackelford County, Texas known as the Conway-Dawson Leases (the "Conway-Dawson
+Leases") from an unaffiliated third party. We paid $400,000 for the Conway-Dawson Leases, all of which was paid pursuant
+to a 24-month balloon Secured Promissory Note (the "Note") with an annual interest rate of six percent (6%). If we
+pay the Note in full within 90 days of its issuance, the outstanding principal amount of the note and accrued interest shall be
+reduced by 10%. We intend to repay the Note by allocating 40% of the monthly proceeds after the lease operating expenses attributable
+to our working interests are deducted will be paid directly to the seller to reduce the debt under the Note.
+
+ 
+
+We have nominal revenues, have achieved losses
+since inception, have limited operations, have been issued a going concern opinion by our auditors and currently rely upon the
+sale of our securities to fund operations.
+
+ 
+
+We have no plans to change our business activities
+or to combine with another business, and are not aware of any events or circumstances that might cause us to change our plans.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001416436_bausch_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001416436_bausch_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001416436_bausch_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001436304_kythera_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001436304_kythera_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001436304_kythera_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001440770_china_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001440770_china_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ce3f355842e0f709987f92be5cea1128fba97831
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001440770_china_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the Risk Factors section and our consolidated financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Unless the context otherwise requires, the "Company", "we," "us," and "our," refer collectively to (i) China Electronics Holdings, Inc., a Nevada corporation ( China Electronics ), (ii) China Electronic Holdings, Inc., a Delaware corporation ( CEH Delaware ), and (iii) Lu an Guoying Electronic Sales Co., Ltd., a wholly foreign enterprise ( WOFE ), under the laws of the People s Republic of China ( Guoying ). Overview We are a significant retailer of consumer electronics and appliances in certain rural markets in the People s Republic of China (the PRC or China ). Our retail stores operate under the Guoying brand name. Such stores include locations that are owned and operated by us as well as locations that we exclusively franchise pursuant to cooperation agreements that franchisees sign with us. Both our Company-owned stores and our exclusive franchise stores only sell merchandise that we provide to them as their exclusive wholesaler, and such merchandise includes Guoying branded products as well as products from major wholesalers such as Sony, Samsung and LG. In addition to our Company-owned stores and our exclusive franchise stores, we provide Guoying branded merchandise as a wholesaler or distributor to other stores to which we are a non-exclusive wholesaler of consumer electronics and appliances. As of August 23, 2012: o We were the exclusive wholesaler to 306 exclusive franchise stores operating under the Guoying brand name and provide merchandise to 296 stores in total located in Anhui province; o We provided Guoying branded merchandise as well as merchandise from well known companies including Sony, Samsung and LG to 176 non-exclusive stores; and o We owned 2 stores both of which operate in Lu An City, Anhui Province, that operate under the Guoying brand name and to which we are the exclusive wholesaler and distributor. We are the exclusive distributor for Guoying branded refrigerators. We are also a wholesaler in the Lu an area for products under the brand names, Sony, LG, Samsung, Tsinghua Tongfang, Haier, Shanghai Shangling, Chigo, Huayang and Huangming. Guoying is a general sales agency of Sino-Japan Sanyo electronic products, such as Sanyo televisions, air conditioners, washing machines and micro-wave ovens. Currently, our products are supplied to us by large distributors, including the brand names Sony, Samsung, LG, Tsinghua Tongfang, Haier. Guoying has partnered with Huangming and Huayang, the two largest manufacturers of solar thermal products in China, to be their exclusive retail outlet in Lu an. Some of their energy efficient, green products include solar thermal water heaters, solar panels (photovoltaic) and energy saving glass. Our sales market currently mainly targets customers in county, township and villages (the third, fourth and fifth tiers of markets) in Anhui Province of China. Our distribution and sales network currently covers twelve districts and counties in Anhui province, namely Shou County, Shu City, Jin An, Yu An, Huo Shan, Jinn Sai, Huo Qiu, Gu Shi , Ye Ji, Fei West, Fei East, and Huai Nan Districts. In August, 2011, our Board decided to terminate our exclusive and non-exclusive franchise agreements with a number of carriers in order to strengthen and grow the Company s business in the long term after concluding that the rapid growth of the company s number of stores and aggressive business expansion had caused deficiencies in the company s internal control and management. The following criteria has been used to determine which stores ( Disqualified Exclusive Stores and Disqualified Non-Exclusive Stores ) to close (i) exclusive franchise stores that sold merchandise supplied by other wholesalers in breach of the exclusive franchise agreement; (ii) exclusive and non-exclusive franchise stores that failed to obey the Company s pricing and resulting in lower profit margins; (iii) stores located remotely Lu An City that result in higher transportation and logistics expenses to us; (iv) stores that sold brand of merchandise that not supplied by us and therefore terminate its franchise agreement with us. During the year ended December 31, 2011 and the quarter ended September 30, 2012, we have closed 1 company-owned store, terminated our contracts with 364 exclusive franchise stores, and terminated our contracts with 560 non-exclusive franchise stores. We do not expect to terminate our franchise contracts with a significant number of non-exclusive stores during the remainder of 2012. We estimate that we may terminate franchise contracts with about 100 exclusive stores if they cannot reach our standards by the end of 2012. Industry According to the 2010 PRC Census, more than 50% of China s population resides in rural areas of China and rural purchasers are the largest consumer group in China. After many years of economic reforms, the average income of people living in China s rural areas has gradually increased, and according to the National Bureau of Statistics of China, the per capita net income of rural residents increased 10.9% in 2010. Based on this increase in average income, we believe that such area has significant growth potential, and it does not appear that many of the urban chains have expanded into the rural communities. First, according to information published by China Economic News dated December 9, 2010, the central government has increased the income of the rural population by reducing the amount of taxes paid by farmers. As a result of this increase in income, such people have more disposable income for discretionary spending. Second, the Chinese government has initiated a rural home appliance and electronics rebate program, called the Rural Consumer Electronics plan. This plan (a) provides that the maximum sales price of electronics is fixed at a price which is usually equal to the market price of the same products in urban areas and (b) grants rural consumers a 13% rebate from the government on their purchases of electronics. Third, the current consumer electronics and appliances markets in big PRC cities like Beijing, Shanghai, and Shenzhen are already saturated by electronics stores, which results in limited margins. While we have some competitors in the rural markets, we believe that the retail chains that exist in larger cities have not established any significant name recognition in the rural markets. Therefore, we believe that such stores success in larger cities will not necessarily result in success in the rural areas where we operate. We believe that significant opportunity remains due to the increased per capita income of rural residents. Our Competitive Strengths We believe that the following strengths differentiate us from our competitors and enable us to maintain a leading position as a rural retailer and wholesale distributor of electronics and consumer appliances in China: o We are a wholesaler in the Lu an area for products under the brand name Sony, LG, Samsung, Tsinghua Tongfang, Haier, Shanghai Shangling; o We are a rural based business and we understand the preferences of a rural customers; and o We are the exclusive retail seller in the Lu an area for Huangming and Huayang, each are well-regarded PRC companies that manufacture solar-powered products for consumer usage. Our Strategy Our goal is to become the dominant rural retailer and wholesale distributor of electronics and consumer appliances with nationwide distribution and sales network in China. The principal components of the business strategy we plan to implement to attain our goals include the following: o Open new company-owned stores and develop growth of business of Company-Owned Stores; o Establish logistic centers in Lu An City to provide transportation and delivery services of merchandises to Anhui , Hubei and Henan provinces; o Close disqualified Exclusive Franchise Stores in Anhui province; open new Exclusive Franchise Stores in Anhui, Hunan and Hubei provinces; maintain and grow business with existing profitable Exclusive Franchise Stores; o Close disqualified Non-Exclusive Franchise stores in Anhui province; open new Non-Exclusive Franchise Stores in Anhui, Hunan and Hubei provinces; maintain and grow business with existing profitable Non-Exclusive Franchise stores; o Be the Exclusive Rural Distributor for Well-Known Electronic and Consumer Appliance Manufactures; and Risks and Challenges We believe that the following are some of the major risks and uncertainties that may materially and adversely affect our business, financial condition, results of operations and prospects: o Poor performance or sales by our exclusive franchise stores or non-exclusive stores; o Our dependence on a limited number of suppliers for our wholesale business; o Our ability to manage the growth and expansion of our operations; o Demand for electronics and consumer appliances in China may not continue to grow; o Our ability to develop new exclusive franchise stores; and o Adverse changes in the Chinese economy. See Risk Factors beginning on page 8 and other information contained in this prospectus for a detailed discussion of these risks and uncertainties. Our Corporate Structure Our current structure is set forth in the diagram below: Our principal executive offices are located at Building G-08, Guangcai Market, Foziling West Road, Lu an City, Anhui Province, PRC 237001, and our telephone number is 011-86-564-3224888. THE OFFERING Between three months and 2 years prior to the consummation of the Share Exchange Agreement, dated as of July 9, 2010 (the Share Exchange Agreement ), CEH Delaware sold shares of common stock and warrants to investors in transactions pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder. On July 15, 2010 we consummated the Share Exchange Agreement with certain Selling Stockholders. Pursuant to the Share Exchange Agreement, on July 15, 2010, 10 former stockholders of our subsidiary, CEH Delaware, transferred to us 100% of the outstanding shares of common stock and preferred stock of CEH Delaware and 100% of the warrants to purchase common stock of CEH Delaware held by them, in exchange for an aggregate of 13,785,902 newly issued shares of our Common Stock (including 13,665,902 shares of common stock issued pursuant to the Share Exchange Agreement dated July 22, 2010, and 120,000 shares of common stock issued to consultants related to their professional services) and warrants to purchase an aggregate of 1,628,570 shares of our Common Stock. CEH Delaware s outstanding Series A warrants were exchanged on a one-for-one basis for Series A warrants of the Company to purchase an aggregate of 314,285 shares of Common Stock, with an exercise price of $2.19 per share. CEH Delaware s outstanding Series B warrants were exchanged on a one-for-one basis for Series B warrants of the Company to purchase an aggregate of 314,285 shares of Common Stock, with an exercise price of $2.63 per share. CEH Delaware s outstanding $1.00 warrants were exchanged on a one-for-one basis for Series E warrants of the Company to purchase an aggregate of 1,000,000 shares of Common Stock, with an exercise price of $0.25 per share. Pursuant to the terms of the Series A, B and E warrants, the Company is required to register as many shares as permitted of Common Stock issuable upon the exercise of the warrants. On July 15, 2010 we also consummated a Private Placement made pursuant to a Subscription Agreement dated as of July 9, 2010 (the Purchase Agreement ) with certain of the Selling Stockholders, pursuant to which we sold units (the Units ) to such Selling Stockholders. Each Unit consists of four shares of our Common Stock, a warrant to purchase one share of Common Stock at an exercise price of $3.70 per share (a Series C Warrant ) and a warrant to purchase one share of Common Stock at an exercise price of $4.75 per share (a Series D Warrant ). Additional Private Placements were consummated on July 26, 2010 and August 17, 2010. The aggregate gross proceeds from the sale of the Units was $5,251,548 and in such Private Placements, an aggregate of (a) 1,989,211 shares of our Common Stock, (b) Series C Warrants to purchase an aggregate of 497,303 shares of our Common Stock and (c) Series D Warrants to purchase an aggregate of 497,303 shares of our Common Stock was sold. Pursuant to Section 9(d) of the Purchase Agreement, the Company is required to register all of the shares of Common Stock and shares of Common Stock underlying the warrants that were issued in the Private Placement. Under Section 8 of the warrants issued by the Company, as many shares as permitted of Common Stock issuable upon exercise of the warrants are required to be registered pursuant to Section 9(d) of the Purchase Agreement. The below table sets forth gross proceeds paid to the Company in the Private Placements, fees paid by the Company in connection with the Private Placements and the resulting net proceeds to the Company: Gross Proceeds Fees Net Proceeds $ 5,251,548 $ 525,155 (1) $ 4,726,393 (1) Represents an aggregate of success fees paid to Hunter Wise Securities, LLC and American Capital Partners, LLC in connection with the offering. As additional consideration, Hunter Wise Securities, LLC received a Series F(i) warrant to purchase 31,429 shares of Common Stock at an exercise price of $1.75 per share, a Series F(ii) warrant to purchase 94,329 shares of Common Stock at an exercise price of $2.64 per share and 180,000 shares of Common Stock. American Capital Partners, LLC received a Series F(iii) warrant to purchase 104,592 shares of Common Stock at an exercise price of $2.64 per share. This prospectus relates to the resale of the 5,390,422 shares of our Common Stock issued to the Selling Stockholders and issuable to the Selling Stockholders upon exercise of all of the warrants referred to in the preceding paragraphs. Issuer China Electronics Holdings, Inc. Common Stock outstanding prior to the Offering 16,775,113 shares Common Stock offered by the Selling Stockholders 5,390,422 shares Total shares of Common Stock to be outstanding after the Offering assuming exercise of all outstanding warrants 19,402,489 shares Use of Proceeds We will not receive any proceeds from the sale of the shares of Common Stock. Our OTCQB Trading Symbol CEHD.QB
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001489542_nugold_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001489542_nugold_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and NuGold Resources refer to NuGold Resources, Inc. NuGold Resources is a development stage company incorporated in the State of Nevada on February 26th, 2010. We were formed to engage in the business of buying and selling gold. Upon the completion of this offering and the implementation of a distribution network, we may expand purchases to include other precious metals and stones. In February 2010 we commenced our planned principal operations. Since our inception on February 26, 2010 through September 30, 2013, we have not generated any revenues and have incurred a net loss of $ 122,834 . In February of 2010 our only business activity was the formation of our corporate entity and the development of our business model. We anticipate the commencement of generating revenues in the next twelve months, of which we can provide no assurance. The capital raised in this offering has been budgeted to cover the costs associated with the offering, such as accounting services, and various filing fees and transfer agent fees. Additionally capital raised in this offering will fund website and marketing development, purchase of investment quality gold and other precious metals and working capital. We believe that our lack of significant expenses and our ability to commence with private purchases and sales, may generate revenues sufficient to support the limited costs associated with our initial ongoing operations for the next twelve months. However, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that cash flows from gold sales will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors report to the financial statements included in the registration statement. NuGold Resources is building a business based on the buying and selling of gold through private party transactions. At this time we are in the process of implementing our marketing plan, which includes graphic design work, and lead development. We have no intentions to be acquired or to merge with an operating company. Additionally, our shareholders have no intention of entering into a change of control or similar transaction. No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date. We commenced operations in February of 2010, since then we have been developing our marketing plan, establishing market contacts and developing our website and our investment methods. Our business model, which is still evolving as new ideas are brought forth, is built on revenue streams from the buying and selling of gold products. In the future we may branch out into the buying and selling of other precious metals as well as rare and precious gem stones. We are unsure at this time as to the time frame of this market expansion, as the result of a lack of additional capital and investment leads. Gold Investment and Sales NuGold Resources initially plans to buy and sell gold through private transactions. We had one supplier of this precious metal, Alcantara Brands Corporation. However they were unable to deliver the gold as agreed and we have since been developing relationships with other potential suppliers; however, we have not come to any concrete agreements with any suppliers. We have been in contact with individuals with connection to a gold mine in the Republic of Ghana in West Africa. We have not yet formalized the relationship or come to any specific agreement. We intend to develop additional contacts to allow the Company to purchase gold and other precious minerals at competitive prices. As of the date of this prospectus we have one officer who also serves as our sole director, acting as our sole employee, who we anticipate devoting a significant portion of his time to the company going forward. Additionally, even with the sale of securities offered hereby, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. Even though we intend to generate revenues upon the commencement of our marketing plan, it is possible we will sustain operating losses for at least the next 12 months. Even if we sell all the securities offered, the majority of the proceeds of the offering will be spent for costs associated with the offering, fees associated with SEC reporting requirements and gold investment purchases. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our plan of operation. NuGold Resources, Inc. s address and phone number are: NuGold Resources, Inc. 7494 Saginaw Way Citrus Heights, CA 95610 (916) 599-6535 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (Amendment No. 9 ) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Commission File Number 333-184228 Filed February 7, 2013 NuGold Resources, Inc. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 1040 (Primary Standard Industrial Classification Code Number) 27-2004301 (I.R.S. Employer Identification Number) 7494 Saginaw Way Citrus Heights, CA 95610 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Brenton J. Country, President NuGold Resources, Inc. 7494 Saginaw Way Citrus Heights, CA 95610 (916) 599-6535 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company x
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001503579_station_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001503579_station_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001504937_vaporin_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001504937_vaporin_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms the Company, we, us, and our refer to Valor Gold Corp. Overview We are an exploration stage gold and minerals exploration company focused on searching for gold and other mineral resources and seeking out potentially significant exploration and development targets. We were incorporated as a Delaware corporation on June 2, 2009 under the name Felafel Corp. for the purpose of establishing and operating a falafel restaurant in Riga, Latvia. On March 27, 2012, we amended and restated our certificate of incorporation in order to, among other things, change our name to Valor Gold Corp. and increase our authorized capital stock to 250,000,000 shares of stock, of which 200,000,000 are designated as common stock and 50,000,000 are designated as blank check preferred stock. On May 17, 2012, we filed a certificate of designation of preferences, rights and limitations of Series A Convertible Preferred Stock designating and authorizing the issuance of 5,000,000 shares of Series A Preferred Stock. On May 24, 2012, we entered into an Agreement and Plan of Merger (the Merger Agreement ) with (i) Red Battle Corp. ( Red Battle ), a Delaware corporation and owner of all of the outstanding membership interests of each of Arttor Gold LLC ( Arttor Gold ), a Nevada limited liability company, and Noble Effort Gold LLC ( Noble Effort ), a Nevada limited liability company, (ii) Pershing Gold Corporation ( Pershing ), a Nevada corporation and owner of all of the outstanding capital stock of Red Battle, and (iii) Valor Gold Acquisition Corp., our newly formed, wholly-owned Delaware subsidiary ( Acquisition Sub ). Upon closing of the transaction contemplated under the Merger Agreement (the Merger ), our Acquisition Sub merged with and into Red Battle, and Red Battle, as the surviving corporation, became our wholly-owned subsidiary. In consideration for the Merger, Pershing received, as Red Battle s sole shareholder, (i) 25,000,000 shares of our Common Stock; (ii) $2,000,000; and ( iii ) a promissory note in the principal amount of $500,000. As a result of the Merger, we acquired certain business and operations from Pershing primarily consisting of junior gold exploration mining claims and related rights held by Arttor Gold and Noble Effort. At the effective time of the Merger, we discontinued our prior business and operations and revised our business purpose to pursue the business and operations previously pursued by Pershing through its Arttor Gold and Noble Effort subsidiaries as its sole business. Contemporaneously with the closing of the Merger, we raised a total of $3,800,000 pursuant to an offering to accredited investors of 4,500,000 shares of Common Stock at $0.40 per share and 5,000,000 shares of Series A Preferred Stock at $0.40 per share. On April 16, 2013, our management made a determination that it would be in the best interest of the Company and its shareholders to explore additional business opportunities and strategic alliances. This decision followed an analysis of the Company s current mining prospects coupled with the current economic climate relating to the gold market in general, which has experienced a significant downturn. We plan on continuing our current business (as a junior exploration company) while exploring new strategic and developmental opportunities, including acquisitions, strategic alliances, consolidations or other partnering arrangements. Additionally, we may explore new opportunities in other business sectors that may be divergent from our historical business focus as an exploration stage gold and minerals company, in which case, we may choose to divest our historical business. To date, we have not entered into any binding agreements or made any formal decision regarding any of the foregoing. Corporate Structure Red Battle is an exploration stage gold and minerals exploration company focused on searching for gold and other mineral resources and seeking out potentially significant exploration and development targets. It was formed in Delaware on April 30, 2012 and on May 23, 2012 purchased all of the outstanding membership interests of Arttor Gold and Noble Effort. As a result of the Merger between the Company, Red Battle, Pershing (Red Battle's sole shareholder) and the Company's newly formed acquisition sub, Red Battle merged with and into the Company's acquisition sub causing Red Battle to become our wholly-owned subsidiary and we succeeded to the business of Red Battle as our sole line of business. Arttor Gold was formed as a limited liability company in Nevada on April 28, 2011 and on May 24, 2011, Pershing purchased all of Arttor Gold s outstanding membership interests from its former members. Also on May 24, 2011, Arttor Gold entered into lease agreements for the Red Rock Mineral Prospect and North Battle Mountain Mineral Prospect, which are both located in Nevada. These leases granted Arttor Gold the exclusive right to explore, mine and develop gold, silver, platinum and other minerals on these properties. On August 22, 2011 Arttor Gold and Pershing entered into a mining lease with Centerra (US) Inc. for exploration rights to certain properties adjacent to the Arttor Gold properties. Noble Effort was formed as a limited liability company in Nevada on June 6, 2011 to explore potential acquisitions of natural resources properties suitable for exploration and development and, pursuant to an operating agreement dated June 6, 2011, Pershing owned 100% of the outstanding membership interests of Noble Effort. On May 24, 2012, Pershing and Arttor Gold assigned their interest in the Centerra properties to Noble Effort. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A (AMENDMENT NO. 3) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 VALOR GOLD CORP. (Exact name of registrant as specified in its charter) Delaware 1000 45-5215796 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) David Rector Chief Executive Officer 200 S Virginia Street, 8th Floor Reno, NV 89501 (888) 734-4361 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Harvey J. Kesner, Esq. 61 Broadway, 32nd Floor New York, New York 10006 Telephone: (212) 930-9700 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. S 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 of 1933 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 a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check One): Large Accelerated Filer Accelerated Filer Non-Accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company S The following organization charts are illustrations of the Merger and the foregoing: CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common stock, par value $.0001 per share (2) 12 ,000,000 $0. 30 $ 3,600 ,000 $ 491.04 Common stock, par value $.0001 per share, issued in connection with the May 2012 Merger Agreement (3) 25,000,000 $ 0. 40 (4) $ 10,000 ,000 $ 1, 364.00 Total 37 ,000,000 $ 1,855.04 (5) (1) Pursuant to Rule 416 under the Securities Act, the shares of common stock offered hereby also include an indeterminate number of additional shares of Common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions. (2) The shares of common stock noted in the first row will be offered under the primary offering prospectus relating to our proposed public offering. (3) The shares of common stock noted in the second row will be offered under the secondary offering prospectus relating to resales by the selling stockholders of the shares of common stock issued to the selling stockholders (the Secondary Offering ). (4) Estimated solely for the purpose of calculating the registration fee, and based upon the average of the high and low prices of the registrant's common stock as reported on the OTC Bulletin Board on April 25, 2013 , in accordance with Rule 457(c) under the Securities Act. (5) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. Properties The North Battle Mountain Mineral Prospect is located in Lander County, Nevada, approximately 20 miles north of the town of Battle Mountain in north central Nevada. The property consists of 72 unpatented lode mining claims and encompasses approximately 1,440 acres. To date, exploration activities have included detailed geologic mapping, rock and soil geochemical sampling, a detailed gravity survey and a 3-line CSAMT geophysical survey. Drill targets have been defined but no drilling has been attempted. As yet, BLM drilling permits have not been obtained. The Red Rock Mineral Prospect is located in Lander County, Nevada, 26 miles south of the town of Battle Mountain. The property consists of 527 unpatented lode mining claims and encompassing approximately 10,440 acres. To date, exploration activities have included detailed geologic mapping, rock and soil geochemical surveys, a detailed gravity survey, a 13 line CSAMT geophysical survey, and drilling of 16 shallow reverse circulation drill holes and 6 diamond core holes. Five reverse circulation/diamond core holes are planned for 2013. If funds are available, additional gravity work will be completed. The Centerra gold prospect is located in Lander County, Nevada, 26 miles south of the town of Battle Mountain. The property consists of 24 unpatented lode mining claims and encompasses approximately 480 acres. Exploration activities include detailed geologic mapping, rock and soil geochemical surveys, a gravity survey, 9 lines of CSAMT geophysical survey and drilling of 11 shallow reverse circulation drill holes and one diamond core hole. Four reverse circulation/diamond core holes are planned for 2013. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED April 26, 2013 PRELIMINARY PROSPECTUS 12 ,000,000 Shares VALOR GOLD CORP. Common Stock 12 ,000,000 Shares of Common Stock We are offering up to 12 ,000,000 shares of our common stock on a best efforts basis. The public offering price will be $0. 30 per share. Because there is no minimum offering amount required as a condition to the closing of this offering, the placement agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth below Our common stock is quoted on the OTC Bulletin Board and trades under the symbol VGLD. The last reported sale price of our common stock on the OTC Bulletin Board on April 25, 2013 , was $0. 40 per share. Investing in the offered securities involves substantial risks. See Risk Factors, beginning on page 6 . Per Share Total Offering Price $ $ Placement agent's fees $ $ Offering proceeds to us, before expenses $ $ Offering proceeds to the selling stockholders $ $ The registration statement of which this prospectus forms a part also registers on behalf of the selling stockholders a total of 25,000,000 shares of our common issued in connection with a merger agreement dated as of May 24, 2012. The shares of our common stock offered by the selling stockholders are not part of or conditioned on the closing of our public offering. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is ________, 2013 . Financial Results We reported a net loss of $1,119,783 for the period from April 28, 2011 (Inception) to December 31, 2011 and a net loss of $8,314,239 for the fiscal year ended December 31, 2012. We expect to incur significant losses into the foreseeable future and our current monthly burn rate is approximately $160,000. We anticipate that we will require approximately $3,000,000 on our gold exploration expenses for our North Battle Mountain, Red Rock and Centerra Gold prospect properties and approximately $500,000 on public company expenses. We have current cash on hand of approximately $813,000 as of December 31, 2012 and we anticipate that our present capital will be sufficient to fund our operations through May 2013. To date, we have not generated any revenues from our mining operations. Our auditor, in its report dated March 25, 2013, express substantial doubt about our ability to continue as a going concern.
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001512081_internatio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001512081_internatio_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summarizes information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including the financial statements and the related notes thereto, contained elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." As used in this prospectus, the terms "IAC," "Company," "we," "our," "us" and similar terms refer to International Automotive Components Group, S.A. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires. Our Company We are a leading global supplier of automotive interior components and systems serving all major multinational automotive original equipment manufacturers, or OEMs. We offer OEM customers around the world a broad portfolio of components and systems through our core product categories, including instrument panels, consoles & cockpits; door & trim systems; flooring & acoustic systems; headliner & overhead systems; and other interior & exterior components. We believe we are the third largest automotive interior components supplier globally by market share and, among our primary competitors in the global marketplace, the only global supplier principally focusing on a wide range of interior products. We have a geographically diversified footprint with 80 manufacturing facilities operating across 19 countries. We believe that we have an efficient and low-cost global footprint. We currently operate in three geographic regions: North America, Europe and Asia. Since our formation, we have successfully integrated 16 acquisitions throughout North America, Europe and Asia. These acquisitions expanded our product capabilities, strengthened and broadened our relationships with OEMs, helped reinforce our product focus, leveraged our program management process and expanded our low-cost global manufacturing footprint. Additionally, we have made investments in emerging economies, building multiple new facilities from the ground up, or greenfield investments, in countries such as China, India and Romania. As OEMs continue to increase their use of common structural and engineering designs for their products across multiple geographic markets, or global vehicle platforms, we believe we are well-positioned to benefit from the associated global supplier sourcing trend given the breadth of our operations. We are an engineering-driven organization that takes a solution-based approach to meeting our customers' needs for automotive components and systems. We utilize our 22 design, technical and commercial centers across North America, Europe and Asia, along with the expertise of approximately 1,900 engineers, to collaborate with OEM customers at the beginning of the vehicle platform development stage to integrate customized designs that balance their concept requirements and cost considerations. As part of this process, we are able to develop components, systems and solutions designed to improve comfort and convenience, increase fuel efficiency, enhance safety, promote personalization, improve acoustics and expand the use of environmentally conscious materials, allowing our customers to produce better products for consumers. We believe OEM customers recognize the benefits and synergies of our full suite of components and systems that we design, engineer and manufacture, providing us with a competitive advantage over single-product interior suppliers. We are a direct supplier to a diverse global customer base that includes established OEM customers as well as smaller, fast-growing OEM customers in emerging markets. We typically are the single-source provider to our OEM customers and usually supply interior components and systems for the life of the vehicle platforms that we serve. We have long-term, well-established relationships with most of our OEM customers that strengthen our position as the incumbent interior components and systems supplier, help us maintain our supplier role throughout the life of our contracts and increase Table of Contents Note 15. Fair Value Measurements (Continued) The estimated fair values for other financial assets and liabilities not measured at fair value were as follows (in millions): June 29, 2013 December 31, 2012 Carrying Value Fair Value Carrying Value Fair Value Measurement Approach Senior Secured Notes $ 300 $ 300 $ 300 $ 278 Level 2 Amended and Restated Credit Facility 141 141 102 102 Level 2 European Securitization Program 91 91 117 117 Level 2 Hermosillo Note Payable 33 35 36 38 Level 2 Other borrowings 42 42 34 34 Level 2 The carrying values reported on the consolidated balance sheets for cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and other current liabilities approximate their fair values due to the short-term nature of these instruments. The fair value of long-term debt, excluding the Senior Secured Notes, was estimated using a discounted cash flow analysis based on the Company's then-current borrowing rates for similar types of borrowing arrangements for long-term debt without a quoted market price. The fair value of the Senior Secured Notes was calculated using quoted market prices. Note 16. Related Party Transactions A summary of transactions with affiliates and other related parties is shown below (in millions): Three Months Ended, Six Months Ended, June 29, 2013 June 30, 2012 June 29, 2013 June 30, 2012 Sales (a) $ 5 $ 33 $ 35 $ 69 Purchases (b) 7 6 14 Administration charges (c) 1 1 1 MARKET AND INDUSTRY DATA Market and industry data used throughout this prospectus, including information relating to our relative position in the automotive interiors supply industry, is based on the good faith estimates of our management, which in turn are based upon our management's review of internal surveys, surveys commissioned by us, independent industry surveys and publications and other publicly available information prepared by third parties, including publicly available information prepared by IHS Automotive, a global forecasting service for automotive production, and J.D. Power and Associates, a global marketing information firm. Our internal data and forecasts have not been verified by any independent source and we have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions upon which those sources relied. Estimates of historical growth rates in the markets where we operate are not necessarily indicative of future growth rates in such markets. TRADEMARKS AND TRADE NAMES This prospectus contains trademarks, trade names and service marks of other companies and such trademarks, trade names and service marks are the property of their respective owners. Use or display by us of the trademarks, trade names or service marks of other companies is not intended to and does not imply a relationship or endorsement or sponsorship by us of the owner. ENFORCEABILITY OF CIVIL LIABILITIES We are a corporation organized under the laws of the Grand Duchy of Luxembourg, or Luxembourg. A substantial portion of our assets are located outside the United States, or the U.S., and certain of our directors reside outside the U.S. As a result, investors may not be able to effect service of process within the U.S. upon us or our directors or officers or to enforce against us or them in U.S. courts judgments predicated upon the civil liability provisions of U.S. federal securities law. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States. It may also be difficult for an investor to bring an original action in a Luxembourg or other foreign court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons. In particular, there is doubt as to the enforceability of original actions in Luxembourg courts of civil liabilities predicated solely upon U.S. federal securities laws, and the enforceability in Luxembourg courts of judgments entered by U.S. courts predicated upon the civil liability provisions of U.S. federal securities laws will be subject to compliance with procedural and other requirements under Luxembourg law, including the condition that the judgment does not violate Luxembourg public policy. Table of Contents the likelihood for us to win new and replacement contracts as next vehicle generation sourcing is completed. We manufacture products for approximately 350 platforms globally with approximately 140 in North America, 130 in Europe and 80 in Asia. In 2012, our products were used in 19 of the top 20 passenger vehicles and trucks, or light vehicles (vehicles which have a maximum gross vehicle weight rating of less than 8,500 pounds), manufactured in North America, 16 of the top 20 light vehicles manufactured in Europe and three of the top 20 light vehicles manufactured in Asia. Our new business awards have increased in recent years, including awards from 20 different OEM customers across a broad range of platforms and geographies during the year ended December 31, 2012. Affiliates of WL Ross & Co. LLC, or, collectively, WLR, formed our company in 2006 with the intent to lead consolidation in the fragmented automotive interior components sector. Together with WLR, our management team has executed a consolidation strategy to create a unified global supplier capable of providing a broad portfolio of interior components and systems. For the year ended December 31, 2012, we generated sales of $4.7 billion, net loss of $38 million and Adjusted EBITDA of $211 million. For the six months ended June 29, 2013, we generated sales of $2.6 billion, net loss of $16 million and Adjusted EBITDA of $100 million. See " Summary Historical Financial Data." We define, reconcile and explain the importance of Adjusted EBITDA, a non-GAAP financial measure, in " Summary Historical Financial Data." Our OEM Customers, Product Categories and End Markets We have a defined focus on interior components and systems, offering a broad interior component portfolio to a diverse global customer base. 2012 Sales by Geography 2012 Sales by Product 2012 Sales by OEM 73, C te d'Eich L-1450 Luxembourg Grand Duchy of Luxembourg +352-267-5040 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Janis N. Acosta Executive Vice President, General Counsel and Corporate Secretary 28333 Telegraph Road Southfield, Michigan 48034 (248) 455-7000 (Name, address, including zip code, and telephone number, including area code, of agent for service) With copies to: Randi L. Strudler Jones Day 222 East 41st Street New York, New York 10017 Tel: (212) 326-3939 Fax: (212) 755-7306 Michael Benjamin Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Tel: (212) 848-4000 Fax: (212) 848-7179 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company The registrants hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents The following sets forth 2012 sales (dollars in millions) and the percentage of 2012 sales for each of our product categories: Instrument Panels, Consoles & Cockpits Door & Trim Systems Flooring & Acoustic Systems Headliner & Overhead Systems Other Interior & Exterior Components $1,675 $1,133 $973 $495 $436 36% 24% 21% 10% 9% The following is a list of products for each of our product categories: Instrument Panels, Consoles & Cockpits Door & Trim Systems Flooring & Acoustic Systems Headliner & Overhead Systems Other Interior & Exterior Components Instrument panels Center consoles Cockpits Air distribution ducts Air registers Cupholders Decorative appliqu s Glove box assemblies Hard panels Soft panels Door panels Armrests Decorative appliqu s Garnish trim Hard panels Map pockets Safety components Soft panels Speaker grilles Switch bezels Floor carpet Acoustic insulators Engine insulators Expandable sealing Floor mats Heat shields Package trays Trunk trim Utility flooring Wheel arch liners Headliner substrates Overhead systems Air distribution ducts Assist handles Coat hooks Garnish trim Interior lighting Overhead consoles Safety components Visors Interior: Cargo management Load floors Seat panels Exterior: Bumper fascias Rocker molding Recreational vehicle trim Reservoir systems Rocker panels The following is a list of representative customers for each of our product categories: Instrument Panels, Consoles & Cockpits Door & Trim Systems Flooring & Acoustic Systems Headliner & Overhead Systems Other Interior & Exterior Components Changan Suzuki Chrysler/FIAT Daihatsu Dongfeng Honda Ford General Motors Honda Hyundai Jaguar Land Rover Mahindra Reva Nissan Suzuki UD Truck Volvo VW Group BMW Changan-Ford Chery JLR Denza Ford GAC Mitsubishi Mahindra & Mahindra MAN Mercedes Benz Nissan SAIC Shanghai GM Toyota VW Group Volvo Subaru BAIC BMW Chrysler/FIAT Daimler Truck Ferrari Ford Honda Jaguar Land Rover Mercedes Benz Navistar Nissan Renault Truck Rolls-Royce Shanghai GM Subaru BMW Chrysler/FIAT Honda Fujian Daimler General Motors International Cars & Motors Jaguar Land Rover Maruti Suzuki Mercedes Benz Qoros Tan Chong Toyota Volvo Eicher VW Group BBAC Brilliance BMW DAF General Motors Hino Truck Hyundai Mahindra Truck MAN Mazda Mitsubishi Fuso Polaris Renault Scania Toyota Volvo Volvo Truck The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated September 13, 2013 PROSPECTUS Shares International Automotive Components Group, S.A. Common Stock Table of Contents Our Industry Demand in the automotive supplier industry is generally a function of the number of new vehicles produced. After experiencing significant downturns globally in 2008 and 2009 due to the global economic slowdown, vehicle sales and production are generally in a period of recovery and growth. The timing, duration and magnitude of these two trends, however, have been, and are forecasted to vary by region. Large-scale events such as the sovereign debt crises in Europe, natural disaster in Japan and improving consumer sentiment in North America have impacted local markets. Since suffering the most dramatic adverse effects of the downturn in 2008 and 2009, the North American market has led the recovery, with light vehicle production growing at a compound annual growth rate, or CAGR, of 21.6% from 2009 to 2012. Production of light vehicles in 2012 eclipsed pre-crisis levels as consumer demand continued to push sales of new vehicles higher while domestic OEMs' operational performance continued to improve. The recovery in the housing market, decline in unemployment and increased consumer confidence along with the above average age of light vehicles on the road, enhanced fuel economy and technology offered on new vehicles have created a backdrop for continued strength in the North American automotive market. IHS Automotive expects the growth trend to continue, forecasting a 2.9% CAGR over the next five years. Europe, although not experiencing as large of a decline as North America during the global slowdown, has not yet recovered as quickly as North America, with economic and automotive performance varying largely intra-region, with countries such as Germany and those of the United Kingdom strongly outperforming Spain, France and Italy. Factors such as the sovereign debt crises of multiple countries and the associated austerity programs have constrained the broader region's overall recent economic performance. Throughout Europe, however, reduced light vehicle inventory levels, increasing average vehicle age and the elimination of capacity are expected to drive growth and increase profitability within the automotive supplier industry. With light vehicle production in 2012 still well below pre-crisis levels, there is significant room for growth. IHS Automotive expects production growth to return to Europe in 2014 with the recovery expected to continue thereafter. Asia-Pacific (ex-Japan and Korea) has continued to experience growth, with light vehicle production increasing at a CAGR of 14.5% between 2009 and 2012, and China and India increasing at CAGRs of 12.4% and 15.4%, respectively, during that time, according to IHS Automotive. Over the next five years, IHS Automotive expects Asia-Pacific (ex-Japan and Korea) regional production to increase 48.1%, or a CAGR of 8.2%. Factors such as increased population, modernization, urban migration, infrastructure improvement and overall wealth creation across this region have continued to fuel demand and increase the need for light vehicles. These fast-growing regions offer opportunities to generate increased sales and gain market share, while lowering production costs. We intend to selectively expand our global footprint to take advantage of growing vehicle demand in the Asia-Pacific (ex-Japan and Korea) region. Japan, a country with one of the highest light vehicle production volumes, has recently implemented new stimulus policies to address economic conditions which otherwise reflect further production unit declines, with 2017 levels 18.8% below 2012 levels, according to IHS Automotive. As of July 2013, IHS Automotive projects new light vehicle production will approximate 100 million units in 2017, an increase of 22.1%, or a CAGR of 4.1%, from 2012 global automotive light vehicle production volumes, reflecting a recovery in both the North American and European markets with a CAGR of 2.9% and 2.6%, respectively, as well as continued growth in the Asia-Pacific (ex-Japan and Korea) market with a CAGR of of 8.2%. We believe we are well-positioned to benefit from this anticipated industry growth in each region, but we are not insulated from short-term fluctuations in the global automotive industry. (a)This category is comprised of approximately 75% Canadian government bonds and 25% Canadian corporate bonds. The following table presents a summary of changes in the fair value of the Level 3 assets listed above (in millions): Balance at December 31, 2010 $ 16 Actual return on plan assets 2 Net contributions 2 Balance at December 31, 2011 20 Actual return on plan assets 4 Net contributions 2 Balance at December 31, 2012 $ 26 Plan assets categorized as Level 3 are insurance contracts held under the Netherlands pension plan, and are reported at the contractual value of discounted guaranteed future cash flows with significant unobservable inputs. Note 20. Related Party Transactions A summary of transactions with affiliates and other related parties, other than related party debt (Note 11, "Long-Term Debt, Related Party"), is shown below (in millions): 2012 2011 2010 Sales(a) $ 128 $ 129 $ 124 Purchases(b) 24 27 28 Administration charges(c) 2 2 This is International Automotive Components Group, S.A.'s initial public offering. We are selling shares of our common stock. We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares of our common stock. We have filed an application to list our common stock on the New York Stock Exchange under the symbol "IACG." Investing in our common stock involves risks that are described in the "Risk Factors" section beginning on page 17 of this prospectus. Table of Contents IHS Automotive Global Light Vehicle Production Forecast (millions of units) Increasing global light vehicle production will contribute to the growth of the automotive interiors market, which we estimate generated sales of $39 billion in 2012. We believe the following additional trends in the global automotive interiors supply industry will help further drive our growth over the coming years: Platform Standardization and Globalization. Automotive OEMs are continuing to increase the number of vehicles built from a single platform in an effort to primarily reduce the total time and cost spent on research and development for new platforms. Vehicle platform-sharing allows OEMs to build a greater variety of vehicles from one basic set of engineered components at a lower cost, because development expenses are spread over a greater number of units produced. Platform-sharing also increases flexibility among manufacturing plants, creating the possibility of smoothly transferring production from one facility to another given the standardization of design. By implementing this strategy globally, OEMs are able to realize significant economies of scale. Despite the standardization of the underlying platform, OEMs maintain the ability to customize certain design elements to address regional-specific requirements. The trend toward platform globalization is expected to result in significant cost savings for OEMs as the number of platforms is reduced and production volumes per platform increase. To support this strategy, OEMs require suppliers to match the size, scale and geographic footprints of these platforms. Suppliers with a global footprint, a broad product offering and the requisite manufacturing expertise are well-positioned to benefit because they are not restricted by these high industry barriers to entry and are able to efficiently respond to customers' local needs. In addition, higher production volumes across fewer platforms are expected to result in cost savings for suppliers as they further standardize and optimize their operations. Consumer Expectations for Increasing Interiors Content per Vehicle. According to the J.D. Power and Associates 2012 Initial Quality Study examining consumer purchasing preferences, interior comfort is the second most important purchasing factor influencing vehicle selection. In addition, according to the J.D. Power and Associates 2013 Avoider Study, which examined the reasons consumers do not consider, or avoid, particular models when shopping for a new vehicle, almost 20% of consumers do not consider vehicles with poorly executed interiors. The trend towards higher consumer expectations for interiors content is increasing demand for qualities such as improved fit, finish and craftsmanship in interiors across all vehicle types. We believe OEMs are dedicating a larger portion of total cost per vehicle to interior components as they "upscale" vehicle interiors across their entire portfolio of platforms, from compact to SUV to luxury. Suppliers with advanced design, materials science and manufacturing capabilities to deliver a broad suite of interior component products across a wide range Per Share Total Public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to us $ $ The underwriters may also purchase up to an additional shares of our common stock from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares of our common stock will be ready for delivery on or about , 2013. Table of Contents of price points should benefit from this continued focus on interior comfort and craftsmanship by both consumers and OEMs. Environmental and Fuel Efficiency Initiatives. Regulatory changes and consumer preferences have driven OEMs and suppliers to align their operations with environmental initiatives such as fuel efficiency, reduced emissions and overall environmentally friendly vehicles. We believe the combination of consumer demand for enhanced interior content, focus on fuel efficiency and alternative propulsion (for example, electric vehicles and hybrids) will drive OEMs to partner with suppliers that can provide a full complement of interior components and systems. The need for components that are lighter-weight, improve acoustical performance and are environmentally friendly will continue to provide an opportunity for differentiation as OEMs strive to reduce the lifecycle ecological footprint of their vehicles. Supplier Rationalization within Automotive Interiors. In 2008 and 2009, the decline in vehicle production volumes dramatically affected the financial condition of many OEMs and, consequently, many automotive suppliers were forced to either seek bankruptcy protection or liquidate. As a result, significant industry consolidation occurred within the automotive interiors segment. We expect this consolidation to continue as OEMs increasingly look to partner with a small number of global suppliers that have a broad product portfolio, a global manufacturing footprint as well as integrated design, engineering and program management capabilities. As the market continues to recover, we anticipate further consolidation as well-capitalized suppliers continue to vertically integrate their operations and expand geographies and diversify their product offering. Our Competitive Strengths Market Leading Interior Components Focused Automotive Supplier. We believe we are the only global supplier with a primary focus on a wide range of interior products. We focus our resources on the design, engineering and manufacturing of a broad array of interior products and systems, which provides our customers with both content variety and price point flexibility. We believe our product focus, along with decades of industry knowledge and track record of high-quality execution, positions us as a preferred supplier with the OEMs as they continue to strive to meet increasing consumer interior expectations. Global Footprint with Diverse Mix of Customers and Vehicle Platforms. Our global manufacturing footprint includes 80 manufacturing facilities worldwide, with 25 in the United States, 21 in Western Europe, 11 in China, seven in Mexico, six in Eastern Europe, three in Japan, three in India and one each in Canada, Malaysia, South Africa and Thailand. Approximately 95% of our sales are derived from light vehicles for which we manufacture products for a diverse mix of approximately 325 vehicle platforms globally, which include cars/crossovers and light-duty pickup trucks/SUVs. In addition, we manufacture products for commercial/heavy-duty trucks. Our diverse customer base includes all of the major multinational automotive OEMs, and we have successfully incorporated our products into the top-selling vehicles in the industry. Given this global footprint, and our diverse customer and platform mix, as well as our manufacturing expertise, we feel that we have fortified industry barriers to entry while also mitigating our dependence on any individual customer. At the same time, we believe we are well-positioned globally, with just over 50% of our revenues generated in North America since 2007, less than 4% of our total sales for the past three years in the economically distressed countries of France, Italy and Spain, and limited exposure to a shrinking vehicle manufacturing environment in Japan. Our footprint in other countries of Europe and Asia as well as North America will allow us to participate in the anticipated automotive recovery. Low-Cost, Vertically Integrated Manufacturer. Our manufacturing facilities are strategically located to serve the needs of our global customers, minimize the costs associated with providing our products, or value stream costs, and maximize operational flexibility. We have developed the expertise Table of Contents INTERNATIONAL AUTOMOTIVE COMPONENTS GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 21. Segment Reporting (Continued) account for significant percentages of sales in 2013 and could potentially subject the Company to a concentration of credit risk. 2012 2011 2010 GM 17 % 20 % 25 % Chrysler/Fiat 17 % 16 % 15 % Jaguar Land Rover 15 % 10 % 6 % Ford(a) 12 % 12 % 14 % Volvo(a) 8 % 11 % BofA Merrill Lynch Deutsche Bank Securities J.P. Morgan Table of Contents to vertically integrate processes such as compounding resins, dying/finishing yarns, manufacturing complex component parts and fabricating tooling as well as to provide product validation services. We leverage these process capabilities to deliver value-added solutions across our global customer base, such as our recently introduced Smartfoil TPO (thermoplastic olefin), material that adorns interior lower door panels and provides improved scratch and mark resistance while reducing material cost and weight. We also utilize our expansive global footprint and common suppliers to negotiate pricing and purchase order terms and conditions globally. We believe that our commitment to managing the complete value chain enables us to maintain high levels of product quality while effectively reducing costs. Efficient Operations with Significant Operating Leverage. We have optimized our global footprint by executing a number of sustainable cost improvement initiatives throughout our manufacturing operations that have lowered our structural cost base. Since our inception, we have selectively closed 16 facilities, eliminating approximately 3.6 million square feet (representing a 25% reduction in capacity), even as we have grown revenue through new business awards and acquisitions. Our management team has partnered with our labor force to establish a competitive hourly wage rate and benefit structure. Additionally, we have implemented comprehensive continuous improvement cost reduction programs and created a performance-based culture that empowers employees at all levels to optimize manufacturing processes and realize operating efficiencies. Leader in Product and Process Innovation. We have made a commitment to pioneer and implement new technologies, as evidenced by our approximately 470 patents worldwide and approximately 100 patent applications pending. We operate 22 design, technical and commercial centers, with six located in North America, ten in Europe and six in Asia, which are each strategically positioned near our OEM customers' design "homerooms" and other development and manufacturing sites. Our full-service engineering expertise allows us to support our customers at the idea generation and design phase of a project and to provide mid-cycle vehicle enhancements. We believe the numerous customer and industry awards we have received reinforces our position as a world-class engineering and manufacturing company of automotive interior and resin-based products. We were one of only four companies from GM's approximately 18,500 global suppliers to receive the 2012 General Motors' Overdrive Award for Commitment and one of two suppliers to Honda of America to receive the 2012 Honda Corporate Citizen Award. Additionally, we have won GM's Supplier of the Year Award in four of the past five years. Other honors and awards received in 2012 include the Ford World Excellence Award and the Award of Excellence in Product Development from Mahindra & Mahindra Ltd. Experienced Management Team. Our management team has substantial industry, operational and financial experience. The key members of our executive leadership team have an average of over 20 years of experience in the automotive supplier industry. During a challenging economic and industry environment, our management oversaw the expansion of our Company from 11 facilities in seven countries in 2006 to 80 facilities in 19 countries in 2013. Our management team executed an aggressive restructuring strategy to eliminate structural issues arising from legacy acquisitions and won product transfers from over 30 financially or operationally distressed suppliers. These efforts have resulted in strengthened relationships with both our long-standing and new customers. We believe we have a strong platform for growth based on the strength of our senior leadership team, and their past integration and restructuring accomplishments have positioned us as a low-cost, global supplier of automotive interior components. Our Strategy Further Penetrate Major OEMs. We are focused on continuing to expand product penetration, growing content per vehicle and winning business on new vehicle platforms. Utilizing our long-standing relationships with OEMs, we are pursuing additional opportunities to provide our broad catalog of The date of this prospectus is , 2013. Table of Contents products to these customers, including complementary products such as certain exterior components. In response to market trends, we also expect to participate in the upscaling of vehicle interiors with additional content and premium materials. Our manufacturing, engineering and design capabilities allow us to provide tailored products, new technology and solutions in line with consumer demands, and we believe we are well-positioned to supply these product enhancements to OEMs. Continue Expansion into Emerging Markets. We intend to continue selectively expanding our global footprint to take advantage of growing vehicle demand in emerging markets. We believe these fast-growing regions offer opportunities to increase sales and market share, as well as realize incremental margin improvements as demand continues to grow in these regions. We have made it a priority to be a global supplier of choice within each region where we operate and have been successful in growing both organically and through acquisitions. We believe we are well-positioned in Asia, as our efforts to grow in the region have focused on China, India, Malaysia and Thailand. We have made greenfield facility investments in China, India and Romania to serve various OEM customers in these markets. Additionally, we currently operate four joint ventures in Asia, including in China, Malaysia and Thailand. We will continue to evaluate alliances, new facilities and other strategic opportunities to increase our presence in these and other important markets. Entering new markets with OEM customers allows us to supply existing vehicle platforms, as well as position ourselves to be integrated into new platforms. Exercise Continuous Improvement to Realize Increased Margins. We have reengineered our organization to focus our culture on continuous efficiency improvements in all phases of the business. Although IAC has come together through a consolidation of numerous acquisitions, we have instituted a "One IAC" operating model to standardize best practices across our global organization. We believe that our consistent focus on sustainable cost reduction, coupled with our return on capital targets, will streamline productivity enhancements, and appropriate tooling and capital expenditure spending. We expect our low-cost manufacturing, together with our disciplined approach to quoting and capital deployment, to enable improved margins while providing an attractive combination of high-quality products and competitive pricing for our customers. Pursue Selective Strategic Acquisitions. The automotive interior component supply industry continues to be fragmented. Through our selective acquisition strategy, we intend to continue to participate in the consolidation of the automotive supplier segment. This will enable us to expand our share in existing markets, increase penetration into emerging markets, gain access to new technologies and further leverage our global operating infrastructure and established customer relationships. We believe our history of successfully identifying, acquiring, integrating and restructuring underperforming assets to realize enhanced performance will enable us to continue our successful acquisition strategy. Additionally, we believe that these acquisitions will further enhance our exposure to the geographies, product segments and vehicle platforms poised to realize significant growth as the end market recovers. Our Corporate Structure Initially formed on January 20, 2006, we are a Luxembourg public limited liability company (soci t anonyme) that operates under the Commercial Companies Law of August 10, 1915, as amended. In March 2011, we were converted from a Luxembourg private limited liability company (soci t responsabilit limit e). We were formed by WLR and investment funds managed by Franklin Mutual Advisers, LLC, or FMA. In connection with certain of our acquisitions, Lear Corporation, or Lear, certain affiliates of Lear and certain creditors of our acquired businesses obtained ownership interests in us. In March 2013, Lear's ownership interests were acquired by WLR and FMA. See "Our Corporate Structure and History." We currently operate through three geographic segments: North America, Europe and Asia. Our North America segment operates 33 manufacturing facilities located in Canada, Mexico and the Table of Contents United States. Our Europe segment operates 27 manufacturing facilities located in Belgium, the Czech Republic, Germany, the Netherlands, Poland, Romania, Slovakia, Spain, Sweden and the United Kingdom. Our Asia segment operates 20 manufacturing facilities located in China, India, Japan, Malaysia, South Africa and Thailand. Together with WLR, our management team has executed a consolidation strategy to create a unified global supplier capable of providing a broad portfolio of interior components and systems. Since our formation, we have completed 16 acquisitions throughout North America, Europe and Asia. These acquisitions have expanded our interior product capabilities, strengthened and broadened our relationships with OEM customers, helped reinforce our product focus and complemented our low-cost global manufacturing footprint. Our model to integrate and improve the operation of these assets included eliminating inefficient capacity and reducing structural and legacy costs. We believe that these assets, now fully integrated into our global operations, enable us to offer a high-quality product at a more competitive cost and to achieve financial performance that had not been possible for these assets in the past. As a result, our OEM customers have awarded us with new business, including mid-cycle business transfers from less financially stable or operationally capable competitors. We believe we are well-positioned to benefit from the improved dynamics of the sector, in which fewer competitors adhere to improved pricing discipline, and to capitalize on incremental consolidation opportunities.
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+PROSPECTUS SUMMARY The following summery is a shortened version of the more detailed information, exhibits and financial statements appearing elsewhere in this prospectus. Prospective investors are urged to read this prospectus in its entirety. We were incorporated on July 21, 2010. We are a Nevada corporation in good standing and are not involved in or aware of any legal proceedings at this time. Our authorized capital stock consists of 200,000,000 shares of common stock at a par value of $.001 per share. We have 5 stockholders who own 110,000,000 shares. The Company has not yet generated any revenue since inception and that your net loss for the period from May 2, 2005 to Sept.30, 2013 is $675,710. Some of our existing shareholders are offering to sell their shares at $0.005 per share. All the proceeds will go to the selling shareholders and not to us. In addition we are making a public offering of 20,000,000 shares at $0.005 per share. Total $100,000. As of the date of this prospectus there was no public market for our common stock. Although we intend to have our shares listed on the OTC Bulletin Board, we may not be successful in establishing any public market for its common stock, because the many variables that will determine our success are uncertain and subject to change based upon circumstances that are not foreseen (for example changes in actual demand for our product or services, success or failure of particular product or strategy) in the market place, etc. At present, we are not listed on any stock exchange and we intend to file for a listing in the Over-The-Counter Bulletin Board Exchange (OTC-BB) or on the pink sheets as soon as we become a reporting company. By means of this prospectus a number of our shareholders are offering to sell up to 15,000,000 shares of our common stock at a price of $0.005 per share. If and when our common stock becomes quoted on the OTC Bulletin Board or listed on a securities exchange, the shares owned by the selling shareholders may be sold in the over-the-counter market, or otherwise, at prices and terms then prevailing or at prices related to the then current market price, or in negotiated transactions. After the offering, one investor will continue to own the majority of the outstanding shares of the company and will be able to exert control over the company to approve matters needing the vote of shareholders. We will not receive any proceeds from the sale of the common stock by the selling stockholders. We are considered a development stage company and our auditor has expressed a going concern opinion in the audit. Neither the Securities and Exchange Commission nor any State Securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offence. We have developed and are currently marketing a suite of software products and services that enable the secure delivery of checks via email using processes convenient for business and consumers, A Company's checks can be deposited directly into the payee's bank with any United States bank just like a traditional check. Our eMailaCheck system can be used by: payors, both individual and corporate, to write checks on their computers and deliver the checks via email; payees, to receive checks via email, and then deposit the checks; and banks, to more cost effectively and securely clear, authenticate, transfer and store checks and prevent fraud. Our mission is to be the most secure, efficient and inexpensive way of making a payment, and to establish eMailaCheck as a universally accepted and trusted method of payment. During the next 12 months our business needs to concentrate on aligning itself with a bank or financial institution in order to get our check transactions to be cleared through a bank. We want to join forces with a bank so that our services can be endorsed by a bank and offered to their customers and ours. A joint venture or cooperation with a bank will give our services more credibility. We have been talking and meeting with several different institutions. At the same time we are offering our services to potential customers. By being able to obtain customers to use our services this gives us more credibility with the bank and gives the bank more incentive to carry our services as it will mean additional business for the banks. Our efforts will be more effective and professional with a greater investment. Currently, the operations are being handled by the principals of the company as time warrants. The funding will enable the company to hire a professional to exclusively market the services to potential customers and banks. Additionally, customers and banks like to do business with a company that has a stronger financial position. Upon obtaining funding the company will hire personnel that specialize and have contacts in the industry. These persons will contact banks and larger companies to solicit their business. We will use the funding to underwrite the setup costs for the banks so that they have more incentive to pilot emailacheck. We believe that an employee of the company spending everyday will be able to obtain a willing bank within 6 months. After finding a pilot bank it will take the company about 90 days to integrate the system. The company has already spoken to various interested parties to write checks once a bank has agreed to handle the transactions. We envision another 60 days before the first customer to start using the services. The emailacheck software system is currently operating and is ready to start immediately upon the initiation of a bank to clear its transactions. SUMMARY INFORMATION OF THE OFFERING Securities Being Offered A Public offering of 20,000,000 unissued shares of common stock at $0.005 per share. plus 15,000,000 shares of common stock held by existing shareholders See section entitled "Description of Securities". Securities Issued 110,000,000 shares of common stock were issued and outstanding as of the date of this Prospectus. See section entitled "Description of Securities". Offering Price: The Selling Shareholders intend to sell their shares of our common stock at a price of $0.005 per share until our common stock is quoted on an exchange, or listed for trading or quotation on any other public market, and thereafter at prevailing market prices or privately negotiated prices. There is no guarantee that our shares will ever become traded on an exchange. We determined this offering price arbitrarily. Risk Factors:
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that 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 Discount Coupons, Company, we, us and our refer to Discount Coupons Corporation. Our Company Discount Coupons was incorporated on August 16, 2010 in the State of Florida. Our domain name, discountcoupons.com, was contributed to the company by a founding shareholder, Charles Zitsman, in exchange for 1,986,612 shares of stock and $12,500. We immediately began to develop our business model, website, and internet mailing list to capitalize on the strength of our domain name. Except where we otherwise state, the information we present reflects our 6.62204-for-1 forward stock split effected on March 12, 2012. We are a marketing firm that provides services to businesses on a cost per acquisition basis through the sale of discount vouchers to consumers. Cost per acquisition basis is an online advertising pricing model, where the advertisers or business merchant pays for each specified action (a purchase, a form submission, or in our case a new customer) linked to the advertisement. We contract with local and online businesses to provide a service where we promote and advertise a specific offer to potential new customers. The offer is in the form of a voucher that a customer may then redeem with a business to obtain the product or service featured in the promoted offer. We earn a commission each time we sell a voucher. Our business operates in a similar manner to businesses that define themselves as daily deal websites. Additionally, we have entered into agreements with four daily deal websites to help them increase their internet presence and websites in return for a portion of their revenues. The Offering Common stock offered by selling security holders 10,994,823 shares of our common stock, par value $0.00001 (the Common Stock ). Common stock outstanding before the offering 10,994,823, shares of Common Stock as of May 9, 2013 Common stock outstanding after the offering 10,994,823 shares of Common Stock will be issued and outstanding after this offering is completed. 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 until our common stock is quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. 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, or any other rule of similar effect. Use of proceeds We will not receive any proceeds from the sales of shares of our common stock by the selling stockholders.
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+Prospectus summary This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common shares. You should read the entire prospectus carefully, especially the risks related to our business, our industry and investing in our common shares that we describe under "Risk factors," and our financial statements and the related notes included in this prospectus, before deciding to invest in our common shares. Our customers are exclusively business customers. We define business customers as customers (other than individual consumers) that have purchased one or more of our products under a unique customer identification number within the past three years. Because the nature of our business involves a large number of small transactions, if we receive orders from multiple subsidiaries of one parent company, we treat each of those subsidiaries as a separate customer. In calculating the number of our customers, we include customers of businesses that we owned during the entire measurement period as well as customers of businesses acquired during the measurement period, assuming that we had owned those businesses throughout the entire measurement period. The presentation of our financial information is affected by our corporate history. See " Special note regarding our corporate history and the presentation of our financial information." GFI Software S.A. Overview We are a global provider of collaboration, managed service provider (MSP) and IT infrastructure software solutions designed for small and medium-sized businesses, or "SMBs." Our solutions enable SMBs (defined as organizations with fewer than 1,000 employees) to easily manage, monitor, secure and access their IT infrastructure and business applications. SMBs currently face many challenges, including increasing IT complexity, intensifying security risks and greater workforce mobility. We address these challenges with simple yet powerful software solutions that are easily deployed and deliver significant value to our customers. Our high-volume go-to-market model simplifies the process for SMBs to discover, evaluate, procure and deploy our solutions. Our customer base has grown from over 89,000 customers as of December 31, 2008 to over 300,000 customers in over 180 countries as of September 30, 2013 and is highly diversified, with no single customer accounting for greater than 1% of our total Billings in 2010, 2011 or 2012 or in the nine months ended September 30, 2013. Our differentiated business model and global distribution platform enable us to cost-effectively sell to SMBs in every region of the world. We operate a scalable, data-driven online marketing model with a multi-channel sales strategy targeted at our SMB customers. We use highly focused marketing campaigns to drive prospective customers to our websites and to our partners. We track and analyze large volumes of data from our systems to improve the visibility and effectiveness of our sales and marketing activities. In addition, we reach SMBs without dedicated IT staff through our MSP customers. We leverage blogs, social media and custom content sites to create online communities that enable existing and prospective customers to connect directly and share information. Our customers purchase our products through our e-commerce sites, inside sales team, and channel partners. As a result, we are able to cost-effectively achieve high volumes of low price point transactions. We offer full-featured, free versions of our products for a designated trial period, an approach that allows prospective customers to experience the full range of benefits of our solutions prior to making their purchase and distinguishes us from the high-cost, up-front sales approach employed by many enterprise software vendors. Amendment No. 8 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents We have developed a broad portfolio of solutions to address the specific needs of SMBs. TeamViewer, our easy-to-use online collaboration product, provides secure remote control and access to virtually any Internet-connected device on which it has been installed along with multi-user web-conferencing, desktop and file sharing. TeamViewer benefits from a powerful network effect, as growth in the number of TeamViewer users drives further adoption of the product. GFI MAX, our cloud-based platform for MSPs, provides MSPs with a comprehensive and affordable portfolio of managed service solutions and enables them to monitor, manage, secure and access their customers' on-premise and distributed IT infrastructure through our integrated cloud-based dashboard. Our IT infrastructure solutions enable SMBs to easily manage and secure their applications, networks and computing systems and are offered through both on-premise and cloud-based deployments. Our GFI Cloud platform, which was launched in 2012, is offered as an integrated framework to deliver these IT infrastructure solutions to SMBs in a unified web browser interface. Our past financial performance has been characterized by consistent Billings growth and strong operating cash flows. For the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2012 and 2013, our Billings were $163.9 million, $187.3 million, $128.4 million, and $147.9 million, respectively, representing period-over-period growth of 14% and 15%, respectively. We define our methodology for calculating Billings, a non-IFRS financial metric, and provide a reconciliation to the most comparable IFRS metric, revenue, under "Selected consolidated financial data Supplemental information." We generated cash flows from operations of $59.9 million, $43.2 million and $40.8 million for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2013, respectively. We incurred net losses of $40.7 million and $51.9 million for the years ended December 31, 2012 and 2011, respectively. We generated net income of $7.9 million (after giving effect to a gain on sale of discontinued operations of $10.5 million) for the nine months ended September 30, 2013, compared to a net loss of $35.3 million for the nine months ended September 30, 2012. In 2012, approximately 32% of our Billings were derived from the Americas, 60% of our Billings were derived from Europe, the Middle East and Africa, and 8% of our Billings were derived from Asia-Pacific. During the nine months ended September 30, 2013, approximately 35% of our Billings were derived from the Americas, 56% of our Billings were derived from Europe, the Middle East and Africa, and 9% of our Billings were derived from Asia-Pacific. Our industry Trends driving our market opportunity SMBs comprise an increasingly large and important part of the global economy. In a 2010 report, IDC estimated that there were approximately 73 million SMBs (defined as organizations with fewer than 1,000 employees) worldwide, representing over 99% of all businesses. Our solutions target this market segment directly and are designed, developed and delivered in ways that maximize their appeal to SMBs. Despite their benefits, many existing IT solutions were designed for larger enterprises and are impractical to implement within SMBs. Several key growth drivers are speeding the adoption of SMB-tailored solutions: Increasingly mobile and connected workforce needs anytime/anywhere collaboration tools. Workers are spending less time in traditional office environments and more time telecommuting and traveling, which is driving demand for remote connectivity and collaboration solutions. A December 2011 IDC report forecasts the global mobile worker population to increase from 1.1 billion in 2011 to 1.3 billion in 2015, representing approximately 37% of the projected 2015 worldwide workforce. GFI Software S.A. (Exact name of registrant as specified in its charter) Luxembourg (State or other jurisdiction of incorporation or organization) 7372 (Primary Standard Industrial Classification Code Number) 98-0631596 (I.R.S. Employer Identification No.) 7A, rue Robert St mper L-2557 Luxembourg Grand Duchy of Luxembourg +352 2786-0231 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) GFI USA, Inc. 4309 Emperor Blvd Suite 400 Durham, NC 27703 (919) 297-1350 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Proliferation of internet-enabled devices. A June 2013 IDC report estimates that there were 722 million smartphones shipped globally in 2012, and forecasts that number to increase to 1.6 billion in 2017, representing a compound annual growth rate, or "CAGR," of 17%. Increasing use of managed service providers. We believe there are over 200,000 value-added resellers, or "VARs," globally, and that the percentage of VARs who are moving to an MSP business model is growing rapidly. Increasing adoption of cloud-based solutions. SMBs continue to expand their use of cloud computing services and software-as-a-service, or "SaaS," solutions to reduce the time and costs associated with installing, configuring and maintaining traditional IT solutions. According to a February 2013 IDC report, U.S. SMB public IT cloud services spending will reach $20.8 billion by 2017. Consumerization of IT. Individuals are spending more time interacting with intuitive, web-based software and services that increase productivity and efficiency in their personal lives. These experiences have consequently increased business users' expectations that they should be able to rapidly access, install and interact with powerful, easy-to-use corporate IT solutions. Increasing IT security threats. The broad adoption by SMBs of cloud-based applications, wireless networks, portable storage and wireless devices has eroded traditional network boundaries and increased the risk of potential attacks. Malware threats have continued to increase in both number and complexity as hackers have become more sophisticated and motivated by the potential for illegally generated profits or the desire to cause disruption or reputational harm to the organizations they target. Rapid IT adoption within emerging markets. According to a Gartner July 2013 report, SMB IT spending in developing regions including Greater China, Emerging Asia-Pacific, Latin America, the Middle East and Africa will grow from $180.6 billion in 2012 to $255.3 billion in 2017. Limitations of existing solutions We believe that many competing solutions fail to meet the needs of SMBs due to a number of limitations: Product complexity. Traditional enterprise software vendors often try to engage SMB customers with solutions designed for large enterprises that are unduly complex and impractical for smaller customers. These enterprise solutions are not designed to meet the unique needs of the SMB market and typically have many sophisticated features that are not required or desired by SMBs. High total cost of ownership. Enterprise software vendors often charge substantial license fees for their solutions and can require significant hardware, training and professional services expenditures for initial deployment and substantial maintenance and additional professional services costs in later years. Poor customer service and support. We believe that SMB customers often receive inadequate technical support from enterprise software vendors, including large providers of cloud-based services, due to the smaller size and associated revenue of their software deployments. Conversely, smaller software vendors often lack the resources to meet their customers' support needs. Lack of product integration. Many of our competitors in the SMB space have assembled their product ranges through acquisitions but have made limited progress in integrating the acquired products and technologies or in streamlining their product lines, resulting in a fragmented and limited user experience. Copies to: Gordon R. Caplan, Esq. Gregory B. Astrachan, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 William V. Fogg, Esq. Andrew J. Pitts, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019 (212) 474-1000 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Table of Contents Our solutions We have designed our solutions to enable SMBs to easily and cost-effectively monitor, manage and secure their IT infrastructure and business applications. We believe that the key differentiators of our solutions include: Purpose-built solutions for SMBs. By focusing on SMBs, we believe that we understand their requirements better and can more effectively deliver highly differentiated technology to address their needs across multiple product categories. Highly intuitive software. The easy-to-use and intuitive interfaces of our solutions not only provide the specific functionality that our customers require, but also accelerate their adoption and realization of value. Low total cost of ownership. Our solutions have a low up-front average selling price of just over $700 that decreases procurement risk and reduces the length of the sales cycle. Our solutions can be implemented in a self-service, try-before-you-buy manner and are designed so that they do not require professional services. SaaS platform approach. We offer a cloud-based, SaaS platform that allows customers to implement our solutions in a modular fashion, enabling them to rapidly solve immediate business needs. Flexible deployment and licensing alternatives. Depending on the solution and market, we support different deployment, usage and licensing arrangements, which we believe increases our potential market opportunity. Our business model Our multi-branded business model is designed to accelerate the adoption of our solutions by our customers by reducing the time and cost of implementation for them. At the same time, our sales strategy enables large sales volumes and efficient distribution. Our business model is characterized by the following attributes: High-velocity global distribution. We offer all of our products directly from our website to maximize our distribution reach and to reduce sales and marketing expense. We support our Internet-based distribution with an inside sales force and an indirect partner network of over 26,000 channel partners acting as resellers worldwide. Full-featured, free solutions offered for a designated trial period. To facilitate the adoption of our solutions, we seek to reduce the time and expense required to evaluate, purchase, and implement our products. We offer full-featured, free and immediately accessible versions of our products for a designated trial period. Simple product adoption. Our solutions are designed to address the specific requirements of our customers and provide a clear value proposition to them. In addition, our solutions are easy to install and do not require professional services, allowing our customers to quickly address their particular IT challenges with no dependencies beyond their organization. Data-driven management. We have developed systems and processes that enable us to closely monitor and manage the results of our business. We track operational and financial metrics to improve our visibility and execution, and make extensive use of search engine optimization and Internet marketing to attract CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common shares, nominal value 0.01 per share 7,015,000 $14 $98,210,000 $12,650 (1) Includes 915,000 shares which may be sold pursuant to the underwriters' over-allotment option. (2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act. (3) $13,640 has previously been paid. Table of Contents potential customers. We continually monitor and analyze customer traffic and purchasing patterns to improve service levels, enhance our marketing strategy and drive better business decisions. Substantial viral network effects. TeamViewer benefits from significant viral network effects. As the number of users of TeamViewer has expanded and consumer awareness of the product has grown, the rate of adoption has continued to increase. As of September 30, 2013, TeamViewer has been activated on over 553 million devices. Growth in the number of TeamViewer users increases the value of the network, contributing to viral adoption of the product. Leveraged technology development. Wherever possible, we share technologies and best practices throughout our global research and development organization, decreasing our costs of development. Our growth strategy Our objective is to extend our position as a leading provider of software solutions to SMBs. To accomplish this, we intend to: Expand our customer base. We believe the market for software solutions to SMBs is considerably underserved and, as a result, we have the opportunity to substantially expand our present customer base. We intend to continue the rapid expansion of our customer base through our specialized global distribution model, converting trial users into paying customers, and leveraging our investments in data analytics to more effectively target prospective customers. Expand our partner ecosystem. We intend to further develop our existing partner ecosystem, increasing sales of our solutions through our existing channel partners and establishing agreements with new partners to provide broader customer coverage as well as extending the breadth of application coverage through complementary partner offerings. We seek to significantly expand our indirect channel across the globe to maximize our distribution capabilities. Increase sales to existing customers. We believe we enjoy a high level of customer satisfaction, which provides us with the opportunity to sell additional solutions to our over 300,000 existing business customers. As of September 30, 2013, only approximately 6% of our customers have purchased two of our products, and only approximately 1% have purchased three or more of our products. We intend to expand our revenue from our existing customers by cross-selling other new and complementary solutions and selling additional licenses and upgrades. Accelerate our growth in targeted geographies. We believe that we have a substantial opportunity to accelerate our revenue growth in largely untapped emerging markets such as Asia-Pacific, Latin America and Eastern Europe by increasing our sales, marketing and support operations in these regions. Additionally, we see further growth opportunities in the United States, as our U.S. subsidiaries generated less than 30% of our global revenue in 2011 and 2012. Develop and extend new software and SaaS products. We plan to develop new software products and functionality that serve the SMB market and complement our existing collaboration, MSP and IT infrastructure software solutions. To maintain and enhance our strong position in delivering solutions that are purpose-built for SMBs, we have increased our investment in product development and platform enhancements. Recent development initiatives include the addition to TeamViewer of a scalable presentation mode, mobile device management functionality and a significant upgrade to our GFI Cloud products. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. Table of Contents Expand our reach through our GFI MAX platform. GFI MAX is our SaaS platform that enables MSPs to deliver remote IT management, monitoring and security to their SMB customers on an outsourced basis. The GFI MAX platform enables us to easily integrate and deliver additional products as a single, cohesive solution at an attractive, small incremental fee to new and existing devices under management. We continue to see a significant market opportunity for us to utilize the approach and architecture that underlie the GFI MAX platform to deliver a solution directly to SMBs. Pursue strategic acquisitions. We continue to selectively evaluate opportunities to acquire businesses and technologies that complement our existing solutions and business model and extend our position among SMBs. Risks related to our business Our business is subject to a number of risks that you should understand before making an investment decision. These risks are discussed more fully under the section entitled "Risk factors" and include, but are not limited to, the following: the markets in which we compete are highly competitive and we could be unable to compete effectively; if the markets for collaboration, MSP and IT infrastructure software solutions do not grow, our business and operating results will be harmed; if we are unable to generate significant volumes of sales leads, in particular from Internet search engines and other online marketing campaigns, traffic to our website could decrease and, as a result, our revenue could decrease; we rely on third-party channel partners acting as resellers to generate a material portion of our revenue and if our partners fail to perform, our ability to sell our solutions will be negatively impacted and our operating results will be harmed; our majority shareholder, investment funds affiliated with Insight Venture Management, LLC, or "Insight," will beneficially own approximately 64.38% of our outstanding common shares following this offering (or 63.04% if the underwriters' over-allotment option is exercised in full) (assuming Insight does not elect to purchase our common shares in this offering) thereby allowing Insight to control our management and affairs and matters requiring shareholder approval; our quarterly operating results could fluctuate significantly, which makes our future results difficult to predict and makes period-to-period comparisons potentially not meaningful; we have a limited operating history as a combined entity, have experienced rapid growth in recent periods, and may be unable to manage our growth effectively; we may not be able to reliably predict our Billings, revenue, earnings or cash flow, even in the near term; the success of our business depends on our ability to protect and enforce our intellectual property rights; our products, including products obtained through acquisitions, could infringe third-party intellectual property rights, which could result in material litigation costs; 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 jurisdiction where the offer or sale is not permitted. Prospectus (subject to completion) Issued November 21, 2013 GFI Software S.A. Common shares Table of Contents if we fail to develop our brands cost-effectively, or if we fail to maintain the integrity and reputation of our brands, our financial condition and operating results might suffer; and if we are unsuccessful in developing and selling new products and product enhancements, our business and operating results will be harmed. In addition, we are subject to risks related to our international operations, our corporate structure and our status as a foreign private issuer. In connection with your investment decision, you should review the section of this prospectus entitled "Risk factors." Corporate reorganization Prior to October 24, 2012, we conducted our business through GFI Software S. r.l., a Luxembourg limited liability company (soci t responsabilit limit e) and its direct and indirect subsidiaries. The registrant does not engage in any operations and has only nominal assets, other than a 100% interest in TV GFI Holding Company S. r.l., a Luxembourg limited liability company (soci t responsabilit limit e), which itself does not engage in any operations or own any material assets, other than a 100% direct or indirect interest in our operating subsidiaries. On October 24, 2012, in anticipation of this offering, we completed a corporate reorganization that involved, among other things, the conversion of the registrant into a Luxembourg joint stock company (soci t anonyme), becoming GFI Software S.A. Investors in this offering will only receive, and this prospectus only describes the offering of, common shares of GFI Software S.A. On November 14, 2012, in anticipation of this offering and pursuant to a meeting of the shareholders held in accordance with Luxembourg law, the shareholders of the registrant effected a 1-for-3 reverse stock split, or "share merger" under Luxembourg law, pursuant to which the number of issued and outstanding common shares of the registrant at such time was reduced from 110,655,881 to 36,885,288, with each shareholder's respective shares being proportionately reduced. We sometimes refer to the share merger herein as the "split." Our corporate information The registrant was incorporated under the name Crystal Indigo S. r.l. as a limited liability company (soci t responsabilit limit e) under the laws of the Grand Duchy of Luxembourg in June 2009 and thereafter changed its name to TV Holding S. r.l. in July 2009. On July 27, 2011, TV Holding S. r.l. changed its name to GFI Software S. r.l. On October 24, 2012, in anticipation of this offering, the registrant was converted into a Luxembourg joint stock company (soci t anonyme), becoming GFI Software S.A. as part of the corporate reorganization described in further detail under the section entitled "Corporate reorganization" included elsewhere in this prospectus. Our principal executive offices are located at 7A, rue Robert St mper, L-2557 Luxembourg, Grand Duchy of Luxembourg. Our telephone number is +352 2786-0231. The address of our website is http://www.gfi.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus. All of the activities of the registrant are conducted through various subsidiaries, which are organized and operated according to the laws of their country of incorporation. "GFI Software," "GFI," "TeamViewer," "GFI MAX," "GFI WebMonitor," "GFI MailSecurity," "GFI Cloud," "FaxMaker," "LanGuard," "IASO" and "GFI MailEssentials," among others, are our trademarks in various jurisdictions. This prospectus may also refer to brand names, trademarks, service marks and trade names of other companies and organizations, and those brand names, trademarks, service marks and trade names are the property of their respective owners. This is the initial public offering of GFI Software S.A., a joint stock company (soci t anonyme) existing under the laws of the Grand Duchy of Luxembourg. We are offering 6,100,000 common shares. This is our initial public offering, and no public market currently exists for our common shares. We anticipate that the initial public offering price will be between $12.00 and $14.00 per common share. After the offering, the market price for our common shares may be outside this range. Table of Contents Special note regarding our corporate history and the presentation of our financial information Our corporate existence began in 1999 when GFI Software LTD was formed as an international business company in the British Virgin Islands with operations in Malta. In May 2005, GFI Software LTD and its subsidiaries were indirectly acquired by GFI Acquisition Company Ltd., or "GFI Acquisition," an entity controlled by Insight, our majority shareholder. The registrant was formed in June 2009. In July 2009 certain other investment funds affiliated with Insight indirectly acquired control of the registrant and, through a series of transactions, the registrant became the parent holding company of TeamViewer GmbH and its affiliates. In November 2010, at the direction of Insight, GFI Acquisition was merged with and into the registrant. We refer to this transaction as the "Merger." The Merger resulted in the consolidation of GFI Acquisition and its subsidiaries and the registrant and its subsidiaries under one organizational structure. Because both GFI Acquisition and the registrant had been under the common control of Insight since July 2009, the Merger is considered for accounting purposes to be a reorganization of entities under common control and the pooling of interest method of accounting has been used in the presentation of our consolidated financial statements. Accordingly, our consolidated financial statements present our results and changes in equity as if the Merger had occurred upon Insight's acquisition of the registrant on July 29, 2009. For periods prior to Insight's acquisition of the registrant, our financial statements present the consolidated results and changes in equity solely of GFI Acquisition and its subsidiaries. We have applied to list our common shares on the New York Stock Exchange under the symbol "GFIS." We are an "emerging growth company" under applicable federal securities laws. Table of Contents
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+PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our Class B common stock. You should read the entire prospectus carefully, especially the risks of investing in our Class B common stock discussed under Risk Factors and our consolidated financial statements and accompanying notes. In this prospectus, unless the context otherwise requires, Applied Medical, Applied, we, us or our refer to Applied Medical Corporation and its subsidiaries. Applied Medical Corporation We develop, manufacture and market medical devices for general, colorectal, bariatric, vascular, gynecological, urological and pediatric surgical procedures. We generate revenue by delivering surgical devices that reduce the invasiveness of open procedures and minimize the likelihood of trauma and wound-site infections during these procedures. Our Mission Our mission is to improve clinical outcomes and enhance the choices available to end users while increasing the availability and affordability of healthcare in general. We offer our customers the following key benefits: Innovation. We have a long history of investing significant portions of our revenues in research and development. As of December 31, 2012, we have compiled a portfolio of 391 issued and 246 pending patents in the U.S., Europe, Japan, Australia and Canada. We respect other parties intellectual property and resolutely defend ours from infringers. Lower Cost. We strive to reduce the cost of surgical procedures and related supplies. We spend approximately half of our research and development budget on developing reliable processes and automation for manufacturing our products. Choices. We are reluctant to eliminate a product choice or an option for the hospital or surgeon. Although we discontinue some older products from time to time, our process for phasing out products is elaborate and takes into consideration our customers needs. Exceptional Service. We have dedicated considerable time, capital and resources to serve our customers, from training to servicing clinical teams. We have also foregone opportunities for faster growth in order to dedicate time and effort towards updating our customers on the latest innovations and improvements. Commitment to Science. We conduct basic scientific research in order to foster our product development. For example, our scientists have enhanced processes for incorporating titanium, gel and other materials into our products. Commitment to Independent and Credible Research. We encourage independent clinical research by providing our products and sharing our knowledge regarding treatment protocols with researchers in order to foster better science, research design and implementation, as well as credible and accurate conclusions. Commitment to Quality and Regulatory Compliance. We continue to strive towards unequivocal compliance with regulatory requirements, including quality system regulations and related policies and procedures. While many of our competitors aspire to provide one or more of these benefits, we are committed to delivering all of them. This means that we strive to offer an improved product or outcome at a lower Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Dated February 13, 2013. 729,798 Shares CLASS B COMMON STOCK This is the initial public offering of Class B common stock of Applied Medical Corporation. No public market currently exists for our shares. The selling stockholders are offering 729,798 shares of our Class B common stock. We will not receive any of the proceeds from the sale of shares by the selling stockholders. We have been informed by the underwriter that its bona fide estimate of the range of the maximum offering price is between $30.00 and $34.00 per share. We do not intend to apply to list our Class B common stock on any national securities exchange.
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+PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION AND DOES NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS PROSPECTUS, ANY RELATED PROSPECTUS SUPPLEMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO IN WHERE YOU CAN FIND MORE INFORMATION ON PAGE 57 BEFORE MAKING AN INVESTMENT IN OUR COMMON STOCK, INCLUDING THE RISK FACTORS SECTION BEGINNING ON PAGE 14. As used in this Prospectus, unless the context requires or is otherwise indicated, the terms we, us, our, the Registrant, the Company, our company only refer to Taxus Pharmaceuticals, Inc., a Nevada corporation, incorporated on February 17, 2012. Set forth below are the defined terms that we use throughout this registration statement to refer to the Registrant s subsidiaries and affiliated operating entities: (i) China Sequoia refers to China Sequoia Pharmaceuticals Group International Holdings Limited a company organized on January 28 , 2011 under the laws of the British Virgin Islands, which is the majority shareholder of the Registrant. (ii) Stand Giant refers to Stand Giant International Limited , a company organized on February 18, 2011 under the laws of Hong Kong, which is the wholly owned subsidiary of the Registrant. (iii) Hongshan Energy refers to Hongshan Energy Technology Services (Taiyuan) Company, Ltd. , a limited liability company organized on May 13, 2011 under the laws of the People s Republic of China, which is a wholly-owned subsidiary of Stand Giant and therefore, indirectly wholly owned subsidiary of the Registrant; (iv) Renji Pharmaceuticals refers to Jinzhong Renji Pharmaceuticals Co., Ltd. , a limited liability company organized on June 05, 2007 under the laws of the People s Republic of China, which is a variable interest entity of Hongshan Energy through contractual arrangements. (v) Hongshan Pharmaceuticals refers to Shanxi Hongshan Pharmaceuticals Co., Ltd. , a limited liability company organized on August 4, 2000 under the laws of the People s Republic of China, which is a variable interest entity of Hongshan Energy through contractual arrangements; (vi) Kunyuan refers to Shanxi Kunyuan Health Products Co., Ltd , a limited liability company organized on November 21, 2000 under the laws of the People s Republic of China and a majority owned subsidiary of Hongshan Pharmaceuticals. (vii) PRC operating entities refer to Hongshan Energy, Renji Pharmaceuticals, Hongshan Pharmaceuticals and Kunyuan, collectively. China or PRC refers to the People s Republic of China, excluding Hong Kong, Macau and Taiwan. RMB or Renminbi refers to the legal currency of China and $ or U.S. Dollars refers to the legal currency of the United States. We make no representation that the RMB or U.S. Dollar amounts referred to in this Prospectus could have been or could be converted into U.S. Dollars or RMB, as the case may be, at any particular rate or at all. GAAP unless otherwise indicated refers to accounting principles generally accepted in the United States. Our Company The Registrant, Taxus Pharmaceuticals, Inc., was founded under the laws of the State of Nevada on February 17, 2012. On March 28, 2012, the Registrant completed a share exchange transaction with China Sequoia, the sole shareholder of Stand Giant, under which the Registrant issued 13,244,500 shares of common stock to China Sequoia in exchange for the total issued and outstanding shares of Stand Giant. Prior to the exchange, Shing Ming Wong, the sole shareholder of China Sequoia, was China Sequoia s director till April 17, 2012. Jiayue Zhang, the director of Taxus Pharmaceuticals, became the director of China Sequoia on April 17, 2012 after the share exchange between the Registrant and China Sequoia was completed on March 28, 2012. Upon the completion of the share exchange transaction, Stand Giant became the Registrant s wholly owned subsidiary. The Registrant engages in the business of growing Yew trees, selling Yew tree bonsai, researching and developing paclitaxel (extract from Yew), retail pharmacy and health care product manufacturing and development in China through Stand Giant s wholly owned Chinese subsidiary Hongshan Energy and its variable interest entities Hongshan Pharmaceuticals and Renji Pharmaceuticals. Hongshan Pharmaceuticals and Renji Pharmaceuticals became the variable interest entities ( VIE ) (as defined in ASC 810-10, formally FIN 46(R)) of Hongshan Energy on June 28, 2011 through a series of contractual arrangements. The contractual arrangements include an Exclusive Business Cooperation and Management Agreement, an Equity Interest Pledge Agreement and an Exclusive Option Agreement. Under the Exclusive Business Cooperation and Management Agreement, Hongshan Energy provided Hongshan Pharmaceuticals and Renji Pharmaceuticals with complete business support, operational management and technical and consulting services to the extent permitted by the currently effective laws of China, which may include all services within the business scope of Hongshan Pharmaceuticals and Renji Pharmaceuticals as may be determined from time to time by Hongshan Energy, such as but not limited to technical services, business consultations, equipment or property leasing and marketing consultancy. Hongshan Energy s compensation for the services provided under the Exclusive Business Cooperation and Management Agreement is the post-tax net income of Hongshan Pharmaceuticals and Renji Pharmaceuticals, which also subject Hongshan Energy to the risk of assuming the loss of Hongshan Pharmaceuticals and Renji Pharmaceuticals in the event that Hongshan Pharmaceuticals and Renji Pharmaceuticals suffer net loss in any fiscal year. Hongshan Pharmaceuticals and Renji Pharmaceuticals and their shareholders have granted Hongshan Energy, under the Exclusive Option Agreement, the exclusive right and option to acquire all of their equity interests in Hongshan Pharmaceuticals and Renji Pharmaceuticals. Further, the shareholders of Hongshan Pharmaceuticals and Renji Pharmaceuticals pledged all of their rights, titles and interests in Hongshan Pharmaceuticals and Renji Pharmaceuticals to Hongshan Energy under the Equity Interest Pledge Agreement. The shareholders of Hongshan Pharmaceuticals and Renji Pharmaceuticals also granted power of attorney to Hongshan Energy to exercise all the shareholder's rights and shareholder's voting rights. Variable interest entity (VIE) is a term used by the United States Financial Accounting Standards Board in FIN 46 to refer to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. A VIE is an entity meeting one of the following three criteria as elaborated in FASB ASC 810-10 [formerly FIN 46 (Revised)]: 1. The equity-at-risk is not sufficient to support the entity's activities (e.g.: the entity is thinly capitalized, the group of equity holders possesses no substantive voting rights, etc.); 2. As a group, the equity-at-risk holders cannot control the entity; or 3. The economics do not coincide with the voting interests (commonly known as the "anti-abuse rule"). The Registrant s principal office is located at 12th Floor, Room 1202 Jinshang International Golden Tower, Yuci District, Jinzhong City, Shanxi Province, China 030600. Our telephone number is 011-86-354-3366667. The Registrant and our subsidiaries and operating companies have generated only minimal revenues, have experienced losses to date, and that it may take years for the extraction process of Paclitaxel to begin, if ever. Although the Company is incorporated in Nevada, all of our officers, directors, shareholders, assets and operations are located in PRC. The Offering This prospectus relates to the resale of up to 862,000 shares of Common Stock, par value $0.0001 per share ( Shares ) of Taxus Pharmaceuticals, Inc., a Nevada corporation, that may be sold from time to time by Selling Stockholders. Selling stockholders will sell at a fixed price of $ 0.25 per share until our common shares are quoted on OTCBB and, thereafter, at prevailing market prices or privately negotiated price. We intend to apply to have our common stock quoted on the OTCBB within one year after this Form S-1 Registration Statement becomes effective and we estimate that the application process might take approximately 3 months The Shares were issued to the Selling Stockholders in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Common Stock outstanding prior to offering 22,642,500 Total shares held by non-affiliate stockholders prior to the offering 7,148,000 Total shares of Common Stock offered by Selling Stockholders 862,000 Common Stock to be outstanding after the offering 22,642,500 Use of proceeds of sale We will not receive any of the proceeds from the sale of the shares of Common Stock by the Selling Stockholders. Risk Factors See Risk Factors beginning on page 14 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our Common Stock.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in the securities offered hereby, you should read the entire Prospectus, including our consolidated financial statements and related notes included in this Prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. In this Prospectus, the terms Privileged, the Company, we, us, and our refer to Privileged World Travel Club, Inc., a Delaware corporation. Summary of the Company PRIVILEGED WORLD TRAVEL CLUB, INC. The Exclusive Society for Prestigious Travelers Corporate History Privileged World Travel Club, Inc. ( Privileged or Company ), was incorporated in Delaware on May 18, 2012 as APEX 4, Inc. ( APEX 4 ). On June 6, 2012, APEX 4 filed a registration statement on Form 10 under the Securities Exchange Act of 1934, as amended (the Exchange Act ), to register with the U.S. Securities and Exchange Commission (the SEC ) as a public company. The Form 10 went effective by statute through the lapse of time 60 days after its initial filing, or on August 8, 2012. On July 17, 2012, Richard Chiang, the sole director and stockholder of APEX 4, appointed Gregory Lykiardopoulos, Chairman and CEO of Triton Distribution Systems, Inc. ( Triton ), as a director of APEX 4. Subsequently, on July 18, 2012, Mr. Chiang and Mr. Lykiardopoulos entered into a Stock Purchase Agreement whereby Mr. Lykiardopoulos purchased 10,000,000 shares of common stock of APEX 4 for a purchase price of $40,000 from Mr. Chiang, which constituted 100% of the issued and outstanding shares of APEX 4 common stock. Mr. Chiang then resigned from all positions with APEX 4. Mr. Lykiardopoulos, as the sole director and stockholder of APEX 4, then appointed himself as President, Chief Executive Officer, and Chairman of the Board of APEX 4, and adopted an amendment to the Certificate of Incorporation, changing the name of the Company to Privileged World Travel Club, Inc. on July 19, 2012. Mr. Lykiardopoulos subsequently assigned and sold the 10,000,000 shares to Triton, which agreed to the cancellation of 1,875,000 shares. As a result of these transactions, Triton became the sole stockholder of the Company, owning 8,125,000 shares of our restricted common stock. Subsequently, the Company issued shares of our restricted common stock to certain of Triton s creditors in exchange for their right to receive payment under obligations owed by Triton. The aggregate amount of shares of restricted common stock issued to former Triton creditors was 5,595,500, and the amount of obligations given to the Company in exchange for the shares was $5,595,500. We also issued 4,730,625 shares of our restricted common stock to certain individuals and entities that have provided services to the Company or its affiliates. See Selling Stockholders for additional information regarding the recipients of these securities who are Selling Stockholders under this Prospectus. We entered into several consulting agreements, described in more detail below, relating to the provision of services to the Company including initial design and development of the Company's US domestic website and website content; sales and marketing of the Company's products and services; technical and financial advice concerning the handling of the Triton note holders and beneficiaries of the UCST Business Trust; creation of travel packages and website content; introductions to other parties in the financial and travel industry; and software implementation and adaptation. Privileged Nevada In May 2012, Mr. Lykiardopoulos had previously formed Privileged, Inc., a Nevada corporation ( Privileged Nevada ), for the purpose of exploring the possibility of developing a domestic and international travel business. He undertook certain preliminary operations, including contacting individuals and entities in China and other overseas companies relating to the commencement of the business. Privileged Nevada had no financial activity. It raised no capital, and had no revenues or expenses. Several of the Company s Selling Stockholders provided initial services to Privileged Nevada. Privileged Nevada is a wholly owned subsidiary of Triton Distribution Services, Inc., which is also a significant shareholder of the Company. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1/A Amendment No. 1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 PRIVILEGED WORLD TRAVEL CLUB, INC. (Exact name of registrant as specified in its charter) Delaware 6770 45-5312769 (State or other jurisdiction of incorporation) (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) 1 Blackfield Drive Tiburon, CA 94920 (415) 888-2478 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Gregory E. Lykiardopoulos Chief Executive Officer and President Privileged World Travel Club, Inc. 1 Blackfield Drive Tiburon, CA 94920 (415) 888-2478 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: C. Parkinson Lloyd, Esq. Durham Jones & Pinegar, P.C. 111 East Broadway Suite 900 Salt Lake City, Utah 84111 Telephone: (801) 415-3000 Facsimile: (801) 415-3500 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. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company Subsequent to the commencement of the activities described above, Mr. Lykiardopoulos determined to acquire the outstanding shares of APEX 4 as described above. Mr. Lykiardopoulos, as an officer and director of the Company, was able to continue his discussions with the individuals and entities contacted previously, which resulted in certain contracts for the Company (including the License Agreement, the Travel Services Agreement, and the Stock Purchase Agreement, all described below). Additionally, the Company was able to benefit from certain of the services that were provided to Privileged Nevada (including website development, negotiations with Chinese travel providers), in exchange for which the Company issued shares of its common stock as described in the section Selling Stockholders. Business of the Company The business of Privileged will be to provide exclusive travel services to persons ( Members ) who elect to join the prestigious Privileged World Travel Club (the Privileged Travel Club ) and international travelers bound for the United States. Immediately after joining, Members of the Privileged Travel Club will be able to begin enjoying the services their membership offers, including a free debit card; discounted airline fares, hotels, car rentals, and travel packages; discounts at Marriott Hotels; free entrance to Walt Disney World Resort or Disneyland; free airport shuttle services; discounts at various Las Vegas, Nevada, hotels; free trip on Amtrak; discounted spa and massage visits; discounts at Honolulu, Hawaii, hotels; discounts on airline tickets to Hawaii; and airline upgrades. Additionally, Members may become eligible for special travel packages to China, Australia, the South Pacific, Asia, and Europe. The organizers of the Privileged Travel Club are very passionate about what they do for two reasons: 1. Globally, tourism is a growing industry at approximately 4% annually (2011 compared to 2010), with Europe growing at a rate of approximately 5.9%, Asia and Asia Pacific at a rate of 4.4%, and North America at a rate of 6.6% annually (2011 compared to 2010). (Source: UNWTO Tourism Highlights, 2012 Edition, on file with the Company.) 2. Based on Management s research, there are very few travel clubs that are catering exclusively to special frequent travelers. Other travel clubs that provide exclusive services and memberships to prestigious travelers are typically very expensive and frequently charge high fees for their memberships. This typically restricts membership in these travel clubs to customers with high net income. By contrast, Privileged Travel Club will charge a relatively low annual membership fee, which we expect will allow more people to participate and join, and enjoy the benefits of membership. Management anticipates that Privileged Travel Club Members to a great extent will be located in urban areas within major cities in the United States, and our target market includes men and women in their forties. Our management expects that there will continue to be rapid growth in the market and increasing demand. In addition, more niche markets are evolving. Initially, we acknowledge that it will be difficult to compete with other more well-established travel clubs. However, the Privileged Travel Club target markets include potential Members who can be differentiated due to their requirements and the accessible pricing for the initial membership and our travel packages. Similarly, the Privileged Travel Club domestic website will offer very easy-to-navigate searches, and will simplify the process of making reservations through a sophisticated technology, giving Members access to different travel destinations and packages around the world. Our goal is to provide luxury service with a high standard of value. We feel that our prices are reasonable and very attainable by all Members to travel any time they wish. We are specially focused to offer our Members luxury membership and travel products and services at specially discounted prices. We expect our offerings to be comparable to the level of offerings by our competitor luxury travel clubs, but at prices below similar packages regularly offered in the travel industry. From our research, other travel clubs that offer luxury services similar to ours do so at prices higher than those we offer to our Members. Our concept is to offer these services to a larger audience and thereby increase our reach to more markets. As of the date of this Prospectus, we continued to develop our business and our websites and to implement our business and operating strategy. We had no Members, paying customers, or sales as of the date of this Prospectus. As we have recently commenced our planned operations, we plan to fund our operations from loans from Triton and our chairman, and we plan to raise equity capital by offering shares of our common stock to investors. On October 5, 2012, we entered into a stock purchase agreement with an investor who agreed to purchase 5,000,000 shares of our restricted common stock for an aggregate purchase price of $5,000,000, to be paid within 10 days of this Registration Statement s being declared effective. On March 14, 2013, the purchaser paid $500,000 of the purchase price to the Company. The Company has issued 500,000 shares in connection with the initial payment, and recognizes its obligation to issue the remaining 4,500,000 shares upon payment of the balance of the purchase price. The remaining shares to be issued are included in the total issued and outstanding shares of the Company s common stock. CALCULATION OF REGISTRATION FEE CHART Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price(3) Amount of registration fee Common Stock, $0.0001 par value per share 11,445,219 $ 1.00 $ 11,445,219 $ 1,562 For the next twelve months, we anticipate we will need approximately $1,500,000 to cover our operating expenses, including our reporting obligations, plus an additional $2,200,000 for our license fee and royalty payment due to Triton at the end of the next twelve month period. Our anticipated monthly burn rate will be approximately $125,000. The detail of our operation expenses over the next twelve months is as follows: Salaries and benefits $ 500,000 Marketing 400,000 General overhead 200,000 Website development and maintenance 100,000 Professional fees 150,000 Royalty and license payments to Triton 2,200,000 $ 3,550,000 We believe we will be able to raise the necessary capital to carry out our business plan, but there is no assurance that we will be able to do so. Even if we are able to raise the funds or generate the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. For these reasons, our auditors have stated in their report that there is substantial doubt that we will be able to continue as a going concern. License Agreement On August 21, 2012, the Company entered into a license agreement (the Triton Agreement ) with Triton. Pursuant to the Triton Agreement, the Company obtained a non-exclusive right and license (the License ) to use Triton s Reservation Expert (the Software ) for the purpose of providing services to the Company s Members. Through the use of the License on the Company s websites, the Company s Members will be able to make travel reservations, book airline seats, issue airline tickets, book hotels, cars, cruises, and other holiday destination packages worldwide from the Privileged website. The Company agreed to pay to Triton a license fee of One Hundred Fifty Thousand Dollars ($150,000), not later than fifteen (15) days following the execution of the Triton Agreement, as a one-time license fee (the License Fee ) for the Software. Triton agreed to defer payment of the License Fee until July 31, 2013, in exchange for increasing the fee to $200,000. The Company also agreed to pay to Triton an annual royalty payment (the Royalty Fee ) of Two Million Dollars ($2,000,000), payable annually beginning on the earlier of (a) the date on which Privileged has a gross profit from operations of at least Five Million Dollars ($5,000,000), or (b) the date on which Privileged has received equity investments of at least Five Million Dollars ($5,000,000). Additionally, Privileged may prepay all or any portion of the annual Royalty Fee in its discretion. Triton agreed to deliver to the Company on or before September 1, 2012, working installations of the Software, unless such deadline is extended pursuant to agreement by the Company and Triton. Triton has made the Software available to the Company for use in its websites when they are developed. Prospective Member List Purchase Agreement Additionally, on October 10, 2012, the Company entered into a Prospective Member List Purchase Agreement (the List Purchase Agreement ) that memorialized a prior verbal agreement with Triton. Prior to and in anticipation of the commencement of the Company s operations, Triton had acquired a list of names and contact information for approximately 9 million individuals (the Potential Member List ) that the Company anticipates using as its initial marketing base to offer memberships in the Company s Privileged World Travel Club. Following the commencement of the Company s business, during September 2012, the Company and Triton had verbally agreed to the terms of the sale of the Potential Member List to the Company in exchange for the cancellation of certain debts of Triton acquired or to be acquired by the Company. (1) We are registering 11,445,219 shares of our Common Stock (the Shares ) owned by 36 selling stockholders identified herein (the Selling Stockholders ). We will not receive any proceeds from the sale of the shares sold by the Selling Stockholders. In the event of stock splits, stock dividends, or similar transactions involving the Common Stock, the number of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended (the Securities Act ). (2) The offering price has been estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on prior sales of Common Stock of Privileged World Travel Club, Inc., at a price of $1.00 per share. (3) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The shares to be sold by the Selling Stockholders will be sold at a fixed price to be determined prior to effectiveness of this Registration Statement. Any increased fees will be paid prior to effectiveness. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. On October 10, 2012, the Company and Triton entered into the List Purchase Agreement, which memorialized the sale of the Potential Member List by Triton to the Company and the Company s agreement to the cancellation and return to Triton of $5,595,500 in promissory notes (the Notes ) which the Company had acquired from prior holders of the Notes. The Notes had previously been issued by Triton to certain individuals and investors in Triton, who had exchanged their notes, either directly with the Company for the issuance of shares of the Company s restricted common stock, or with the UCST Trust, which had exchanged the Notes with the Company for the issuance of shares of the Company s restricted common stock. Information about Triton Distribution Systems, Inc., Relationship between Triton and Privileged Triton was organized as Petramerica Oil, Inc., a Colorado corporation ( Petramerica Oil ), in September 1986 to explore for oil and gas in the Rocky Mountain region of the United States. From inception, Petramerica Oil was primarily involved in raising capital and did not conducted any significant operations. Petramerica Oil acquired all of the outstanding common stock of Triton Distribution Systems, Inc., a Nevada corporation ( Triton Nevada ), in July 2006 for 36,750,950 shares of Petramerica common stock. Triton Nevada was organized in January 2006 to engage in the travel business. Petramerica Oil subsequently changed its name to Triton Distribution Systems, Inc. Triton is a development stage Web-based business primarily focused on travel services distribution. The travel marketplace is a global arena in which millions of buyers such as travel agents and consumers and sellers such as airlines, hotels, car rental agencies, cruise ship lines, tour operators and entertainment companies come together. Among the systems available to buyers in their search for travel options, availability and rates are Global Distribution Systems companies, known as GDSs, which are accessed primarily by travel agents and Internet travel Web site companies such as Cendant Corp.'s Orbitz, Expedia, Inc.'s Expedia.com and Sabre Holdings Corp.'s Travelocity, which are accessed by consumers. These systems electronically connect a vast network of travel product sellers and globally dispersed travel agents and consumers. Triton s business model is a Business to Business ( B to B ) business model, as compared to Privileged s Business to Consumer ( B to C ) business model. Triton's direct customers are travel agents worldwide that need reservation tools to effect and make bookings for their customers, issue the proper documentation, account for all the transactions they sell through an accounting system, track their commissions and maintain inventory that needs to be sold to their customers, the consumer/traveler, whereas Privileged is an exclusive and selectively operated Travel Club that will cater to the consumers directly. In connection with the license of the Software, Triton will supply to Privileged an electronic brochure for travel with various trips designed for worldwide access and bookings. Because of the diversified quantity and quality of the trips, it has the appearance of being a catalog that Members of Privileged will be able to review, and will have the opportunity to pick and choose the destinations and the trips they desire and book them from the systems online directly from the brochure. Triton is not a GDS. Instead, Triton is an aggregator of inventory and ready-designed travel packages that will be able to be booked by the Privileged Members from vendors that are selling them online in real time. All inventory, packages, pricing, and ticketing is supplied by the vendors, including the GDSs, and the inventory, packages, pricing, and ticketing are then passed on to the Privileged Members via the proprietary Software developed by Triton. Triton was a publicly reporting company until 2009 when Triton filed a Form 15 and terminated its registration under Section 12(g) of the Exchange Act, as permitted in light of the combination of the number of shareholders and total assets of Triton for the preceding three fiscal years. Triton s Board of Directors has periodically reviewed the possibility of becoming a reporting company again, but has not had the access to capital to enable it to satisfy its obligations, including the costs relating to being a public company. As of the date of this prospectus and the Registration Statement of which it is a part, Triton was trading on the OTC Pink Market (formerly, the Pink Sheets). Neither this Prospectus nor the Registration Statement of which it is a part relate to any shares of Triton common stock or the business of Triton, other than in connection with Triton s role as a shareholder or contract partner of Privileged. As discussed elsewhere in this Prospectus, Triton is a significant shareholder of Privileged, owning approximately 31% of Privileged s outstanding common stock as of the date of this Prospectus. Additionally, Triton and Privileged are parties to two contracts, the License Agreement and the List Purchase Agreement, both discussed above. Moreover, Mr. Lykiardopoulos, the Chairman and CEO of Privileged, is also the Chairman and CEO of Triton. Nevertheless, Triton and Privileged are and remain two separate entities with different and distinct business plans and models. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated July 23, 2013 PRIVILEGED WORLD TRAVEL CLUB, INC. 11,445,219 Shares Common Stock This Prospectus relates to the resale of up to 11,445,219 shares (the Shares ) of Common Stock of Privileged World Travel Club, Inc. ( Privileged or Company ), $0.0001 par value per share ( Common Stock ) by 36 selling stockholders (the Selling Stockholders ) identified and described herein. The Selling Stockholders will offer their shares at fixed or negotiated prices, although the sales by the Triton Creditor Selling Stockholders will be at a fixed price ($1.00) for the duration of this offering. The Selling Stockholders will receive all of the proceeds from the sale of the Shares and Privileged will receive none of those proceeds. Certain of the Selling Stockholders (identified as the Triton Creditor Selling Stockholders discussed herein) are underwriters within the meaning of the Securities Act of 1933 ( Securities Act ) in connection with the resale of our Common Stock under this Prospectus, and the remaining Selling Stockholders may also be deemed to be underwriters within the meaning of the Securities Act. No other underwriter or person has been engaged to facilitate the sale of the Shares in this Offering. Our Common Stock is publicly traded on the OTC Bulletin Board, and trades under the symbol PVCL. On June 30, 2013, the closing price of our common stock was $1.00, although the trading in the shares has been minimal. Privileged currently has a concurrent offering of its shares under a separate registration statement. A registration statement on Form S-1 (SEC File Number 333-183743) covers sales by thirty-six selling shareholders of up to 466,306 shares of Privileged s common stock issued. As such, there are a total of 11,911,525 shares registered for resale under this and the other registration statement referred to above, although there is no guarantee that all of the shares will be sold. Both this registration statement and the existing registration statement are resale registrations. As such, all of the shares under this registration statement and the other registration statement are presently outstanding, and accordingly those shares are included in the number of shares of our common stock listed as issued and outstanding. Investing in our Common Stock involves a high degree of risk. You should purchase shares only if you can afford a complete loss of your investment. See Risk Factors beginning on page 10. Privileged World Travel Club, Inc., is a development stage company and currently has no revenues. The Company is an Emerging Growth Company under the JOBS Act of 2012, but the Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(B) of the JOBS Act. Investing in our common stock involves risks. See Risk Factors on page 10. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is July ___, 2013. Travel Services Agreement On October 8, 2012, the Company entered into a Travel Services Agreement (the Travel Agreement ) with China International Group Travel ( CIGT ), a division of China International Travel Service Limited, a Republic of China Government Enterprise ( CITS ), relating to the provision of travel services by the Company. Pursuant to the Travel Agreement, the Company agreed to build and develop a travel-related website (the Privileged Website ), using our proprietary reservation software, that will permit the preparation of consolidated itineraries for travel within China through a link to an external Chinese GDS to be provided by CIGT, and for international travel and travel within the US, including travel relating to the following cities: San Francisco, California; Los Angeles, California; Las Vegas, Nevada; Chicago, Illinois; Miami, Florida; Boston, Massachusetts; New York, New York; New Orleans, Louisiana; and Orlando, Florida (collectively, the Travel Cities ). Additionally, through the Privileged Website, the Company agreed to provide consolidated itineraries for both the Chinese domestic travel and international travel to and among the Travel Cities by Chinese Citizens traveling to any one or more of the Travel Cities (collectively, the Covered Travelers ). Finally, the Company agreed to work with CIGT to arrange package tours to the Travel Cities, and will provide tour guide and assistance for such tours, pursuant to agreements, the terms and conditions of which will be determined by the Parties. In exchange for these services to be provided by the Company, pursuant to the Travel Agreement CIGT agreed to book all travel for the Covered Travelers through the Privileged Website. CIGT further agreed that it would provide to the Company a functional link (together with all necessary technical support for functionality) to a TravelSky Technology Limited ( TravelSky ), a Chinese State-owned enterprise and dominant provider of IT solutions to China's air travel and tourism industries, and to obtain all necessary and proper permission and approval from TravelSky for use of the link on the Privileged Website. CIGT further agreed to use the Privileged Website to book all domestic travel for the Covered Travelers in connection with their travel to the Travel Cities, using the link to TravelSky on the Privileged Website. Finally, CIGT agreed to pay a fee to Privileged for all booked travel pursuant to the terms to be provided by the Company in connection with applicable tour packages for the Travel Cities once the Privileged Website is operational and CIGT can begin booking travel. Additionally, the Company will work with CIGT in connection with the arrangement of packaged tours and the fees to be paid to Privileged for arranging the tours. Both the Company and CIGT agreed to maintain the confidentiality of each others confidential and trade secret information and documentation. Moreover, the Company and CIGT agreed that each would be responsible for payment of their respective taxes in connection with the operation of their businesses. The term of the Travel Agreement runs from October 8, 2012, through December 31, 2015, and may be renewed for additional one-year terms on the written agreement of the Company and CITG. Our operational milestones in connection with the Travel Services Agreement include the development of our domestic travel website and the two Chinese travel websites, which we anticipate will become operational during the third quarter of 2013, which will permit us to begin booking travel both domestically and internationally. We anticipate that we will begin generating revenues during the third or fourth quarters of 2013. Management anticipates that the costs of the development of these websites will be approximately $50,000 - $60,000, although there can be no guarantee that we will be able to develop the websites for these fees. Project Design and Administration Agreement On December 3, 2012, the Company entered into a Project Design and Administration Agreement (the Design Agreement ) with MagNet Solutions, Inc., a California corporation ( MagNet ), relating to the development of the Company s websites for use in connection with the Company s Travel Club. Pursuant to the Design Agreement, the Company and MagNet agreed to work together on three projects. The first project is to update and revise the Company s current website (the Domestic Website ) to permit online signups for Memberships in the Company s Travel Club and for sale and purchase of travel and travel related services to the Company s Members. The second project is to develop a website (the International Website ) for use in selling tours to US cities to Chinese travelers in China. The third project is to create a system, using the International Website, for Chinese travelers to travel from their homes to Beijing or Shanghai, for further travel to the US cities by connecting to Chinese GDSs, and to provide travel related services and options to such Chinese travelers. MagNet will provide the creative design, including initial wire frames for the International Website and the Domestic Website (collectively, the Websites ). The Company will provide one or more Work Specification Documents, which will include the specific terms, systems, abilities, and parameters for each of the Websites. MagNet will build out the Websites, and will populate them with content provided by the Company. MagNet also agreed to design and develop all underlying site applications; perform functional testing on the Websites and systems; and coordinate the launch. The Company and MagNet agreed that support for the Websites would be covered under a separate support services and service level agreement. Management believes that work will commence on the updating and development of the Company s websites during the second or third quarter of 2013, although there can be no guarantee as to when the work will commence. For MagNets s services, the Company agreed to pay MagNet as follows: - Initial Funding The Company agreed to make an initial payment to MagNet, within ten (10) trading days of the date on which the SEC declares the Company s Registration Statement effective, of $40,000 (the Initial Deposit ). Following the Initial Deposit, MagNet will commence work on all three Projects, until MagNet has incurred costs of $30,000 of the Initial Deposit. Within three days of being notified by MagNet that it has spent $30,000 of the Initial Deposit with respect to work on the Projects, the Company will provide an additional $20,000 (for an aggregate of $60,000), if needed. - Expenses The Company agreed to reimburse MagNet s expenses in accordance with the terms of the Work Specification Document. Revenue Sharing In addition to the development fees to be paid, the Company agreed to permit MagNet to share in the gross revenues generated through the Websites, of between 1% and 3%, depending on the amounts received by the Company. Additionally, with respect to any revenues generated from the sale of any other travel related services, the Company will pay to MagNet 10% of the net revenues, on a monthly basis. Common Stock Purchase Agreement On October 5, 2012, the Company entered into an agreement to sell and issue 5,000,000 shares of its restricted common stock in exchange for a purchase price of Five Million Dollars ($5,000,000). Pursuant to the agreement, the purchase price, minus any prior advances to the Company, will be paid to the Company within ten (10) days of the date of effectiveness of the Company s Registration Statement on Form S-1. The purchaser is committed to purchasing the shares. As noted above, on March 14, 2013, the purchaser paid $500,000 of the purchase price to the Company. The Company has issued 500,000 shares in connection with the initial payment, and recognizes its obligation to issue the remaining 4,500,000 shares, upon payment of the balance of the purchase price. The sale of the shares was made pursuant to Regulation S, and the purchaser made written representations and warranties to the Company that it was purchasing for its own accounts, for investment, and not with a view to distribution of the shares; that by reason of their business or financial experience, or that of its professional advisors, it was capable of evaluating the merits and risks of an investment in the Company in connection with the transaction; that the shares would contain a legend to the effect that transfer is prohibited except in accordance with the provisions of Regulation S; and that the Company was required to refuse to register any transfer of any securities issued to the investor not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration. No public solicitation was undertaken in connection with the private purchase and sale of the shares. The investor had a pre-existing business relationship with the Company and its officers and directors, although the investor was not an affiliate of either Triton or the Company, and would not be considered a related party of either company under SEC rules. Reasons for Filing Registration Statement The principal reasons for the Company s filing the registration statement, of which this Prospectus is a part, for its Selling Stockholders is to provide the Selling Stockholders with liquidity in the ownership of their shares. Management has finalized an agreement and a developed a working relationship with a market maker who submitted an application to FINRA for listing the Company s common stock with the OTC Bulletin Board. Management has also met with additional market makers and investor relations firms who the Company plans to use to help develop a public market for the Company s shares, which Management believes, based on their discussions with market makers and other securities professionals, will be easier to do with a larger number of shares than the 466,306 shares that were covered under the Company s prior registration statement. Additionally, the Company determined to acquire ownership of a publicly reporting company (APEX 4) and to become a full reporting company for numerous reasons, including: to gain access to the capital markets; to give potential investors an understandable exit strategy; to be able to attract and retain employees with stock and option incentives; to make it easier for the Company to raise capital faster, easier and at lower cost; to increase corporate, product, and services exposure; and for potential acquisitions of other companies or assets with stock. (The Company currently has no plans for acquisitions or other capital raising transactions, other than as disclosed in this registration statement, although in the future, management believes that the Company s ability to undertake such plans would be improved as a public company.) The Company recognizes that the re-sale nature of the Registration Statement will not result in capital to the Company at this time. However, the ability to grant registration rights to other private investors and the ability to conduct a future primary offering of the Company s securities are both enhanced by the Company s becoming a public company, and the creation of a market for the Company s securities. Additionally, as noted above, the Company finalized negotiations with respect to a private stock purchase agreement whereby the investor agreed to purchase 5,000,000 shares of the Company s restricted common stock for an aggregate purchase price of $5,000,000. Management believes that these funds will enable the Company to continue its preliminary operations, leading to the generation of revenues from operations. Risks Associated With Our Business Our ability to execute our strategy and capitalize on our competitive strengths is subject to a number of risks more fully discussed in the Risk Factors section immediately following this summary. Before you invest in our shares, you should carefully consider all of the information in this Prospectus, including matters set forth under the heading Risk Factors, such as: the fact that we are an emerging growth company, with a limited operating history; the relatively recent commercialization of our technology; technological advances by our competitors; the unknown level of market acceptance of our technology and related system; the potential loss of any key employees; and the availability of capital on terms satisfactory to us. By way of further explanation, we are dependent on the knowledge, skill and expertise of several key founding and business development employees, including the current executive officers and outside consultants: Gregory Lykiardopoulos and Adam Himmelman (Directors and Officers), and David Sao Marcos (Consultant). The loss of any of the key personnel listed above could materially and adversely affect our future business efforts. Company Information We are organized in the State of Delaware. Our principal executive offices are located at 1 Blackfield Drive, Tiburon, California 94920. Our telephone number is (415) 888-2478. We maintain a website at http://www.privilegedwtc.com/. The URL of our website is included herein as an inactive textual reference. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this Prospectus or the registration statement of which it is a part. The Selling Stockholders The Selling Stockholders are thirty-six individuals or entities who hold shares of our Common Stock, including 8 stockholders who received shares in exchange for services rendered to Privileged; and 28 stockholders who received shares in exchange for debts owed by Triton. Additionally, three individuals (including one couple) who were already Selling Stockholders purchased additional shares from the Company, and one additional Selling Stockholder entered into a new consulting agreement pursuant to which he received additional shares. The Selling Stockholders who are former creditors of Triton (the Triton Creditor Selling Stockholders ) agreed to exchange their right to receive repayment from Triton for shares of our Common Stock at a price of $1.00 per share, together with our agreement to file a registration statement covering the resale of up to five percent (5%) of the shares issued in exchange for Triton s debt. See Selling Stockholders on page 57. Once the registration statement of which this Prospectus is part becomes effective with the SEC, the Selling Stockholders may sell the Shares indicated above in public transactions or otherwise, on the OTC Bulletin Board (or such other public market as may develop) or in privately negotiated transactions. The sales by the Triton Creditor Selling Stockholders will be at a fixed price ($1.00) for the duration of this offering. The Selling Stockholders act independently of one another in making a determination to sell the Shares owned by them and they do not act as or form a group for purposes of their ownership or disposition of the Shares offered hereunder. There is no guarantee that an active public market in the Common Stock will develop in the foreseeable future or ever.
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+Prospectus Summary 1
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+S-1/A 1 a2214357zs-1a.htm S-1/A Table of Contents As filed with the Securities and Exchange Commission on April 15, 2013 Registration No. 333-184063 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Neither we nor the selling stockholders have authorized anyone to provide you with information or to make any representations other than those contained in this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Dealer Prospectus Delivery Obligation Until , 2013 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions. (1)Our Red Hook, Brooklyn, New York location was temporarily closed from October 29, 2012 to February 28, 2013 due to substantial damage sustained during Hurricane Sandy. AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents BASIS OF PRESENTATION Our fiscal year is the 52- or 53-week period ending on the Sunday closest to March 31. Our last four completed fiscal years ended on March 28, 2010, April 3, 2011, April 1, 2012 and March 31, 2013. For ease of reference, we identify our fiscal years in this prospectus by reference to the calendar year in which the fiscal year ends. For example, "fiscal 2012" refers to our fiscal year ended April 1, 2012. TRADEMARKS AND TRADE NAMES This prospectus includes our trademarks and service marks, FAIRWAY , FAIRWAY "Like No Other Market" , LIKE NO OTHER MARKET and FAIRWAY WINES & SPIRITS , which are protected under applicable intellectual property laws and are the property of Fairway. This prospectus also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the or TM symbols. We do not intend our use or display of other parties' trademarks, trade names or service marks 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. TERMS USED IN THIS PROSPECTUS As used in this prospectus, the term "Greater New York City metropolitan area" means New York City and the New York, New Jersey and Connecticut suburbs within a 50 mile radius of New York City. References to "stores in suburban areas" or similar expressions refer to stores located in the Greater New York City metropolitan area outside of the Borough of Manhattan in New York City. References to "Sterling Investment Partners" are to the investment funds managed by affiliates of Sterling Investment Partners that own shares of our common and preferred stock. The term "SKU" refers to inventory stock-keeping units. "Comparable store sales" refers to the percentage change in our same-store sales as compared to the prior comparable period. Our practice is to include sales from a store in same-store sales beginning on the first day of the fourteenth full month following the store's opening. This practice may differ from the methods that other food retailers use to calculate comparable or "same-store" sales. We define "store contribution margin" as gross profit less direct store expenses (excluding depreciation and amortization included in direct store expenses). MARKET AND INDUSTRY DATA Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, such as the Buxton Company, Willard Bishop Consulting LLC, the Food Marketing Institute and other third-party sources (including industry publications, surveys and forecasts), and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily 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 results to differ materially from those expressed in the estimates made by the independent parties and by us. *The companies shown are companies that we view as strong operators in the category listed. Our Competitive Strengths We believe the following strengths contribute to our success as a premier destination food retailer and position us for sustainable growth: Iconic brand. We believe our Fairway brand has a well established reputation for delivering high-quality, value-priced fresh, specialty and conventional groceries. Fairway has served millions of passionate customers in the Greater New York City metropolitan area for more than 75 years, recording approximately 12.7 million customer transactions in fiscal 2012. We believe the strength of the Fairway brand enhances our ability to: (i) attract a broad demographic of customers from a wider geographic radius than a conventional supermarket; (ii) source hard-to-find, unique gourmet and specialty foods; (iii) build a trusted connection with our customers that results in a high degree of loyalty; (iv) attract and retain highly talented employees; (v) secure attractive real estate locations; and (vi) successfully open new stores. Destination food shopping experience "Like No Other Market". We provide our customers a differentiated one-stop shopping experience by offering a unique mix of product breadth, quality and value in a visually appealing in-store environment. Fairway creates a fun and engaging atmosphere in which customers select from an abundance of fresh foods and other high-quality products while Fairway Group Holdings Corp. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 5411 (Primary Standard Industrial Classification Code Number) 74-1201087 (I.R.S. Employer Identification Number) 2284 12th Avenue New York, New York 10027 (646) 616-8000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Herbert Ruetsch, Chief Executive Officer Fairway Group Holdings Corp. 2284 12th Avenue New York, New York 10027 (646) 616-8000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents interacting with our attentive and knowledgeable employees throughout the store. Customers will find in our stores a "specialty shop" orientation designed to recreate the best features of local specialty markets, such as a gourmet cheese purveyor, full service butcher shop, seafood market and bakery, all in one location. We believe the distinctive Fairway food shopping experience drives loyalty, referrals and repeat business. Distinctive merchandising strategy. Our merchandising strategy is the foundation of our highly differentiated, one-stop shopping experience. We offer a unique product assortment generally not found in either conventional grocery stores or natural / specialty stores, consisting of a large variety of high-quality produce, meats and seafood, as well as gourmet, specialty and prepared foods and a full selection of everyday conventional groceries. High-quality perishables and prepared foods account for approximately 65% of our sales, compared to the more typical one-quarter to one-third of a conventional grocer's sales. We believe that our distinctive merchandising strategy has enabled us to build a trusted connection with our customers. Powerful store format with industry leading productivity. We believe our stores are among the most productive in the industry in net sales per store, net sales per square foot and store contribution margin. During fiscal 2012, for food stores open more than 13 full months, our net sales per store and net sales per selling square foot averaged $64.8 million and $1,859, respectively. In addition, during fiscal 2012, the contribution margin of our food stores open more than 13 full months was 12.3%. Our highly productive store format delivers attractive returns on investment due to the following key characteristics: High-volume one-stop shopping destination. Our high volumes result in operating efficiencies and generate high inventory turnover, which enables us to maintain a fresher selection of quality perishables than most of our competitors, in turn helping to drive customer traffic and sales. Attractive product mix. Our broad assortment of high-quality fresh, natural and organic products and prepared foods, which account for approximately 65% of our sales, and specialty items, which account for approximately 7% of our sales, enhance gross margins and store productivity. Direct-store delivery. We believe that our "farm-to-shelf" time is shorter than that of many of our competitors. The majority of our perishables are delivered directly to our stores and not stored in a warehouse during the transport period, reducing supply chain costs while enhancing product freshness. Strong vendor relationships. We have built valued, long-standing relationships with both large and small vendors that enable us to achieve attractive pricing on our broad merchandise offering. Maximum merchandising flexibility. We generally enable our merchandising teams to control our on-shelf product selection and positioning, rather than permitting vendors to do so through slotting fees. Proven ability to replicate store model. Since March 2009, we have successfully opened eight new food stores, including three Fairway Wines & Spirits locations, more than doubling our store base. Our urban food store operating model for new stores is based primarily on a store size of approximately 40,000 gross square feet (approximately 25,000 selling square feet), a net cash investment, including store opening costs, of approximately $16 million, not all of which requires an immediate cash outlay, net sales after two years of approximately $75 million to $85 million, a contribution margin at maturity of approximately 17% to 20%, and an average payback period on our initial investment of less than two years. Our suburban food store operating model for new stores is based primarily on a store size of approximately 60,000 gross square feet (approximately 40,000 selling square feet), a net cash With copies to: Paul Jacobs, Esq. Roy L. Goldman, Esq. Steven I. Suzzan, Esq. Fulbright & Jaworski L.L.P. 666 Fifth Avenue New York, New York 10103 Telephone (212) 318-3000 Fax (212) 318-3400 Nathalie Augustin, Esq. Senior Vice President General Counsel Fairway Group Holdings Corp. 2284 12th Avenue New York, New York 10027 Telephone (646) 616-8070 Fax (212) 234-2603 Robert Evans III, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Telephone (212) 848-4000 Fax (646) 848-8830 Table of Contents investment, including store opening costs, of approximately $15 million, not all of which requires an immediate cash outlay, net sales after two years of approximately $45 million to $55 million, a contribution margin at maturity of approximately 10% to 13%, and an average payback period on our initial investment of approximately 3 to 3.5 years. We may elect to opportunistically open stores in desirable locations that differ from our prototypical new store model in square footage and/or net sales but that we believe will provide similar contribution margins and returns on invested capital. Passionate and experienced management team. We are led by a management team with a proven track record, complemented by hands-on senior merchants and store operations managers who have broad responsibility for merchandising and store operations. Our senior merchants have an average of 32 years in the food retailing industry and an average of 14 years at Fairway, and we believe they are widely recognized as authorities in their product categories. Our Growth Strategy We plan to pursue the following growth strategies: Open stores in existing and new markets. We currently plan to open two new stores in fiscal 2014, and for the next several years thereafter, we intend to grow our store base in the Greater New York City metropolitan area at a rate of three to four stores annually. Over time, we also plan to expand Fairway's presence into new, high-density metropolitan markets. Based on demographic research conducted for us by the Buxton Company, a customer analytics research firm, we believe, based on these demographics, we have the opportunity to more than triple the number of stores in our existing marketing region, the Northeast market (from New England to the District of Columbia) can support up to 90 stores and the U.S. market can support more than 300 additional stores (including stores in the Northeast) operating under our current format. Capitalize on consumer trends. We believe that our differentiated format positions us to capitalize on evolving consumer preferences and other key trends currently shaping the food retail industry, which include: Increasing focus on the customer shopping experience; Increasing consumer focus on healthy eating; and Increasing consumer interest in private label product offerings. Improve our operating margins. We intend to improve our operating margins by leveraging our well-developed and scalable infrastructure and continuing to implement our key operating initiatives. We have made significant investments in management, information technology systems, infrastructure, compliance and marketing to enable us to pursue our growth plans without a significant increase in infrastructure spending. Risks Affecting Our Business While we have set forth our competitive strengths above, food retail is a large and highly competitive industry, and our business involves many risks and uncertainties, including: our ability to open new stores on a timely basis or at all; our ability to achieve sustained sales and profitable operating margins at new stores; the availability of financing to pursue our new store openings on satisfactory terms or at all; our ability to compete effectively with other retailers; Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. Table of Contents our ability to maintain price competitiveness; the geographic concentration of our stores; our ability to maintain or improve our operating margins; our history of net losses; ordering errors or product supply disruptions in the delivery of perishable products; restrictions on our use of the Fairway name other than on the East Coast and in California and certain parts of Michigan and Ohio; our ability to retain and attract senior management, key employees and qualified store-level employees; rising costs of providing employee benefits, including increased healthcare costs and pension contributions due to unfunded pension liabilities; our ability to satisfy our ongoing capital needs and unanticipated cash requirements; funds managed by affiliates of Sterling Investment Partners, which own common stock representing approximately 67.6% of the voting power of our outstanding common stock before this offering and the Exchange referred to below, will, upon completion of this offering, own shares of Class A common stock and Class B common stock representing approximately 52.0% of our outstanding common stock and approximately 77.1% of the voting power of our common stock, enabling them to control all matters submitted to our stockholders and limiting or precluding other stockholders from influencing corporate matters for the foreseeable future; we will be a "controlled company" with less stringent requirements concerning the independence of our board of directors and its committees under the corporate governance rules of the NASDAQ Global Market; the market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price; and we qualify as an "emerging growth company" under the JOBS Act, and as such will be permitted to, and intend to, rely on exemptions from certain accounting and executive compensation disclosure and stockholder advisory vote requirements that are applicable to other public companies. Investing in our Class A common stock involves substantial risk. The factors that could adversely affect our results and performance, including those identified above, are discussed under the heading "Risk Factors" immediately following this summary. Before you invest in our Class A common stock, you should carefully consider all of the information in this prospectus, including
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001555947_yuma_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001555947_yuma_prospectus_summary.txt
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+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to YUMA RESOURCES INC. CORPORATE BACKGROUND AND INFORMATION YUMA RESOURCES INC. Yuma Resources Inc. was organized under the laws of the State of Nevada on June 1, 2012, to explore mineral properties in North America. Yuma Resources Inc. is engaged in the exploration for copper and other minerals. The Company has acquired one MTO mineral claim totaling 20.49 hectares. It is located approximately 2.5 kilometres northwest of the community of Holberg on Northern Vancouver Island. We refer to these mining claims as the Millington Copper Property. This property is without known reserves. The Millington Copper Property comprises one mineral claim containing 1 cell claim unit, totaling 20.49 hectares: BC Tenure # Work Due Date Cells Total Area (Hectares) ----------- ------------- ----- --------------------- 994534 June 6, 2013 1 20.49 We require an estimated total of $300,000 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Yuma Resources Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2013 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2013 in order to conducts its operations. Our offices are located at: 64 Gainsborough Avenue, St. Albert, Alberta, T8N 0W5. Telephone: (780) 458-2778 THE OFFERING Securities offered 8,000,000 shares of common stock Selling stockholder Thomas Wielobob Offering price $0.002 per share Shares outstanding prior to the offering 20,000,000 shares of common stock Shares to be outstanding after the offering 20,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended Period Ended August 31, November 30, 2012 2012 ---------- ---------- Revenues 0 0 Operating expenses 13,675 1,995 Net loss from operations 13,675 1,995 Net loss before taxes 13,675 1,995 Loss per share - basic and diluted 0.00 0.00 Weighted average shares outstanding basic 20,000,000 20,000,000 BALANCE SHEET DATA At At August 31, November 30, 2012 2012 ---------- ---------- Cash and cash equivalents 16,325 16,325 Total current assets 16,325 16,325 Total assets 16,325 16,325 Management Accrual Fee 0 1,995 Total liabilities 0 1,995 Common stock 20,000 20,000 Additional paid-in capital 10,000 10,000 Deficit accumulated during exploration period (13,675) (15,670) Total stockholder's equity 16,325 16,325
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+++ b/parsed_sections/prospectus_summary/2013/CIK0001555949_bonanza_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to BONANZA RESOURCES CORP. CORPORATE BACKGROUND AND INFORMATION BONANZA RESOURCES CORP. Bonanza Resources Corp. was organized under the laws of the State of Nevada on June 1, 2012, to explore mineral properties in North America. Bonanza Resources Corp. is engaged in the exploration for quartz and other minerals. The Company has acquired one MTO mineral claim totaling 381.90 hectares. It is located on the western slope of Mount Gardner on Bowen Island, approximately 8.5 kilometers south east of Gibson. We refer to these mining claims as the Bonanza Property. This property is without known reserves. The Bonanza Property comprises of one mineral claim containing 6 cell claim units totaling 126.20 hectares; BC Tenure # Work Due Date Units Total Area (Hectares) ----------- ------------- ----- --------------------- 983802 May 2, 2013 6 126.20 We require an estimated total of $240,000 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Bonanza Resources Corp.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2013 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2013 in order to conducts its operations. Our offices are located at: 14727 - 129th Street, Edmonton, Alberta T6V 1C4. Telephone: (780) 887-4998 THE OFFERING Securities offered 9,000,000 shares of common stock Selling stockholder Wayne Cadence Offering price $0.002 per share Shares outstanding prior to the offering 20,000,000 shares of common stock Shares to be outstanding after the offering 20,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended Period Ended August 31, November 30, 2012 2012 ---------- ---------- Revenues 0 0 Operating expenses 13,675 1,995 Net loss from operations 13,675 1,995 Net loss before taxes 13,675 1,995 Loss per share - basic and diluted 0.00 0.00 Weighted average shares outstanding basic 20,000,000 20,000,000 BALANCE SHEET DATA At At August 31, November 30, 2012 2012 ---------- ---------- Cash and cash equivalents 16,325 16,325 Total current assets 16,325 16,325 Total assets 16,325 16,325 Management Accrual Fee 0 1,995 Total liabilities 0 1,995 Common stock 20,000 20,000 Additional paid-in capital 10,000 10,000 Deficit accumulated during exploration period (13,675) (15,670) Total stockholder's equity 16,325 16,325
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001556169_anchor_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001556169_anchor_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..931a96fa8767249a6a2e7df44cd1554b6c89319d
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001556169_anchor_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary does not contain all of the information you should consider before making your investment decision. You should read the entire prospectus carefully, including the section titled "Risk Factors" and the financial statements and the notes relating to those statements. We were incorporated in Florida in June 2012. All of our operations to date have been related to the formation and development of our business plan to develop and operate compressed natural gas fueling stations for motor vehicles. We currently have minimal assets, no revenues and no operating history beyond certain start-up activities. Our ability to commence commercial operations and successfully implement our business plan depends on us obtaining adequate financial resources, which cannot be assured. Since we are in the developmental stage and have not yet opened any compressed natural gas fueling stations, we cannot assure you that we will achieve profitable operations. Our principal executive offices are located at 301 North E Street, Lake Worth FL 33460 and our telephone number is 908-892-4958. The Offering Stock Offered: 500,000 shares of Series A Convertible Preferred Stock Offering price: $10.00 per share Liquidation Preference: $10.00 per share Dividends: In the event a dividend or distribution is declared on the Common Stock of the Company, in cash or other property (other than a dividend of our Common Stock), the holders of the Series A convertible Preferred Stock will be entitled to receive the amount of cash or property equal to the cash or property which would be received by the holders of the number of shares of Common Stock into which such shares of Series A Convertible Preferred Stock could be converted immediately prior to such dividend or distribution. Optional Conversion: Each share of convertible preferred stock may be converted, at the option of the holder, into 10 shares of our common stock, subject to adjustment in a number of circumstances described under "Description of Series A Convertible Preferred Stock—Conversion Rate Adjustments." No additional payment is required in connection with a conversion. Voting Rights: The Preferred Stock will vote, on an as converted basis, with the Common Stock. Series A Convertible Preferred Stock Outstanding: None ANCHOR CNGO CORP. (F/K/A ANCHOR RESORT CORP.) (A DEVELOPMENT STAGE COMPANY) STATEMENT OF OPERATIONS FOR THE PERIOD FROM JUNE 8, 2012 (INCEPTION) TO AUGUST 31, 2012 Operating Expenses Professional fees $5,000 General and administrative 1,301 Total Operating Expenses 6,301 LOSS FROM OPERATIONS BEFORE INCOME TAXES (6,301) Provision for Income Taxes - NET LOSS $(6,301) Net Loss Per Share - Basic and Diluted $(0.01) Weighted average number of shares outstanding during the period - Basic and Diluted 1,250,000 See Accompanying Notes to Audited Financial Statements ANCHOR CNGO CORP. (F/K/A ANCHOR RESORT CORP.) (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JUNE 8, 2012 (INCEPTION) TO FEBRUARY 28, 2013 (UNAUDITED Deficit Accumulated Preferred stock Common stock Additional accumulated during Other Total paid-in Subscription development Comprenhensive Stockholders' Shares Amount Shares Amount capital Receivables stage Loss Equity Balance, June 8, 2012 - $- - $- $- $- $- $- $- Common stock issued for cash ($.10/share) - - 1,250,000 1,250 123,750 (2,315) - - 122,685 Net loss for the period from June 8, 2012 to August 31, 2012 - - - - - - (6,301) - (6,301) Balance, August 31, 2012 - $- 1,250,000 $1,250 $123,750 $(2,315) $(6,301) $- $116,384 Net loss for the Six months ended February 28, 2013 - - - - - - (46,110) - (46,110) Common stock issued for services ($.10/share) - - 55,000 55 5,445 - - - 5,500 Imputed compensation - - - - 2,500 - - - 2,500 Comprenhensive loss on investment securities - - - - - - - (1,160) (1,160) Comprenhensive loss - - - - - - - - (47,270) Balance, February 28, 2013 - $- 1,305,000 $1,305 $131,695 $(2,315) $(52,411) $(1,160) $77,114 See Accompanying Notes to Condensed Unaudited Financial Statements Common Stock outstanding: Prior to offering: 1,305,000 shares After offering (assuming sale of all Convertible preferred stock and conversion of into common stock): 6,305,000 shares Estimated Proceeds: Because this is a self underwritten offering with no minimum, we may receive from $0 up to $5,000,000 if all 500,000 shares of preferred stock offered are sold. Use of Proceeds: Operations and development of our business, acquire property and inventory, advertising, marketing, and working capital.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001559122_jewel_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001559122_jewel_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..148f1e34ab4e03af5f9567167ac886c51b275b1e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001559122_jewel_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to JEWEL EXPLORATIONS INC. CORPORATE BACKGROUND AND INFORMATION JEWEL EXPLORATIONS INC. Jewel Explorations Inc. was organized under the laws of the State of Nevada on May 31, 2012, to explore mineral properties in North America. Jewel Explorations Inc. is engaged in the exploration for gold and other minerals. The Company has acquired one Mineral Titles Online "MTO" mineral claim totaling 164.52 hectares.The Mystic Gold Property is located on Northern Vancouver Island adjacent to Klootchlimmis Creek, which drains north ward into Quatsino Sound. The property is accessible from the town of Port Alice via logging roads. We refer to these mining claims as the Mystic Gold Property. This property is without known reserves. To current date the Company has never commenced any operational/exploration activity other than issuing shares. The Mystic Gold Property comprises one mineral claim composed of 8 MTO cell claim units totaling 164.52 hectares; BC Tenure # Work Due Date Units Total Area (Ha.) ----------- ------------- ----- ---------------- 998882 June 19, 2013 8 164.52 We require an estimated total of $281,000 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Jewel Explorations Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2012 in order to conducts its operations. Our offices are located at: #2-556 Furby Street, Winnipeg, Manitoba R3B 2V8 THE OFFERING Securities offered 10,000,000 shares of common stock Selling stockholder Sydney Kraft Offering price $0.002 per share Shares outstanding prior to the offering 24,000,000 shares of common stock Shares to be outstanding after the offering 24,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended August 31, 2012 --------------- Revenues 0 Operating expenses 5,675 Net loss from operations 5,675 Net loss before taxes 5,675 Loss per share - basic and diluted 0.00 Weighted average shares outstanding basic 24,000,000 BALANCE SHEET DATA At August 31, 2012 ------------------ Cash and cash equivalents 18,825 Total current assets 18,825 Mineral Property 8,500 ------- Total assets 27,325 Accounts payable 3,000 Current liabilities 3,000 Total liabilities 3,000 Common stock 24,000 Additional paid-in capital 6,000 Deficit accumulated during exploration period (5,675) ------- Total stockholder's equity 24,325 ------- Total liabilities and stockholder's equity 27,325 =======
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001559124_braxton_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001559124_braxton_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..28378051a21fea25e9baab46a1a125135c75bcfc
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001559124_braxton_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to BRAXTON RESOURCES INC. CORPORATE BACKGROUND AND INFORMATION BRAXTON RESOURCES INC. Braxton Resources Inc. was organized under the laws of the State of Nevada on May 31, 2012, to explore mineral properties in North America. Braxton Resources Inc. is engaged in the exploration for gold and other minerals. The Company has acquired one MTO mineral claim totaling 244.93 hectares. The Bristol Gold Property is located on the south shore of Carpenter Lake, near the mining communities of Goldbridge and Bralorne, BC. Access is gained via 75 km of road from Lillooet, and then by small boat across the lake or via helicopter. An old 4x4 road leads 5.5 km up Tommy Creek, which bisects the property, accessing the Benboe/Bristol gold mine. We refer to these mining claims as the Bristol Gold Property. This property is without known reserves. To current date the Company has never commenced any operational/exploration activity other than issuing shares. The Bristol Gold Property comprises one MTO mineral claim containing 12 cell claim units totaling 244.93 hectares. BC Tenure # Work Due Date Staking Date Total Area (Ha.) ----------- ------------- ------------ ---------------- 904142 Sep. 30, 2013 Sep. 30, 2011 244.93 We require an estimated total of $313,210.94 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Braxton Resources Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2012 in order to conducts its operations. Our offices are located at: 7558 W. Thunderbird Rd #1-486, Peoria, Arizona 85381. Telephone: (602) 509-2822 THE OFFERING Securities offered 12,000,000 shares of common stock Selling stockholder Charles Irizarry Offering price $0.002 per share Shares outstanding prior to the offering 30,000,000 shares of common stock Shares to be outstanding after the offering 30,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." STATEMENTS OF OPERATION Period Ended August 31, 2012 --------------- Revenues 0 Operating expenses 5,675 ---------- Net loss from operations (5,675) Net loss before taxes (5,675) Loss per share - basic 0.00 Weighted average shares outstanding basic 30,000,000 BALANCE SHEET DATA At August 31, 2012 ------------------ Cash and cash equivalents 17,825 Total current assets 17,825 Mineral property 8,500 ---------- Total assets 26,325 Accounts payable 2,000 ---------- Total current liabilities 2,000 Common stock 30,000 Additional paid-in capital 0 Deficit accumulated during exploration period (5,675) ---------- Total stockholders' equity 24,325 ---------- Total liabilities and stockholders' equity 26,325
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001559126_canyon_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001559126_canyon_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7665eaf9ed534a83205186a559245c4c6fcd2937
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001559126_canyon_prospectus_summary.txt
@@ -0,0 +1 @@
+The following summary highlights some of the information in this prospectus. It may not contain all of the information that is important to you. To understand this offering fully, it is important that you read the entire prospectus carefully, including the "RISK FACTORS" and our financial statements and the notes accompanying the financial statements that appear elsewhere in this prospectus. Unless otherwise specifically noted, the terms "Company," "we," "us" or "our" refers to CANYON MINERALS INC. CORPORATE BACKGROUND AND INFORMATION CANYON MINERALS INC. Canyon Minerals Inc. was organized under the laws of the State of Nevada on May 31, 2012, to explore mineral properties in North America. Canyon Minerals Inc. is engaged in the exploration for gold and other minerals. The Company has acquired one MTO mineral claim totaling 310.235 hectares. The property is located near the head of Jervis Inlet, about 120 km northwest of Vancouver, BC. Access is by float plane from Vancouver or Sechelt, or by boat from Egmont or Pender Harbour on the Sechelt Peninsula. We refer to these mining claims as the Canyon Gold Property. This property is without known reserves. To current date the Company has never commenced any operational/exploration activity other than issuing shares. The Canyon Gold Property comprises one MTO mineral claim containing 15 cell units totaling 310.235 hectares in area. BC Tenure # Work Due Date Staking Date Area (Ha.) ----------- ------------- ------------ ---------- 901869 Sept. 28, 2013 Sept. 27, 2011 310.235 We require an estimated total of $286,963.75 to implement the three phases of our exploration plan. We have not yet commenced our exploration plan. We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration program described in the section entitled, "Business of the Issuer." Our auditors have issued a going concern opinion, raising substantial doubt about Canyon Minerals Inc.'s financial prospects and the Company's ability to continue as a going concern. We are not a "blank check company," as we do not intend to participate in a reverse acquisition or merger transaction. Securities laws define a "blank check company" as a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person. With its current assets, the Company can remain operational through 2012 if it does not complete Phase 1 of its program and only pays the government fees to keep the claims valid. However, the Company plans to raise the capital necessary to fund our business through a private placement and public offering of our common stock. The Company intends to work directly with private placees once this registration statement is declared effective. The Company anticipates that they will have either a private placement or additional funding from its founder by the end of 2012 in order to conducts its operations. Our offices are located at: 3350 South 2940 East, Suite #9948, Salt Lake City, Utah 84109. Telephone: 801-244-8769 THE OFFERING Securities offered 12,000,000 shares of common stock Selling stockholder Wayne Middleton Offering price $0.002 per share Shares outstanding prior to the offering 24,000,000 shares of common stock Shares to be outstanding after the offering 24,000,000 shares of common stock Use of proceeds The Company will not receive any proceeds from the sale of the common stock by the selling stockholder. SUMMARY FINANCIAL INFORMATION The following tables set forth the summary financial information for the Company. You should read this information together with the financial statements and the notes thereto appearing elsewhere in this prospectus and the information under "Plan of Operation." CONSOLIDATED STATEMENTS OF INCOME Period Ended August 31, 2012 --------------- Revenues 0 Operating expenses 5,675 Net loss from operations (5,675) Net loss before taxes (5,675) Loss per share - basic and diluted 0.00 Weighted average shares outstanding basic 24,000,000 BALANCE SHEET DATA At August 31, 2012 ------------------ Cash and cash equivalents 18,825 Total current assets 18,825 Mineral property 8,500 ------- Total assets 27,325 Accounts payable 3,000 3,000 Total current liabilities -- Total liabilities 3,000 Common stock 24,000 Additional paid-in capital 6,000 Deficit accumulated during exploration period (5,675) ------- Total stockholder's equity 24,325 ------- Total liabilities and stockholder's equity 27,325 =======
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001561679_icon-eci_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001561679_icon-eci_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001561679_icon-eci_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001562738_apptigo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001562738_apptigo_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4888544559a16984d70f97f3ff093a46fb7cdc8f
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001562738_apptigo_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND BALIUS CORP. REFERS TO BALIUS CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. BALIUS CORP. We are a development stage company and intend to commence operations in the equine business. We plan to buy young Irish Sport Horses, train them and resell. Balius Corp. was incorporated in Nevada on October 23, 2012. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $50,000 for the next twelve months as described in our Plan of Operations. The amount of funds necessary to implement our plan of operations cannot be predicted with any certainty and may exceed any estimates we set forth. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. However, there is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue. As of May 3 , 2013 we have cash reserves of approximately $1,220. We currently spend approximately $583 per month on our operations, and our present cash will last for approximately 2 months. We intend to purchase young Irish Sport Horses aged 4 year and older and train them. Basic horse training will begin with ground training and ground manners. Please see Our Business section on page 19 for the definitions for the terms ground training, ground manners and eventing. Then, we will train then for jumping competition and eventing. We intend to train them at riding arena which we intend to rent. The length of time we anticipate we will be caring for and training such horses before resale is 2-3 month. We intend to offer our horses for sale to potential customers from Europe (England, Germany, France, Switzerland, Netherlands and other) and USA. We plan to sell our horses at local, national and international horse auctions and advertise them at different web sites and sell directly to the public. Being a development stage company, we have very limited operating history. After twelve months period we may need additional financing. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at 38 Sea View Park, Cliffoney, Co. Sligo, Ireland. Our phone number is 353851997078. From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (October 23, 2012) through March 31, 2013, reports no revenues and a net loss of $6,504. Our independent registered public accounting firm has issued an audit opinion for Balius Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan, purchased a young horse for $2,000 and entered into a Grazing Lease Agreement, dated January 22, 2013. The breed of horse we purchased is Irish Sport Horse. Its age is 4 year old. We have already begun to train this horse at Trawalua Strand Beach in Sligo County. Also, because our sole officer and director has broad connections in equine industry he has access to some riding arena where he also trained our horse. On March 26, 2013 we entered into oral agreement with Thomas Casidy to use a property which includes a riding arena, a stable for 8 horses and 6 acres pasture field in Ballaghnatrillick, a village in County Sligo, Ireland. The owner left Ireland and offered the property free of charge and for indefinite term. The only our responsibility is to maintain the property in a good condition. We have started offering our horse to potential clients through our president s connections in equine industry. Our president has contacted several horse dealers who recorded video of our horse and posted photo and information on their web-site. We offer our horse for $10,000 to these dealers. Our price is fixed. The dealers will not receive any commission from us if they sell the horse. They add their interest on top of our price which is unknown to us and offer the horse to their clients. We did not use other methods of offering horses to the public that described in our business plan on page 20. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success. Our sole officer and director will only be devoting approximately 30 hours a week to our operations. As a result, our operations may be sporadic and occur at times which are convenient to our sole officer and director. Our sole officer and director is engaged in a similar business to us. Mr. Vitaliy Gladky is a self-employed horse trainer. Potential conflicts of interest may arise in future that may cause our business to fail, including the amount of time he is able to dedicate to our business as well as additional conflict of interests over opportunities presented to our sole officer and director during the performance of his duties. Balius Corp. does not currently have a right of first refusal pertaining to opportunities that come to management s attention where the opportunity may relate to our proposed business operations. THE OFFERING The Issuer: BALIUS CORP. Securities Being Offered: 10,000,000 shares of common stock. Price Per Share: $0.01 Duration of the Offering: The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 10,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 10,000,000 shares registered under the Registration Statement of which this Prospectus is part. Gross Proceeds $100,000 Securities Issued and Outstanding: There are 10,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Vitaliy Gladky Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $7,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001570765_market_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001570765_market_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..f4275fd1a4d13df42313890dce9ecd2c970a6f2c
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001570765_market_prospectus_summary.txt
@@ -0,0 +1,192 @@
+PROSPECTUS
+SUMMARY
+
+ 
+
+This is only a summary of this Prospectus,
+and while it contains material information about the Market Vectors Redeemable Gold Trust (the "Trust") and the shares
+it issues (the "Shares"), it does not contain or summarize all of the information about the Trust and the Shares contained
+in this Prospectus that is material and that may be important to you. You should read this entire Prospectus, including "Risk
+Factors" beginning on page [ ], and the material incorporated by reference herein before making an investment decision about
+the Shares. Capitalized terms not defined in this section have the meaning set forth in the Glossary beginning on page [ ] of this
+Prospectus.
+
+ 
+
+Overview of the Trust Structure, the Sponsor, the Trustee
+and the Custodian
+
+ 
+
+The Trust was formed pursuant to a Depositary
+Trust Agreement (the "Trust Agreement") under New York law. The Trust s primary objective is for the Shares to
+reflect the performance of the price of gold less the expenses of the Trust s operations. The Trust s secondary objective
+is to provide investors with an opportunity to invest in gold through the Shares and to be able to take delivery of physical gold
+bullion in exchange for those Shares. Each Share represents a fractional undivided beneficial interest in the Trust s net
+assets. The Trust s assets consist principally of gold bullion held on the Trust s behalf. The Trust will
+hold London Good Delivery Bars ("London Bars") (also referred to herein as the "Gold Bars").
+
+ 
+
+The sponsor of the Trust is Van Eck Associates
+Corporation (the "Sponsor"). The Sponsor is a Delaware corporation. The Shares are neither interests in nor obligations
+of, and are not guaranteed by, the Sponsor or any of its affiliates.
+
+ 
+
+Shares are issued by the Trust in blocks
+of [ ] Shares called "Baskets" in exchange for gold bullion from certain registered broker-dealers or other securities
+market participants ("Authorized Participants"). See "Creation and Redemption of Shares by Authorized Participants"
+for requirements to qualify as an Authorized Participant. Baskets may be redeemed by the Trust in exchange for the amount of gold
+corresponding to their redemption value. The Trust issues and redeems Baskets on an ongoing basis at net asset value ("NAV")
+to Authorized Participants who have entered into a contract with the Sponsor and the Trustee (defined below).
+
+ 
+
+Individual Shares will not be redeemed by
+the Trust but are expected to be listed for trading, subject to notice of issuance, on NYSE Arca, Inc. ("NYSE Arca")
+under the symbol "[ ]." A Delivery Applicant (as defined above) may deliver Shares to the Trust in exchange for Gold
+Bars pursuant to procedures established by the Trust. See "Taking Delivery of Gold Bars."
+
+ 
+
+The material terms of the Trust are discussed
+in greater detail under the section "Description of the Trust." The Trust is not an investment company registered under
+the Investment Company Act of 1940, as amended (the "1940 Act"), and is not required to register with the Securities
+and Exchange Commission (the "SEC") thereunder.
+
+ 
+
+The Sponsor arranged for the creation of
+the Trust, the registration of the Shares for their public offering in the United States and the listing of the Shares on NYSE
+Arca. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does
+not exercise day-to-day oversight of the Trustee or such service providers. The Sponsor may remove the Trustee and appoint a successor
+trustee under certain circumstances. The Sponsor also has the right to direct the Trustee to appoint any new or additional custodian
+of the Trust s gold that the Sponsor selects.
+
+ 
+
+The Sponsor: (1) will develop a marketing
+plan for the Trust on an ongoing basis; (2) will prepare marketing materials regarding the Shares; (3) will maintain the Trust s
+website; (4) may provide instructions for assaying gold, and other instructions relating to custody of the Trust s Gold Bars,
+as necessary; (5) may request the Trustee to order Custodian audits (to the extent permitted under the Custody Agreement);
+and (6) will review Delivery Applications from Delivery Applicants who want to take delivery of Gold Bars for their Shares and
+arrange for the delivery of the Gold Bars to the Delivery Applicants.
+
+ 
+
+To assist the Sponsor in marketing the Shares,
+the Sponsor has entered into a marketing support agreement with Van Eck Securities Corporation. In addition, the Sponsor maintains
+a public website on behalf of the Trust, containing information about the Trust and the Shares, including a listing of the Gold
+Bars held by the Trust. The internet address of the Trust s website is www.[ ].com. This internet address is only
+provided here as a convenience, and the information contained on or connected to the Trust s website is not considered part
+of this Prospectus.
+
+ 
+
+The Sponsor has agreed to assume the following
+administrative and marketing expenses incurred by the Trust: the Trustee s monthly fee and out-of-pocket expenses; the Custodian s
+fee; expenses reimbursable under the Custody Agreement; exchange listing fees; SEC registration fees; printing and mailing costs;
+maintenance expenses for the Trust s website; audit fees and up to $100,000 per annum in legal expenses. The Sponsor also
+will pay the costs of the Trust s organization and the initial sale of the Shares, including applicable SEC registration
+fees. See "The Sponsor."
+
+ 1
+
+ 
+
+ 
+
+The Trustee is The Bank of New York Mellon.
+The Trustee is generally responsible for the day-to-day administration of the Trust. The Trustee s principal responsibilities
+include: (1) valuing the Trust s gold and calculating the NAV per Share and adjusted NAV per Share of the Trust, (2) supplying
+inventory information to the Sponsor for the Trust s website; (3) receiving and processing orders from Authorized Participants
+for the creation and redemption of Baskets; (4) coordinating the processing of orders from Authorized Participants with the Custodian
+and The Depository Trust Company ("DTC"), including coordinating with the Custodian the receipt of gold transferred
+to the Trust in connection with each issuance of Baskets; (5) cooperating with the Sponsor, the precious metals dealer and the
+Custodian in connection with the delivery of Gold Bars to Delivery Applicants in exchange for their Shares; (6) selling the Trust s
+Gold Bars as needed to cover the Trust s expenses; (7) holding the Trust s cash and other financial assets, if any;
+(8) when appropriate, making distributions of cash or other property to investors; and (9) receiving and reviewing reports on the
+custody of and transactions in the Trust s Gold Bars from the Custodian and taking such other actions in connection with
+the custody of the Trust s Gold Bars as the Sponsor instructs.
+
+ 
+
+The Custodian is ________________________.
+The Custodian is responsible for the safekeeping of the Trust s allocated gold bullion and supplying inventory information
+to the Trustee and the Sponsor. The Custodian also is responsible for facilitating the transfer of gold in and out of the Trust
+through accounts that the Custodian maintains for each Authorized Participant. The Custodian will deposit into the Trust s
+Unallocated Account gold received from an Authorized Participant in exchange for Baskets. The Custodian will promptly convert the
+deposit to allocated London Bars, unless the Sponsor instructs the Custodian to convert a portion of the gold received into Gold
+Bars other than London Bars for delivery to a Delivery Applicant. The Custodian may, after pre-approval of a Delivery Application
+by the Sponsor, engage in over-the-counter ("OTC") transactions with a precious metals dealer to convert the Trust s
+gold into gold of different specifications as requested by a Delivery Applicant in the Delivery Application. The Custodian will,
+at the direction of the Trustee, deliver Gold Bars to any Delivery Applicant.
+
+ 
+
+Detailed descriptions of certain specific
+rights and duties of the Trustee and the Custodian are set forth in "Description of the Trust," "The Trustee"
+and "The Custodian."
+
+ 
+
+Trust Objectives
+
+ 
+
+The primary objective of the Trust is for
+the Shares to reflect the performance of the price of gold less the expenses of the Trust s operations. The Trust s
+secondary objective is to provide investors with an opportunity to invest in gold through Shares, and to be able to take delivery
+of physical gold bullion in exchange for their Shares. The Trust is not actively managed. It does not engage in any activities
+designed to obtain a profit from, or to compensate investors for losses caused by, changes in the price of gold.
+
+ 
+
+The Trust holds London Bars and, in connection
+with a Delivery Applicant s exchange of Shares for Gold Bars, the Trust may obtain Gold Bars of other specifications as requested
+by the Sponsor. The Trust receives gold deposited by Authorized Participants in exchange for the creation of Baskets and delivers
+gold to Authorized Participants in exchange for Baskets surrendered to it for redemption.
+
+ 
+
+Investors may contact their broker-dealer
+to purchase and sell Shares. An investor who would like to take delivery of physical gold bullion for its Shares (a "Delivery
+Applicant") may do so pursuant to procedures established by the Trust. See "Taking Delivery of Gold Bars."
+
+ 
+
+The Shares are intended to constitute a cost-efficient
+mechanism for investors to make an investment in gold. Although the Shares are not the exact equivalent of an investment in gold,
+they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
+The Shares are:
+
+ 
+
+ Listed and traded on NYSE Arca like other exchange-traded securities under the symbol "[ ]."
+
+ 
+
+ Easily accessible to investors through traditional brokerage accounts.
+
+ 
+
+ Backed by allocated gold held by the Custodian. The Shares differ from other financial products that gain exposure to bullion
+in that other financial products may use derivatives to gain exposure to the price of gold.
+
+ 
+
+ Cost efficient because the expenses involved in an investment in physical gold are dispersed among all investors in the Shares
+
+ 
+
+Principal Offices
+
+ 
+
+The offices of the Trust are located at 335
+Madison Avenue, New York, New York 10017. The Trustee has a corporate trust office located at 2 Hanson Place, Brooklyn, New York
+11217. The Sponsor is located at 335 Madison Avenue, New York, New York 10017, and its telephone number is (212) 293-2000. The
+Custodian is located at [ ].
+
+ 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573026_digicom_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573026_digicom_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001573026_digicom_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573027_bv-bc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573027_bv-bc_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001573027_bv-bc_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573056_infohighwa_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573056_infohighwa_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001573056_infohighwa_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001573057_info_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001573057_info_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..efc3a56bdef422ea7f2ebe4caa72341889d8888e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001573057_info_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Company Overview We are a leading cloud-based service provider of communications and information technology solutions to small and medium sized business ( SMB ) and enterprise customers nationwide. After several years of development, we began providing cloud-based communication services in 2005 and later introduced into our product portfolio a variety of cloud-based computing solutions. Today, we offer a full suite of cloud-based systems and services to customers nationwide, with more than 100,000 active licenses on our flagship product offering, our cloud-based business communications platform named OfficeSuite , which comprises a growing percentage of our overall revenue and the vast majority of our existing cloud-based revenue stream. We benefit from software development expertise, proprietary technology and a strong next-generation network infrastructure. This allows us to offer our customers more than just cloud-based services, but additionally products that include advanced, converged communications services and network access by leveraging our network infrastructure, on a cost-effective basis. For the three months ended March 31, 2013, over 82% of all new revenue installed during the period was provisioned on our next-generation IP network. We have provided cloud-based services in the Northeast and Mid-Atlantic United States since 2005 and offered cloud-based services nationwide since late 2009. Prior to 2009, our focus had been solely on markets across 10 states, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. These markets remain important markets for us and we have the majority of our direct sales efforts focused on these markets. We distribute our products through quota-bearing sales representatives, including a direct sales force primarily based in the Northeast and Mid-Atlantic United States, sales agents nationwide, and by our expanded efforts in wholesale, web marketing, Value Added Resellers ( VARs ) and nationwide distributor channels. As of March 31, 2013, we provided our services to approximately 30,000 business customers nationwide. For the three months ended March 31, 2013 and the year ended December 31, 2012, approximately 90% and 89%, respectively, of our total revenue was generated from retail end users in a wide array of industries, including professional services, health care, education, manufacturing, real estate, retail, automotive, non-profit groups and others. For the same periods, approximately 10% and 11%, respectively, of our total revenue was generated from wholesale, carrier access and other sources. We have transitioned a significant percentage of our revenue base to T-1- and IP-based products and cloud-based communications services. For the three months ended March 31, 2013 and the year ended December 31, 2012, revenue from these accounts represented 78% and 76%, respectively, of our retail revenue with cloud-based communications services generating 18% and 16%, respectively, of retail revenue. From the first quarter of 2009 to the first quarter of 2013, cloud-based communications products and services have grown at approximately a 27% compound annual growth rate ( CAGR ). For the three months ended March 31, 2013 and the year ended December 31, 2012, we generated total revenues of $80.8 million and $340.9 million, respectively, and Adjusted EBITDA of $11.7 million and $60.2 million, respectively. For more information, see the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Presentation. Our product portfolio provides bundled packages that include cloud computing and cloud-based voice services and network connectivity with a focus on addressing the productivity, flexibility, security and business continuity needs of end users operating within complex infrastructures. In addition, our growth initiatives focus Table of Contents TABLE OF CONTENTS Page SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 3
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574787_np-opco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574787_np-opco_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574787_np-opco_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574805_np-mt_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574805_np-mt_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574805_np-mt_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001574825_np-sonoma_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001574825_np-sonoma_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001574825_np-sonoma_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001582086_blue_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001582086_blue_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001582086_blue_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001583513_stg-group_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001583513_stg-group_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001583513_stg-group_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2013/CIK0001584873_american_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001584873_american_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..7a7e7d8603c84b1138ecbd41ac5fb49ae8f81ef0
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2013/CIK0001584873_american_prospectus_summary.txt
@@ -0,0 +1 @@
+This summary highlights information contained elsewhere in this prospectus. Unless we otherwise specify, all references to information and data in this prospectus about our business and fleet refer to the business and fleet to be contributed to us by American Petroleum Tankers Holding LLC ( Holding ) upon the closing of this offering (our initial fleet ) but prior to our exercise of our option to purchase the newbuild vessels (the State Class newbuild vessels ) from State Class Tankers II LLC and/or certain of its subsidiaries (collectively, State Class Tankers ). See Our Fleet. Prior to the closing of this offering, we will not own any vessels. Unless otherwise indicated, all references to size, age and capacity of our fleet and other Jones Act vessels are as of September 30, 2013. Unless the context otherwise requires, all references in this prospectus to we, our, us and the Partnership or similar terms when used in a historical context refer to the assets, liabilities and operations of Holding, including its vessels and its subsidiaries that hold interests in the vessels in our initial fleet, which constitute 100% of its assets. When used in the present tense or prospectively, those terms refer to American Petroleum Tankers Partners LP and its subsidiaries. All references in this prospectus to our general partner refer to American Petroleum Tankers GP LLC, the general partner of American Petroleum Tankers Partners LP. All references in this prospectus to our Sponsors refer to Blackstone Capital Partners V USS L.P. ( BCPV ), a fund of The Blackstone Group, L.P., and its affiliates (collectively, Blackstone ), affiliates of GSO Capital Partners LP ( GSO ) and affiliates of Cerberus Capital Management, L.P. ( Cerberus ), which together indirectly own substantially all of the equity interests of Holding and our general partner. You should read the entire prospectus carefully, including our historical financial statements and the notes to those financial statements. The information presented in this prospectus assumes, unless otherwise noted, (1) an initial public offering price of $ per common unit and (2) that the underwriters do not exercise their option to purchase additional common units. You should read Risk Factors for more information about important risks that you should consider carefully before buying our common units. American Petroleum Tankers Partners LP We are a Delaware master limited partnership formed to own, operate and acquire tankers that transport refined petroleum products and crude oil in the U.S. domestic trade, which is commonly referred to as the Jones Act trade, under long-term time charter contracts. Our initial fleet will consist of five medium-range ( MR ) product tankers with an average age of 3.8 years, compared to an average age of 12 years for the rest of the fleet of tankers that satisfy the requirements to conduct Jones Act trade (or the Jones Act fleet ). Our product tankers are modern, high quality vessels that are versatile and that we believe are among the most fuel efficient tankers in the Jones Act fleet. We intend to leverage the experience, reputation and relationships of our management team and Sponsors to capitalize on what we believe are significant growth opportunities in the Jones Act tanker market. We operate our vessels under contracts, or time charters, with creditworthy counterparties, including affiliates of BP, p.l.c. ( BP ), Royal Dutch Shell plc ( Shell ), Chevron Corporation ( Chevron ), the Military Sealift Command of the U.S. Navy ( MSC ), a division of the U.S. Department of Defense, and, on a forward basis, with Phillips 66 Company ( Phillips 66 ) and an affiliate of Tesoro Corporation ( Tesoro ). Each of the vessels in our initial fleet is either operating pursuant to a time charter with a remaining term of more than one year or is forward chartered to another counterparty for a multiple-year term (which we refer to, in either case, as a long-term time charter ). These long-term time charters provide predictable and stable cash flows based on contracted daily rates of hire for our vessels and have allowed us to maintain utilization rates for our initial fleet in excess of 99% since their commencement. We intend to grow our business and cash distributions through accretive acquisitions of additional Jones Act vessels from State Class Tankers, an affiliate of Blackstone that is building four new MR tankers that we have an Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED NOVEMBER 26, 2013 PRELIMINARY PROSPECTUS
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diff --git a/parsed_sections/prospectus_summary/2013/CIK0001587637_universal_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/CIK0001587637_universal_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Universal Movers Corporation refer to Universal Movers Corporation unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. Our Company Universal Movers Corporation was incorporated on September 9, 2013, under the laws of the State of Nevada, for the purpose of providing moving and storage services. We are a development stage company that has not realized any revenues to date, and our accumulated deficit as of September 30, 2013 is $2,425. To date we have raised an aggregate of $6,000 through a private placement of our securities. Proceeds from the private placement were used for working capital. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company s principal offices are located at 125 Beech Hall Road London, Greater London E4 9NN, UK. Our telephone number is +44 20 3734 7531. We intend to provide our moving and storage services to resident and commercial areas in London, UK, and also plan to secure a storage facility upon the completion of our public offering in London, UK, as well. To implement our business plan we require a minimum funding of $45,000 over the next twelve months. We are in the early stages of developing our business, for the purpose of providing moving and storage services. Our plan of operations over the 12 month period following successful completion of our offering of $60,000 is to use (i) $7,500 for legal and accounting fees, (ii) $7,500 for costs associated with being a reporting issuer under the Securities Exchange Act of 1934, as amended, (iii) $5,000 to setup a small office and storage facility, (iv) $5,000 to pay a salary to Shahzad Ahmed, our President and sole director, (v) $5,000 for purchasing of moving equipments, (vi) $20,000 for purchasing/leasing of a used 5 ton truck, (vii) $5,000 for website development and marketing, and (viii) $5,000 for purchasing insurance for storage facility and truck. In the event that we raise $45,000, we will use such funds as follows: (i) $7,500 for legal and accounting fees, (ii) $7,500 for costs associated with being a reporting issuer under the Securities Exchange Act of 1934, as amended, (iii) $5,000 to setup a small office and storage facility, (iv) $5,000 to pay a salary to Shahzad Ahmed, our President and sole director, (v) $5,000 for purchasing of moving equipments, and (vi) $15,000 for purchasing/leasing of a used 5 ton truck. In the event that we raise $30,000, we will use such funds as follows: (i) $7,500 for legal and accounting fees, (ii) $7,500 for costs associated with being a reporting issuer under the Securities Exchange Act of 1934, as amended, (iii) $5,000 to setup a small office and storage, (iv) $5,000 to pay a salary to Shahzad Ahmed, our President and sole director, and (v) $5,000 for purchasing of moving equipments. In the event that we raise $15,000, we will use such funds as follows: (i) $7,500 for legal and accounting fees, and (ii) $7,500 for costs associated with being a reporting issuer under the Securities Exchange Act of 1934, as amended. See Use of Proceeds on page 14. We plan to raise the additional funding for our twelve month business plan by way of private debt or equity financing, is to seek for additional funding beyond the minimum required by our plan regardless of the amount we raise through this offering, but have not commenced any activities to raise such funds. We cannot provide any assurance that we will be able to raise sufficient funds to proceed with our twelve month business plan. The reasons of our sole officer and director to make the Company become a public company is based on his subjective belief that potential investors are more inclined to invest in the Company if the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), which provides investors with updated material information about the Company and the ability of the Company s investors to resell securities through the facilities of the securities markets, assuming the Company finds a market maker in order to have its shares of common stock quoted on the OTC Bulletin Board or the OTCQB tier of the OTC Markets. Our sole officer and director believes that the disadvantages of becoming a public company are the continuing reporting costs of being a reporting issuer under the Exchange Act which he estimates will be $15,000 throughout the year and the reluctance of persons qualified to serve as directors of the Company because of a director s exposure to possible legal claims. From inception until the date of this filing we have had limited operating activities, primarily consisting of the incorporation of our company, opening a corporate bank account, the initial equity funding by our sole officer and sole director, development of our business plan and registering our domain name "www.universal-movers.com" but the website is not developed and is currently under construction. We received our initial funding of $6,000 through the sale of common stock to our President and sole director, who purchased 6,000,000 shares of common stock at $0.001 per share. Our financial statements from inception on September 9, 2013 through September 30, 2013 report no revenues and a net loss of $2,425. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Shahzad Ahmed, our President, sole director and sole officer did not agree to serve as an officer or director of the Company at least in part due to a plan, agreement or understanding that he, respectively, would solicit, participate in, or facilitate the sale of the enterprise to (or a business combination with) a third party looking to obtain or become a public reporting entity, and Mr. Ahmed also confirms that he has no such present intention. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS--RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS on page 12 of this prospectus. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our sole officer and sole director will be solely responsible for selling shares under this offering and no commission will be paid on any sales. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. Under U.S. federal securities legislation, our common stock will be penny stock . Penny stock is any equity that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Summary Financial Information The tables and information below are derived from our audited financial statements for the period from September 9, 2013 (Inception) to September 30, 2013. Our working capital deficit as at September 30, 2013 was $2,425. September 30, 2013 ($) Financial Summary (Audited) Cash and Deposits 5,991 Total Assets 5,991 Total Liabilities 2,416 Total Stockholder s Equity (Deficit) (3,575) Accumulated From September 9, 2013 (Inception) to September 30, 2013 ($) Statement of Operations Total Expenses 2,425 Net Loss for the Period (2,425) Net Loss per Share 0.00 The Offering Securities offered: 3,000,000 shares of our common stock, par value $0.001 per share. Offering price: $0.02 Duration of offering: The 3,000,000 shares of common stock are being offered for a period of 12 months. Net proceeds to us: $60,000, assuming the maximum number of shares sold. For further information on the Use of Proceeds, see page 14. Shares outstanding prior to offering: 6,000,000 Shares outstanding after offering: 9,000,000
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2013/LITB_lightinthe_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/LITB_lightinthe_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in the ADSs. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements, before making an investment decision. Overview LightInTheBox is a global online retail company that delivers products directly to consumers around the world. We offer customers a convenient way to shop for a wide selection of lifestyle products at attractive prices through www.lightinthebox.com, www.miniinthebox.com and our other websites, which are available in 17 major languages and cover more than 80.0% of Internet users globally, according to Internet World Stats. Our innovative data-driven business model allows us to offer customized products at scale for optimal marketing, merchandising and fulfillment. We have built an effective business model whereby we source most of our products directly from China-based manufacturers and we work closely with them to re-engineer their manufacturing processes to achieve faster time-to-market with a greater variety of products. We acquire customers exclusively through the Internet and serve our customers from our cost-effective locations in mainland China and Hong Kong. In 2012, we ranked number one in terms of revenue generated from customers outside of China among all China-based retail websites that source products from third-party manufacturers, according to a report conducted at our request by iResearch, an independent market research firm. We target lifestyle product categories where consumers value choice or customization. We believe that by offering more variety and personalization we will be able to create and capture new consumer demand. We offer products in the three core categories of apparel, small accessories and gadgets and home and garden, representing categories with the fastest net revenue growth in terms of absolute amount in 2012. The products of our core categories generally require design specificity, thus giving us more pricing flexibility and allowing us to capture higher margin potentials. At any time, a customer shopping for a special occasion dress on our site can have her dress made-to-measure, choosing from more than 4,300 distinctive designs. As of March 31, 2013, we had more than 220,000 product listings. In the three months ended March 31, 2013, we added an average of more than 14,000 new product listings each month. We serve consumers globally without incurring the costs and complexities associated with establishing a traditional multinational retail infrastructure. Our major markets are Europe and North America. We use global online marketing platforms such as Google and Facebook to reach our consumers, we accept payments through all major credit cards and electronic payment platforms such as PayPal and we deliver our goods through major international couriers, including UPS, DHL and FedEx. We believe that being a China-based company provides important advantages in supply chain management. We strive to source high quality products directly from some of the most competitive manufacturers in the strongest supply ecosystems. By locating our sourcing offices near some of the most competitive factories, we realize cost advantages and just-in-time inventory management as we create effective supplier competition while maximizing the quality of our products. Our suppliers benefit from working closely with our in-house manufacturing experts to re-engineer their manufacturing processes to achieve faster time-to-market for our products and enable large scale production of individually customized products. To acquire and retain customers across diverse geographic markets, we have developed proprietary technologies to manage and optimize our large-scale technical and marketing operations. In addition, we have established a specialized social marketing team that uses creative interactive activities to Amendment No. 5 to Form F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents engage online users. We provide a user-friendly online shopping experience and intelligent product recommendation algorithms to facilitate purchasing decisions. We have developed a proprietary technology platform that integrates every aspect of our business operations, including global marketing, online shopping platforms, supply chain management, fulfillment, logistics and customer service. Our founders have extensive experience and expertise in software development. We have made significant investments in software research and development to improve operational efficiency and enable business innovation. We have grown significantly since we commenced our operations. Our net revenues grew from $6.3 million in 2008 to $200.0 million in 2012. Our net revenues were $73.3 million in the three months ended March 31, 2013. The number of our customers increased from approximately 36,000 in 2008 to approximately 2.5 million in 2012. The number of our customers was approximately 1.1 million in the three months ended March 31, 2013. We experienced a net loss of $3.0 million, $4.8 million, $21.9 million, $24.5 million and $4.2 million in 2008, 2009, 2010, 2011 and 2012, respectively. We generated net income of $2.6 million for the three months ended March 31, 2013. We also used cash in operating activities of $2.1 million, $2.3 million, $19.9 million and $14.1 million in 2008, 2009, 2010 and 2011, respectively. We generated $7.4 million and $6.6 million in cash from operating activities in 2012 and the three months ended March 31, 2013, respectively. Industry Background Global online retail sales continue to experience robust growth. According to Euromonitor International, or Euromonitor, global online retail sales are expected to grow at a compound annual growth rate, or CAGR, of 17.7% from $521 billion in 2012 to $849 billion in 2015. Online retail penetration remains low in major markets around the world, but has and is expected to continue to increase over time. For example, according to Euromonitor, online retail sales as a percentage of total retail sales in the United States increased from 4.2% in 2008 to 6.5% in 2012, and is expected to increase further to 8.9% by 2015. In addition, there are significant differences in online retail penetration across different product categories. For example, in the United States, online retail penetration in 2012 is 28.3% for consumer electronics products but only 6.9% for apparel and 3.9% for home and garden, according to Euromonitor. We believe that these underpenetrated categories present significant future growth opportunities for online retailing. China has become a major manufacturing hub for consumer goods for global brands and smaller China-based exporters. According to iResearch, the Chinese consumer goods export market is expected to grow from $1,270 billion in 2012 to $1,983 billion in 2015, representing a CAGR of 16.0%. Historically, major product categories for Chinese consumer goods exports have included apparel and electronics, where China has a strong competitive advantage in manufacturing due to its unique ability to provide high levels of skill, customization and attention to detail, all at affordable prices. We believe that there are increasing opportunities for China-based companies to participate in global online retailing. They enjoy access to a large, low-cost export-oriented manufacturing base, global payment and logistics solutions and globally scalable online marketing. In addition, declining trade barriers have contributed significantly to the expansion of world trade. According to iResearch, the global online retail market for direct-to-consumer China-made goods is expected to grow from $1.7 billion in 2012 to $9.0 billion in 2015, representing a CAGR of 75.8%. However, the market remains heavily fragmented with many smaller companies. We believe these companies are faced with significant challenges associated with achieving scale; they must customize shopping experiences, manage online marketing across multiple languages, understand consumer needs across diverse geographic markets and maintain scalable and integrated technology, fulfillment and LightInTheBox Holding Co., Ltd. (Exact name of Registrant as Specified in its Charter) Cayman Islands (State or Other Jurisdiction of Incorporation or Organization) 5961 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) Building 2, Area D, Floor 1-2, Diantong Times Square No. 7 Jiuxianqiao North Road Chaoyang District, Beijing 100020 People's Republic of China Telephone: +86-10-5692-0099 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents logistics infrastructures. As a result, we believe there is an attractive opportunity for large scale, well-capitalized companies to capture market share, achieve economies of scale, build brand equity and establish best practices. Our Strengths We believe we are a first mover in offering consumers around the world an attractive online shopping experience by fully capitalizing on direct sourcing from China-based suppliers. We believe the following strengths contribute to our success and differentiate us from our competitors: scalable business model designed for global reach; supply chain optimization for faster time-to-market and product variety; distinctive products optimized for online merchandising; sophisticated online marketing capabilities; advanced technology platform that enables business innovation; and global operations with cost advantages from our base operations in China. Our Strategies Our goal is to become a leading global online retail company that revolutionizes the way people shop and manufacturers produce their merchandise. We have built an organization with unique competitive advantages that can provide us with long-term sustainable growth. We plan to execute the following key strategies in order to increase customer base and loyalty, improve marketing and sourcing efficiency, reduce operational costs and establish brand preference: enhance our customer experience to grow our customer base; expand and strengthen our product offerings; strengthen our supply chain management and efficiency; optimize our logistics network and infrastructure; deepen our market penetration globally and build stronger brand awareness; and invest in our technology platform. Our Challenges Our ability to achieve our goal and execute our strategies is subject to risks and uncertainties, including the following: our limited operating history and historical losses may make our growth and future prospects uncertain and difficult to evaluate; the online retail industry is intensely competitive and we may not compete successfully against new and existing competitors, which may materially and adversely affect our results of operations; our failure to quickly identify and adapt to changing industry conditions may have a material and adverse effect on our business, financial condition and results of operations; we have incurred net losses since our inception and prior to 2012 experienced negative cash flow from operating activities, and we may continue to incur net losses and experience negative cash Law Debenture Corporate Services Inc. 400 Madison Avenue, 4th Floor New York, New York 10017 +1 (212) 750-6474 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents flow from operating activities and, as a result, we may need to obtain additional capital in the future; any failure to manage our growth or execute our strategies effectively may materially and adversely affect our business and prospects; products manufactured by our suppliers may be defective or inferior in quality or infringe on the intellectual property rights of others, which may materially and adversely affect our business and our reputation; and we may have difficulties managing our marketing efforts and may face increased competition in our marketing efforts, which could materially and adversely affect our business and growth prospects. We also face other risks and uncertainties that may materially affect our business, financial conditions, results of operations and prospects. You should consider the risks discussed in
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diff --git a/parsed_sections/prospectus_summary/2013/MPAA_motorcar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2013/MPAA_motorcar_prospectus_summary.txt
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+This summary does not contain all of the information you should consider before investing in any securities offered pursuant to this prospectus. You should carefully read this entire prospectus and any applicable prospectus supplement, including each of the documents incorporated herein or therein by reference, before making an investment decision. For instructions on how to find copies of these documents, see Where You Can Find More Information. Our principal executive offices are located at 2929 California Street, Torrance, California 90503 and our telephone number is (310) 212-7910. About Motorcar Parts of America, Inc. We are a leading manufacturer, remanufacturer, and distributor of aftermarket automobile parts. After the Bankruptcy, as defined below, we have one reportable segment. Within this segment, we manufacture and remanufacture alternators and starters for import and domestic cars, light trucks, heavy duty, agricultural and industrial applications. On June 10, 2013, certain of Motorcar Parts of America, Inc. s subsidiaries, Fenwick Automotive Products Limited, or FAPL, Introcan, Inc., or Introcan, and Introcan s direct and indirect subsidiaries, Flo-Pro Inc., LH Distribution Inc., Rafko Logistics Inc., Rafko Holdings Inc. and Rafko Enterprises Inc., or collectively the Debtors, each filed a voluntary petition for relief under Chapter 7 of Title 11 of the United States Code in the U.S. Bankruptcy Court for the District of Delaware, or the Bankruptcy. George L. Miller has been appointed as the Chapter 7 Trustee of the Bankruptcy and is in the process of liquidating the Debtors assets. The aftermarket for automobile parts is divided into two markets. The first market is the do-it-yourself, or DIY, market, which is generally serviced by the large retail chain outlets. Consumers who purchase parts from the DIY channel generally install parts into their vehicles themselves. In most cases, this is a less expensive alternative than having the repair performed by a professional installer. The second market is the professional installer market, commonly known as the do-it-for-me, or DIFM, market. This market is serviced by the traditional warehouse distributors, the dealer networks, and the commercial divisions of retail chains. Generally, the consumer in this channel is a professional parts installer. Our products are distributed to both the DIY and DIFM markets and are distributed predominantly throughout North America. We sell our products to the largest auto parts retail and traditional warehouse chains and to major automobile manufacturers for both their aftermarket programs and their warranty replacement programs. Demand and replacement rates for aftermarket remanufactured automobile parts generally increase with the age of vehicles and increases in miles driven. Historically, the largest share of our business was in the DIY market. While that is still the case, our DIFM business is now a significant part of our business. In difficult economic times, we believe consumers are more likely to purchase lower cost replacement parts in both the DIY and DIFM markets. We focus on supplying both these channels with the most cost efficient replacement parts for the consumer to purchase. The DIFM market is an attractive opportunity for growth. We are positioned to benefit from this market opportunity in two ways: (1) our auto parts retail customers are expanding their efforts to target the DIFM market and (2) we sell our products under private label and our own brand names directly to suppliers that focus on professional installers. In addition, we sell our products to original equipment manufacturers for distribution to the professional installer both for warranty replacement and their general aftermarket channels. We have been successful in growing sales in our rotating electrical segment to this market. While we continually seek to diversify our customer base, we currently derive, and have historically derived, a substantial portion of our sales from a small number of large customers. To mitigate the risk associated with this concentration of sales, we have or are renegotiating long-term agreements with many of our major customers. The increased demand for product as a result of entering into these longer-term agreements often requires that we increase our inventories, accounts payable and personnel. Customer demands that we purchase their remanufactured core inventory have also been a significant and an additional strain on our available working capital. The marketing and other allowances we typically grant our customers in connection with our new or expanded customer relationships adversely impact the near-term revenues, profitability and associated cash flows from these arrangements. However, we believe the investment we make in these new or expanded customer relationships will improve our overall liquidity and cash flow from operations over time. For our fiscal year ended March 31, 2013, we reported a net loss of $91,511,000. For our most recent fiscal quarter ended June 30, 2013, we reported a net income of $100,980,000. We are party to a financing agreement, or the Financing Agreement, dated as of January 18, 2012 and as amended to date, with a syndicate of lenders, Cerberus Business Finance, LLC, or Cerberus, as collateral agent, and PNC Bank, National Association, as administrative agent. The loans under the Financing Agreement consist of: (i) term loans aggregating $105,000,000, collectively, the Term Loans, and (ii) revolving loans of up to $20,000,000, subject to borrowing base restrictions and a $10,000,000 sublimit for letters of credit, collectively, the Revolving Loans and together with the Term Loans, the Loans, in each case maturing on January 17, 2017. Since the execution of the Financing Agreement, we have entered into the following material amendments and waivers: First Amendment to Financing Agreement, dated as of March 18, 2012, which extended (a) our deadline for transferring deposit accounts to PNC Bank, National Association, or PNC, and to deliver related cash management agreements and (b) extended the time that accounts payable due to Wanxiang America Corporation, or Wanxiang, would not count as indebtedness for purposes of the financial covenants. Second Amendment to Financing Agreement, dated as of May 24, 2012, pursuant to which we (a) borrowed an additional $10,000,000 in term loans, (b) modified the interest rates applicable to all term loans to either LIBOR plus 8.5% or base rate plus 7.5% (at the Company s option), (c) modified the quarterly amortization payments for all term loans to commence on October 1, 2012 at a rate of $250,000 per quarter with an increase to $600,000 per quarter on April 1, 2013 and $1.35 million on October 1, 2013 until maturity, (d) adjusted the Applicable EBITDA Multiple numbers and financial covenants, (e) added a requirement that we maintain cash and cash equivalents of up to $10,000,000 in the aggregate until our obligations with respect to Wanxiang have ceased and (f) issued a warrant to Cerberus for 100,000 shares of our common stock for an initial exercise price of $17.00 per share for a period of five years, subject to certain adjustments. Third Amendment and Waiver to Financing Agreement, dated as of August 22, 2012, pursuant to which (a) our existing subordinated indebtedness and general unsecured indebtedness baskets were replaced with baskets permitting our additional investment in FAPL, and its guaranty of $22,000,000 of FAPL s obligations to Wanxiang pursuant to the Revolving Credit/Strategic Cooperation Agreement, referred to herein as the Guaranty, (b) our general lien basket was removed, (c) additional reporting requirements regarding financial reports of auditors and material notices were added, (d) certain defaults arising as a result of our failure to comply with certain reporting requirements were waived and (e) certain other consequential amendments were made. Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Fourth Amendment to Financing Agreement, dated as of December 3, 2012, which permitted us to repurchase up to $300,000 of our common stock held by Melmarks Enterprises LLLP. Fifth Amendment to Financing Agreement, dated as of January 16, 2013, which permitted us to repurchase up to $454,675 of our shares held by Selwyn Joffe. Sixth Amendment and Waiver to Financing Agreement, dated as of June 14, 2013, pursuant to which (a) the agents and lenders agreed to waive any event of default that would otherwise arise under the Financing Agreement due to the qualification in the opinion by our certified public accountants with respect to the financial statements for the fiscal year ended March 31, 2013, (b) a reporting requirement with respect to our liquidity levels and certain inventory purchases were added, and (c) a financial covenant under which we must maintain the following levels of liquidity on the following dates unless otherwise consented to by the lenders was added: on June 28, 2013, an aggregate amount of at least $25,000,000; on July 31, 2013, an aggregate amount of at least $26,000,000; and on August 30, 2013, an aggregate amount of at least $27,000,000, in each case subject to certain adjustments. Seventh Amendment to Financing Agreement, dated as of August 26, 2013, pursuant to which (a) we borrowed an additional $20,000,000 in term loans, (b) the Senior Leverage Ratio and Fixed Charge Coverage Ratio covenants were reset, (c) certain carveouts related to transaction fees and restructuring costs to the definitions of Consolidated EBITDA and Excess Cash Flow and the calculation of liquidity were added and (d) the agents and lenders consented to our payment of certain subordinated debt with respect to the Guaranty. Eighth Amendment to Financing Agreement, dated as of October 9, 2013, which permitted us to repurchase up to $626,500 of our shares held by Selwyn Joffe. Ninth Amendment and Waiver to Financing Agreement (the Ninth Amendment ), dated as of November 6, 2013, pursuant to which (a) the agents and lenders waived a requirement for the Company to pay down loans with its receipt of certain state tax refunds, (b) the Revolving Credit Commitment (as defined therein) was increased by $10,000,000 to $30,000,000 (the Amended Revolving Loans ), (c) the Term Loan Commitment was decreased by $10,000,000 to $95,000,000 (the Amended Term Loans ), (iv) the final maturity date was extended to November 6, 2018, (d) the interest rates for the Amended Term Loans were lowered to bear interest at rates equal to, at the Company s option, either LIBOR (subject to a 1.50% LIBOR floor) plus 5.25% or a reference rate plus 4.25%, (e) the interest rates for the Amended Revolving Loans were lowered to bear interest at rates equal to, at the Company s option, either LIBOR plus 2.50% or a reference rate plus 1.00%, and are subject to borrowing base restrictions, and (f) certain other amendments and modifications were made to the Financing Agreement, in the form of an amended and restated financing agreement in the form attached to the Ninth Amendment. MOTORCAR PARTS OF AMERICA, INC. (Exact name of registrant as specified in its charter) Table of Contents
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including our consolidated 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 expressly indicated or the context otherwise requires, in this prospectus, Performant, we, us, our, and the Company refer to Performant Financial Corporation and, where appropriate, its subsidiaries. Overview We provide technology-enabled recovery and related analytics services in the United States. Our services help identify and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Our clients typically operate in complex and regulated environments and outsource their recovery needs in order to reduce losses on billions of dollars of defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. We generally provide our services on an outsourced basis, where we handle many or all aspects of our clients recovery processes. We believe we have a leading position in our markets based on our proprietary technology-enabled services platform, long-standing client relationships and the large volume of funds we have recovered for our clients. Our clients include 11 of the 31 public sector participants in the student loan industry and these relationships average more than 10 years in length, including a 22-year relationship with the Department of Education. In the healthcare market, we are currently one of four prime Medicare Recovery Audit Contractors, or RACs, in the United States for the Centers for Medicare and Medicaid Services, or CMS. We utilize our technology platform to efficiently provide recovery and analytics services in the markets we serve. We have continuously developed and refined our technology platform for almost two decades by using our extensive domain and data processing expertise. We believe our technology platform allows us to achieve higher workforce productivity versus more traditional labor-intensive outsourcing business models, as we generated in excess of $150,000 of revenues per employee during 2012, based on the average number of employees during the year. In addition, we believe that our platform is easily adaptable to new markets and processes. For example, we utilized the same basic platform previously used primarily for student loan recovery activities to enter the healthcare market. Our revenue model is generally success-based as we earn fees based on a percentage of the aggregate amount of funds that we enable our clients to recover. Our services do not require any significant upfront investments by our clients and we offer our clients the opportunity to recover significant funds otherwise lost. Furthermore, our business model does not require significant capital expenditures for us and we do not purchase loans or obligations. We believe we benefit from a significant degree of revenue visibility due to reasonably predictable recovery outcomes in a substantial portion of our business. For the year ended December 31, 2012, we generated approximately $210.1 million in revenues, $23.0 million in net income, $69.6 million in adjusted EBITDA and $30.6 million in adjusted net income. See Adjusted EBITDA and Adjusted Net Income below for a definition of adjusted EBITDA and adjusted net income and reconciliations of adjusted EBITDA and adjusted net income to net income determined in accordance with generally accepted accounting principles. Our Markets We operate in markets characterized by strong growth, a complex regulatory environment and a significant amount of delinquent, defaulted or improperly paid assets. Table of Contents The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued April 16, 2013 6,500,000 Shares COMMON STOCK The selling stockholders are offering 6,500,000 shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. Our common stock is listed on The NASDAQ Global Select Market under the symbol PFMT. On April 15, 2013, the last sale of our common stock as reported on The NASDAQ Global Select Market was $12.25 per share. Investing in our common stock involves risks. See Risk Factors beginning on page 12. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions Proceeds to Selling Stockholders Per Share $ $ $ Total $ $ $ See Underwriting for additional information regarding compensation. The selling stockholders identified in this prospectus have granted the underwriters an option for a period of 30 days to purchase, on the same terms and conditions as set forth above, up to an additional 975,000 shares of our common stock. We will not receive any of the proceeds from the sale of shares by these selling stockholders if the underwriters exercise their option to purchase additional shares of common stock. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2013. GOLDMAN, SACHS & CO. MORGAN STANLEY WELLS FARGO SECURITIES CREDIT SUISSE WILLIAM BLAIR COMPASS POINT , 2013 Table of Contents Student Lending According to the Department of Education, total government-supported student loan originations were estimated to be approximately $115 billion in the year ended September 30, 2012, and the aggregate dollar amount of these loans has grown at a compound annual growth rate of 11% from 2002 through 2012. The cohort default rate, which is the measure utilized by the Department of Education to track the percentage of government-supported loan borrowers that enter repayment in a certain year ended September 30 and default by the end of the next year ended September 30, has risen from approximately 5% in 2006 to approximately 9% in 2010, the last year for which data is available. Healthcare According to CMS, U.S. healthcare spending reached $2.7 trillion in 2011 and is forecast to grow at a 6% annual rate through 2021. CMS indicates that government-related healthcare spending for 2011 totaled approximately $1.2 trillion. This government-related spending included approximately $554 billion of payments under Medicare, of which $43 billion, or 8%, was estimated to be improper. Medicare improper payments generally involve incorrect coding, procedures performed which were not medically necessary, incomplete documentation or claims submitted based on outdated fee schedules, among other issues. Other Markets We believe that the demand for recovery of delinquent state taxes will grow as state governments struggle with revenue generation and face significant budget deficits. According to the Center on Budget and Policy Priorities, an independent think tank, 43 U.S. states faced budget shortfalls totaling $107 billion in the year ended September 30, 2012, with at least 31 states anticipating deficits for fiscal year 2013. The federal agency market consists of government debt subrogated to the Department of the Treasury. For the year ended September 30, 2011, federal agency recoveries in this market totaled more than $6.2 billion, a significant portion of which were made by private firms on behalf of the Department of Financial Management Service, a bureau of the Department of the Treasury. Our Platform Our technology-enabled services platform is based on over two decades of experience in recovering large amounts of funds on behalf of our clients across several markets. The components of our platform include our data management expertise, analytics capabilities and technology-based workflow processes. Our platform integrates these components to allow us to achieve optimized outcomes for our clients in the form of increased efficiency and productivity and high recovery rates. We believe our platform and workflow processes are also intuitive and easy to use for our recovery and claims specialists and allow us to increase our employee retention and productivity. Our Competitive Strengths We believe that our business is difficult to replicate, as it incorporates a combination of several important and differentiated elements, including: Scalable and flexible technology-enabled services platform. We have built a proprietary technology platform that is highly flexible, intuitive and easy to use for our recovery and claims specialists. Our platform is easily configurable and deployable across multiple markets and processes. Advanced, technology-enabled workflow processes. Our technology-enabled workflow processes, developed over many years of operational experience in recovery services, disaggregate otherwise complex recovery processes into a series of simple, efficient and consistent steps that are easily configurable and applicable to different types of recovery-related applications. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/ABEO_abeona_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/ABEO_abeona_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus and may not contain all of the information that may be important to you. For a more complete understanding of our business and the spinoff, you should read this summary together with the more detailed information and financial statements appearing elsewhere in this Prospectus. You should read this entire Prospectus carefully, including the Risk Factors and Cautionary Statement Concerning Forward-Looking Statements sections. A-Mark, the Company, we, our, and us refer to A-Mark Precious Metals, Inc. and our subsidiaries. Our Company A-Mark is a full-service precious metals trading company, and an official distributor for many government mints throughout the world. We offer gold, silver, platinum and palladium in the form of bars, plates, powder, wafers, grain, ingots and coins. Our Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals. Our Coin & Bar unit deals in over 200 coin and bar products in a variety of weights, shapes and sizes for distribution to dealers and other qualified purchasers. We have trading centers in Santa Monica, California and Vienna, Austria for buying and selling precious metals. The functional currency of the trading center in Vienna, Austria is U.S. Dollars. In addition to wholesale and trading activity, A-Mark offers its customers a variety of services, including financing, consignment and various customized financial programs. As a U.S. Mint-authorized purchaser of gold, silver and platinum coins, A-Mark purchases bullion products directly from the U.S. Mint for sale to its customers. A-Mark also has distributorships with other sovereign mints, including in Australia, Austria, Canada, China, Mexico and South Africa. Customers of A Mark include mints, manufacturers and fabricators, refiners, coin and metal dealers, banks and other financial institutions, jewelers, investors and collectors. The Company s precious metals inventory and certain of its transactional activities are subject to fluctuation of underlying commodity market prices. A-Mark enters into transactions to hedge substantially all of its exposure to changes in market price. Through our subsidiary, Collateral Finance Corporation, referred to as CFC, a licensed California Finance Lender, we offer loans collateralized by numismatic and semi-numismatic coins and bullion to coin and metal dealers, investors and collectors. All loans made by CFC are collateralized with loan-to-value ratios principal loan amount divided by the liquidation value of the collateral of, in most cases, 50% to 80%. The loans have fixed interest rates, based on prevailing rates at the relevant time, and maturities from three to twelve months. Through our Transcontinental Depository Services subsidiary, referred to as TDS, we offer a variety of managed storage options for precious metals products to financial institutions, dealers, investors and collectors around the world. We believe that our businesses largely function independently of the price movement of the underlying commodities in which we deal. However, factors such as global economic activity or uncertainty and inflationary trends, which affect market volatility, have the potential to impact customer demand, volume and margins. Our Capital Stock Immediately prior to the spinoff, A-Mark s outstanding capital stock will consist of A-Mark common stock, par value $.01 per share, all of which will be held by SGI. The A-Mark common stock being distributed in the spinoff will represent 100% of A-Mark s equity and general voting power. Holders of A-Mark common stock will be entitled to one vote per share. Our Relationship with SGI In July 2005, all of the outstanding common stock of A-Mark was acquired by Spectrum PMI, Inc. Spectrum PMI was a holding company whose outstanding common stock was owned 80% by SGI, and 20% by Auctentia, S.L. At that time Auctentia, together with its parent company, Afinsa Bienes Tangibles, S.A., held a majority of SGI s common stock. In September 2012, SGI purchased from Auctentia its 20% interest in Spectrum PMI. On September 30, 2013 Spectrum PMI was merged with and into SGI, as a result of which all of the outstanding shares of A Mark are now owned directly by SGI. In connection with the distribution, we will enter into a separation and distribution agreement with SGI which will govern the distribution and certain aspects of our relationship with SGI following the distribution. We and SGI will also enter into a tax separation agreement, which will address various tax matters affecting the two companies following the distribution. These agreements will be made in the context of a parent-subsidiary relationship and were negotiated in the overall context of our separation from SGI. The terms of these agreements may be more or less favorable than those we could have negotiated with unaffiliated third parties. For more information regarding the agreements between us and SGI, see Certain Relationships and Related Party Transactions Agreements with SGI in this Prospectus.
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled Risk Factors, Business and Management s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this prospectus. Unless the context otherwise requires, the terms A10, the company, we, us and our in this prospectus refer to A10 Networks, Inc., and its subsidiaries. A10 NETWORKS, INC. Overview We are a leading provider of advanced application networking technologies. Our solutions enable enterprises, service providers, Web giants and government organizations to accelerate, secure and optimize the performance of their data center applications and networks. Our products are built on our Advanced Core Operating System, or ACOS, platform of advanced networking technologies, which is designed to enable our products to deliver substantially greater performance and security relative to prior generation application networking products. Our software based ACOS architecture also provides the flexibility that enables us to expand our business to offer additional products to solve a growing array of networking and security challenges arising from increased Internet cloud and mobile computing. We currently offer three software based advanced application networking solutions. These are Application Delivery Controllers, or ADCs, to optimize data center performance; Carrier Grade Network Address Translation, or CGN, to provide address and protocol translation services for service provider networks; and a Distributed Denial of Service Threat Protection System, or TPS, for network-wide security protection. We deliver these solutions both on optimized hardware appliances and as virtual appliances across our Thunder Series and AX Series product families. Our ACOS platform architecture is optimized for modern 64-bit computer processors, or CPUs, which increasingly have multiple parallel processing cores that operate within a single CPU for higher efficiency and performance scalability. In order to maximize the capabilities of these increasingly dense multi-core CPUs, ACOS implements a proprietary shared memory architecture that provides all cores with simultaneous access to common memory. This shared memory architecture enables our products to utilize these multi-core CPUs efficiently and scale performance with increasing CPU cores. As a result, we believe our ACOS application networking platform enables us to provide our end-customers with products that can deliver superior price performance benefits over products that lack these capabilities. We believe our products can process two to five times more web transactions (measured as Layer 4 connections per second) in certain head to head product comparisons per unit of computing and memory resources, power, rack space or list price. ACOS s high performance design enables our products to address a wide range of today s performance-driven networking challenges. For example, we have expanded our products capabilities to defend against the rising volume of large scale, sophisticated cyber security threats, such as Distributed Denial of Service, or DDoS, and other increasingly sophisticated high volume network attacks. The flexible software design of ACOS enables our end-customers to deploy our products across a number of new models for IT operations, such as managed hosting of their network by a third party provider and Internet cloud-based applications and networks. We are a leading provider of application network technologies, based on our networking solutions performance, security and scalability. We believe our products can process two to five times more web transactions (measured as Layer 4 connections per second) in certain head to head product comparisons per unit of computing and memory resources, power, rack space or list price. Furthermore, the flexible software design of Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued March 13, 2014 12,500,000 Shares COMMON STOCK A10 Networks, Inc. is offering 9,000,000 shares of its common stock and the selling stockholders are offering 3,500,000 shares. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $13.00 and $15.00 per share. Our common stock has been approved for listing on the New York Stock Exchange under the symbol ATEN. We are an emerging growth company under the federal securities laws and are subject to reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 13. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds to A10 Networks Proceeds to Selling Stockholders Per Share $ $ $ $ Total $ $ $ $ (1) See Underwriters (Conflicts of Interest) for additional information regarding underwriting compensation. The selling stockholders have granted the underwriters the right to purchase up to an additional 1,875,000 shares of common stock to cover over-allotments. The Securities and Exchange Commission and any state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2014. MORGAN STANLEY BofA MERRILL LYNCH J.P. MORGAN RBC CAPITAL MARKETS PACIFIC CREST SECURITIES OPPENHEIMER & CO. , 2014 Table of Contents ACOS enables our end customers to deploy our products across a number of new models for IT operations, such as managed hosting of their network by a third party provider and Internet cloud-based applications and networks. To maintain and strengthen our leadership position, we will need to continue to innovate and advance our application network technologies and compete effectively with other companies that participate in our markets, including larger and more well-established companies. We sell our products globally to service providers and enterprises that depend on data center applications and networks to generate revenue and manage operations efficiently. Our high-touch sales force engages directly or through indirect distribution channels with our end-customers. We believe that a high-touch, customer-focused selling process is important before, during and after the sale of our products to maximize our sales success. Product fulfillment is generally done through our original equipment manufacturers or distribution channel partners. As of December 31, 2013, we had sold our products to more than 2,900 customers across 65 countries, including three of the top four United States wireless carriers, seven of the top ten United States cable providers, and the top three wireless carriers in Japan, in addition to other global enterprises, Web giants and governmental organizations. Our business is geographically diversified with 48% of our total revenue from the United States, 28% from Japan and 24% from the rest of the world for the year ended December 31, 2013. For the years ended December 31, 2010, 2011, 2012 and 2013, our total revenue was $55.3 million, $91.3 million, $120.1 million and $141.7 million, representing a compound annual growth rate of approximately 37% from 2010 to 2013. Our total revenue grew 32% from 2011 to 2012 and 18% from 2012 to 2013. For the years ended December 31, 2010, 2011, 2012 and 2013, our gross margin was 78%, 80%, 80% and 76%. We generated net income (loss) of $5.2 million, $7.3 million, $(90.2) million and $(27.1) million for the years ended December 31, 2010, 2011, 2012 and 2013. Our net income (loss) in these periods was affected by the settlement of, and legal expenses related to, our litigation with Brocade Communications Systems, Inc. Our Industry Organizations are increasingly dependent on their websites and data center infrastructure for business operations. IT administrators struggle to ensure continuous availability of these business critical resources in the face of escalating performance expectations, demands to migrate to cloud computing and increasingly sophisticated cyber security attacks. IT administrators are therefore seeking new application networking technologies to optimize the performance and security of data center applications and networks. Trends Driving Continued Evolution of Application Networking Commercial damage and customer dissatisfaction from poor website, data center application and network performance can have a lasting negative impact well beyond the expenses related directly to the downtime. To optimize data center application and network performance and avoid unforeseen downtime, organizations deploy application networking technology to ensure the performance and security of data center resources. These organizations must simultaneously address significant networking industry trends such as: Increased Adoption of Cloud Computing Applications. According to Cisco s Global Cloud Index, global Internet Protocol, or IP, traffic for cloud-based applications will grow at a 35% compound annual growth rate from 2012 through 2017, while data center traffic generally will grow at a 25% compound annual growth rate over the same period. As organizations move their business critical applications to the cloud, they need application networking solutions optimized for cloud computing that can scale with the performance demands and security expectations of this growth. Increased Network Complexity Due to Virtualization and Software Defined Networking Adoption. The increased use of virtual servers and software defined networks is increasing network complexity. To deal with this complexity, organizations require next-generation application networking solutions that are flexible and dynamic. Table of Contents Meeting Needs in Mission-Critical Areas of the Network ADC TPS Customer Network Perimeter DDoS Security Detect and Mitiga DDoS Attacks Data Center Application Delivery Controller Optimize Data Center Performance and Security Web Web App Database CGN Service Provider Backbone Carrier Grade Network Address Translation/ IPv6 Transition Extend and Migrate Network Infrastructure ACOS Advanced Core Operating System Firewall IPv4 IPv6 Broad Solution offering We are a leading provider of advanced application networking technologies. We offer a range of software-based appliances that leverage our Advanced Core Operating System (ACOS). ACOS incorporates our proprietary shared memory architecture, which is designed to utilize multicore processors efficiently and provide increasing levels of performance with increasing processor density. Thunder Thunder vThunder hardware appliance hybrid virtual appliance virtual appliance Table of Contents Rapid Growth of Internet-Connected Devices and the Exhaustion of the Existing IP Address Space. The rapid growth of mobile and other Internet-connected devices has overwhelmed the current Internet Protocol addressing scheme, IPv4, which will be fully exhausted in major markets such as the United States, Europe and Asia by 2015. To support this rapid growth of Internet-connected devices, the industry is transitioning to the next-generation addressing system, IPv6. As this transition unfolds, application networking technology will play an increasingly significant role in managing two Internet connection standards, simultaneously extending the viability of IPv4 and enabling end-customers to move to the IPv6 standard. Increasing Risk from Cyber Security Threats. Cybercriminals, foreign military intelligence organizations and amateur hackers are targeting the data centers of organizations of every type. One particular cyber threat, DDoS, is particularly nefarious and presents a significant threat to any network. As these and other types of attacks have become more frequent and sophisticated, organizations increasingly rely on application networking technologies for defense. Exponential Growth in Data Center Speeds. Organizations are enhancing the performance of their networks by increasing the data traffic speeds of their data center networks from the 1 and 10 Gigabit Ethernet rates in use over the last ten years to 40 Gigabit Ethernet currently and evolving to 100 Gigabit Ethernet as soon as 2015. Organizations require high performance application networking technology to ensure data center application and network performance and security are maintained despite rapidly escalating data rates. Limitations of Alternative Approaches in Addressing These Challenges Conventional networking equipment is built on custom designed semiconductors and is limited to only basic data forwarding and security functions based on a narrow range of address fields within a data packet. Due to these rigid designs and limited capabilities, conventional networking equipment cannot process more advanced application data and thus cannot effectively perform application-layer networking functions. To address these shortcomings, first-generation application networking products were developed that could inspect and take action based upon the specific application of data traffic. This capability is referred to as being application-aware. First generation application networking products were able to improve application performance and security in ways not possible for conventional networking equipment. Examples of these first-generation application networking products include server load balancers and intrusion prevention systems. However, these first-generation products have fundamental limitations, including general purpose computing architectures that do not provide for sharing of memory resources and thus cannot fully utilize the functionality of modern, multi-core processors. These products lack the performance capabilities necessary to rapidly analyze application data at the rates necessary to meet performance and security requirements in modern data centers. Need for Next-Generation High Performance Application Networking In order to address these increasingly complex network challenges, a new generation of application-aware networking solutions is needed in order to look deeply into application content, modify content for performance optimization or security purposes, and forward the traffic at rapidly escalating network data rates. Next-generation application networking solutions require: Ability to Scale with High Speed Network Traffic. Next-generation application networking technologies must be able to analyze application data intelligently as they move through faster networks to take full advantage of the increasing computing power of modern multi-core processors. Platform to Provide Broad Application Extensibility. First-generation application networking technology has been unable to respond effectively to the dynamic requirements of modern applications and cloud computing. Next-generation application networking technology must be flexible and agile to address the increasing array of networking and application challenges. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that 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 consolidated financial statements, before making an investment decision. Our actual results may differ significantly from the results discussed in these forward-looking statements as a result of certain factors, including those described in Risk Factors and Cautionary Note Regarding Forward-Looking Statements. All references to we, us, our, and the Company mean Actinium Pharmaceuticals, Inc. and its subsidiary Actinium Corporation. Business Overview We are a biopharmaceutical company focused on the $54 billion market for cancer drugs. Our most advanced products are Actimab -A, an antibody-drug construct containing actinium 225 (Ac-225), currently in human clinical trials for acute myeloid leukemia (AML) and Iomab -B, an antibody-drug construct containing iodine 131 (I-131), used in myeloconditioning for hematopoietic stem cells transplantation (HSCT) in various indications. Based on the successful Iomab-B End of Phase 2 (EOP-2) meeting and subsequent discussions with the U. S. Food and Drug Administration (FDA), the Company established an agreement on the path to a Biologics License Applications (BLA) submission which included a single pivotal Phase 3 clinical study design. The key clinical study design primary and secondary endpoints and study size were confirmed. Iomab-B is to be used in preparing patients for HSCT. The trial population in this two arm randomized controlled multicenter trial will be refractory AML patients over the age of 55. The trial size was set at 150 patients (75 patients per arm). The Company is developing its cancer drugs using its expertise in radioimmunotherapy. In addition, the Ac-225 based drugs development relies on the patented Alpha Particle Immunotherapy Technology (APIT) platform technology co-developed with Memorial Sloan Kettering Cancer Center (MSKCC), whose indirect subsidiary, Actinium Holdings Ltd., is a significant stockholder of the Company. The APIT technology couples monoclonal antibodies (mAb) with extremely potent but comparatively safe alpha particle emitting radioactive isotopes, in particular actinium 225 and bismuth 213. The final drug construct is designed to specifically target and kill cancer cells while minimizing side effects. The Company intends to develop a number of products for different types of cancer and derive revenue from partnering relationships with large pharmaceutical companies and/or direct sales of its products in specialty markets in the United States. Since our inception on June 13, 2000, we have not generated any revenues, and as of September 30, 2013, we have incurred net losses of $60.6 million. As of December 31, 2012 and September 30, 2013 our cash balance was $5.7 million, and $4.0 million, respectively, and we need up to $25 million in cash to finance research and development and to cover our ongoing working capital needs through the first quarter of 2016. In December 2013 and January 2014, the Company closed on total gross proceeds of approximately $6.6 million from the private placement of common stock and warrants to new and existing accredited investors. If we do not raise any additional funding, we will be able to continue our operations through 2014 and into the first quarter of 2015. As we have raised 25% of the needed funds, we will be able to conduct our planned operations through 2014 and into the first quarter of 2015. If we raise 50% of the needed funds, we will be able to conduct our planned development programs through the second half of 2015. If we raise 75% or more of the needed funds, we will be able to accelerate our planned development programs through 2015 and into the second quarter of 2016. Our first product is not expected to be commercialized until at least 2017. In the second quarter of 2013 we issued shares of common stock pursuant to the exercise of A-Warrants originally issued in connection with a private placement that closed in January 2013. The warrants were exercised at $1.65 per share, resulting in gross proceeds of approximately $3.5 million for the Company. As the remainder of the outstanding warrants are exercisable on a cashless basis there can be no assurance that we will be able to realize any proceeds from their exercise. Corporate Information Our principal executive offices are located at 501 Fifth Avenue, 3rd Floor, New York, NY 10017 and our telephone number is (646) 459-4201. Our website address is www.actiniumpharmaceuticals.com. The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part. The information on our website is not part of this prospectus. (1) Based upon the total number of issued and outstanding shares as of February 11, 2014 (2) Based upon the total number of issued and outstanding shares as of February 11, 2014, and including 276,529 shares of our common stock issuable upon exercise of common stock warrants held by the selling stockholders at an exercise price of $9.00 per share. TABLE OF CONTENTS
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere, or incorporated by reference, in this prospectus. As a result, it does not contain all the information that may be important to you. To understand this transaction fully, you must read this entire prospectus carefully, including the risk factors beginning on page 10 and the documents incorporated by reference into this prospectus. The Company Carver Bancorp, Inc., a Delaware corporation (the Company or Carver") is the holding company for Carver Federal Savings Bank ( Carver Federal or the Bank ), a federally chartered savings bank. The Company is headquartered in New York, New York. The Company conducts business as a unitary savings and loan holding company, and the principal business of the Company consists of the operation of its wholly owned subsidiary, Carver Federal. Carver Federal was founded in 1948 to serve African American communities whose residents, businesses and institutions had limited access to mainstream financial services. The Bank remains headquartered in Harlem, and predominantly all its ten branches and four stand alone 24/7 ATM Centers are located in low- to moderate income neighborhoods. Many of these historically underserved communities have experienced unprecedented growth and diversification of incomes, ethnicity and economic opportunity, after decades of public and private investment. Carver Federal is the largest African American operated bank in the United States. The Bank remains dedicated to expanding wealth enhancing opportunities in the communities it serves by increasing access to capital and other financial services for consumers, businesses and non-profit organizations, including faith based institutions. A measure of its progress in achieving this goal includes the Bank s Outstanding rating, issued by the OCC following its most recent Community Reinvestment Act ( CRA ) examination in 2012. The examination report noted that 76.1% of the Bank s community development lending and 55.4% of the Bank s Home-Owners Mortgage Disclosure Act ( HMDA ) reportable loan originations were within low- to moderate income geographies, which far exceeded peer institutions. The Bank had approximately $639.8 million in assets as of March 31, 2014 and employed approximately 132 employees as of March 31, 2014. Carver Federal engages in a wide range of consumer and commercial banking services. Carver Federal provides deposit products including demand, savings and time deposits for consumers, businesses, and governmental and quasi governmental agencies in its local market area within New York City. In addition to deposit products, Carver Federal offers a number of other consumer and commercial banking products and services, including debit cards, online banking, online bill pay, and telephone banking. Carver Federal also offers a suite of products and services for unbanked and underbanked consumers, branded as Carver Community Cash. This includes check cashing, wire transfers, bill payments, reloadable prepaid cards and money orders. Carver Federal offers loan products covering a variety of asset classes, including commercial, multi family and residential mortgages, construction loans and business loans. The Bank finances mortgage and loan products through deposits or borrowings. Funds not used to originate mortgages and loans are invested primarily in U.S. government agency securities and mortgage backed securities. The Bank s primary market area for deposits consists of the areas served by its nine branches in the Brooklyn, Manhattan and Queens boroughs of New York City. The neighborhoods in which the Bank s branches are located have historically been low- to moderate income areas. The Bank s primary lending market includes Bronx, Kings, New York and Queens counties in New York City, and lower Westchester County, New York. Although the Bank s branches are primarily located in areas that were historically underserved by other financial institutions, the Bank faces significant competition for deposits and mortgage lending in its market areas. Management believes that this competition has become more intense as a result of increased examination emphasis by federal banking regulators on financial institutions fulfillment of their responsibilities under the CRA and more recently due to the decline in demand for loans by qualified borrowers. Carver Federal s market area has a high density of financial institutions, many of which have greater financial resources, name recognition and market presence, and all of which are competitors to varying degrees. The Bank s competition for loans comes principally from mortgage banking companies, commercial banks, and savings institutions. The Bank s most direct competition for deposits comes from commercial banks, savings institutions and credit unions. Competition for deposits also comes from money market mutual funds, corporate and government securities funds, and financial intermediaries such as brokerage firms and insurance companies. Many of the Bank s competitors have Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per security Proposed maximum aggregate offering price Amount of registration fee * Series D Preferred Stock, $0.01 par value per shares 45,118 shares $ 1,000.00 (3) $ 45,118,000 $ 5,812 Common Stock, $0.01 par value per share 9,047,331 shares (1)(2) $ 9.30 (4) 84,140,179 10,837 Total $ 129,258,179 $ 16,649 (1) Represents (i) 3,529,325 shares of common stock currently outstanding and (ii) 5,518,006 shares of common stock that may be issued to the holders of the Registrant s Series D Preferred Stock upon the occurrence of certain transfers that cause the conversion of the Series D Preferred Stock. The Series D Preferred Stock will convert automatically upon the occurrence of certain transfers, including some sales by the selling stockholders. Shares of common stock issued to persons who purchase Series D Preferred Stock from the selling shareholders are offered by, and will be issued by, the Registrant. (2) In the event of a stock split, reverse stock split, stock dividend, anti-dilution adjustment or similar transaction involving common stock of the Registrant, the number of shares registered shall be automatically increased to cover the additional shares or decreased to reflect the event in accordance with Rule 416(b) under the Securities Act. (3) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act based upon the initial price of the Company s Series C Preferred Stock, a portion of which converted on a 1-to-1 basis into Series D Preferred Stock. (4) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act based upon the last reported trading price of the Registrant s common stock on the Nasdaq Capital Market on August 11, 2014. * A filing fee of $16,898 was previously paid in connection with the Registrant s Registration Statement on Form S-1 filed on September 28, 2011. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. _________________________________________________________________________ Explanatory Note: This Post-Effective Amendment No. 3 is being filed in order to incorporate by reference Carver Bancorp, Inc. s Annual Report on Form 10-K for the year ended March 31, 2014 and certain other documents filed with the SEC by Carver Bancorp, Inc., and to make certain corresponding changes in the Registration Statement. substantially greater resources and offer a wider array of financial services and products. This combined with competitors larger presence in the New York market add to the challenges the Bank faces in expanding its current market share and growing its near-term profitability. Carver Federal s more than 60 year history in its market area, its community involvement and relationships, targeted products and services and personal service consistent with community banking, help the Bank compete with other competitors that have entered its market. The Bank formalized its many community focused investments on August 18, 2005, by forming Carver Community Development Company ( CCDC ). CCDC oversees the Bank s participation in local economic development and other community based initiatives, including financial literacy activities. CCDC coordinates the Bank s development of an innovative approach to reach the unbanked customer market in Carver Federal s communities. Importantly, CCDC spearheads the Bank s applications for grants and other resources to help fund these important community activities. In this connection, Carver Federal has successfully competed with large regional and global financial institutions in a number of competitions for government grants and other awards. In June 2006, Carver Federal was selected by the United States Department of the Treasury to receive an award of $59 million in New Markets Tax Credits ( NMTC ). In May 2009, Carver Federal won another NMTC award in the amount of $65 million and in August 2011, Carver Federal received a third NMTC award in the amount of $25 million. The NMTC award is used to stimulate economic development in low- to moderate income communities. The NMTC award enables the Bank to invest with community and development partners in economic development projects with attractive terms including, in some cases, below market interest rates, which may have the effect of attracting capital to underserved communities and facilitating revitalization of the community, pursuant to the goals of the NMTC program. The NMTC award provides a credit to Carver Federal against federal income taxes when the Bank makes qualified investments. In addition to the tax credit awards recognized, the Company may transfer rights to an investor in a NMTC project and recognize a gain on the transfer of rights. The Company s ability to realize the benefit of the tax credits is dependent upon the Company generating sufficient taxable income. As of March 31, 2014, all three award allocations have been fully utilized in qualifying projects. A description of our business and operations is included in our Annual Report on Form 10-K for the year ended March 31, 2014, filed with the SEC on July 15, 2014, and our Quarterly Reports on Form 10-Q for the period ended June 30, 2013, filed with the SEC on August 13, 2013, for the period ended September 30, 2013, filed with the SEC on November 12, 2013, for the period ended December 31, 2013, filed with the SEC on February 13, 2014, and for the period ended June 30, 2014, filed with the SEC on August 12, 2014, all of which are incorporated herein by reference. Cease-and-Desist Orders On February 7, 2011, the Company and the Bank consented to the Office of Thrift Supervision ( OTS ) issuing an Order to Cease and Desist against the Company (the Company Order ) and against the Bank (the Bank Order ) (together the Orders ). The OTS issued the Orders based upon its findings that the Company and the Bank were operating with an inadequate level of capital for the volume, type and quality of assets held by the Company and the Bank, that they were operating with an excessive level of adversely classified assets and that earnings were inadequate to augment capital. The Orders impose significant restrictions on the operations of the Company and the Bank. Effective July 21, 2011, supervisory authority with respect to the Company Order was transferred from the OTS to the Board of Governors of the Federal Reserve System (the Federal Reserve ) and the supervisory authority with respect to the Bank Order was transferred from the OTS to the Office of the Comptroller of the Currency (the OCC ). The Company Order requires, among other things, the Company to notify and receive the written permission of the Federal Reserve prior to (i) declaring, making or paying any dividends or other capital distributions, or repurchasing or redeeming any capital stock; (ii) incurring, issuing, renewing, repurchasing or rolling over any debt, increasing any current lines of credit or guaranteeing the debt of any entity; (iii) making certain changes to its directors or senior executive officers; (v) entering into, renewing, extending or revising any contractual arrangement related to compensation or benefits with any of its directors or senior executive officers; and (vi) making any golden parachute payments or prohibited indemnification payments. The Company Order also requires the Company to submit and adhere to a written plan to maintain and enhance the capital of the Company. The Bank Order requires, among other things, the Bank (i) attain and maintain a Tier 1 Core Capital Ratio equal to or greater than nine percent (9%) and a Total Risk-Based Capital Ratio equal to or greater than thirteen percent (13%); (ii) revise and adhere to a written plan to identify, monitor and control risk associated with concentrations of assets; (iii) adhere to a detailed written plan with specific strategies, targets and timeframes to reduce the Bank s level of problem Prospectus Carver Bancorp, Inc. 45,118 Shares of Series D Preferred Stock 9,047,331 Shares of Common Stock This prospectus relates to the offering of two categories of our securities. The securities may be resold from time to time by and for the accounts of certain selling stockholders named in this prospectus. See Plan of Distribution for important information regarding the methods of resale of the securities offered pursuant to this prospectus. We will not receive any of the proceeds of such resales. Common Stock The first category of securities that this prospectus relates to is 3,529,325 shares of Common Stock held by certain selling stockholders. Series D Preferred Stock and Common Stock Issuable Upon Conversion of Series D Preferred Stock The second category of securities that this prospectus relates to is 45,118 shares of our Series D Preferred Stock held by certain selling stockholders and up to 5,518,006 shares of Common Stock that may be issued from time to time upon the subsequent conversion of shares of the Series D Preferred Stock. In the event of certain subsequent transfers of the Series D Preferred Stock, which may include sales pursuant to this prospectus, the Series D Preferred Stock will automatically convert into shares of Common Stock. See Description of Securities-Series D Preferred Stock-Conversion for more information regarding the conversion of the Series D Preferred Stock into shares of Common Stock. In most circumstances, a purchaser of Series D Preferred Stock pursuant to this prospectus will receive Common Stock instead of Series D Preferred Stock. In the event of such a transfer, shares of Common Stock issued to persons who purchase Series D Preferred Stock from the selling stockholders are offered by and will be issued by us. The conversion price of the Series D Preferred Stock is $8.1765, subject to anti-dilution adjustments. The shares of Common Stock will not be available until such time as particular shares of Series D Preferred Stock are sold in one or more transactions that cause the conversion of the Series D Preferred Stock. This prospectus and the registration statement of which this prospectus forms a part may be amended from time to time, including to reflect changes in the number of shares of each of the above categories that may be resold by the selling stockholders pursuant to this prospectus and the price at which such shares may be resold by the selling stockholders. Our shares of Common Stock are currently traded on the NASDAQ Capital Market under the symbol CARV. On August 11, 2014, the last reported sales price of our Common Stock was $9.30 per share. Our shares of Series D Preferred Stock are not currently listed or traded on any exchange. The Selling Shareholders may sell all or a portion of the securities from time to time, in amounts, at prices and on terms determined at the time of offering. The selling stockholders may sell the securities by any means described in the section of this Prospectus entitled Plan of Distribution, including in ordinary broker transactions or in negotiated transactions, and they may pay broker commissions in connection with such transactions. The selling stockholders and any broker dealer executing sell orders on behalf of or purchasing from the selling stockholders may be deemed to be an underwriter within the meaning of the Securities Act of 1933. Commissions received by any such broker dealer may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. The shares offered pursuant to this prospectus will be held in book-entry form with our registrar and transfer agent. No certificates will be issued with respect to such shares, and such shares will not be held in global form at The Depository Trust Company. If you wish to have your shares held through The Depository Trust Company, you will need to make arrangements with your broker to transfer your shares into the name of The Depository Trust Company or its nominee. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 10 to read about factors you should consider before buying shares of our Series D Preferred Stock or Common Stock. assets, which include all criticized and classified assets; and (iv) ensure that the Bank s financial reports and statements are timely and accurately prepared and filed. The Bank Order also provides that, unless the Bank first receives the prior written non-objection of the OCC, the Bank may not (i) originate or purchase, refinance, extend or otherwise modify any commercial real estate loan as defined in the Bank Order, unless the refinance, modification or extension meets certain criteria, including improving the credit quality and collectability of the loan; (ii) increase its asset size in any quarter greater than an amount equal to the net interest credited on deposit liabilities during the prior quarter; (iii) declare or pay dividends or make any capital distributions; (iv) make certain changes to its directors or senior executive officers; (v) enter into, renew, extend or revise any contractual arrangement related to compensation or benefits with any of its directors or senior executive officers; (vi) make any golden parachute or prohibited indemnification payments; (vii) enter into certain transactions with affiliates; and (xiii) enter into any arrangement or contract with a third party service provider that is significant or outside the normal course of business. Finally, without prior approval of the Federal Deposit Insurance Corporation (the FDIC ), the Bank may not roll over or renew any brokered deposit or accept any new brokered deposits. The Company and the Bank complied with the requirements of the Orders related to the submission of various plans and documentation by the April 30, 2011 deadlines set forth in the Orders. The Company and the Bank are actively working to rectify the following matters set forth in the Orders. The Company and the Bank were operating with an inadequate level of capital. The Company completed a private placement of $55 million of preferred stock that closed on June 30, 2011, and contributed $44 million to the Bank. See -Recapitalization Transaction. The Bank s Tier 1 Core Capital Ratio was 10.38% at March 31, 2014, compared to 10.26% at March 31, 2013, 9.83% at March 31, 2012 and 5.38% at March 31, 2011. The Bank s Total Risk-Based Capital Ratio was 20.12% at March 31, 2014, compared to 19.55% at March 31, 2013, 16.94% at March 31, 2012 and 9.6% at March 31, 2011. In an effort to maintain the capital ratios at or above the minimum of 9.0% Tier 1 Core Capital Ratio and 13.0% Total Risk-Based Capital Ratio set forth in the Orders, the Company is actively marketing to fund new loans, reduce non-performing assets and grow non-interest income via additional product offerings (e.g. Carver Community Cash ). The Company and the Bank were operating with an excessive level of adversely classified assets. In order to reduce classified assets, the Company has continued to pursue the sale of certain loans. In the year ended March 31, 2014 and March 31, 2013, the Company transferred $12.6 million and $10.5 million, respectively, of non-performing loans into the held-for-sale category, and sold $20.8 million and $27.3 million, respectively, of loans. The Company has also engaged in loan resolution activities, which, together with the movement of non-performing loans into the held-for-sale category, has resulted in a decrease in non-performing loans to $12.6 million, or 3.22% of total loans, at March 31, 2014, compared to $30.6 million, or 8.27% of total loans, at March 31, 2013, $54.6 million, or 13.22% of total loans, at March 31, 2012 and $77.4 million, or 13.34% of total loans, at March 31, 2011. The Company s resolution activities have also resulted in a decrease in non-performing assets to $18.9 million, or 2.96% of total assets, at March 31, 2014, compared to $46.1 million, or 7.23% of total assets, at March 31, 2013, $86.4 million, or 12.29% of total assets, at March 31, 2012, and $87.2 million, or 12.3% of total assets, at March 31, 2011. In addition, the Company is taking action diversify its portfolio to reduce concentration risk, including efforts to decrease construction loans, focus on owner occupied commercial real estate loans, and increase small business, non-profit, and consumer loans. Earnings were inadequate to augment the Company s and the Bank s capital. In order to offset the decrease in yields experienced by the Company in recent quarters, the Company and the Bank are engaged in marketing efforts to attract more core deposits and make more loans, using the proceeds of the recapitalization transaction as well as the new deposit funds. In addition, the Company launched Carver Community Cash, a product line designed to meet the daily transaction needs of the unbanked, which generates direct revenues and which the Company believes will result in increased banking relationships with existing institutional customers and relationships with a new segment of retail customers. The Company Order and the Bank Order are filed as exhibits to our Current Report on Form 8-K filed with the SEC on February 10, 2011, which are incorporated herein by reference. The securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2014 Recapitalization Transaction On June 29, 2011, the Company completed a private placement of 55,000 shares of the Company s Mandatorily Convertible Non-Voting Participating Preferred Stock, Series C (the Series C Preferred Stock ) to several institutional investors (the Investors ) for an aggregate purchase price of $55.0 million. After the payment of fees of $3.2 million to our financial advisor in connection with the recapitalization transaction, and approximately $400,000 of legal, accounting and other fees related to the recapitalization transaction, our net proceeds were approximately $51.4 million. Effective October 28, 2011, the Series C Preferred Stock converted into: an aggregate of 1,208,039 shares of Common Stock, at a conversion price of $8.1765 (which reflects the 1-for-15 reverse stock split that was effective as of October 27, 2011); and an aggregate of 45,118 shares of the Company s Convertible Non-Cumulative Non-Voting Participating Preferred Stock, Series D (the Series D Preferred Stock ), at a ratio of 1:1. In connection with the private placement, the Company entered into an Exchange Agreement (the Exchange Agreement ) with the United States Department of the Treasury ( Treasury ), pursuant to which Treasury agreed to exchange the 18,980 shares of the Company s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the Series B Preferred Stock ) that it held for shares of Common Stock at the same conversion price applicable to the conversion of the Series C Preferred Stock (the Exchange ). The Exchange was effective October 28, 2011, and the Series B Preferred Stock was exchanged for 2,321,286 shares of Common Stock. The Exchange Agreement grants Treasury the right to include the shares of Common Stock received in exchange for the shares of Series B Preferred Stock pursuant to the Exchange Agreement in any registration statement filed by the Company, including with respect to registration of securities held by other selling stockholders. In the event that an underwriter advises the Company that it is necessary to reduce the number of securities included in any registered offering initiated by the Company, the securities shall be included in the following order of priority: first, shares of Common Stock held by Treasury; second, shares being issued by the Company; third, shares of Common Stock held by any person to whom Treasury has transferred such securities; and fourth, any other securities proposed to be included in the registration statement. In addition, in the event that an underwriter advises the Company that it is necessary to reduce the number of securities included in any registered offering initiated upon demand of holders of the Series D Preferred Stock or Common Stock issued upon conversion of the Series D Preferred Stock, the securities shall be included in the following order of priority: first, shares of Common Stock held by Treasury; second, shares being issued by the Company; and third, any other securities proposed to be included in the registration statement. In connection with the private placement and the Exchange, the Company held a meeting of its stockholders on October 25, 2011, at which the stockholders approved the following proposals related to the recapitalization transaction: an increase in the number of shares of authorized Common Stock (which was not effected because of the 1-for-15 reverse stock split); the conversion of the Series C Preferred Stock into shares of Series D Preferred Stock and Common Stock; the issuance of the Series D Preferred Stock; the subsequent conversion of the Series D Preferred Stock into shares of Common Stock in the event of certain transfers; the exchange of the Series B Preferred Stock for Common Stock; and an amendment of the Company s certificate of incorporation that permits Treasury to vote shares of Common Stock that it holds in excess of 10% of the Company s outstanding Common Stock. In addition, the stockholders approved a 1-for-15 reverse stock split pursuant to which each 15 shares of the Company s Common Stock would be converted into one share of Common Stock. The 1-for-15 reverse stock split was effective as of October 27, 2011, resulting in a reduction in the number of outstanding shares of the Company s Common Stock from 2,510,238 to 166,975, an increase of the conversion price of the Series C Preferred Stock and the Series D Preferred Stock and the exchange ratio of the Series B Preferred Stock from $0.5451 to $8.1765, and a corresponding decrease in the number of shares of Common Stock issued to the Investors and Treasury. Corporate Information Our principal executive offices are located at 75 West 125th Street, New York, New York, 10027-4512. Our telephone number is (718) 230-2900. Our internet address is www.carverbank.com. Information contained on, or that is accessible through, our website should not be considered to be part of this prospectus. Listing Our shares of Common Stock are currently traded on the NASDAQ Capital Market under the symbol CARV. On August 11, 2014, the last reported sales price of our Common Stock was $9.30 per share. Our shares of Series D Preferred Stock are not listed or traded on any market or exchange. Resale of Common Stock by Selling Stockholders A total of 3,529,325 shares of Common Stock are offered pursuant to this prospectus. These shares of Common Stock are offered for sale by the selling stockholders identified in this prospectus, and not by us. Please see Description of Securities-Common Stock for important information regarding our Common Stock. We will not receive any proceeds from the sale by the selling stockholders of the any of these shares of Common Stock. Shares of Common Stock outstanding prior to the offering of Common Stock. 3,696,060 shares of Common Stock(1) Shares of Common Stock outstanding after the completion of the offering of shares of Common Stock by the selling stockholders 3,696,060 shares of Common Stock(2) Proceeds and Use of Proceeds We will not receive any proceeds from the sale by the selling stockholders of these shares of Common Stock (1) As of August 11, 2014. (2) Does not give effect to the issuance of 5,518,006 shares of Common Stock upon conversion of the Series D Preferred Stock. If all of the Series D Preferred Stock also converts, there would be 9,214,066 shares of Common Stock outstanding. Resale of Series D Preferred Stock and Common Stock by Selling Stockholders A total of 45,118 shares of our Series D Preferred Stock and 5,518,006 shares of Common Stock issuable upon conversion of the Series D Preferred Stock are offered pursuant to this prospectus. The shares of Series D Preferred Stock are offered for sale by the selling stockholders identified in this prospectus, and not by us. In the event of certain transfers resulting in the conversion of the Series D Preferred Stock, shares of Common Stock issued to persons who purchase Series D Preferred Stock from the selling stockholders are offered by, and will be issued by, us. Please see Description of Securities-Series D Preferred Stock and -Common Stock for important information regarding the Series D Preferred Stock and the Common Stock into which the Series D Preferred Stock may be converted. In the event of certain transfers of the Series D Preferred Stock, including certain sales by selling stockholders pursuant to this prospectus, the Series D Preferred Stock will automatically convert into shares of Common Stock, and the purchaser will not receive shares of Series D Preferred Stock. We will not receive any proceeds from the sale by the selling stockholders of the any of the shares of Series D Preferred Stock or the issuance by us of Common Stock into which the Series D Preferred Stock may convert. Shares of Series D Preferred Stock outstanding prior to the offering. 45,118 shares of Series D Preferred Stock Shares of Series D Preferred Stock outstanding after the offering. 45,118 shares of Series D Preferred Stock (1) Shares of Common Stock outstanding prior to the offering of Common Stock underlying Series D Preferred Stock. 3,696,060 shares of Common Stock(2) Shares of Common Stock outstanding after the conversion of the Series D Preferred Stock and the offering of Common Stock issuable upon the conversion of the Series D Preferred Stock. 9,214,066 shares of Common Stock (3) Proceeds and Use of Proceeds We will not receive any proceeds from the sale by the selling stockholders of the Series D Preferred Stock or any of the shares of Common Stock issuable upon conversion of the Series D Preferred Stock. (1) Assumes that all shares of Series D Preferred Stock are sold in transfers that do not cause the Series D Preferred Stock to convert into shares of Common Stock. If some of the shares of Series D Preferred Stock are sold in transfers that result in the conversion of the Series D Preferred Stock into shares of Common Stock, there will be fewer shares of Series D Preferred Stock outstanding after the offering. (2) As of August 11, 2014. (3) Assumes that all shares of Series D Preferred Stock are sold in transfers that cause the Series D Preferred Stock to convert into shares of Common Stock. If some of the shares of Series D Preferred Stock are sold in transfers that do not result in the conversion of the Series D Preferred Stock into shares of Common Stock, there will be fewer shares of Common Stock outstanding after the offering.
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+Prospectus Summary 1
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+S-1/A 1 eleds1a102814.htm As filed with the Securities and Exchange Commission on October 29, 2014 Registration No. 333-199174 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C., 20549 FORM S-1/A2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ENERGIE HOLDINGS, INC. (Exact Name of Registrant as specified in its Charter) Delaware 3646 94-2857548 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.) Incorporation or Organization) Classification Code Number) 4885 Ward Road, Suite 300 Wheat Ridge, Colorado 80033 (720)-963-8055 (Address and telephone number of principal executive offices) Harold Hanson, President 4885 Ward Road, Suite 300 Wheat Ridge, Colorado 80033 (720)-963-8055 (Name, address, including zip code, and telephone number, including area code, of agent for service) _________ Copies of communications to: Andrew I. Telsey, Esq. Andrew I., Telsey P.C. 12835 E Arapahoe Rd. Tower 1 Penthouse #803 Centennial, CO 80112 Tel: (303) 768-9221 Fax: 303-768-9224 ---------------------------------------------------------------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. ---------------------------------------------------------------------- If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [ ] If this Form is 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. [ ] The information in this preliminary Prospectus is not complete and may be changed. We may not sell these securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective. This preliminary Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION October 29, 2014 ENERGIE HOLDINGS, INC. 5,000,000 Shares of Common Stock This Prospectus relates to the offer and sale of up to 5,000,000 shares of our Common Stock by Dutchess Opportunity Fund, II, LP ("Dutchess"), which Dutchess has agreed to purchase from us pursuant to an investment agreement ("Investment Agreement"), dated as of July 16, 2014 between our company and Dutchess. Subject to the terms and conditions of the Investment Agreement, we have the right, but not the obligation, to "put," or require Dutchess to purchase up to $5 million worth of our shares of Common Stock during a 36 month period commencing on the date of this Prospectus. This arrangement is sometimes referred to as an "Equity Line." We will not receive any of the proceeds from Dutchess sale of these shares. However, we will receive proceeds from our initial sale of these shares to Dutchess pursuant to the Investment Agreement. We will sell these shares to Dutchess at a price equal to 94% of the lowest daily volume weighted average price ("VWAP"), of our Common Stock during the five (5) consecutive trading days beginning on the Put Notice Date and ending on and including the date that is four (4) Trading Days after such Put Notice Date. We have the right to withdraw all or any portion of any put before the closing, subject to certain limitations set forth in the Investment Agreement. Dutchess may sell these shares from time to time in regular brokerage transactions, in transactions directly with market makers or in privately negotiated transactions. For additional information on the methods of sale that may be used by Dutchess, see the section entitled "Plan of Distribution" on page 20. We will bear the costs relating to the registration of these shares, but we will not pay any of the selling commissions, brokerage fees or related expenses. Our Common Stock is currently quoted on the OTCQB under the symbol "ELED." Only a limited public market currently exists for our Common Stock. The closing price of our Common Stock on October 1, 2014 was $0.0275 per share. With the exception of Dutchess, which is an "underwriter" within the meaning of the Securities Act of 1933, no other underwriter or person has been engaged to facilitate the sale of shares of our Common Stock in this offering. The Securities and Exchange Commission may take the view that, under certain circumstances, any broker-dealer or agent that participates with the selling stockholder in the distribution of the shares may be deemed to be an "underwriter" within the meaning of the Securities Act. Commissions, discounts or concessions received by any such broker-dealer or agent may be deemed to be underwriting commissions under the Securities Act. Investing in our Common Stock involves a high degree of risk. See "Risk Factors" beginning on page 3 of this Prospectus to read about factors you should consider before investing in shares of our Common Stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ——————————— The date of this Prospectus is __________________ __, 2014 Table of Contents PART I - INFORMATION REQUIRED IN PROSPECTUS Prospectus Summary 1
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+Prospectus Summary Cautionary Note Regarding Forward-Looking Statements This Prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled "Description of Business", "Risk Factors", and "Management s Discussion and Analysis of Financial Condition and Results of Operations". These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates", "believes", "seeks", "could", "estimates", "expects", "intends", "may", "plans", "potential", "predicts", "projects", "should", "would" and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, the factors described in the "Risk Factors" section below. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; consumer demand; financial resources and condition; changes in revenues; changes in profitability; changes in accounting treatment; cost of sales; selling, general and administrative expenses; interest expense; the ability to produce the liquidity or enter into agreements to acquire the capital necessary to continue our operations and take advantage of opportunities; legal proceedings and claims. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Prospectus. You should read this Prospectus and the documents that we reference and file or furnish as exhibits to this Prospectus completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. Presentation of Information Except as otherwise indicated by the context, references in this Prospectus to "we", "us" and "our" are to the combined business of Tropic International Inc. and its consolidated subsidiaries, unless otherwise indicated. In this Prospectus, the phrase the "Company" refers to Rockford Minerals Inc. prior to June 28, 2013. This Prospectus includes our audited consolidated financial statements as at and for the years ended August 31, 2013 and 2012, as well as our interim consolidated financial statements for the three month period ended November 30, 2013. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP"). All financial information in this Prospectus is presented in Canadian dollars, unless otherwise indicated, and should be read in conjunction with our audited consolidated financial statements and the notes thereto included in this Prospectus. As disclosed in our current report on Form 8-K dated July 3, 2013, on June 28, 2013 (the "Closing Date"), we completed a share exchange with Tropic Spa Inc. ("Tropic Spa"), an Ontario corporation, 1896432 Ontario Inc., an Ontario corporation ("Subco"), and certain of the shareholders of Tropic Spa (collectively, the "Tropic Spa Shareholders"), pursuant to which we acquired 78,030,877 common shares, or approximately 78% of the issued and outstanding shares, of Tropic Spa in exchange for the issuance of 78,030,877 preferred shares of Subco, our wholly owned subsidiary, to the Tropic Spa Shareholders on a one-for-one basis (the "Share Exchange"). As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and the former shareholders of Tropic Spa became holders of the preferred shares of Subco, a company that has only one issued and outstanding common share which is held by us. The transaction was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein Tropic Spa is considered the acquirer for accounting and financial reporting purposes. Our consolidated financial statements are therefore, in substance, those of Tropic Spa. Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Security ($) (1) Proposed Maximum Aggregate Offering Price ($) (1) Amount of Registration Fee ($) Common stock, par value $0.001 per share 4,932,766 (2) 0.05 246,638.30 31.77 (1)Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended (the "Securities Act"). The price per security and aggregate offering price are based on the price of the registrant s most recent private placement of common stock at US$0.05 in March 2013. (2) Pursuant to Rule 416 under the Securities Act, this Registration Statement also covers any additional securities that may be offered or issued in connection with any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration that results in an increase in the number of outstanding shares of the registrant s common stock. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said section 8(a), may determine. Business Overview We are a development stage company in the business of developing and commercializing an innovative home mist tanning system. Our goal is to market a unique system for convenient home use that delivers a full-body application and eliminates the harmful health effects associated with traditional tanning beds. The primary effect is exposure to ultraviolet (UV) radiation, and the consequences of such exposure have been well-documented by numerous organizations, including the American Cancer Society and the Canadian Cancer Society. They generally include an increase in the risk of contracting both melanoma and non-melanoma skin cancers as well as structural damage to the skin that can result in what dermatologists call "photoageing", or premature wrinkles, freckles, leathery texture and a loss of elasticity. To date, we have finalized the design of our product, applied for and acquired a United States Patent for it entitled "Apparatus for Spray Application of a Sunless Tanning Product" (the "Patent") and have patents pending which are in the process of being completed for Australia, Canada, China and the European Union. We have also prepared our product for market and completed two phases of test marketing initiatives, and we are currently preparing to launch a comprehensive three-phase marketing strategy. Our Corporate History and Background We were incorporated as "Rockford Minerals Inc." under the laws of the State of Nevada on October 29, 2007. From our inception until the closing of the Share Exchange, we sought to be a producer of gold and silver ore, and of other precious metals. On July 19, 2008, we acquired an undeveloped mining claim called the Rockford Lode Mining Claim located in Clark County, Nevada, for which we paid $12,000, including the cost of a geological report prepared by Sookochoff Consultants Inc. and Laurence Sookochoff, P. Eng., as a consulting geologist, for the purpose of recommending an exploration program. Due to lack of capital, we did not commence any phase of the exploration program recommended in the geological report. On August 24, 2010, we filed a certificate of amendment with the Nevada Secretary of State to increase our authorized capital from 10,000,000 shares of common stock to 100,000,000, each with a par value of $0.001 per share. On April 17, 2013, we filed a certificate of amendment with the Nevada Secretary of State to increase our authorized capital from 100,000,000 shares of common stock to 300,000,000, each with a par value of $0.001 per share. On June 24, 2013, we purchased one common share of Subco and one common share of 1896431 Ontario Inc., an Ontario corporation ("Callco"), from Gregory J. Neely, our former President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director. Both of these companies were incorporated on April 15, 2013 in anticipation of completing the Share Exchange, and became our wholly owned subsidiaries as a result of the share purchases. Prior to the closing of the Share Exchange, we had not generated any revenue and our operations were primarily limited to capital formation, organization and development of our business plan. As a result of the Share Exchange, we ceased our prior operations and, through Tropic Spa, we now operate as a company that manufactures and sells home mist tanning units with a patent-protected feature. In order to more accurately reflect our new business operations, on December 6, 2013, we changed our name from "Rockford Minerals Inc." to "Tropic International Inc." as a result of a merger with Tropic International Inc., our wholly-owned subsidiary that was incorporated solely to effect the name change. Tropic Spa was incorporated under the laws of the Province Ontario on September 17, 2007. Its operations to date have consisted of business formation, strategic development, test marketing, technology development and capital raising activities. Tropic Spa has generated $58,086 in revenues since its inception. Its website is www.tropicspatan.com. PROSPECTUS TROPIC INTERNATIONAL INC. 4,932,766 Shares of Common Stock The date of this Prospectus is April 1, 2014 Tropic International Inc. ("we", "us", "our") is registering an aggregate of 4,932,766 shares of common stock, par value $0.001 per share, held by 40 selling security holders, including 150,000 shares owned by the spouse of Gregory Neely, our former President, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director. The selling security holders may sell their shares at a fixed offering price US$0.05 per share until our common stock is quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We will not receive any proceeds from the sale of our common stock by the selling security holders, who will receive aggregate net proceeds of US$246,638.30 if all of the shares being registered are sold. We will incur all costs associated with this Prospectus. Our common stock is presently not traded on any national securities exchange or the NASDAQ stock market, and we do not intend to apply to have our common stock listed on any national securities exchange or the NASDAQ stock market. Instead, we plan to apply to have our common stock quoted on the OTC Bulletin Board. The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last-sale prices and volume information for over-the-counter equity securities. Over-the-counter securities are traded by a community of market makers that enter quotes and trade through a sophisticated computer network. There is currently no public market for our common stock and we cannot guarantee that an active market will develop. We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. See the sections entitled "Prospectus Summary" beginning on page 1 of this Prospectus and "Risk Factors" beginning on page 8 for a discussion regarding how and when we may lose emerging growth company status and the various exemptions that are available to us. An investment in our securities is speculative. See the section entitled "Risk Factors" beginning on page 8 of this Prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense. The information in this Prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement that includes this Prospectus is declared effective by the Securities and Exchange Commission. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall the selling security holders sell any of these securities in any state where such an offer or solicitation would be unlawful before registration or qualification under such state s securities laws. On April 11, 2013 and in anticipation of completing the Share Exchange, Tropic Spa completed a vertical amalgamation with 1893211 Ontario Inc., its wholly owned subsidiary. The amalgamation was approved by the directors of each of Tropic Spa and 1893211 Ontario Inc., and was completed for the sole purpose of merging the two corporations and carrying on as one entity. Acquisition of Tropic Spa On the Closing Date, we entered into a share exchange agreement (the "Exchange Agreement") with Subco, Tropic Spa and the Tropic Spa Shareholders pursuant to which we acquired approximately 78% of the outstanding capital stock of Tropic Spa in exchange for the issuance of 78,030,877 preferred shares of Subco to the Tropic Spa Shareholders. The shares issued to the Tropic Spa Shareholders pursuant to the Share Exchange constituted 100% of Subco s issued and outstanding preferred shares as of and immediately after the consummation of the Share Exchange. Each one preferred share of Subco (each, an "Exchangeable Share") is exchangeable into one share of our common stock at the option of the holder thereof, subject to the following restrictions: the holders of such preferred shares may not, without the written consent of Subco, exchange, sell or otherwise dispose of, directly or indirectly, any of their preferred shares until the six month anniversary of the Closing Date; within 30 days of that time, and provided Tropic Spa has generated at least $1,000,000 in gross revenue during the preceding six month period, Subco shall permit the holders of such preferred shares to require Subco to redeem an aggregate of 1% of its then-outstanding preferred shares on a pro rata basis; and within 30 days of each six month anniversary of the Closing Date until June 30, 2015, on which date all restrictions on such preferred shares shall automatically expire unless extended by the approval of the holders thereof, Subco shall grant the holders of its preferred shares a permission identical to the one described above. The foregoing restrictions do not apply to any exchange, sale or other disposition of the preferred shares of Subco by the holder thereof: to a person over which such holder exercises sole voting and investment control; upon such holder s death by will or intestacy; or as a distribution solely to members, partners or stockholders of such holder, if the holder is a corporation, partnership or other organization. The foregoing description of the preferred shares of Subco is qualified in its entirety by reference to the complete text of the rights, privileges, restrictions and conditions attached to such preferred shares (the "Exchangeable Share Provisions"), included as Appendix I to the Exchange Agreement filed as Exhibit 10.1 to this Prospectus. As a result of the Share Exchange, Tropic Spa became our majority-owned subsidiary and John Marmora, the sole officer and director of Tropic Spa, acquired the right to become our principal stockholder by exchanging the Exchangeable Shares he received on the Closing Date for shares of our common stock. The Share Exchange was accounted for as a reverse merger/recapitalization effected through a share exchange, with Tropic Spa as the accounting acquirer and the Company as the accounting acquiree. Unless the context suggests otherwise, when we refer in this Prospectus to business and financial information for periods prior to the consummation of the Share Exchange, we are referring to the business and financial information of Tropic Spa. In connection with the Share Exchange and on the Closing Date, Gregory J. Neely submitted his resignation as our President, Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer; John Marmora was appointed by our Board of Directors to fill the resulting vacancies; Mr. Marmora was appointed as our Chief Executive Officer and a director; Mr. Neely submitted his resignation as the President, Secretary and sole director of Subco and Callco, and Mr. Marmora was appointed to fill the resulting vacancies. On November 29, 2013, Mr. Neely also resigned as our director. As a result of our acquisition of Tropic Spa, Tropic Spa became our majority-owned subsidiary and we assumed the business and operations of Tropic Spa. As a condition of the closing of the Exchange Agreement, we also entered into the following agreements on the Closing Date: a Support Agreement with Subco and Callco (the "Support Agreement"); and a Voting and Exchange Trust Agreement with Subco, Callco and John Marmora (the "Trustee"), our new President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and director (the "Trust Agreement"). The structure of the Share Exchange was determined largely based on the potential tax implications for the Tropic Spa shareholders of exchanging their common shares of Tropic Spa, an Ontario corporation, for shares of our common stock. Under s. 85(1) of the Income Tax Act (Canada), a tax-deferred "rollover" is not available where shares of a Canadian corporation are exchanged for shares of a United States corporation and, as a result, we created Subco, also an Ontario corporation, for the purpose of allowing those shareholders who elected to participate in the Share Exchange to do so on a tax-deferred "rollover" basis (i.e., by allowing them to defer any capital gain that would accrue upon the exchange of their common shares of Tropic Spa for shares of our common stock). This was achieved by issuing exchangeable preferred shares of Subco to the holders of Tropic Spa s common shares on the Closing Date. Callco, our wholly owned subsidiary, was formed solely for the purpose of avoiding a Canadian deemed dividend withholding tax payable on a dividend or other distribution of Subco to us to the extent that such a dividend or other distribution exceeds the paid-up capital of Subco. However, in order for this to take place Callco must become the holder of the one issued and outstanding common share of Subco that we currently hold, since it would then permit the dividend or other distribution to pass through Callco before being distributed to us. Support Agreement The Support Agreement provides and establishes a procedure whereby we are required to take certain actions and make certain payments and deliveries in connection with the satisfaction of the obligations of Callco and/or Subco under the Exchangeable Share Provisions. As described in the Exchangeable Share Provisions, Subco is required to deliver shares of our common stock to a holder of Exchangeable Shares upon the liquidation or insolvency of Subco, upon the redemption of Exchangeable Shares by Subco, and upon the exercise of the retraction or exchange right by such holder. The Exchangeable Share Provisions also require Subco to pay dividends on the Exchangeable Shares that are equivalent to any dividends that are paid on shares of our common stock. The Support Agreement provides commercial certainty and is in the interests of the holders of Exchangeable Shares because it creates enforceable contractual rights of Subco against us so that in all relevant circumstances Subco is in a position to acquire the necessary shares of our common stock, and finance any dividend payments equivalent to dividends paid on shares of our common stock, in order to satisfy Subco s obligations under the Exchangeable Share Provisions. In that respect, the Support Agreement includes certain covenants made by us, including that we will: not declare or pay a dividend on shares of our common stock unless Subco can simultaneously pay the same dividend on the Exchangeable Shares; ensure that Subco has a sufficient number of shares of our common stock in the event of the liquidation or insolvency of Subco to satisfy all retraction or exchange requests or redemptions of Exchangeable Shares; and as the sole holder of common shares of Subco, not cause Subco to be liquidated or dissolved. In general, the Support Agreement ensures that the obligations of Subco are backstopped by covenants made by us or any successor to us. It will remain in effect until no Exchangeable Shares (or securities or rights convertible into or exchangeable for Exchangeable Shares) are held by any person other than us or any of our affiliates (in other words, until all the Exchangeable Shares have been exchanged into shares of our common stock). Trust Agreement The Trust Agreement provides and establishes a procedure whereby the voting rights attached to shares of our common stock are exercisable by the registered holders (the "Beneficiaries") of the Exchangeable Shares, other than those Exchangeable Shares held by us or our affiliates, through the Trustee. The Trustee holds legal title to a special voting share (the "Special Voting Share") to which voting rights are attached for the benefit of the Beneficiaries. The Special Voting Share confers on the Trustee the number of votes equal to the number of outstanding Exchangeable Shares, other than Exchangeable Shares held by us or our affiliates, on all matters on which the holders of shares of our common stock are entitled to vote. Under the Trust Agreement, the Trustee is required to hold the Special Voting Share as trustee solely for the use and benefit of the Beneficiaries and has no power or authority to sell, transfer, vote or otherwise deal with the Special Voting Share. The Trust Agreement provides a mechanism under which a Beneficiary may instruct the Trustee regarding how to vote the votes conferred by the Special Voting Share relating to such Beneficiary s Exchangeable Shares. This mechanism ensures that Beneficiaries have a complete bundle of rights that collectively is equivalent to the rights each Beneficiary would have if it owned shares of our common stock directly, and is exercised by Beneficiaries providing written instructions to the Trustee following the mailing of any communications by us to the holders of our common stock as well as the holders of Exchangeable Shares. For commercial reasons, it is in the interests of a holder of Exchangeable Shares to obtain additional protection with respect to its ability to exercise retraction or exchange rights in the event of the liquidation or insolvency of us or Subco. As a result, the Trust Agreement also grants such holders "insolvency put rights", including the right to automatically exchange their Exchangeable Shares for shares of our common stock upon the occurrence of certain events. The right of a Beneficiary to exercise any voting rights in respect of the Exchangeable Shares held by such Beneficiary will cease immediately upon the exercise of any exchange right, automatic exchange, retraction or redemption of Exchangeable Shares for shares of our common stock, or the liquidation, dissolution or winding-up of Subco. The foregoing description of the Exchange Agreement, including the Support Agreement and the Trust Agreement, includes a summary of all the material provisions but is qualified in its entirety by reference to the complete text of the Exchange Agreement filed as Exhibit 10.1 to this Prospectus. We do not expect to generate substantial revenues for the foreseeable future. Since our inception, we have incurred operational losses, and we have been issued a going concern opinion by our auditors. We have also accumulated net losses since our inception and incurred a net loss for the most recent audited and interim periods. To finance our operations, we have completed several rounds of private placements of our common stock. Emerging Growth Company Status We are an "emerging growth company," as defined in the JOBS Act. For as long as we are an "emerging growth company", we may take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not "emerging growth companies", including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation. Under the JOBS Act, we will remain an "emerging growth company" until the earliest of: the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; the last day of the fiscal year following the fifth anniversary of the completion of this offering; the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter. The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. See the section entitled "Risk Factors" beginning on page 8 of this Prospectus for a discussion regarding the effect on our financial statements of such election. Our principal executive office is located at 1057 Parkinson Road, Unit #9, Woodstock, Ontario, Canada N4S 7W3. Our telephone number is (519) 421-1900. Our fiscal year end is August 31. The Offering The 4,932,766 shares of our common stock being registered by this Prospectus represent approximately 40.2% of our issued and outstanding common stock as of April 1, 2014, and 5.5% of our issued and outstanding common stock on a fully-diluted basis as of that date. Securities Offered: 4,932,766 shares of common stock offered by the 40 selling security holders Offering Price: The US$0.05 per share offering price of our common stock is based on the price of our most recent private placement of the Company s common stock at US$0.05 in March 2013. The selling security holders may also sell their shares from time to time through privately negotiated transactions at market prices prevailing at the time of sale or at negotiated prices. Securities Issued and to be Issued: As of April 1, 2014 we had 12,264,146 issued and outstanding shares of our common stock and no securities convertible into shares of our common stock apart from the 78,030,877 exchangeable shares of Subco s preferred stock. All of the common stock to be sold under this Prospectus will be sold by existing stockholders. There is no established market for the common stock being registered. We intend to apply to have our common stock quoted on the OTC Bulletin Board, which will require a markert maker to submit an application on our behalf. We have not engaged any market maker as a sponsor to submit the application on our behalf. If we are unable to engage a market maker for our securities, we may be unable to develop a trading market for our common stock. If our common stock becomes quoted and a market for the stock develops, the actual price of the shares will be determined by prevailing market prices at the time of the sale. Trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock. Proceeds: We will not receive any proceeds from the sale of our common stock by the selling security holders or the exchange of the preferred stock of Subco into shares of our common stock. Financial Summary Information All references to currency in this Prospectus are to Canadian dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Income Statement Data Three Months Ended November 30, 2013 (unaudited) ($) Three Months Ended November 30, 2012 (unaudited) ($) Year ended August 31, 2013 ($) Year ended August 31, 2012 ($) Period from September 17, 2007 (inception) to November 30, 2013 (unaudited) ($) Period from September 17, 2007 (inception) to August 31, 2013 ($) Revenues 7,611 8,381 31,799 25,387 65,697 58,086 Production Costs 109,136 110,309 408,080 502,211 1,933,197 1,824,061 Expenses 103,295 119,030 405,358 483,287 1,607,009 1,503,714 Net Loss 204,820 220,958 781,639 960,111 3,474,509 3,269,689 Net Loss per share 0.02 0.003 0.01 0.018 n/a n/a Balance Sheet Data November 30, 2013 (unaudited) ($) August 31, 2013 ($) August 31, 2012 ($) Working Capital 119,849 229,633 102,478 Total Assets 5,054,124 5,237,301 5,533,126 Total Liabilities 84,293 62,650 88,975
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should read the entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. When used herein, unless the context requires otherwise, references to the Company, we, our and us refer to Medican Enterprises, Inc., a Nevada corporation, collectively with its wholly-owned subsidiary, Medican Systems Inc., a corporation incorporated under the laws of the Territory of the Yukon (which we sometimes refer to herein as Medican Systems),and Medican Systems wholly-owned subsidiaries, Medican (Delta) Systems Inc., a corporation incorporated under the laws of the Province of British Columbia (which we sometimes refer to herein as Medican Delta), and Canaleaf Systems Inc. a corporation incorporated under laws of Canada (which we sometimes refer to herein as CanaLeaf). Our Company Overview We are a pharmaceutical business currently focused on developing, distributing and marketing medical marijuana in Canada. Leveraging recently enacted Canadian federal law establishing a national regulatory system for the production and distribution of medical marijuana in Canada, we are presently seeking to establish collaborations with experienced agriculture and pharmaceutical distribution companies in Canada to facilitate this business. As of the date of this prospectus, we have not commenced the actual the production and sale of medical marijuana but are seeking to lay the foundation to commence this business. We currently have three subsidiaries through which we plan to operate our business. Medican Systems, our direct wholly-owned subsidiary, is a corporation incorporated under the laws of the Territory of the Yukon under incorporation number 535642 on December 30, 2013. The primary focus of Medican Systems is to function as a holding company for Canadian based investments, joint ventures and opportunities. Medican Delta, which is wholly-owned by Medican Systems, is a corporation incorporated under the laws of the Province of British Columbia under incorporation number BC0989867 on December 31, 2013. The primary focus of Medican Delta is to pursue opportunities in the medical marijuana industry in and around the city of Delta in British Columbia, Canada. CanaLeaf, which is also wholly-owned by Medican Systems, is a corporation incorporated under laws of Canada under the Canada Business Corporation Act under incorporation number 883348-6 on March 25, 2014. CanaLeaf is our principal operating subsidiary, and CanaLeaf is the consumer-facing brand name for our business. Through Canaleaf, we expect to own a 51% interest in International Herbs Medical Marijuana Ltd. (or IHMML), a company that is applying to obtain licensed producer status from Health Canada as described further below. Canadian Regulatory Changes Regarding Medical Marijuana Until recently, the medical use of marijuana in Canada was governed by the Marihuana Medical Access Regulations (or MMAR), a regulation to the federal Controlled Drugs and Substances Act (or CDSA), which allowed qualified patients to access medical marijuana by growing their own marijuana, designating a third party to grow marijuana for them, or purchasing marijuana directly from Health Canada, the department of the federal Canadian government which oversees public health matters. Although the MMAR was repealed effective March 31, 2014, preliminary injunction orders rendered by the Federal Court of Canada on March 21, 2014 and May 7, 2014 have exempted certain MMAR patients from the repeal, pending a trial of the issues raised in those proceedings. Since April 1, 2014, access to medical marijuana in Canada has been exclusively pursuant to the Marihuana for Medical Purposes Regulations (or MMPR), the bulk of which came into force in 2013. The MMPR, which is also a regulation to the CDSA creates a licensing scheme for the commercial production and distribution of dried marijuana for medical purposes. Patients (other than those subject to the preliminary injunction orders previously mentioned) are now prohibited from growing their own medical marijuana. Rather, the production and distribution of medical marijuana is restricted to licensed producers pursuant to the MMPR.Licensed producers are permitted to grow strains of their choosing based on market demand and to freely set pricing for their various marijuana strains. Our Business Collaborations Fueled by the recent changes in the regulatory environment for medical marijuana business in Canada, we are seeking to enter into agreements with well-known Canadian businesses in this industry in order to fully explore the emerging opportunities. On March 13, 2014, our company, Medican Systems and CanaLeaf (which we refer to collectively as Medican CanaLeaf) entered into an Amended and Restated Management Services Agreement with International Herbs (BC) LTD., an affiliate of International Herbs Ltd., (or IHL), a leader in the production of fresh herbs and specialty produce in Canada LFG Advisory Ltd., and LFG Advisory & Accounting Ltd. (which we refer to together with LFG Advisory Ltd., as LFG). According to the agreement, the parties agree to cooperate and work together to promote and develop the business of CanaLeaf and to assist CanaLeaf in partnering with IHMML, which is presently applying to Health Canada to become a licensed commercial medical marijuana grower and receive a commercial growing license. IHMML has received notice from Health Canada that its application is completed and has undergone a preliminary site assessment from Health Canada. IHMML also owns the rights for Zenabis , another consumer facing brand that will be developed in conjunction with CanaLeaf. On April 8, 2014, CanaLeaf entered into an Subscription Agreement under which CanaLeaf was expected to become a 50% holder of the issued and outstanding common shares of IHMML by subscribing for 41,600,000 common shares of IHMML for an aggregate subscription price of CND$52,000,000. IHMML planned to use these investment proceeds to acquire certain lands, retrofit and/or build a marijuana growing operation and attend to the growing, marketing, research and development, training, distribution and retail sale of medical marijuana in Canada as regulated by Health Canada. Such lands were originally contemplated to include (a) a building in Atholville, New Brunswick with 300,000 square foot of grow space within a 393,000 square foot facility (which we refer to as the Atholville Facility), (b) a 273,000 square foot facility, in Poekmouche, New Brunswick (which we refer to as the Poekmouche Facility), and (c) a property with a 25,000 square foot facility in Delta, British Columbia (which we refer to as the Delta Facility). The other 50% interest in IHMML was to be As filed with the Securities and Exchange Commission on August 29, 2014 Registration No. 333-194710 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Medican Enterprises, Inc. (Exact Name of Registrant as Specified in its Charter) Nevada 8741 87-0474017 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 3440E. Russell Road Las Vegas, NV, 89120 Telephone: (800) 416-8802 Fax Number: (702) 825-2660 (Address, including zip code, and telephone number, including area code, of principal executive offices) Mr. Kenneth Williams Chief Executive Officer Medican Enterprises, Inc. 5955 Edmond Street, Suite 102 Las Vegas, NV Telephone: (800) 416-8802 Fax Number: (702) 825-2660 (Address, including zip code, and telephone number, including area code, of agent for service) Copies to: Lawrence A. Rosenbloom, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 Telephone: (212) 370-1300 Fax Number: (212) 370-7889 Approximate date of proposed sale to public: As soon as practicable on or after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x owned by Zenabis Limited Partnership, a Manitoba limited partnership (which we refer to as Zenabis), which is owned in turn by affiliates of IHL and The Monark Group (or Monark). Monark is a full-service provider of marketing, information technology, and call center services In Canada. Currently, CanaLeaf has been unable to raise funding necessary to fulfill its obligations under the Subscription Agreement. As of the date of this prospectus, the acquisition of the Atholville Facility was consummated, and we determined not to pursue the Poekmouche Facility and will be focused on acquiring the Delta Facility. On July 25, 2014, we entered into a Non-binding Letter of Intent (which we refer to as the LOI) with the CanaLeaf, Zenabis and IHMML. Pursuant to the LOI, we intend to restructure our proposed acquisition of an interest in IHMML so that our company, through CanaLeaf, will acquire an outright 51% interest in IHMML and an option to acquire the remainder and, in return, Zenabis and its affiliates will obtain a majority ownership interest in and control of our company. Under the terms of the transaction as set out in the LOI, CanaLeaf s subscription rights as described above will be restructured as follows: the obligation of CanaLeaf to purchase its interest in IHMML will terminate and instead, Canaleaf will acquire 51% of the outstanding interests in IHMML outright; Zenabis or its designees will receive newly issued shares of common stock in the Company in an amount equal to 70% of the fully diluted currently outstanding shares of the Company; the senior management of IHMML (including representatives of IHL and Monark) will take over the day to day operations of the Company, and Zenabis will appoint new directors of the Company; and Zenabis will grant to CanaLeaf a 5 year option to acquire the remaining 49% ownership interest in IHMML at fair market value. The LOI is a non-binding statement of intention of the parties, and the final terms of the transaction are subject to change based on tax and regulatory considerations and discussions between the Company and Zenabis. The parties are presently proceeding to prepare execute definitive agreements for the transaction, with the intention that a closing occur by September 15, 2014. We believe our relationship with IHL and Monark will be key steps in establishing our company as a leader in the medical marijuana industry in Canada. As described above, Health Canada has implemented a major shift from designated growers to licensed commercial growers. Under the old MMAR, production was limited to two patients per grower and four patients per residential address. Under the new MMPR system, there will be no limit to the number of patients for each licensed commercial grower. To capitalize on this new development, we are working with IHL and Monark to implement our business plans. We believe that IHL is an ideal manufacturing partner for our proposed business. IHL is Western Canada s largest fresh herb grower and importer. Founded in 1990, IHL is also the leading specialty herbal produce grower in North American, carrying products such as fresh herbs, baby vegetables, lettuces and gourmet salads. As an agricultural grower and distributor, IHL has the growing, testing and security expertise to be a licensed producer of medical marijuana and implement this program to its full extent. IHL and CanaLeaf are both members of the Canadian National Medical Marijuana Association (or CNMMA). The CNMMA was created to ensure all Canadian patients who benefit from 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 definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per unit Proposed maximum aggregate offering price Amount of registration fee common stock, par value $0.001 per share, underlying the principal of convertible note held by certain selling stockholders (1) 1,632,653 shares (3) $ 1.35 $ 2,204,081.6 $ 283,89 common stock, par value $0.001 per share, underlying the interest of convertible note held by certain selling stockholders (1) 81, 633 shares (4) $ 1.35 $ 110,204.6 $ 14.19 common stock, par value $0.001 per share, underlying warrants held by certain selling stockholders (1) 297,832 shares (5) $ 1.35 $ 402,073.2 $ 51.79 common stock, par value $0.001 per share, held by certain selling stockholders (1) 190,000 shares $ 1.35 $ 256,500 $ 33.04 TOTAL 2,202,118 shares $ 2,972,859 $ 384.90 (1) Pursuant to Rule 416 of the Securities Act of 1933, also registered hereby are such additional and indeterminable number of shares as may be issuable due to adjustments for changes resulting from stock dividends, stock splits and similar changes as well as anti-dilution provisions applicable to the note and warrants. (2) Estimated pursuant to Rule 457(f)(2) under the Securities Act of 1933 solely for the purpose of calculating the amount of the registration fee, based on the book value of such securities received by the Company in the Share Exchange. medical marijuana have access to the highest quality of products and services to meet their health care needs in a well regulated environment. CanaLeaf plans to create opportunities for political lobbying and exposure through the CNMMA. We believe that Monark is an ideal distribution partner for our proposed business. With over $500 million in sales and over 5 million prescriptions filled through their system, Monark created an automated prescription ordering/refill, delivery system and customer contact process that will be integral to our business. Once and assuming sufficient funding is obtained (through investments in our company or otherwise), IHMML expects commence operations in the Atholville Facility. IHMML will commence retrofitting the facility with capital upgrades and will begin immediately building the growing rooms for 300,000 square feet in production area. To date interim financing of approximately $5 million has been provided by the Monark group and its affiliates. After we commence production at Atholville and Delta Facility are expected to be retrofitted and secured for production. The Delta Facility will serve as a growing distribution and research and development center for IHMML in Western Canada. Our Products and Their Markets Through our CanaLeaf subsidiary, we are working with IHMML to obtain a license through Health Canada to become a licensed commercial grower of medical marijuana. IHMML, under Health Canada s new regulations, intends to begin operations in a commercial property in Atholville, New Brunswick. CanaLeaf will produce medical marijuana, conduct research and development, and coordinate its distribution efforts at the Atholville facility. We also plan to retrofit and secure a second location in Delta, British Columbia. IHMML has a four-pronged approach to furthering its products offered and services provided: research and development, horticultural supremacy, distribution and market penetration, and asset security. These four principles will be the focus of our growth and potential partnerships in the future. Upon initial entry into the market, we expect to offer a number of products based on different strains of marijuana and undergo regular review based on customer feedback, sales data and customer data to ensure the optimal suite of products are available that not only maximizes sales but also meets customers evolving needs. Our Financial Condition We presently have approximately $68,810.64 in cash or cash equivalents and have yet to commence operations or generate sales. In addition, our independent registered public accounting firm has expressed in its auditors report on the financial statements for the year ended December 31, 2013 included as part of this prospectus a substantial doubt regarding our ability to continue as a going concern. According to our management s estimates and based on our budget, we believe that we will have sufficient resources to continue our activity until October 31, 2014. If we are unable to obtain additional capital resources, we may not be able to continue activities beyond that time and to further our business plan. If we cannot continue as a going concern, our stockholders would lose their entire investment in our company. (3) The 1,632,653 shares of common stock are being registered for resale by a certain selling stockholder named in this registration statement, which shares are issuable by the registrant upon the conversion of the principal amount of the registrant s 5% Convertible Note due June 25, 2015. (4) The 81,633 shares of common stock are being registered for resale by a certain selling stockholder named in this registration statement, which shares are potentially issuable by the registrant upon the conversion of the interest accrued under the registrant s 5% Convertible Note due June 25, 2015. (5) The 297,832 shares of common stock are being registered for resale by a certain selling stockholder named in this registration statement, which shares are issuable by the registrant upon the exercise of the registrant s common stock purchase warrants issued on June 25, 2014. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. Corporate Information We were incorporated under the laws of the State of Nevada in October, 1988 and have operated several businesses during that time. See Business Corporate History . Our current address is 5955 Edmond Street, Suite 102, Las Vegas, NV 89118 and our telephone number is +(800) 416-8802. The Offering Common stock outstanding before the offering 47,135,852 Common stock offered by selling stockholders (1) Up to 2,202,118 shares of common stock held by the selling stockholders or underlying securities held by the selling stockholders. Common stock to be outstanding after the offering Up to 49,280,930 shares, assuming full conversion or exercise of the Note and Warrants. OTBCC Symbol MDCN. No active market for our common stock presently exists. Use of proceeds We will not receive any proceeds from the sale of the common stock offered hereby. However, we may receive up to a maximum of $640,338 of proceeds from the exercise of the warrants held by certain selling stockholders, which proceeds we would expect to use for general working capital. No assurances can be given, however, that all or any portion of such warrants will ever be exercised.
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+This summary highlights certain information included elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, including the risks discussed in Risk factors and our consolidated financial statements and related notes included elsewhere in this prospectus. Some of the statements in this summary constitute forward-looking statements. See Forward-looking statements for additional information. As used in this prospectus, unless the context otherwise indicates, the references to we, us, our, the company or Lighting Science Group refer to Lighting Science Group Corporation, a Delaware corporation, or, as applicable, its predecessor entities and, where appropriate, its wholly-owned subsidiaries. Overview We are a leading provider of light emitting diode ( LED ) lighting technology. We design, develop, manufacture and market general illumination products that exclusively use LEDs as their light source. Our broad product portfolio includes LED-based retrofit lamps (replacement bulbs) used in existing light fixtures as well as purpose-built LED-based luminaires (light fixtures). Our lamps and luminaires are used for many common indoor and outdoor residential, commercial, industrial and public infrastructure lighting applications. We believe our proprietary technology, unique designs, and key relationships throughout the LED lighting supply chain position us favorably to capitalize on the expanding acceptance of LEDs as a light source. Our in-house design of power supplies, thermal management solutions and optical systems, along with our detailed specification of the packaged LEDs incorporated into our products provides us with a distinctive ability to manage the interrelationships between components and subsystems. This system-based approach enables us to provide a broad range of products that deliver high quality lighting efficacy and reliability. Our customers include leading retailers and original equipment manufacturers ( OEMs ) such as The Home Depot, Inc. ( The Home Depot ) and Standard Products, Inc. ( Standard Products ), which sell our products on a co-branded or private label basis. Notably, we are The Home Depot s preferred product partner for LED retrofit lamps, which are currently sold under its EcoSmart brand. We have also partnered with Google to develop intelligent lighting products controllable through the Android@Home platform. Large retail, hospitality and other corporate customers such as Harrah s Operating Company, Hilton Hotels Corporation, Simon Property Group and Starbucks Corporation have also purchased products from us directly. In addition, our luminaires are installed in large-scale infrastructure projects throughout the world. During 2012 and through the third quarter of 2013, we sold approximately 9.2 million LED retrofit lamps. Products and applications We have an extensive product portfolio with three distinct offerings lamps, fixtures and custom lighting solutions. The products in each of these offerings provide a lumen output and efficacy that leads to shorter payback periods. We also plan to enhance our lamp and fixture product offerings with several new products during 2014, which are designed to provide improved performance by incorporating components and subsystems that deliver enhanced light quality and energy efficiency at a more competitive price per unit. Lamps. We offer a broad range of LED retrofit lamps designed to fit into existing light fixtures. These LED retrofit lamps are replacements for traditional incandescent and halogen lamps. Our range of dimmable LED retrofit lamps produce consistent color and deliver improved light distribution and brightness in commercial and residential settings as compared to traditional lighting products. Our product line includes DEFINITY branded lamps which we sell directly to our customers and through distributors under the Lighting Science name, co-branded lamps which are currently sold under The Home Depot Eco Smart brand. Fixtures. We offer LED luminaires that combine energy efficiency, long life span and enhanced light distribution, making them ideal for street lighting and parking garages, outdoor areas, warehouses and manufacturing areas. Our industrial product line includes: (i) PROLIFIC Series Roadway Luminaires, (ii) C2D LowBay, BayLight, Flat LowBay and BayLume luminaires for use in parking garages and (iii) the Forefront ShoeBox and WallPack luminaires for use in area, pathway and security lighting, respectively. Our SYMETRIE line of LED luminaires is designed for retail display applications and is available in various profiles and lengths and in color temperatures ranging from cool to warm. The luminaires in our SYMETRIE line offer a broad range of color control to highlight the appearance of high value or perishable products, without generating excessive heat or UV light that may damage these products. We also offer LED-based spot, accent, recessed, pendant and track lighting for our commercial customers, which produce uniform illumination and an energy efficient alternative to incandescent halogen lighting. Custom lighting solutions. We offer LED lighting solutions that combine project management, system integration, and advanced control systems and software to create custom lighting effects. Although our custom projects no longer generate significant revenues, these projects often elevate brand visibility and inform new product applications. Our notable custom solutions include the Times Square New Year s Eve Ball, circadian lighting for the International Space Station and seasonal art displays at the Atlanta Botanical Gardens. Table of Contents Explanatory Note As contemplated by Rule 479 promulgated under the Securities Act of 1933, as amended, this Pre-Effective Amendment No. 3 to our Registration Statement on Form S-1 (this Amendment No. 3 ) is filed to update the registration statement to comply with the applicable requirements of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. We have not determined when, or if, we will make a public offering of our securities or whether any such offering will be pursuant to the prospectus contained herein. Accordingly, all statements in this Amendment No. 3 concerning our intention to offer for sale and list our securities, and our intended use of the proceeds from any such offer and sale, are subject to our determination to proceed with such offering. Table of Contents Industry background In a 2013 report, McKinsey & Company estimated that in North America, Europe and Asia, the share of the lighting market, on a dollar value basis, represented by LEDs will rise to around 45% in 2016 and around 70% in 2020, including both new fixture installation and light source replacement. In Latin America, the Middle East, and Africa, LED market share on a dollar value basis is expected to rise to around 35% in 2016 and between 55- 60% in 2020. According to the U.S. Department of Energy ( DOE ), LEDs are the most promising technology for reducing energy consumption as lighting is estimated to account for at least 25% of all U.S. electricity consumption. We believe that the continuing improvements in LED product efficacy and light quality, coupled with reductions in the purchase price, will further reduce the total cost of ownership and accelerate adoption of LEDs for general illumination purposes. Other catalysts expected to play an increasing role in adoption are: (i) consumer and governmental focus on energy efficiency and environmental sustainability, (ii) demand for enhanced lighting functionality, (iii) design differentiation enabled by the smaller size, lower heat output, longer lifetime, dimmability, and wireless controllability, (iv) financial incentives for energy efficient technologies from government and utility rebates, and (v) government regulations restricting incandescent bulb sales in the United States and the European Union. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated February 14, 2014 Shares Common Stock Lighting Science Group Corporation is offering shares of its common stock. We intend to apply to have our common stock listed on the NASDAQ stock market under the symbol LSGC. We anticipate that the public offering price will be between $ and $ per share. Our common stock is currently traded on the Over-the-Counter Bulletin Board under the symbol LSCG.OB. Investing in our common stock involves risks. See Risk factors beginning on page 8 of this prospectus. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to Lighting Science Group Corporation $ $ (1) We entered into an agreement with Moelis & Company LLC pursuant to which we agreed to pay Moelis & Company LLC a fee of $200,000 for financial advisory services in connection with this offering, and which we have not included in the underwriting discounts and commissions. We have granted the underwriters the right to purchase up to additional shares of our common stock to cover over-allotments. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on , 2014. , 2014 Table of Contents Risks that we face Our business is subject to numerous risks, which are highlighted in the section entitled Risk factors. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. These risks include: We have a history of operating losses and negative cash flow. We may be unable to continue operations unless we can generate sufficient cash flow in the future. If we are unable to manage any future growth effectively, our profitability and liquidity could be adversely affected. If our developed technology or technology under development does not achieve market acceptance, prospects for our growth and profitability would be limited. Further, if we fail to anticipate and adapt to the rapid technological changes in the LED lighting industry, the products we sell could become obsolete. We rely on our relationship with The Home Depot and the loss of such relationship could have a material adverse effect on our financial results. Our financial results may vary significantly from period-to-period, which may lead to volatility in our stock price. Our industry is highly competitive and if we are not able to compete effectively, our prospects for future success will be jeopardized. Our failure to maintain effective internal controls could have a material adverse effect on our operations and our stock price. We rely upon key members of our management team and other key personnel and a loss of key personnel could prevent or significantly delay the achievement of our goals. Our outstanding shares of preferred stock and our debt obligations contain restrictions that impact our business, may limit our ability to raise capital and/or take certain actions. Table of Contents Table of Contents Relationship with Pegasus Capital We are controlled by affiliates of Pegasus Capital Advisors, L.P. ( Pegasus Capital ), a U.S.-based private equity fund manager that provides capital and strategic solutions to middle market companies across a variety of industries. Established in 1995, Pegasus Capital currently manages approximately $2.2 billion in assets through several private equity funds and has made more than 86 investments since its inception. Historically, Pegasus Capital has invested in our capital stock through LSGC Holdings LLC ( LSGC Holdings ), Pegasus Partners IV, L.P. ( Pegasus IV ) and LED Holdings, LLC ( LED Holdings ). Additionally, as described in more detail in section Certain relationships and related transactions below, each of PCA LSG Holdings LLC ( PCA Holdings ) and LSGC Holdings II LLC ( Holdings II ), affiliates of Pegasus Capital, hold shares of our Series I Convertible Preferred Stock ( Series I Preferred Stock ) and Series J Convertible Preferred Stock ( Series J Preferred Stock ), which are each convertible into shares of our common stock, as described in the Certificate of Designation establishing the terms of the Series I Preferred Stock (the Series I Certificate of Designation ) and Series J Preferred Stock (the Series J Certificate of Designation ), respectively. Relationship with Riverwood On May 25, 2012, we entered into a Preferred Stock Subscription Agreement with RW LSG Holdings LLC, ( Riverwood Holdings ), an affiliate of RW LSG Management Holdings LLC ( Riverwood Management ) and Riverwood Capital Partners L.P. ( Riverwood Capital, and together with Riverwood Holdings, Riverwood Management and their affiliates, Riverwood ) and certain other purchasers (the Preferred Subscription Agreement ), pursuant to which we issued an aggregate of 60,705 shares of our Series H Convertible Preferred Stock ( Series H Preferred Stock, and together with the Series I Preferred Stock and Series J Preferred Stock, the Preferred Shares ) and 6,364 shares of our Series I Preferred Stock at a price of $1,000 per share (the Riverwood Offering ). The Company raised gross proceeds of approximately $67.1 million in the Riverwood Offering. In connection with the Riverwood Offering, on May 25, 2012, we issued a warrant (the Original Riverwood Warrant ) to Riverwood Management to purchase 18,092,511 shares of our common stock at an exercise price determined at the date of exercise pursuant to a formula as described therein. In connection with a partial assignment of the Riverwood Warrant to certain third parties, the Original Riverwood Warrant was cancelled and we issued (i) Riverwood management a new warrant representing the right to purchase 12,664,760 shares of common stock (the New Riverwood Warrant ) and (ii) such third parties warrants to purchase, in the aggregate, 5,427,751 shares of common stock (the Transfer Warrants ). The terms of the reissued warrants are substantially the same as those of the Original Riverwood Warrant. The Certificate of Designation establishing the terms of the Series H Preferred Stock (the Series H Certificate of Designation, and together with the Series I Certificate of Designation and Series J Certificate of Designation, the Certificates of Designation ), the Series I Certificate of Designation and Series J Certificate of Designation each contain certain rights exercisable by Riverwood and Pegasus Capital, respectively, as the primary investor of the Series H Preferred Stock and Series I Preferred Stock, respectively and as joint primary investors of the Series J Preferred Stock (as such term is defined in the respective Certificates of Designation). As primary investor, each of Riverwood and Pegasus Capital have been granted certain preferential rights, including but not limited to, the right to designate the number of directors to our board of directors (the Board ) equal to the greater of (a) two (2) directors and (b) product obtained by multiplying (1) the total number of directors that constitute the whole Board by (2) the applicable primary investor s Pro Rata Share (as defined in the Certificates of Designation) of our outstanding shares of common stock and securities exercisable, convertible or exchangeable into or for shares of common stock for so long as Riverwood or Pegasus Capital (as applicable) or their respective affiliates continue to beneficially own at least 2,500 shares of Series H Preferred Stock or Series I Preferred Stock, respectively. As of February 13, 2014, Pegasus and Riverwood had the right to appoint five and two directors, respectively. The terms of the Certificates of Designation are described further in the section Description of capital stock Preferred stock below. September 2012 private offering On September 25, 2012, we entered into Preferred Stock Subscription Agreements (together, the September 2012 Subscription Agreements ) with (i) Portman Limited ( Portman ) and (ii) Cleantech Europe II (A) LP ( Cleantech A ) and Cleantech Europe II (B) LP ( Cleantech B and together with Cleantech A, and Zouk Holdings Limited, Zouk ). Pursuant to the September 2012 Subscription Agreements, we issued an aggregate of 49,000 shares of Series H Preferred Stock, each at a price of $1,000 per share of Series H Preferred Stock (the September 2012 Preferred Offering ). In the September 2012 Preferred Offering, we issued (i) 24,500 shares of Series H Preferred Stock to Portman, and (ii) 20,862 and 3,638 shares of Series H Preferred Stock to Cleantech A and Cleantech B, respectively, and we raised gross proceeds of $49 million. Pursuant to the Series H Certificate of Designation, for so long as Zouk continues to beneficially own at least 2,500 shares of Series H Preferred Stock, it has the right to elect one director to the Board. Each of Portman, Cleantech A and Cleantech B also received a warrant to purchase 4,000,000; 3,406,041; and 593,959 shares of common stock, respectively (the September 2012 Warrants ). The September 2012 Warrants are exercisable on or after October 9, 2015 at an exercise price of $0.72 per share. In connection with the issuance of the September 2012 Warrants, on September 25, 2012, we entered into a Commitment Agreement (the Commitment Agreement ) with Pegasus IV pursuant to which we have the right and obligation to buy from Pegasus IV or its affiliates shares of common stock (the Commitment Shares ) equal to the number of shares, if any, for which the September 2012 Warrants are exercised, up to an aggregate number of shares of common stock equal to the aggregate number of shares of common stock underlying all September 2012 Warrants. The purchase price for any Commitment Shares will be equal to the consideration paid to us pursuant to the September 2012 Warrants. Subject to certain limitations, Pegasus IV has the right to cancel its obligations to us pursuant to the Commitment Agreement with respect to all or a portion of the Commitment Shares at any time by indirectly purchasing the then outstanding September 2012 Warrants (a Pegasus Call ). Upon the exercise of a Pegasus Call, the September 2012 Warrants provide us with the right, and the Commitment Agreement obligates us, to purchase all of the September 2012 Warrants subject to the Pegasus Call for an amount equal to the consideration paid by Pegasus IV pursuant to the Pegasus Call. Additionally, on September 25, 2012, in connection with the September 2012 Preferred Offering, we amended and restated the Riverwood Registration Rights Agreement (as described in the section Shares eligible for future sale Registration rights below) (the Amended Registration Rights Agreement ), originally entered into between the Company, Riverwood Holdings and Riverwood Management (collectively, the RRA Parties ). Pursuant to the Amended Registration Rights Agreement, we added Portman, Cleantech A and Cleantech B as parties and provided them with participation rights in any demand registrations initiated by the RRA Parties and unlimited piggyback registration rights. Such registration rights relate to (a) any shares of common stock issued upon (i) conversion of the shares of Series H Preferred Stock held by the RRA Parties or the other holders under the Amended Registration Rights Agreement or (ii) exercise of the warrant held by such RRA Parties or (b) such additional shares of common stock acquired by the RRA Parties or the other Holders under the Amended Registration Rights Agreement while any of them continues to hold any registrable securities (as such term is defined in the Amended Registration Rights Agreement). Series J Preferred Offering Between September 11, 2013 and January 14, 2014, we issued an aggregate of 37,394 units of our securities (the Series J Securities ) at a purchase price of $1,000 per Series J Security and raised gross proceeds of $37.4 million (the Series J Offering ). We issued an aggregate of 8,500 Series J Securities to PCA Holdings, 19,657 Series J Securities to Holdings II, 5,254 Series J Securities to Riverwood Holdings and 2,570 Series J Securities to Zouk. Each Series J Security consists of (A) one share of Series J Preferred Stock and (B) a warrant to purchase 2,650 at an exercise price of $0.001 per share shares of common stock (the Series J Warrants ). The Company has offered each holder of shares of Series H Preferred Stock, Series I Preferred Stock and Series J Preferred Stock the right to purchase a pro-rata share of the Series J Securities issued in the Series J Offering. Amendments to Certificates of Designation and Preferred Stock Subscription Agreements On September 11, 2013, Riverwood Holdings, Holdings II, PCA Holdings and certain holders of shares of Series H Preferred Stock and Series I Preferred Stock agreed to make certain amendments to the agreements entered into in connection with the purchase of (i) the shares of Series H Preferred Stock and Series I Preferred Stock and (ii) the Company s previously issued shares of Series F Preferred Stock and Series G Preferred Stock, which were subsequently converted into shares of Series H Preferred Stock and Series I Preferred Stock (collectively, the Preferred Stock Subscription Agreements ). The amendments to the Preferred Stock Subscription Agreements include the termination of the right of the holders to seek indemnification from the Company for certain breaches of the representations and warranties contained in the Preferred Stock Subscription Agreements. Pegasus Warrant As compensation for the advisory services provided by Pegasus, on September 11, 2013, we issued a warrant to Holdings II (the Pegasus Warrant ) to purchase 10,000,000 shares of our common stock at an exercise price to be determined at the time of exercise pursuant to a formula as described therein. The Pegasus Warrant also provides for certain anti-dilution adjustments and, if unexercised, expires on May 25, 2022. Corporate information We were incorporated in the state of Delaware in 1988 and our business today is the result of the combination of the products, intellectual property and businesses of four LED lighting companies, namely: (i) Lighting Science Group Corporation, an early entrant and leader in the application of LEDs for general illumination; (ii) LED Effects, Inc. ( LED Effects ), a California-based LED company specializing in the design, development and manufacturing of custom and architectural lighting systems, which was acquired in October 2007; (iii) Lighting Science Group, B.V. ( LSGBV ), formerly known as Lighting Partner B.V., a Netherlands-based manufacturer and marketer of LED retail shop lighting and other specialty LED lighting products, which was acquired in April 2008; and (iv) Lamina Lighting, Inc. ( Lamina ), a supplier of LED light engines and modules, which was acquired in July 2008. In addition, we have a Mexican subsidiary, Lighting Science Group S. de R.L. de C.V. ( LSG Mexico ), and a subsidiary in India, Lighting Science India Private Limited ( LSIPL ). Our principal executive offices are located at 1227 South Patrick Drive, Building 2A, Satellite Beach, Florida 32937, and our telephone number is (321) 779-5520. Our website address is www.lsgc.com. This reference to our website is an inactive textual reference only and is not a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our common stock. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider before buying our securities. You should read the entire prospectus carefully, especially the Risk Factors section and our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our securities. Some of the statements in this prospectus constitute forward-looking statements. See Information Regarding Forward-Looking Statements. Unless the context requires otherwise, references in this prospectus to the Company, we, us and our refer to U.S. Dry Cleaning Services Corporation. Our Company We believe we are the largest owner-operator of dry cleaning and laundry stores in the United States, with 68 retail locations located in Central California, Southern California, Hawaii, Indiana and Virginia. Given the relatively large size and extremely fragmented nature of our industry, our net sales of $21.4 million in fiscal 2013 represent a market share that is less than 0.3% of the approximately $9.0 billion dry cleaning and laundry market, as reported in the IBISWorld Industry Report (November 2013). We believe these market dynamics provide us with tremendous opportunities for growth. We established our business through several acquisitions completed between 2005 and 2008. We financed each of these acquisitions using cash raised through the sale of debt instruments with relatively short maturities. However, given the financial crisis and the associated difficulties with raising capital in late 2008, we were unable to repay or restructure our debt obligations. As a result, we filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. On September 23, 2011, the Bankruptcy Court approved our plan of reorganization, or Bankruptcy Plan, which enabled us to eliminate a significant amount of our outstanding debt and close or relocate 12 unprofitable stores, while still allowing stockholders to maintain a continuing equity interest in our company. After emerging from bankruptcy, we continued to focus on improving our balance sheet and operations by converting additional debt to equity; making changes in management and field personnel; upgrading stores and production plants; expanding the use of eco-friendly solvents and green dry cleaning processes; pursuing new store locations and free door-to-door home and office delivery in order to leverage existing production capacity; expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning; expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations; and expanding our existing dry cleaning and laundry services related to fire and flood restoration. We now believe that we have a compelling opportunity to expand our position as the largest owner-operator of retail dry cleaning and laundry stores nationwide. To this end, we recently entered into an agreement to purchase substantially all the assets of a 17-store dry cleaning and commercial laundry operator located in Las Vegas, Nevada (see Prospectus Summary Recent Developments Advent Cleaners Acquisition ). AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Our Operating Plan The dry cleaning industry in the United States is an amalgamation of small independent brands and mom and pop retail stores. According to the IBISWorld Industry Report, a majority of dry cleaning companies employ less than five people and over 90% of all dry cleaning companies consist of just one facility. In this context, we believe we have a unique operating platform. With between five and 25 stores in each of our five primary geographical markets, we believe that our larger operating base provides a strong foundation for future growth. We have identified the following areas of operational focus to advance this growth: leveraging excess production capacity in our existing markets; promoting green dry cleaning processes, which are gentler on fabrics and healthier for our customers and the environment; expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning; expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations; expanding our existing dry cleaning and laundry services related to fire and flood restoration; and further developing a customer-focused culture that strengthens our brands. We operate a hub-and-spoke model, utilizing a large centralized processing plant, or hub, to provide dry cleaning and laundry services to several smaller company-owned retail stores, or spokes, rather than each store having its own equipment and performing its own dry cleaning and laundry. While the implementation varies from market to market, we believe this approach is the best way to (i) ensure consistent production quality, (ii) allow for more efficient equipment maintenance and repairs, and (iii) leverage labor, supplies, and utilities in order to lower production costs. Moreover, the cost to build a hub is quite high, whereas the cost to open new stores (assuming they will be serviced by an existing hub) is quite low. Therefore, once a hub exists and there is excess capacity, we believe the opportunity to add stores is compelling. We currently operate central hubs in Southern California, Virginia and Hawaii. We also refer to our central hubs as production plants in this prospectus. These three central hubs occupy, in the aggregate, approximately 62,500 square feet and service 31 retail stores. We believe that our central hubs have capacity to service, in the aggregate, approximately 60 additional retail stores and additional delivery routes. We believe that adding additional stores and delivery routes will drive operating efficiencies, lower the production cost per unit, and increase profitability. We intend to open dry stores for the drop-off and pick-up of garments that do not contain dry cleaning equipment, acquire existing stores and chains that consist primarily of dry stores, and establish new delivery routes in areas surrounding these central hubs in order to make use of this excess capacity. In larger and more geographically spread-out markets, such as Central California and Indiana, we operate a modified version of the hub-and-spoke model, where smaller mini-hubs service a few neighboring stores rather than a single hub servicing the entire market. While this approach typically requires more equipment, it is superior when the drive-times are long (i.e., more than 30-40 minutes between the hub and the spoke). We currently operate 15 mini-hubs in Central California and Indiana which service, in the aggregate, 37 retail stores. We believe that our mini-hubs have capacity to service, in the aggregate, approximately 40 additional retail stores and additional delivery routes, which would drive operating efficiencies, lower the production cost per unit, and increase profitability. We intend to utilize the excess capacity of mini-hubs by opening dry stores, acquiring existing stores and chains that consist primarily of dry stores, and establishing new delivery routes in areas surrounding these mini-hubs. U.S. Dry Cleaning Services Corporation (Exact Name of Registrant as Specified in its Charter) Delaware 81323 77-0357037 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 20250 Acacia Street, Suite 230 Newport Beach, CA 92660 (949) 734-7310 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Table of Contents Our Commitment to Eco-Friendly Production State and federal regulatory agencies have targeted the practices of the dry cleaning industry over the past two decades due to the use of certain solvents in the cleaning process, with perchloroethylene, or perc, being the most widely scrutinized. Of the 71 total locations we lease (68 retail stores and three central hubs), 31 are used for processing clothes and of those 31 locations only four currently use perc (one of which is being converted to eliminate the use of perc by the end of 2014), while the other locations use eco-friendly solvents and green dry cleaning processes. We use a number of eco-friendly solvents including those manufactured by GreenEarth Cleaning. We promote our green cleaning processes in many of our marketing materials designed to appeal to customers seeking environmentally sensitive dry cleaning options. Our Customer-Focused Culture We strive to promote a customer-focused culture in which customer satisfaction is the paramount objective. While certain aspects of our operations vary from region to region, we nonetheless require that every store or route manager deliver on the basic consumer proposition of providing consistently clean clothes, ready on time, at a great value, delivered with genuinely warm and friendly customer service. As part of our value proposition, we believe we provide quality and services that surpasses many of our competitors, such as expert stain identification and removal, hand pressing of all garments (as opposed to simply sending them through a steam tunnel), detailed garment inspection with free minor repairs and button replacement, same-day service, e-mail notifications when an order is ready, and free delivery to home or office. We believe that the incremental cost of labor required to provide these additional customer benefits is outweighed by the opportunity to engender customer loyalty and increase referrals. We believe that our core customer proposition of eco-friendly solvents and processes that are not just green but also gentler on fabrics and healthier for our customers and the environment, combined with excellent quality, value and service will assist us in attracting customers and improving market share over time. We have recently begun testing the effectiveness of different methods of advertising and marketing and will continue to aggressively promote our focus on these core customer propositions. As part of our marketing strategy, we recently sought to improve our customer relationships and the positive association of our brands by upgrading our online and social media platforms. We utilize branded websites, third party providers for search-engine-optimization and Facebook pages that keep us in front of customers while also offering garment care tips, contests, and discounts/coupons. We have also enabled Talk to the Manager access on our websites for each region, providing customers with direct and anonymous text message access to each store manager, district manager and regional manager. As a result of our daily focus on executing against the most important customer criteria, we believe we now offer an improved customer experience and are now better able to market that experience. Alexander Bond Chief Executive Officer U.S. Dry Cleaning Services Corporation 20250 Acacia Street, Suite 230 Newport Beach, CA 92660 (949) 734-7310 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Our Growth Strategy We intend to increase our market share through a combination of organic and strategic growth. We seek to achieve organic growth by increasing sales in our existing stores and also by opening select new stores in order to leverage excess production capacity from existing central hubs or mini-hubs. We also believe that we can increase sales in our existing stores by expanding our service offerings and by promoting our brands more effectively. Since many of our costs, including rent, salaried-labor and delivery are relatively fixed, we believe that incremental sales will improve our profitability. In addition to increasing revenue in existing stores and routes, we plan to open new stores and establish new routes, especially dry stores in areas that can be serviced by one of our existing central hubs or mini-hubs. In certain new markets or trade areas where new housing and retail shopping centers are being developed outside existing service areas, we will also consider establishing new mini-hub type stores, especially if we anticipate being able to leverage that investment by opening several additional stores in the same trade area or geographic region. Because of their significantly smaller initial investment compared to larger central hubs, we believe that mini-hubs provide excellent flexibility for scaled growth. We also intend to grow through strategic acquisitions, especially in more mature markets and trade areas, where there are fewer new retail centers being developed and where existing competition is already entrenched. We seek to acquire leading operators in attractive markets, but we also plan to be opportunistic as it relates to underperforming operations that we believe have significant potential for improvement. We believe we can offer an intriguing exit alternative to targets that do not otherwise have an attractive exit option, especially upon completing this offering, which will provide cash for acquisitions and improve our access to capital going forward. Since there are currently no other publicly-traded dry cleaning companies, we would be the only company in our industry able to offer equity securities that would allow targets to participate in the appreciation of such securities. In addition, we believe that having publicly-traded securities will enable us to incentivize key employees with equity securities, including stock options, which would be a competitive advantage. We routinely analyze and target markets for development and then screen specific areas based on demographic and company-specific variables to identify local chains for acquisition. We intend to use this approach to cluster stores in specific geographic areas of demand, which we believe will increase brand awareness and improve our operating and marketing efficiencies, especially where we are able to leverage other operating costs associated with our existing central and mini-hubs and regional management structure. Recent Developments Sale of Arizona Operations On September 8, 2014, we sold substantially all of the assets used in the operation of two retail stores in Arizona for $200,000 cash, less broker fees and escrow expenses of $20,570. These were our only stores in Arizona and not part of our continuing growth strategy. We intend to use the proceeds from this transaction for general corporate purposes. Advent Cleaners Acquisition On August 25, 2014, we entered into an agreement to purchase, upon the closing of this offering and subject to other customary closing conditions, substantially all of the assets of Advent Cleaners, LLC, or Advent Cleaners, for $4.0 million in cash, subject to adjustment. We refer to this potential acquisition of Advent Cleaners as the Advent Cleaners Acquisition. Upon the closing of the Advent Cleaners Acquisition, we will add 14 dry stores, three mini-hubs with retail operations and a 20,230 square foot central hub, all located in the greater Las Vegas, Nevada area and operated under the brands Al Phillips and Thrift DLux Cleaners. The acquired assets also include contracts for commercial laundry accounts with some of the largest resorts and hotels in Las Vegas. We intend to hire substantially all of Advent Cleaners employees, including existing managers with significant operating experience in both retail and commercial dry cleaning and laundry. In addition, we have agreed to enter into, at the closing of the Advent Cleaners Acquisition, a five-year exclusive supply agreement with United Cleaners Supply, LLC to purchase the dry cleaning and laundry supplies used in the Advent Cleaners operations. This offering will not be consummated if the Advent Cleaners Acquisition cannot be consummated concurrently. See Business Our Proposed Strategic Acquisition for additional information regarding this proposed acquisition. Copies to: Larry A. Cerutti, Esq. Sarah E. Williams, Esq. Rushika Kumararatne de Silva, Esq. Tamar Aydin Donikyan, Esq. Troutman Sanders LLP Ellenoff Grossman & Schole LLP 5 Park Plaza, Suite 1400 1345 Avenue of the Americas, 11th Floor Irvine, California New York, New York 10105 (949) 622-2700/(949) 622-2739 (fax) (212) 370-1300 Table of Contents Debt Restructuring and Recapitalization On July 23, 2014, we entered into an exchange agreement, or Exchange Agreement, with certain holders of our debt instruments, warrants and rights to purchase common stock to (i) exchange certain of our secured and unsecured notes and loan agreements, under which an aggregate amount of $11,274,781 in principal and interest was outstanding as of October 2, 2014, for an aggregate of 1,572,808 shares of our common stock upon the closing of this offering, based upon an assumed public offering price for our common stock of $5.99 per share, which is the midpoint of the range of the purchase price for a share of common stock set forth on the cover page of this prospectus; and (ii) exchange warrants and rights to purchase an aggregate of 224,059 shares of our common stock at exercise prices ranging from $5.99 (which is the midpoint of the range of the purchase price for a share of common stock set forth on the cover page of this prospectus) to $32.00 per share for an aggregate of 112,032 shares of our common stock upon the closing of this offering (i.e., one share of common stock for each warrant representing the right to purchase two shares of common stock). We refer to the exchange of this outstanding debt, warrants and rights to purchase shares of our common stock pursuant to the terms of the Exchange Agreement as the Exchange Offer. As a result of the Exchange Offer, upon the closing of this offering and prior to application of the net proceeds of this offering, we expect to have a total of approximately $1,477,523 in debt outstanding and no warrants or rights to purchase shares of our common stock outstanding (other than warrants to purchase 2,000,000 shares of common stock issued to investors in this offering and a warrant to purchase up to 160,000 shares of common stock to be issued to the representative or the underwriters in this offering). We expect to repay up to $1.0 million of the $1,477,523 in debt that will be outstanding after the Exchange Offer with the proceeds of this offering. In addition, under the terms of the Exchange Agreement, certain holders of our common stock have agreed to cancel 1,098,445 shares of our common stock upon the closing of this offering, including 871,882 shares of common stock initially issued under the terms of the Reorganization Agreement described below. The closing of the Exchange Agreement is conditioned upon and shall close concurrently with this offering. Risks Associated with Our Business
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+S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A-1 FUELSTREAM, INC. (Exact Name of Registrant as Specified in Charter) 510 Shotgun Road, Suite 110 Sunrise Florida 33325 (Address of Principal Executive Offices) (954) 423-5345 (Registrant s Telephone Number, Including Area Code) John D. Thomas, Chief Executive Officer Fuelstream, Inc. 510 Shotgun Road, Suite 110 Sunrise Florida 33325 (Name and Address of Agent for Service) Copies to: Kenneth I. Denos, Esq. Kenneth I. Denos, P.C. 11650 South State Street, Suite 240 Draper, UT 84020 Telephone: (801) 816-2511 Facsimile: (801) 816-2599 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [ ] Smaller reporting company [X] Table of Contents CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 x Registration Statement Under the Securities Act of 1933 Title of Securities Being Registered Amount Being Registered (1) Proposed Maximum Aggregate Offering Price (2) Amount of Registration Fee (2) Common Stock ($0.0001 par value) 42,505,433 $340,043.46 $43.80 (1)Represents the number of shares being registered for resale by the selling stockholder pursuant to the conversion of a certain convertible note issued by the Registrant, which is convertible based on a 40% discount to the average of the three lowest daily volume-weighted average prices as reported on the OTCQB for the ten trading days ended April 16, 2014. In the event of a stock split, stock dividend, or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover additional shares of common stock pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"). (2)Calculated pursuant to Rule 457(c) based on the closing price of our common stock as reported on the OTCQB on April 16, 2014. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, ______________, 2014 Up to 42,505,433 Shares of Common Stock FUELSTREAM, INC. ________________________________________ This prospectus relates to the resale of shares of common stock of Fuelstream, Inc. (hereafter, "we" "us" "our", "Fuelstream" or the "Company") by a certain selling stockholder named herein. We will not receive any of the proceeds from the sale of the shares by the selling stockholder. Any participating broker-dealers and, if the selling stockholder is an affiliate of any such broker-dealers, may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholder has informed us that it is not a broker-dealer, is not an affiliate of a broker dealer, and does not have any agreement or understanding, directly or indirectly, with any person to distribute our common stock. Our common stock is traded on the over-the-counter market under the symbol "FLST". The closing price for our common stock on April 16, 2014 was $0.0080 per share, as reported by the OTCQB. The shares being registered herein are comprised of 42,505,433 shares of common stock that are issuable from the conversion of a convertible note we have issued to the selling stockholder on January 21, 2014 in the face amount of $212,500 (the "Note"). The Note is convertible into shares of common stock at a 40% discount from the average of the three lowest daily volume-weighted average prices as reported by the OTCQB for the ten trading days ending on the trading day immediately prior to the date of conversion. Because the Note is convertible at the discretion of the holder, the date of conversion is unknown. Consequently, the actual conversion price for the Note is also unknown. Accordingly, we caution readers that, although we are registering 42,505,433 shares, there is no minimum conversion price for the Note (and therefore no maximum amount of our shares that may be issued by the conversion of the Note) and, therefore the number of shares actually issued from conversion of the Note may be substantially greater than the number registered. See "Summary of Convertible Note Terms and Other Transactions with the Selling Stockholder" on page 27 for a more complete discussion of the Note and the terms by which we may be required to issue additional shares of our common stock. Our auditors have expressed substantial doubt as to our ability to continue as a going concern. We expect that we will need approximately $250,000 in capital to continue as a going concern for the next twelve months from the date of this prospectus. We intend to raise capital to fund our operations through sales of aviation fuel, borrowings, and private placements of our common stock. An investment in our common stock is subject to many risks and an investment in our shares will also involve a high degree of risk. The conversion of the debentures will dilute the ownership interest and voting power of existing stockholders. See "Risk Factors" on page 4 to read about factors you should consider before purchasing shares of our common stock. _______________________________________ Neither the Securities and Exchange Commission ("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 information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by us with the SEC. The selling stockholder may not sell these securities until the registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. The date of this prospectus is , 2013 Table of Contents You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The selling stockholder is not offering to sell these securities in any jurisdiction where such offering or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS AND PROJECTIONS ii PROSPECTUS SUMMARY 1
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+Prospectus Summary This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not contain all the information that you need to consider in making your investment decision to purchase our common stock. You should carefully read this entire prospectus, as well as the information incorporated by reference herein, before deciding whether to invest in our common stock. You should carefully consider the section entitled Risk Factors on page 15 of this prospectus and the documents incorporated by reference herein to determine whether an investment in our common stock is appropriate for you. The Company Guaranty Federal Bancshares, Inc. is a bank holding company headquartered in Springfield, Missouri. Our wholly-owned subsidiary, Guaranty Bank, operates nine branches in Greene and Christian Counties in southwest Missouri, primarily concentrated in the Springfield, Missouri market and one loan production office in Webster County. We are a community-oriented financial institution that offers traditional banking services for individuals and small to medium sized businesses in our markets. We seek to be the provider of choice for financial solutions to customers in our markets who value exceptional personalized service and local decision making. The Company was formed in 1997 in conjunction with a plan of reorganization involving the Bank and its then existing mutual holding company. Our Bank was established in 1913 as Guaranty Savings and Loan Association, became Guaranty Federal Savings and Loan in 1935 and was renamed Guaranty Bank when it converted from a federal savings bank to a state-chartered trust company with banking powers in 2003. Currently, the Bank is regulated by the Missouri Division of Finance ( MDF ) and the FDIC. As of September 30, 2013, on a consolidated basis, we had total assets of $640.5 million, total gross loans of $468.1 million, total deposits of $510.7 million and tangible common equity of $37.7 million. For the three months ended September 30, 2013, net income available to common stockholders was $1.1 million, diluted earnings per common share was $0.41 and our annualized return on average assets was 0.85%. Also, at September 30, 2013, our Tier 1 leverage capital ratio was 10.58%, Tier 1 risk-based capital ratio was 13.22% and total risk-based capital ratio was 14.47%. Like many commercial banks in our market, our loan portfolio is comprised of different types of industries. However, real estate lending is a significant portion of our business and accounted for more than 75% of our loan portfolio by value as of September 30, 2013. W e were not immune to asset quality issues as a result of the very challenging economic environment and real estate market that began in 2008. This created loan losses over the last several years that were above historical levels. For example, in fiscal years 2009 and 2008, the Bank s net charge-offs as a percentage of average loans was 1.86% and 0.70%, respectively, compared to pre-recession net charge-off percentages of 0.14%, 0.08% and 0.02% for fiscal years 2007, 2006 and 2005, respectively. See Summary Consolidated Financial Data on page 14 of this prospectus for further details of the Bank s net charge-off percentages. Our nonperforming assets peaked at $42.1 million at June 30, 2012. We have made significant progress since then , having reduced nonperforming assets to $22.5 million at September 30, 2013. Of the $18.6 million of nonperforming loans, $17.7 million was attributable to seven relationships, and of the $3.9 million of foreclosed assets, $2.9 million was made up of two pieces of land. While these few asset issues remain outstanding, we feel that we are properly reserved and well positioned to build on our recent strong earnings performance and grow profitability going forward. Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ABOUT THIS PROSPECTUS You should rely only on the information contained in or incorporated by reference into this prospectus and any free writing prospectus we authorize to be delivered to you. We have not, and the underwriter has not, authorized anyone to provide you with additional information or information different from that contained in or incorporated by reference into this prospectus and any free writing prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. To the extent information in this prospectus and any free writing prospectus is inconsistent with any of the documents incorporated by reference into this prospectus and any free writing prospectus, you should rely on this prospectus and any free writing prospectus. We are offering to sell, and seeking offers to buy, our common stock only in states where those offers and sales are permitted. You should assume that the information contained in or incorporated by reference into this prospectus and any free writing prospectus is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. You should read this prospectus, all of the information incorporated by reference into this prospectus and the additional information about us described in the section entitled Where You Can Find More Information beginning on page iii before making your investment decision. Neither we, nor any of our officers, directors, agents or representatives or the underwriter, make any representation to you about the legality of an investment in our common stock. You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our common stock. No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about, and to observe, any restrictions as to the offering and the distribution of this prospectus applicable to those jurisdictions. In this prospectus, we rely on and refer to information and statistics regarding the banking industry and banking markets in Missouri. We obtained this market data from independent publications or other publicly available information. In addition, the sources of the demographic information that we have included in our discussion of our market areas in this prospectus include United States Census Bureau, economic development authorities and chamber of commerce materials. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information. In this prospectus, we frequently use the terms we, our, us and the Company to refer to Guaranty Federal Bancshares, Inc., Guaranty Bank, and other subsidiaries which we own as a combined entity, except where it is clear that the terms mean only Guaranty Federal Bancshares, Inc. We also use the term the Bank to refer to Guaranty Bank. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Company may from time to time make written or oral forward-looking statements, including statements contained in the Company s filings with the SEC, in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this prospectus, words such as anticipates, estimates, believes, expects, and similar expressions are intended to identify such forward-looking statements but are not the exclusive means of identifying such statements. (1) Net income (loss) divided by average total assets. (2) Net interest income divided by average interest-earning assets. Background of the Offering On January 30, 2009, as part of the U.S. Department of the Treasury s Troubled Asset Relief Program s Capital Purchase Program ( CPP ), we sold to the United States Department of the Treasury ( Treasury ) 17,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, $1,000 liquidation preference per share (the Series A Preferred Stock ). On June 13, 2012, we repurchased 5,000 shares of the Series A Preferred Stock held by Treasury. On April 29, 2013, Treasury sold its remaining 12,000 shares of our Series A Preferred Stock to six parties unrelated to us. As of the date of this prospectus, we have outstanding 12,000 shares of Series A Preferred Stock, with a liquidation preference amount of $1,000 per share. In February of 2014, our coupon rate on the Series A Preferred Stock accelerated to 9.0% from its previous rate of 5.0%. We are conducting this offering primarily to provide us with additional capital to redeem all outstanding shares of the Series A Preferred Stock and to increase the amount of common equity in our capital structure. Subject to the completion of this offering and the receipt of all required regulatory approvals, we intend to repurchase all of the outstanding Series A Preferred Stock through the exercise of the redemption right that we have under the terms of the Series A Preferred Stock. See Use of Proceeds beginning on page 27 below. In order for the Company to redeem all of its Series A Preferred Stock, we must submit a request to the Federal Reserve Bank of St. Louis (the FRB ) for approval to redeem all of the Company s 12,000 shares of its outstanding Series A Preferred Stock. We also will notify the FDIC and the MDF on the request. The request will include documentation certifying that sufficient funds have been raised and are available to pay the redemption price. Additionally, the request will include: actual calculations for each of the Bank and the Company on a consolidated basis of their respective Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio as of a specified date; GUARANTY FEDERAL BANCSHARES, INC. (Exact name of registrant as specified in its charter) Delaware 6022 43-1792717 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.) 1341 West Battlefield Springfield, Missouri 65807 (417) 520-4333 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Shaun A. Burke, President and CEO Guaranty Federal Bancshares, Inc. 1341 West Battlefield Springfield, Missouri 65807 (417) 520-4333 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Craig A. Adoor, Esq. Husch Blackwell LLP 190 Carondelet Plaza, Suite 600 St. Louis, Missouri 63105 (314) 480-1500 Robert M. Fleetwood, Esq. Barack Ferrazzano Kirschbaum & Nagelberg LLP 200 West Madison Street, Suite 3900 Chicago, Illinois 60606 (312) 984-3100 These forward-looking statements involve risks and uncertainties, such as statements of the Company s plans, objectives, expectations, estimates and intentions, that are subject to change based on various important factors (some of which are beyond the Company s control). The following factors, among others, could cause the Company s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve, inflation, interest rates, market and monetary fluctuations; the timely development of and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors products and services; the willingness of users to substitute competitors products and services for our products and services; our success in gaining regulatory approval of our products and services, when required; the impact of changes in financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; the ability to successfully manage and integrate any future acquisitions if and when our Board of Directors and management conclude any such acquisitions are appropriate; changes in consumer spending and saving habits; our success at managing the risks resulting from these factors; and other factors set forth in reports and other documents filed by the Company with the SEC from time to time. For further information about these and other risks, uncertainties and factors, please review the disclosure under the heading Risk Factors beginning on page 15 of this prospectus and the information under the heading Risk Factors beginning on page 32 of our Annual Report on Form 10-K for the year ended December 31, 2012 and page 38 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. The Company cautions that the listed factors are not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and file with the SEC proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as required of a U.S. listed company. You may read and copy any document we file at the SEC s public reference room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC s web site at www.sec.gov or on our website at www.gbankmo.com. However, the information on, or that can be accessible through, our website does not constitute a part of, and is not incorporated by reference in, this prospectus. Written requests for copies of the documents we file with the SEC should be directed to Vicki L. Lindsay, Secretary, Guaranty Federal Bancshares, Inc., 1341 W. Battlefield St., Springfield, MO 65807-4181. pro forma calculations for the Company on a consolidated basis of its Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio reflecting the preferred stock redemption; and projected consolidated capital ratio calculations for each of the Bank and the Company on a consolidated basis as of and for the dates requested by the FRB, both on an expected case basis and a stressed case basis. There can be no assurance that the FRB will approve our request to redeem all of the Series A Preferred Stock. Once we receive the approval of the FRB to redeem the Series A Preferred Stock, we will provide the holders of the Series A Preferred Stock with a formal notice of redemption and will work with the holders of the Series A Preferred Stock to effect the redemption as soon as practicable. We intend to use the remaining proceeds of the offering for working capital and for general corporate purposes, including to support organic growth and, potentially, acquisitions in the future to expand our market area and product offerings. While we are not in discussions with any particular acquisition target at this time, we may use a whole bank acquisition as an opportunity to acquire complementary non-interest income generating products such as trust, asset management or insurance that we currently do not offer. See Our Business Strategy beginning on page 6 and Use of Proceeds beginning on page 27 below. Our Markets All 10 of the Bank s facilities are located within the Springfield, Missouri Metropolitan Statistical Area (the Springfield MSA ) which had an aggregate population of 444,617 and total deposits of $7.9 billion at June 30, 2012. Our primary market within the Springfield MSA is the city of Springfield where we hold the fourth highest deposit market share and operate six branches in which approximately 90% of our deposits are domiciled. Springfield had a population of 162,191 and total deposits of $5.5 billion at June 30, 2012. The Springfield MSA is an attractive banking market that combines a low unemployment rate with a diversified and stable local economy. At December 31, 2013, the Springfield MSA s unemployment rate of 4.6% was well below the Missouri rate of 5.9% and the national rate of 6.7%. The principal components of the Springfield MSA economy are service industries, education, health care, retail industries and light manufacturing. Springfield is a regional health care hub for surrounding markets with two large regional hospitals. In addition, the area is home to Missouri State University and four accredited colleges that have a combined enrollment of over 45,000. Our local area serves as the corporate headquarters for Bass Pro, Inc., O Reilly Automotive, Inc. and Expedia, Inc. Part of the area s growth can be attributed to its proximity to Branson, Missouri, which has developed a strong tourism industry related to country music and entertainment. Branson is located 30 miles south of Springfield, and attracts between five and six million tourists each year, many of whom pass through Springfield. Approximate date of commencement of proposed sale to the public: as soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) This prospectus is part of a registration statement on Form S-1 filed by us with the SEC under the Securities Act of 1933, as amended (the Securities Act ). As permitted by the SEC, this prospectus does not contain all the information in the registration statement filed with the SEC. For a more complete understanding of this offering, you should refer to the complete registration statement, including exhibits, on Form S-1 that may be obtained as described above. Statements contained in this prospectus about the contents of any contract or other document are not necessarily complete. If we have filed any contract or other document as an exhibit to the registration statement or any other document incorporated by reference in the registration statement, you should read the exhibit for a more complete understanding of the contract or other document or matter involved. Each statement regarding a contract or other document is qualified in its entirety by reference to the actual contract or other document. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The SEC allows us to incorporate by reference the information that we file with it, which means that we can disclose important information to you by referring you to other documents. The information incorporated by reference is an important part of this prospectus. We incorporate by reference the following documents (other than information furnished rather than filed in accordance with SEC rules): the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 2012; the Company s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013; June 30, 2013; and September 30, 2013; the Company s Current Reports on Form 8-K filed on February 8, 2013; May 15, 2013; May 28, 2013; September 30, 2013; and February 5, 2014; and the Company s Definitive Proxy Statement related to its 2013 Annual Meeting of Stockholders, as filed with the SEC on April 22, 2013. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded. We will provide without charge, upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus and a copy of any or all other contracts or documents which are referred to in this prospectus. Requests should be directed to: Vicki L. Lindsay, Secretary, Guaranty Federal Bancshares, Inc., 1341 W. Battlefield St., Springfield, MO 65807-4181, Telephone: (417) 520-4333. Our Management Team Our leadership structure has materially evolved from the mutually-owned savings bank that fully converted to stock form in 1997. Each of our eight Board members has joined the Company since our conversion. The Board hired Shaun Burke, our Chief Executive Officer, in 2004 to continue this evolution from a savings bank to a commercial bank. Since his hiring, Mr. Burke has assembled a strong management team by focusing on hiring individuals with diversified banking experiences in the local market that have the energy and drive to take our Company to the next level. The members of our management team all have significant experience in the financial services industry. They have been able to leverage that experience to provide a greater level of expertise to our community bank operations. Combined, our management team has over 138 years of banking and financial services experience: Executive (age) Years of Experience Years of Experience in Springfield, MO Previous Employers (years) Shaun Burke (50) 30 30 Boatmen s Bank (14) Chief Executive Officer Signature Bank (7) Carter Peters (44) 21 21 BKD, LLP (11) Chief Financial Officer Southern Missouri Bank (2) H. Michael Mattson (60) 36 28 United Kansas Bank (8) Chief Lending Officer Mercantile Bank (8) Boatmen s Bank (4) Metropolitan National Bank (4) Liberty Bank (5) Sheri Biser (50) 27 27 Mercantile Bank (14) Chief Credit Officer Metropolitan National Bank (8) Robin E. Robeson (47) 24 18 Boatmen s Bank (3) Chief Operating Officer Commerce Bank (15) Duck Creek Software (3) CALCULATION OF REGISTRATION FEE Title of each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, $0.10 par value $23,000,000 $3,137 (1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. (2) Includes offering price of shares that the underwriter has the option to purchase to cover over-allotments, if any. (3) Previously paid. Our Competitive Strengths We believe we distinguish ourselves from our competitors through the following competitive strengths: Franchise Value Built on Relationships. The Company is dedicated to being the provider of choice for financial solutions to local businesses, professionals and other individuals in our markets who want to bank with an institution that offers local decision-making and individualized service. We believe that we present a natural alternative to the larger regional and national competitors for customers who prefer high touch customer service and that our service level is valued by our customers. We believe that this business philosophy enables us to build long-term relationships with desirable customers, which enhances the quality and stability of our funding and lending operations. Core Funding Strength. Customer deposits are our primary source of funds. Core deposits, which exclude certificates over $100,000 and brokered deposits, comprised 87.3% of our total deposits as of September 30, 2013. Non-interest bearing, NOW, money-market and savings accounts were $379.0 million, or approximately 74.2%, of our deposit base at September 30, 2013, having grown by $39.2 million or 11.5% since September 30, 2012. With a total cost of interest-bearing deposits of 0.63% for the three months ended September 30, 2013 and a modest 18.8% of our deposit base in traditional certificate form at September 30, 2013, we are confident that our funding structure will be a source of strength in the future. Balanced Loan Portfolio. We have developed a loan portfolio to create a commercial bank loan composition that is not highly concentrated in any one type or sector of the economy. At September 30, 2013, our loan portfolio consisted of 20.8% commercial and industrial, 20.0% single family, 10.4% multi-family, 36.8% commercial real estate and 8.4% construction and development loans. Profitable Core Banking Operations. Like many financial institutions in the market downturn that began in 2008, including in our market area, our recent earnings performance has been negatively impacted by elevated loan loss provisions and non-interest expenses as we have dealt with our elevated nonperforming assets. We believe the negative earnings pressures from our asset quality issues are in our past. In the three months ended September 30, 2013, we reported an income statement that was void of these issues and that we believe is reflective of our future earnings power. We believe that the availability of a portion of the proceeds of this capital raise for potential future acquisitions will allow for future growth that will improve both of these measures. Experienced and Energized Management Team. Our management team includes executives with extensive experience in the banking industry and significant connections to our Missouri markets. We are committed to the long term growth of our franchise as we expand our customer base and product offerings. Our Board and management team are particularly excited about this capital offering, as we intend to use a portion of the proceeds to help support our growth. Ability to Attract and Retain Talented Banking Professionals. Integral to the continued implementation of our plan to grow our business and expand our market area will be our ability to attract and retain new talent. Evidenced by the experienced banking professionals we have already hired, we believe we have the ability to recruit and hire the type of banking and management talent that will be necessary to contribute to the future growth in asset quality and expanded banking services and to manage it effectively. We recently hired an experienced recruiter to find the banking and management talent we will need going forward. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Our Business Strategy The Company is focused on growing business relationships and building core deposits, profitable loans and non-interest income. We believe that we have built a solid franchise that meets the financial needs of our clients by providing an array of personalized products and services delivered by seasoned banking professionals with decisions made at the local level. Our overall strategic goal is to provide the highest level of service to our customers and to be a high-performing financial institution. Our specific business strategies include: Produce Profitable Organic Growth. We believe that we can attract new customers and expand our total loans and deposits within our existing market areas consistent with our capital raising intentions. Further, we believe that the Tier 1 common equity resulting from this offering will provide us with a more sound capital foundation upon which to prudently grow our balance sheet going forward. Acquisitions of Banks or Complementary Business Lines. We expect the persistent challenges presented by the economic climate coupled with the significant legislation and regulation enacted in response to the current economic crisis, along with increased compliance costs and an accelerated need for economies of scale, will encourage many smaller financial institutions to seek a merger partner. In the past few years, as we assembled our current management team, we had neither the currency nor the capital to realistically participate in the merger arena. With the excess capital and increased liquidity in our stock that this offering will provide coupled with the extensive relationships we have developed with local community bankers throughout our careers, we are confident that we will be an attractive merger partner for institutions with total assets between $100 million and $300 million. Within 50 miles of Springfield, 16 community banks exist that fit our asset size criteria. Broadening our range to 100 miles increases the number of institutions to 66. In addition, while we offer a competitive array of banking services to assist our commercial clients, we do not offer non-interest products such as trust, asset management or insurance. While we would like to offer these services to increase our profitability and we have experience in these fields within our management team, we do not anticipate developing these businesses from within. We would look to acquire these businesses as stand-alone entities or as part of a whole bank acquisition. We are confident that we would be able to leverage any acquisition in these spaces with our existing customer base to provide for meaningful financial returns. Notwithstanding the future possibilities discussed above, we have no current plans, arrangements, and/or understandings to engage in any mergers with another entity or make any material acquisitions. Maintain Financial Discipline. We are committed to being a high performing financial institution and will look to expand our franchise, but only in a disciplined manner. We plan to grow the loan portfolio, open new branches and consider new acquisitions only after rigorous due diligence and substantial quantitative analysis regarding the financial and capital impacts of such transactions. Our experience with our asset quality issues in the recent economic crisis has given us a hardened appreciation for the values of a clean portfolio and quality loan assets. We will not reduce our credit standards or pricing discipline to generate new loans or make acquisitions. We believe that maintaining our financial discipline will generate long-term stockholder value. Recent Developments Termination of the ESOP The Bank s Employee Stock Ownership Plan (the ESOP ) is a tax-qualified retirement plan sponsored and maintained by the Bank for the benefit of employees of the Company and the Bank. Effective as of December 31, 2012, the Bank s Board of Directors approved the termination of the ESOP. Prior to distributing participant account balances held under the ESOP, the Bank allocated all then unallocated shares held by the ESOP as of December 31, 2012 to the appropriate participants accounts. The Bank also submitted to the Internal Revenue Service an application for a determination letter in connection with the termination of the ESOP. By letter dated September 9, 2013, the Service indicated that, based upon the information contained in the Bank s application, it had determined that the termination of the ESOP does not adversely affect its qualification for federal tax purposes. Based on the Service s issuance of a favorable determination letter, the Bank distributed all 233,224 shares of common stock held in the account balances to all of the ESOP s 145 participants by December 31, 2013. The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated February 27, 2014 PRELIMINARY PROSPECTUS $15 Million of Common Stock GUARANTY FEDERAL BANCSHARES, INC. This prospectus relates to the public offering of shares of the common stock, $0.10 par value per share, of Guaranty Federal Bancshares, Inc., a bank holding company headquartered in Springfield, Missouri (the Company ), at a price of $ per share. Our common stock is quoted on the NASDAQ Global Market under the symbol GFED. On February 24, 2014, the last reported sale price of our common stock on the NASDAQ Global Market was $11.10 per share. Investing in our common stock involves risks. You should read the Risk Factors section beginning on page 15 of this prospectus before making a decision to invest in our common stock. Per Share Total Public offering price $ $ 15,000,000 Underwriting discounts and commissions (1) $ $ Proceeds to us, before expenses $ $ (1) See the Underwriting section for additional information regarding the underwriting discount and certain expenses payable to the underwriter by us. The underwriter also may purchase up to an additional shares of our common stock within 30 days of the date of this prospectus to cover over-allotments, if any. None of the Securities and Exchange Commission (the SEC ), the Federal Deposit Insurance Corporation (the FDIC ), the Board of Governors of the Federal Reserve System (the Federal Reserve ), any state or other securities commission or any other federal or state bank regulatory agency has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The securities are not savings accounts, deposits or other obligations of any bank, thrift or other depositary institution and are not insured or guaranteed by the FDIC or any other governmental agency or instrumentality. The offering price per share to the public will be agreed to by the underwriter and us. At the time that the offering price per share to the public is determined, we will enter into a firm commitment underwriting agreement with the underwriter. The underwriter expects to deliver the shares of common stock in book-entry form through the facilities of The Depository Trust Company and its participants against payment on or about , 2014. Preliminary December 31, 2013 Financial Information The information below summarizes our preliminary financial data as of and for the three months and year ended December 31, 2013, for which consolidated financial statements are not yet available and for which the audit has not been completed. Our independent registered public accounting firm, BKD, LLP, has not audited, reviewed, compiled or performed any procedures on this preliminary financial data, and accordingly, does not express an opinion or other form of assurance with respect to this preliminary financial data. The financial information for the three months and year ended December 31, 2013 is preliminary and may change and any such changes could be material. This preliminary information should not be viewed as a substitute for our full annual financial statements prepared in accordance with U.S. generally accepted accounting principles, which will be filed with the SEC pursuant to the Exchange Act. In addition, these preliminary results of operations for the three months and year ended December 31, 2013 are not necessarily indicative of the results to be achieved for any future period. Net income for the fiscal year 2013 was $5,240,000 as compared to $1,944,000 in fiscal year 2012. After preferred stock dividends, diluted earnings per common share was $1.58 for 2013 as compared to $.30 earned in 2012, an increase of $1.28 (427%). The complete preliminary financial highlights are set forth in the following table. RAYMOND JAMES The date of this prospectus is , 2014. Quarter ended Year ended Operating Data: December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012 (Dollar amounts are in thousands, except per share data) Total interest income $ 6,619 $ 7,047 $ 25,855 $ 27,606 Total interest expense 1,158 1,572 5,097 6,858 Net interest income 5,461 5,475 20,758 20,748 Provision for loan losses 700 350 1,550 5,950 Net interest income after provision for loan losses 4,761 5,125 19,208 14,798 Noninterest income 739 992 5,319 3,256 Noninterest expense 3,689 4,188 17,657 16,241 Income before income taxes 1,811 1,929 6,870 1,813 Provision (credit) for income taxes 437 447 1,630 (131 ) Net income $ 1,374 $ 1,482 $ 5,240 $ 1,944 Preferred stock dividends and discount accretion 199 199 795 1,076 Net income available to common shareholders $ 1,175 $ 1,283 $ 4,445 $ 868 Basic income per common share $ 0.43 $ 0.47 $ 1.63 $ 0.32 Diluted income per common share $ 0.42 $ 0.45 $ 1.58 $ 0.30 Annualized return on average assets (1) 0.87 % 0.91 % 0.82 % 0.30 % Annualized return on average equity (2) 10.81 % 11.73 % 10.34 % 3.67 % Net interest margin (3) 3.63 % 3.55 % 3.44 % 3.42 % Efficiency ratio (4) 59.50 % 64.76 % 67.71 % 67.66 % (1) Net income divided by average total assets. (2) Net income divided by average stockholder's equity. (3) Net interest income divided by average interest-earning assets. (4) Non-interest expense divided by the sum of net interest income plus non-interest income. Financial Condition Data: As of As of December 31, 2013 December 31, 2012 Cash and cash equivalents $ 12,303 $ 41,663 Investments and interest bearing deposits 97,772 102,162 Loans, net of allowance for loan losses 12/31/2013 - $7,802; 12/31/2012 - $8,740 465,003 468,376 Other assets 44,810 48,231 Total assets $ 619,888 $ 660,432 Deposits $ 487,319 $ 500,015 Advances from correspondent banks 55,350 68,050 Subordinated debentures 15,465 15,465 Securities sold under agreements to repurchase 10,000 25,000 Other liabilities 1,399 1,034 Total liabilities 569,533 609,564 Stockholders' equity 50,355 50,868 Total liabilities and stockholders' equity $ 619,888 $ 660,432 Equity to assets ratio 8.12 % 7.70 % Tangible book value per common share $ 14.04 $ 14.34 Nonperforming assets $ 19,670 $ 19,861 The following key issues contributed to the fourth quarter results as compared to the same period in 2012: Net interest income As a result of an environment with weak loan demand and continued low interest rates, the Company experienced significant pressures on interest income. Throughout fiscal year 2013, the declines in loan balances and increased competition in loan pricing has significantly elevated the challenge to improve or maintain loan yield. For the quarter, the Company s asset yield declined to 4.39% from 4.58% during the same period in 2012. However, the Company has been able to hold net interest income steady and expand its net interest margin. During the quarter, the Company recognized approximately $200,000 of interest income on a credit relationship that had been classified as non-accrual. This credit relationship was fully paid off during the quarter. Margin also improved due to the continued decline in the Company s cost of funds. Bank-wide efforts to grow lower cost core deposit relationships have been successful allowing reductions in non-core, wholesale funding and higher cost retail certificates of deposit. The average cost of funds for the quarter was 0.85% compared to 1.11% during the same period in 2012. Non-interest income Non-interest income declined $253,000 during the quarter primarily due to a $383,000 decrease in the Company s gains on sales of loans in the secondary market from the same period in 2012. Long-term interest rates increased substantially over the last six months of 2013, dramatically reducing consumer demand for long-term secondary market mortgage loans. With mortgage interest rates expected to remain near or higher than current levels, management anticipates that secondary market income will remain a significant challenge compared to income recognized in recent quarters. Offsetting the decline in mortgage income was an increase of $73,000 in service charges and debit/credit card income compared to the same period in 2012. Non-interest expense Non-interest expense decreased $499,000 over the prior year quarter. First, the Company received proceeds on an insurance claim relating to a loss on deposit accounts recognized in the first quarter of 2013 ($231,000). As of December 31, 2013, the Company received a total of $291,000 on its claim representing $217,000 of the previously recognized loss plus $74,000 in reimbursable expenses incurred throughout 2013. These amounts were recognized as an offset to non-interest expense to the extent they were incurred in 2013. Also, impacting the quarter over quarter results were losses recognized during the fourth quarter of 2012 for settlements of two investor indemnification claims associated with six secondary market loans. Total 2012 expenses incurred on the settlements were $147,000. Provision for loan loss expense and allowance for loan losses Based on its reserve analysis and methodology, the Company recorded a provision for loan loss expense of $700,000 during the quarter, an increase from the $350,000 recognized in the prior year quarter. In addition to the provision for loan loss expense of $700,000 recorded by the Company, loan charge-offs of specific loans (classified as nonperforming) exceeded recoveries by $1,371,000 during the quarter. Also, the Company experienced a decline in loan balances during fiscal year 2013 that reduced allowance for loan loss reserve requirements. The allowance for loan losses as of December 31, 2013 was 1.65% of gross loans outstanding (excluding mortgage loans held for sale) compared to 1.84% as of December 31, 2012. Management believes the allowance for loan losses is at a level to be sufficient in providing for potential loan losses in the Bank s existing loan portfolio. Capital At December 31, 2013, as compared to December 31, 2012, stockholders equity decreased $513,000, with a corresponding reduction in book value per common share by $0.30 to $14.04. This is due to a few factors. First, stockholders equity increased due to $4.4 million in net income after preferred stock dividends and accretion. However, other factors reduced stockholders equity. In May 2013, the Company completed a $2 million repurchase of the warrant issued to the Treasury in 2009 as part of the CPP. The Treasury no longer has any equity interest in the Company which eliminates any potential stockholder dilution that would have occurred had the warrant been exercised rather than repurchased. Additionally, as a result of increases in market interest rates on many debt securities during the second and third quarters of 2013, the banking industry has experienced a sharp decline in the value of its investment portfolios. The Company s unrealized gains on available-for-sale securities declined $3.3 million at December 31, 2013 as compared to December 31, 2012. Despite the reduction in stockholders equity, the Company s tangible common equity as a percentage of tangible assets increased 27 basis points to 6.19% at December 31, 2013 compared to 5.92% at December 31, 2012. Also, the regulatory capital ratios for both the Company and the Bank remain strong and well above regulatory requirements. 2013 Nonperforming assets The Company reduced its nonperforming assets to $19.7 million as of December 31, 2013 as compared to $22.5 million at September 30, 2013. The balance at December 31, 2013 is also a decline of $200,000 from its level at December 31, 2012. Nonperforming assets as a percentage of total assets was 3.17% as of December 31, 2013 compared to 3.52% as of September 30, 2013 and 3.01% as of December 31, 2012. Reducing nonperforming assets will continue to be a significant focus of the Company. 2014 Nonperforming Assets Update Following the end of 2013, the Company significantly reduced its nonperforming assets due to the payoff of a $3.7 million non-accrual loan relationship. If this had occurred in 2013, on an adjusted basis at year end, nonperforming assets would have been reduced to $16.0 million compared to $19.7 million at year end, representing a decline of approximately 19% from the year end. Nonperforming assets as a percentage of total assets would have been approximately 2.58% compared to the actual 3.17% as of December 31, 2013. From the payoffs and the collection of accrued interest, in January the Company has recognized $335,000 of income from the transactions. Corporate Information Our principal executive offices are located at 1341 West Battlefield, Springfield, Missouri 65807, and the telephone number is (417) 520-4333. Our website is www.gbankmo.com. The information on our website does not constitute a part of, and is not incorporated by reference in, this prospectus. Our common stock trades on the Nasdaq Global Market under the ticker symbol GFED. The Offering Common stock offered shares ( shares if the underwriter exercises its over-allotment option in full). Common stock outstanding after the offering (1)(2) shares ( shares if the underwriter exercises its over-allotment option in full). Net proceeds The net proceeds of this offering to us will be approximately $ million after deducting underwriting discounts and commissions and the offering expenses payable by us. The amount of net proceeds will be approximately $ million if the underwriter exercises its over-allotment option in full. Use of proceeds We intend to use the proceeds of the offering to redeem all of the Series A Preferred Stock, and to use the remainder for working capital and for general corporate purposes, including to support organic growth and, potentially, acquisitions in the future to expand our market area or product offerings. We intend to repurchase our Series A Preferred Stock through the exercise of the redemption right that we have under the terms of the Series A Preferred Stock. Any redemption of the Series A Preferred Stock by the Company would require regulatory approval. We can make no assurances as to when, or if, we will receive such approvals. The redemption of the Series A Preferred Stock will require the use of $12.0 million which is the aggregate liquidation value of the 12,000 shares outstanding, which amount does not include the accrued dividends thereon to be paid through the date of redemption which cannot be calculated until the date of redemption is known. We intend to use the remaining proceeds of this offering for working capital and for general corporate purposes. If we were to conclude that we will not receive such approvals within a reasonable period of time, then we may decide to use the proceeds of this offering that would otherwise have been used for the repurchase of the Series A Preferred Stock, instead for working capital and for general corporate purposes, including potential future acquisitions. See Use of Proceeds beginning on page 27 below. Dividend policy We are not currently paying any cash dividends on our common stock and our ability to pay cash dividends is limited by the factors described under Dividend Policy beginning on page 29 below. NASDAQ Global Market Symbol GFED
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that 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 FPS, IFUE, Company, we, us and our refer to Fuel Performance Solutions, Inc., a Nevada corporation and its subsidiaries, including Interfacial Technologies (UK) Limited. Overview Fuel Performance Solutions, Inc., formerly known as International Fuel Technology, Inc., (the Company or FPS ) is a fuel performance enhancement technology company transitioning to a commercial enterprise. We believe fuel environmental regulations will likely result in increased demand for additive products to help offset adverse fuel performance and engine impacts resulting from these regulations. We believe our products and technology are positioned to benefit from this macro environment by offering fuel performance enhancement solutions that specifically address these macro developments and trends. Where You Can Find Us Our principal executive office is located at 7777 Bonhomme Avenue, Suite 1920, St. Louis, Missouri 63105. Our telephone number is (314) 772-3333 and fax number is (314) 863-6900. Our website is: http://www.fuelperformancesolutions.com/. THE OFFERING Securities offered 26,224,917 shares of Common Stock consisting of: (1) 11,500,000 shares of Common Stock underlying the Company s 10% senior convertible notes; (2) 6,666,667 shares of Common Stock underlying the Warrants; (3) an aggregate of 7,258,250 of Common Stock issuable upon exercise of warrants pursuant to certain piggy-back registration rights agreements; and (4) an aggregate of 800,000 shares of Common Stock issuable upon exercise the Placement Agent Warrants. Common stock outstanding before the offering: 202,675,382* Common stock outstanding after the offering: 202,675,382* Termination of the offering: The offering will conclude upon such time as all of the Common Stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act, or any other rule of similar effect. OTCBB trading symbol: IFUE 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. We could, however, receive up to $800,000 net of fees to a placement agent, in the event the Warrants are exercised for cash (notwithstanding that such Warrants have a cashless exercise feature). We will use the proceeds from the exercise of the Warrants for general corporate purposes, which may include, among other things, our working capital needs and other general corporate purposes. Risk factors: The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See Risk Factors beginning on page 8. ___________ *does not include Common Stock underlying any convertible notes, warrant or option, including ones offered in this registration statement.
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+S-1/A 1 pncr080614s1a.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 5 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ACOLOGY, INC. (Exact name of Registrant as specified in its charter) Florida (State or other jurisdiction of incorporation or organization) 3085 (Primary Standard Industrial Classification Code Number) 65-0207200 (I.R.S. Employer Identification Number) 912 Maertin Lane Fullerton, CA 92831 Phone: (661) 510-0978 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) Curtis Fairbrother Chief Executive Officer 912 Maertin Lane Fullerton, CA 92831 Phone: (661) 510-0978 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: Barry J. Miller, Esq. 13321 Ludlow St. Huntington Woods, MI 48070 Phone: (248) 232-8039 As soon as practicable after this Registration Statement becomes effective (Approximate date of commencement of proposed sale to the public) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered2 Proposed Maximum Offering Price Per Share Proposed Maximum Offering Price Registration Fee Common Stock, par value $0.00001 per share1 700,000,000 $0.023 $14,000,000 $1,803.20 1Represents outstanding shares of common stock offered for resale by the selling shareholders named herein. 2Pursuant to Rule 416 under the Securities Act, the shares of common stock offered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of anti-dilution provisions, stock splits, stock dividends, recapitalizations or other similar transactions. 3Estimated pursuant to Rule 457(a) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee, based on the sales price for the common stock of the Registrant in the private placement described in this Registration Statement, as there is currently no public market price for the Registrant s common stock. The Registrant hereby amends this Registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ACOLOGY, INC. 700,000,000 Shares of Common Stock This Prospectus relates to the resale of up to 700,000,000 shares of the common stock, par value $0.00001 per share, of Acology, Inc., a Florida corporation ( Common Stock ), by the selling shareholders. As of the date of this Prospectus, the Common Stock will be quoted on and traded over the market maintained by OTC Markets Group Inc. known as "OTC Pink" ("OTC Pink") under the symbol ACOL. Acology has applied to OTC Markets Group Inc. to have the Common Stock quoted on its "OTCQB" tier ("OTCQB"). As described below, there have been minimal recent public quotations of the Common Stock. For at least 10 years, there has been no active public market for the Common Stock, and the shares are being offered in anticipation of the development of a secondary trading market. For information as to bid and trading prices for the Common Stock since January 1, 2012, see Market Price, Dividends and Related Shareholder Matters on page 35. The price to the public at which the selling shareholders will offer their shares will be $0.02 per share unless and until until the Common Stock is quoted on OTCQB; when and if the Common Stock is quoted on OTCQB, the selling shareholders will offer their shares at prevailing market prices; the selling shareholders may also sell their shares in negotiated transactions. The selling shareholders reserve the right to accept or reject, in whole or in part, any proposed purchase of shares. The selling shareholders will pay any underwriting discounts and commissions. We will not receive any proceeds from sales of shares of Common Stock by the selling shareholders and we will bear all costs associated with the registration of their shares under the Securities Act of 1933, as amended, (the "Securities Act"), other than any selling shareholder s legal or accounting costs or commissions. Acology is an emerging growth company, as that term is defined in section 2(a)(19) of the Securities Act. we are not a blank check company and have no current plans or intentions to engage in an acquisition, merger or other combination with an entity in an unrelated industry following this offer INVESTING IN THE COMPANY S SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS IN THIS PROSPECTUS BEGINNING ON PAGE 4 FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR COMMON STOCK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with information that is different from that contained in this Prospectus. The selling shareholders are offering to sell and seeking offers to buy shares of the Common Stock only in jurisdictions where offers and sales are permitted. The information contained in this Prospectus is accurate only as of the date of this Prospectus. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this Prospectus nor any distribution of securities in accordance with this Prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this Prospectus. The date of this Prospectus is August__, 2014. PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this Prospectus. This summary does not contain all of the information that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes, before you decide whether to invest in the Common Stock. If you invest in the Common Stock, you are assuming a high degree of risk. See the section entitled Risk Factors. References to our, we, us, or the Company our Company, refer to Acology, Inc. and its subsidiary, unless the context requires otherwise "Acology" refers to Acology, Inc. D&C refers to D&C Distributors LLC, a California limited liability company and our wholly owned subsidiary. Overview Through D&C, we are in the business of designing, manufacturing, branding and selling proprietary plastic medical grade containers that can store pharmaceuticals, herbs, teas and other solids or liquids, some of which can grind solids and shred herbs. While some of our marketing to date has related to the use of these containers for marijuana-related purposes, we have recently received child safety certification for our 20-dram container and we plan to focus our marketing efforts on drug stores and drug store chains, veterinarians and veterinary distributors and other distributors and end users. For more detailed information as to our business and our plans to develop it, see Description of Business, which begins on page 23. Acology s operating subsidiary, D&C, which Acololgy acquired on March 28, 2014, commenced operations on January 29, 2013. The address of the Company is 912 Maertin Lane, Fullerton, CA 92831 and its telephone number is (661) 510-0978. Our audited financial statements for the year ended December 31, 2013, include only the period commencing with the inception of D&C on January 29, 2013, and do not include any historical financial data of Acology, which was incorporated on September 5, 1997, ceased doing business in 2002 and remained dormant until it acquired D&C in the merger that is discussed under the caption "Prospectus Summary – Our History – the Merger" on page 2. Accordingly, these financial statements are those of D&C. Our unaudited financial statements as of the quarter ended March 31, 2014, show our consolidated results for that period and have been prepared on the basis that D&C was the accounting acquirer in the merger which is discussed under the caption Prospectus Summary Our History The Merger on page 2. Potential investors in the Common Stock should consider, in addition to the Risk Factors commencing on page 4, the fact that Acology has pledged all of the membership units in its operating subsidiary, D&C, for the payment of a convertible promissory note in the principal amount of $400,000, of which $40,000 has been prepaid and of which $360,000 is due in full on March 4, 2015. We are presently unable to repay this promissory note and, unless we are able to develop sufficient revenues and/or obtain sufficient financing, we will be unable to repay the convertible promissory note when due. In that event, the lender could foreclose on and sell all of the membership units in D&C, through which we are required to conduct all of our operations, in order to satisfy, as a whole or in part, the indebtedness outstanding under the convertible promissory note, with the result that Acology would be left with no operations and the shareholders would lose all, or substantially all, of their investment. This note also contains restrictive convenants which limit our ability to make acquisitions and issue publicly traded securities. For further information on the convertible promissory note, the circumstances under which it was issued, certain risks associated with it and the pledge, see Directors, Executive Officers, Promoters and Control Persons Related Party Transactions Exchange Transaction on page 37. We have a history of net losses. As of March 31, 2014, our accumulated deficit was $366,384. Potential investors in the Common Stock should consider that our two officers and directors beneficially own 85% of the outstanding Common Stock and therefore will exercise significant control over the company and all matters requiring the approval of shareholders. There is no established public trading market for the Common Stock. Table of Contents-1- Our History Prior to the Merger Acology was incorporated on September 9, 1997, in the State of Florida under the name of Synthetic Flowers of America, Inc. ( Synthetic Flowers ) for the purpose of producing and selling silk flowers. On February 15, 1999, Acology amended its articles of incorporation to (i) change its corporate name to Pinecrest Investment Group, Inc., (ii) to increase the aggregate number of shares of common stock that it was authorized to issue be increased to 100,000,000 shares, $.001 par value per share, and (iii) to authorize 25,000,000 shares of preferred stock, $.001 par value per share. On January 10, 2000, Acology s Board of Directors approved a 5-for-4 forward stock split for shareholders of record on December 31, 1999, with any fractional shares being rounded up to the next whole share. On January 26, 2000, Acology amended its Articles of Incorporation (i) to reduce the number of the authorized shares of common stock to 50,000,000, (ii) reduce the number of authorized shares of preferred stock to 10,000,000 shares, (iii) provide that shares of preferred stock would have no par value and (iv) provide that the preferred stock would be issuable in series. Acology ceased doing business in 2002. On or about October 23, 2008, Acology, was placed in receivership by order of the Circuit Court of the 13th Judicial Circuit in and for Hillsborough County, Florida. As a result, (i) Brian K. Goldenberg was appointed receiver of Acology and (ii) pursuant to his powers as receiver, he appointed Mark Rentschler as its president and sole director, replacing its existing president and directors, who had abandoned their duties as such for several years. The receivership was closed on February 10, 2009. Mr. Rentschler received 35,000,000 shares of Acology s common stock for his services in these capacities. On October 27, 2009, Mr. Rentschler resigned as President and sole director of the Acology and appointed Mark Astrom, the son of Richard S. Astrom, as its president and sole director. On or about February 17, 2009, Green Fusion Corp., a corporation all of whose shares are owned by Richard S. Astrom, who served as president and sole director of the Acology from January 1, 2012, until March 4, 2014, acquired the above mentioned 35,000,000 shares of common stock from Mr. Rentschler, which gave Mr. Astrom control of Acology. On January 1, 2012, Mark Astrom resigned as President and sole director of Acology and appointed Richard S. Astrom as its President and sole director. On July 5, 2012, Acology amended its Articles of Incorporation to increase the number of the authorized shares of its common stock to 3,000,000,000. Immediately prior to the merger described below, Acology was a nonreporting shell company. The Merger December 24, 2013, Acology, PNCR, Acquisition, LLC, a California limited liability company and the wholly-owned subsidiary of the Company ( Merger Sub ), and D&C entered into an Agreement and Plan of Merger under which, among other things, Merger Sub would be merged with and into D&C, with the result that D&C would be the surviving entity and become the wholly owned subsidiary of Acology. Table of Contents-2- On March 4, 2014, the closing under the Merger Agreement took place and on March 28, 2014, D&C and Merger Sub filed the merger certificate with the Secretary of State of the State of California. As a result of the Merger, Acology is no longer a shell company. In connection with the Merger, Acology issued 3,846,000,000 shares of Common Stock to Curtis Fairbrother and Douglas Heldoorn, the holders of all of the membership units in D&C, who thereby became Acology s controlling shareholders. Upon the closing of the Merger, Richard Astrom resigned as Acology s sole director and president and Messrs. Fairbrother and Heldoorn became its officers and directors. Also in connection with the Merger: On March 4, 2014, Acology completed a private placement with 3 investors, who are the selling shareholders under this Prospectus (the Private Placement ) of 700,000,000 shares of Common Stock for proceeds of $40,000 in cash. The price paid by each investor was $0.000571429 per share. Acology also entered into Registration Rights Agreements with these investors, under which Acology was obligated to file the registration statement under the Securities Act of which this Prospectus forms a part covering the shares issued in the Private Placement (the Registration Statement ) and to use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible. The Registration Rights Agreements did not provide for penalties, whether cash or otherwise, for failure to file the Registration Statement or for delays in registering the Common Stock. For further information about the participation of a corporation owned by Richard S. Astrom, our president and sole director until March 4, 2014, in the Private Placement, see "Directors, Executive Officers, Promoters and Control Persons - Related Party Transactions - Private Placement" on page 38. Prior to the Merger, Richard S. Astrom, Acology s president and sole director, entered into an Exchange Agreement with Acology, under which 35,000,000 shares of the Common Stock owned by Green Fusion Corp. and $151,269 of Acology s indebtedness to him were exchanged for the proceeds of the Private Placement and a secured convertible promissory note of Acology payable to him in the principal amount of $400,000 and bearing interest at the rate of 0.28% per annum. The convertible promissory note is due March 4, 2015, is subject to acceleration in the event of certain events of default, contains certain restrictive covenants and is secured by a pledge of all of the shares of common stock of D&C. If an event of default, including failure to pay the convertible promissory note when due, occurs, the unpaid principal amount of the convertible promissory note and the interest accrued thereon will be convertible as a whole or in part from time to time into an indeterminate number of shares of Common Stock at a conversion price per share equal to 50% of the average of the daily closing prices for a share of Common Stock for the three (3) consecutive trading days ending on the trading day immediately prior to the day on which the convertible promissory note is delivered for conversion. For further information respecting the convertible promissory note, certain risks associated with it and the pledge, see Prospectus Summary Overview on page 1, and Directors, Executive Officers and Control Persons Related Parties Exchange Transaction on page 37. On January 9, 2014, Acology amended its Articles of Incorporation (i) to change its corporate name to Acology, Inc., (ii) to increase the number of the authorized shares of common stock to 6,000,000,000 and (iii) to reverse split its common stock on the basis of 1 new share for 1,000 existing shares. The reverse stock split was applicable to shares held by shareholders of record on February 14, 2014, and was implemented on that date. As a result of the Merger, we are in the business of designing, manufacturing, branding and selling proprietary plastic medical grade containers that can store, and grind and shred, pharmaceuticals, herbs, teas and other solids or liquids. For more detailed information as to our business and our plans to develop it, see Description of Business, which begins on page 23. The Company s corporate structure is as follows: Acology, Inc. (a Florida corporation) D&C Distributors LLC1 (a California limited liability company) (100% owned) Table of Contents-3- 1.All of the membership units in D&C have been pledged to secure indebtedness of Acology, Inc. For further information respecting this indebtedness and this pledge, see Prospectus Summary Overview on page 1 and Directors, Executive Officers, Promoters and Control Persons Related Party Transactions Exchange Transaction on page 37. As of the date of this Prospectus, the Common Stock will be quoted on and will be traded over OTC Pink under the symbol ACOL. The Company intends to apply to be quoted on and traded over OTCQB and when and if its application is granted, it will be quoted and traded under that symbol. The information contained in this Prospectus, together with the additional information contained in the registration statement of which this Prospectus forms a part, is intended to constitute Form 10 Information, as that term is defined in Rule 144 promulgated by the under the Securities Act.
\ No newline at end of file
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+PROSPECTUS SUMMARY
+ 
+ This summary highlights information contained throughout this prospectus and is qualified in its entirety to the more detailed information and financial statements included elsewhere herein. This summary may not contain all the information that may be important to you. We are an emerging growth company under the federal securities laws and will therefore be subject to reduced public company reporting requirements. Before making an investment decision, you should read carefully the entire prospectus, including the information under the "Risk Factors" section and our financial statements and related notes.
+ 
+ Our Business
+ 
+ Eastgate Acquisitions Corporation, a Nevada corporation, was organized on September 8, 1999 for the purpose of engaging in investigating prospective business opportunities with the intent to acquire or merge with one or more businesses. In March 2002, we changed our corporate name to Talavera s Fine Furniture in anticipation of making an acquisition. However, the acquisition was not finalized and in November 2006 we changed our name back to Eastgate Acquisitions. In October 2007, we changed our name to Eastgate Acquisitions Corporation and we continued our search for business opportunities.
+ 
+
+ On May 22, 2012, we finalized the Patent Acquisition Agreement ( Acquisition Agreement ) to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products (collectively referred to as the Acquired Products ).
+ 
+
+ In anticipation of the Acquisition Agreement, on March 6, 2012 we effected a forward stock split of our issued and outstanding shares of common stock on a 7.75 shares for one share basis. Prior to the forward stock split, we had 1.5 million shares of common stock issued and outstanding, which increased to 11,625,000 shares following the split. All further references herein to our common stock shall be on a post-split basis.
+ 
+
+ In exchange for the Acquired Products and related technology we issued at the closing to the seller, Anna Gluskin and/or her assigns, 10 million shares of our authorized but previously unissued common stock on a post-split basis. In addition, the Acquisition Agreement provided for the issuance of an additional 10 million shares of common stock to other persons in consideration for services rendered and/or monies advanced to Eastgate. Those shares were issued to TGT Investments Group Corp. for expenses paid prior to the Acquisition Agreement for product development and for services to the company and in connection with finalizing the Acquisition Agreement.
+ 
+
+ Upon closing the Acquisition Agreement, we became engaged in developing, formulating and ultimately commercializing pharmaceutical and nutraceutical products, food supplements and consumer health products. Our goal is to apply novel technologies to improve the efficacy of the Acquired Products, based on natural or well-established compounds. It is our intention to complete formulation of the Acquired Products and to ultimately market commercialized products and compounds. We are a development stage company in the early phase of research and there is no assurance that we will be able to successfully formulate and commercialize any future products. 
+ 
+
+ Our principal executive offices are presently located at 2681 East Parleys Way, Suite 204, Salt Lake City, Utah 84109 and our telephone number is (801) 322-3401. 
+ 
+
+ Our Strategy
+ 
+
+ Our strategy is to develop novel patentable formulations of pharmaceutical products that can be used for the treatment of various diseases and symptoms. We believe that improving solubility of many biologically active compounds remains a serious problem for modern drug development because limited water solubility negatively affects absorption and, subsequently, bioavailability of these compounds. 1
+ 
+
+ In order to improve the solubility of poorly soluble drugs and explore new methods of delivery of existing drugs, our technologies when fully developed are intended to utilize (i) a self-nanoemulsifying approach for oral or topical use, and (ii) a delivery system with improved solubilization properties of incorporated compounds. 
+ 
+
+ The Offering
+ 
+
+ 
+
+ 
+ Common Stock Offered by the Selling Stockholders: 
+ 16,754,028 shares, including 3,663,000 shares underlying $0.25 warrants 
+
+ Common Stock Outstanding before this Offering: 
+ 49,868,028
+
+ Common Stock Outstanding after this Offering 
+ (assuming exercise of all Warrants):
+ 53,531,028
+
+ 
+
+ Use of Proceeds: 
+ 
+
+ We will not receive any proceeds from the sale of shares in this offering by the selling stockholders.
+
+ Stock Symbol:
+ 
+
+ Our common stock is quoted on the OTCBB under the symbol ESAQ 
+
+ Risk Factors
+ 
+
+ You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the Risk Factors section beginning on page 7 of this prospectus before deciding whether or not to invest in shares of our common stock.
+
+ 
+
+ Emerging Growth Company Status
+ 
+
+ We are an emerging growth company as defined in the Jumpstart Our Business Startups Act, or JOBS Act. For as long as we are an emerging growth company, unlike other public companies, we will not be required to:
+ 
+
+ 
+ 
+ 
+ provide an auditor s attestation report on management s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;
+
+ 
+
+ 
+ 
+ 
+ comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;
+
+ 
+
+ 
+ 
+ 
+ comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission determines otherwise;
+
+ 
+ 
+ 
+ 
+ provide certain disclosure regarding executive compensation required of larger public companies; or
+
+ 
+
+ 
+ 
+ 
+ obtain shareholder approval of any golden parachute payments not previously approved.
+
+ 
+ We will cease to be an emerging growth company upon the earliest of:
+ 
+
+ 
+ 
+ 
+ when we have $1.0 billion or more in annual revenues;
+
+ 
+
+ 
+ 
+ 
+ when we have at least $700 million in market value of our common units held by non-affiliates;
+
+ 
+
+ 
+ 
+ 
+ when we issue more than $1.0 billion of non-convertible debt over a three-year period; or
+
+ 
+
+ 
+ 
+ 
+ the last day of the fiscal year following the fifth anniversary of our initial public offering.
+
+ 
+ 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 have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1), which will allow us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
+ 
+
+ Business Address and Telephone Number
+ 
+
+ Our address is 2681 East Parleys Way, Suite 204, Salt Lake City, Utah 84109 and our telephone number is (801) 322-3401.
+ 
+
+ Selling Stockholders 
+ 
+
+ This prospectus relates to the sale by 41 selling stockholders of a total of 16,754,028 shares of common stock, 3,663,000 of which are issuable upon the exercise of $0.25 warrants. 4,884,000 shares of common stock and 3,663,000 shares of common stock underlying warrants being registered are held by 22 investors who purchased our securities in private placement transactions in March and June of 2014. We received a total consideration of $1,221,000 from the sale of these securities. 2,305,028 shares being registered are held by 11 non-affiliate consultants and vendors who were issued these shares as compensation for services. The 10,852,028 shares held by the investors, non-affiliate consultants and vendors, including the shares underlying the warrants, represent approximately 65% of the shares offered hereby and approximately 22% of our total issued and outstanding common stock. 
+ 
+
+ 
+
+ 5,902,000 of the shares, or approximately 35% of the shares offered hereby and approximately 12% of our total issued and outstanding common stock, are held by 8 affiliates. These shares were issued as compensation for services provided and payment for accrued and unpaid debt.
+ 
+ SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
+ 
+
+ This prospectus contains forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement except where applicable law requires us to update these statements. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information.
+ 
+
+ 
+
+ 4
+ 
+
+ RISK FACTORS
+ 
+
+ An investment in our common stock involves significant risks, and should not be made by anyone who cannot afford to lose his or her entire investment. You should consider carefully the following risks, together with all other information contained in this prospectus, before deciding to invest in our common stock. If any of the following events or risks should occur, our business, operating results and financial condition would likely suffer materially and you could lose all or part of your investment.
+ 
+ Risks Relating to Our Business
+ 
+ Our auditors have issued an unqualified opinion on our financial statements with a going concern paragraph.
+ 
+ Our independent auditors include a modification in their report to our financial statements expressing that certain matters regarding the company raise substantial doubt as to our ability to continue as a going concern. Note 2 to the December 31, 2013 financial statements states that we have not established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. In order to continue as a going concern, we need, among other things, to secure additional capital resources to meet our operating expenses, which we plan to obtain from management and by seeking equity and/or debt financing. However management cannot provide any assurances that we will be successful in accomplishing any of our plans. If we are unable to obtain adequate capital, we could be forced to cease operations. 
+ 
+
+ If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results, which could have a material adverse effect on our share price.
+ 
+
+ Effective internal controls are necessary for us to provide accurate financial reports. We are in the process of documenting and testing our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and related SEC rules. These regulations require, among other things, management to assess annually the effectiveness of our internal control over financial reporting. During the course of this documentation and testing, we may identify significant deficiencies or material weaknesses that we may be unable to remediate before the deadline for those reports. If our controls fail or management or our independent auditors conclude in their reports that our internal control over financial reporting was not effective, investors could lose confidence in our reported financial information and negatively affect the value of our shares. Also, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. 
+ 
+
+ Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting, and will not be required to do so for as long as we are an emerging growth company pursuant to the provisions of the JOBS Act. Please read Summary Emerging Growth Company Status. 
+ 
+
+ We have identified a lack of adequate segregation of duties and absence of an audit committee as a material weakness in our internal controls, which could cause stockholders and prospective investors to lose confidence in the reliability of our financial reporting.
+ 
+
+ We currently have limited segregation of duties among our officers and employees with respect to the preparation and review of financial statements, which is a material weakness in internal controls. If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the company's financial reporting which could harm the trading price of our shares.
+ 
+
+ The company and our independent public accounting firm have identified this as a material weakness in the company's internal controls. The company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist.
+ 
+
+ We have a limited operating history and have not recorded revenues or operating profits since inception. 
+ 
+
+ Although the company was formed in 1999, we have had only limited operations and no revenues since inception. We are deemed a development stage company, which is considered inherently more risky than established companies. Because we have no earnings history and there is no assurance that we will realize future revenues, there is substantial doubt as to whether we will achieve profitability. If we are unsuccessful in the development and commercialization of our proposed products and technology, the negative effect on our business would be substantial and our future would be questionable.
+ 
+
+ We anticipate needing additional financing in order to accomplish our business plan.
+ 
+
+ At June 30, 2014, we had cash on hand of $389,485, mainly comprised of the remaining proceeds from private placement transactions completed in March and June of 2014. Management estimates that we will require approximately an additional $5,000,000 over the next twelve months to fully implement our current business plan. We expect to incur numerous expenses in our efforts to develop and eventually commercialize our proposed products. There is no assurance that we will be able to secure necessary financing, or that any financing available will be available on terms acceptable to us, or at all. Also, any additional offerings of our common stock will dilute the holdings of our then-current stockholders. If necessary, our directors or other stockholders may agree to loan funds to the company, although there are no formal agreements to do so. If we are unable to raise sufficient capital, we would not be able to continue our product development and we would likely have to curtail operations.
+ 
+
+ Our future success depends on our ability to develop products and technology and ultimately generate revenues from their commercialization, which may be subject to many factors. 
+ 
+
+ Our operations to date have been limited to acquiring the Acquired Products and organizing and staffing our company. Our prospective products are in the early stage of development and we have not yet demonstrated the ability to successfully develop and market any products. The potential to generate future revenues and profits from our business depends on many factors, including, but not limited to the following:
+ 
+
+ our ability to secure adequate funding to develop our proposed products and technology into commercially viable products and to obtain regulatory approval of our products;
+ 
+
+ our ability to market those products;
+ 
+
+ the cost and expenses associated with developing products and gaining regulatory approvals;
+ 
+
+ the size and timing of future customer orders, product delivery and customer acceptance, if required; 
+ 
+
+ the costs of maintaining and expanding operations;
+ 
+
+ our ability to compete with existing and new entities that offer the same or similar products; and 
+ 
+
+ our ability to attract and retain a qualified work force as business warrants.
+ 
+
+ There can be no assurance that we will be able to achieve any of the foregoing factors or realize revenues and profitability in the immediate future, or at any time.
+ 
+
+ Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.
+ 
+
+ Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge and, even if not challenged, may not provide us with meaningful protection from competition. Due to ongoing capital needs, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us. 
+ 
+
+ If our patents are determined to be unenforceable or expire, or if we are unable to obtain new patents based on current patent applications or for future inventions, we may not be able to prevent others from using our intellectual property.
+ 
+
+ Our future success will depend in part on our ability to:
+ 
+
+ obtain and maintain patent protection with respect to our products;
+ 
+
+ prevent third parties from infringing upon our proprietary rights;
+ 
+
+ maintain trade secrets;
+ 
+
+ operate without infringing upon the patents and proprietary rights of others; and
+ 
+
+ obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur.
+ 
+
+ We have certain pending patent applications with the United States Patent and Trademark Office, specifically on our Nano E-drops and Anticonvulsant oral spray. We may not be successful in securing final patents on these or other products or be able to maintain or extend the patents if necessary. There can be no assurance that any patents issued to us will not be challenged, invalidated, infringed on or circumvented, or that the rights granted thereunder will provide competitive advantages to us.
+ 
+
+ If we fail to obtain necessary regulatory approvals, we may not be allowed to commercialize our proposed products and we will not generate revenues.
+ 
+
+ Satisfaction of all regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product candidate, and requires the expenditure of substantial resources for research, development and testing. Our research and clinical approaches may not lead to products or drugs that the U.S. Food and Drug Administration ( FDA ) considers safe for humans and effective for indicated uses. The FDA may require us to conduct additional clinical testing, in which case we would have to expend additional time and resources. The approval process may also be delayed by changes in government regulation, future legislation or administrative action or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvals may:
+ 
+
+ delay commercialization of, and product revenues from, our product candidates;
+ 
+
+ impose costly procedures on us; and
+ 
+
+ diminish the competitive advantages that we would otherwise enjoy.
+ 
+
+ In foreign jurisdictions, we may have to receive marketing authorizations from the appropriate regulatory authorities before we can commercialize and market our proposed products. Foreign regulatory approval processes generally include all of the aforementioned requirements and risks associated with regulatory approval in the United States.
+ 
+
+ If we are unable to obtain requisite regulatory approvals, we would be unable to commercialize our products or to realize any future revenues. This would have a material adverse effect on our business and we may be forced to cease operations. 
+ 
+
+ We may not be able to maintain necessary confidentiality of our technology and proprietary information.
+ 
+
+ Patent applications in the U.S. are confidential for a period of time until they are published. Publication of discoveries in scientific or patent literature typically lags actual discoveries by several months. As a result, we cannot be certain that the inventors listed in any patent or patent application owned by us were the first to conceive of the inventions covered by such patents and patent applications, or that such inventors were the first to file patent applications for such inventions.
+ 
+
+ We also may rely on unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position, which we may seek to protect, in part, by confidentiality agreements. Presently, we do not have any such agreements. There can be no assurance, however, that future agreements will not be breached, that we will have adequate remedies for any breach, or that trade secrets will not otherwise become known or be independently discovered by competitors. 
+ 
+
+ Our product development program may not be successful.
+ 
+
+ In addition to the development of the Acquired Products, we expect to pursue development of other potential products in the future. None of our potential pharmaceutical product candidates have commenced clinical trials and there are a number of FDA requirements that we must satisfy in order to commence clinical trials. These requirements will require substantial time, effort and financial resources. We may never satisfy these requirements. In addition, prior to commencing any trials of a drug candidate, we must evaluate whether a market exists for a particular candidate. This is costly and time consuming, and any market studies we rely on may not be accurate. We may expend significant capital and other resources on a candidate and find that no commercial market exists for the drug. Even if we are not required to obtain FDA pre-market approval for our potential product candidates, we will still be subject to a number of federal and state regulations, including regulation by the FDA and the Federal Trade Commission on any marketing claims we make and, we may be unable to satisfy these requirements. As a result, we may never successfully develop and obtain approval to market and sell any of our potential product candidates. Even if we do develop and obtain approval to market and sell such product candidates, we may be unable to compete against the many products and treatments currently being offered or under development by other established, well-known and well-financed cosmetic, health care and pharmaceutical companies.
+ 
+
+ If we are unable to rely upon the FDA s accelerated approval process for certain pharmaceutical products, our plans to market some or all of our proposed pharmaceutical products may be jeopardized severely.
+ 
+
+ We intend to rely upon Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act to obtain approval for certain pharmaceutical products without conducting the full complement of safety and efficacy trials mandated by the FDA. Section 505(b)(2) is available for drugs that are similar or equivalent to ones already approved by the FDA. An applicant may use an original filer s information and rely on published studies to demonstrate the safety and effectiveness of a new drug based on a known compound. This could possibly decrease requirements for preclinical investigations and clinical testing, accelerate the clinical approval process, shorten the time to market, and simplify the steps of the product development process. Initially, we intend to apply our technology only to known compounds previously approved by the FDA. Thus, we believe that Section 505(b)(2) could be available to us, which would likely decrease requirements for preclinical investigations and clinical testing and accelerate the overall approval process for our products. There can be no assurance that any of our proposed products will qualify for 505(b)(2) approval, or that we will be successful in completing the shortened approval process for any pharmaceutical product. Our inability to rely upon Section 505(b)(2) would significantly increase development expenses and approval time for our proposed products, which would negatively affect our business plan and our ability to ultimately market our proposed products.
+ 
+
+ Government agencies may establish and promulgate guidelines that directly apply to our products that may affect the use of our drugs.
+ 
+
+ Government agencies, professional societies, and other groups may establish guidelines that could apply to our potential future products and technologies. These guidelines could address such matters as usage and dose of our products, among other factors. Application of such guidelines could mitigate the potential use of our products.
+ 
+
+ If ultimately approved, there is no guarantee that the marketplace will accept any of our proposed products. If we are not successful in introducing products or if the market does not accept our products, our business, financial position, results of operations and stock price would be materially and adversely affected.
+ 
+
+ Even if we ultimately obtain regulatory approvals for our proposed products, uncertainty exists as to whether the market will accept them. A number of factors may limit market acceptance, including timing of regulatory approvals and market entry relative to competitive products, availability of alternative products, pricing, availability of third party reimbursement and the extent of our marketing efforts. We cannot assure you that any of our products will receive regulatory approval or that any products will achieve market acceptance in a commercially viable period of time, if at all. We cannot be certain that any investment made in developing products will be recovered, even if we are successful in commercialization. To the extent that we expend significant resources on research and development efforts and are not able, ultimately, to introduce successful new products, our business will be materially and adversely affected and the market value of our common stock would decline.
+ 
+
+ We may not become or remain profitable even if our products are approved for sale.
+ 
+
+ Even if we obtain regulatory approval to market our pharmaceutical products or product candidates, many factors may prevent the products from ever being sold in commercial quantities. Some of these factors are beyond our control, such as: 
+ 
+
+ acceptance of the formulation or treatment by health care professionals and patients;
+ 
+
+ the availability, effectiveness and relative cost of alternative treatments that may be developed by competitors; and
+ 
+
+ the availability of third-party (i.e. insurer and governmental agency) reimbursements.
+ 
+
+ We must depend upon others for marketing and distribution of products. It may become necessary to enter into contracts that limit our potential benefits and control we have over our products. We intend to rely on collaborative arrangements with one or more other companies that possess strong marketing and distribution resources to perform these functions for us, although we have not finalized any such agreements to date. In addition, we will not have the same control over marketing and distribution that we would have if we conducted these functions ourselves. 
+ 
+
+ We may not be able to compete with remedies now being marketed and developed, or which may be developed and marketed in the future by other companies.
+ 
+
+ Our products, upon development and commercialization will compete with existing and new therapies and treatments. Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals, research organizations, individual scientists and non-profit organizations are engaged in the development of alternatives to our technologies. Most all of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing drug delivery technologies could enhance our competitors financial, marketing and other resources. Developments by other drug delivery companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can. 
+ 
+
+ If government programs and insurance companies do not agree to pay for or reimburse patients for our pharmaceutical products following their approval, our success will be negatively impacted.
+ 
+
+ Sales of our potential pharmaceutical products in U.S. and other markets, considering such products are approved, will depend in part on the availability of reimbursement by third-party payers such as government health administration authorities, private health insurers and other organizations. Third-party payers often challenge the price and cost-effectiveness of medical products and services. Governmental approval of health care products does not guarantee that these third-party payers will pay for the products. Even if third-party payers do accept our future product, the amounts they pay may not be adequate to enable us to realize a profit. Legislation and regulations affecting the pricing of pharmaceuticals may change before our products are approved for marketing and any such changes could further limit reimbursement. 
+ 
+
+ We face significant product liability risks, which may have a negative effect on our financial condition.
+ 
+
+ The administration of drugs or treatments to humans, whether in clinical trials or commercially, can result in product liability claims whether or not the drugs or treatments are actually at fault for causing an injury. Furthermore, if ultimately approved our pharmaceutical products may cause, or may appear to have caused, serious adverse side effects (including death) or potentially dangerous drug interactions that we may not learn about or understand fully until the drug or treatment has been administered to patients for some time. Product liability claims can be expensive to defend and may result in large judgments or settlements against us, which could have a severe negative effect on our financial condition. 
+ 
+
+ Developments by competitors may render our products or technologies obsolete or non-competitive.
+ 
+
+ Alternative technologies and products similar to ours are being developed by other companies. Some of these products may be in clinical trials or are awaiting approval from the FDA. In addition, companies that sell generic products represent substantial competition. Most competitors have greater capital resources, larger research and development staffs and facilities and more experience in drug development and in obtaining regulatory approvals. These organizations also compete with us to attract qualified personnel and partners for acquisitions, joint ventures or other collaborations. If we are unable to successfully compete with these other companies, our business will be negatively affected.
+ 
+ We are dependent upon our directors, officer and consultants, the loss of any of whom would negatively affect our business.
+ 
+ We are dependent upon the efforts of our directors, officers and consultants to operate our business. Should any of these persons leave or otherwise be unable to perform their duties, or should any consultant cease their activities for any reason before qualified replacements could be found, there could be material adverse effects on our business and prospects. We have not entered into employment agreements with any individuals and do not maintain key-man life insurance. Unless and until additional employees are hired, our attempt to manage our projects and meet our obligations with such a limited staff could have material adverse consequences, including without limitation, a possible failure to meet a contractual or SEC deadline or other business related obligation. 
+ 
+ We may not be able to manage future growth effectively, which could adversely affect our operations and financial performance.
+ 
+ The ability to manage and operate our business as we execute our business plan will require effective planning. Significant future rapid growth could strain management and internal resources that would adversely affect financial performance. We are in the early phase of research and we may not be able to successfully formulate and commercialize any future products. If we do succeed in finalizing and marketing any of our proposed products, we anticipate that potential future growth could place a significant strain on personnel, management systems, infrastructure and other resources. Our ability to manage future growth effectively will also require attracting, training, motivating, retaining and managing new employees and continuing to update and improve operational, financial and management controls and procedures. If we do not manage growth effectively, our operations could be adversely affected resulting in slower growth and a failure to achieve or sustain profitability.
+ 
+
+ Being a public company involves increased administrative costs, which could result in lower net income and make it more difficult for us to attract and retain key personnel.
+ 
+ As a public company subject to the reporting requirements of the Securities Exchange Act of 1934 (the Exchange Act, ) we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the SEC, require changes in corporate governance practices of public companies. We expect these new rules and regulations will increase our legal and financial compliance costs and make some activities more time consuming. For example, in connection with being a public company, we may have to create new board committees, implement additional internal controls and disclose controls and procedures, adopt an insider trading policy and incur costs relating to preparing and distributing periodic public reports. These rules and regulations could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee.
+ 
+
+ The recently enacted JOBS Act reduces certain disclosure requirements for emerging growth companies, thereby decreasing related regulatory compliance costs. We qualify as an emerging growth company as of the date of this offering and may continue to qualify as an emerging growth company for up to five years. However, we would cease to qualify as an emerging growth company if:
+ 
+
+ we have annual gross revenues of $1.0 billion or more in a fiscal year;
+ 
+
+ we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or
+ we become a large accelerated filer , defined by the SEC as a company with a word-wide public float of its common equity of $700 million or more.
+ 
+
+ Upon the occurrence of any of the above, we would not be able to take advantage of the reduced regulatory requirements and any associated cost savings.
+ 
+
+ Risks Relating to the Offering and Ownership of Our Common Stock
+ 
+
+ Our common stock was only recently cleared for trading in the over-the counter market and there can be no assurance that an active public market will develop or that our common stock will continue to be quoted for trading.
+ Our common stock was recently cleared to be quoted and traded in the over-the-counter market under the trading symbol ESAQ . Inclusion on the OTCBB permits price quotations for our shares to be published by that service. However, we do not anticipate a substantial public trading market in our shares in the immediate future. Only companies that report their current financial information to the SEC may have their securities included on the OTCBB. Therefore, we must keep current in our filing obligations with the SEC, including periodic and annual reports and the financial statements required thereby. In the event that we become delinquent in our filings or otherwise lose our status as a "reporting issuer," any future quotation of our shares would be jeopardized.
+ A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Whether stockholders may trade their shares in a particular state is subject to various rules and regulations of that state.
+ The price of our common stock may be affected by a limited trading volume, may fluctuate significantly and may not reflect the actual value of our business. 
+ There may be only a limited public market for our common stock and there can be no assurance that an active trading market will develop or continue. An absence of an active trading market could adversely affect our stockholders ability to sell our common stock in short time periods, or at all. Our common stock has likely to experience in the future significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors, such as our sale of securities in connection with capital raising activities, could cause the price of our common stock to fluctuate substantially. Thus, the price at which shares of our common stock may trade from time to time may not reflect the actual value of our business or the actual value of our common stock.
+ From time to time, we may hire companies to assist us in pursuing investor relations strategies to generate increased volumes of investment in our common stock. Such activities may result, among other things, in causing the price of our common stock to increase on a short-term basis.
+ Furthermore, the stock market generally and the market for stocks of companies with lower market capitalizations and small biopharmaceutical companies, like us, have from time-to-time experienced, and likely will again experience significant price and volume fluctuations that are unrelated to the operating performance of a particular company. 
+ Our stock price is below $5.00 per share and is treated as a penny stock , which places restrictions on broker-dealers recommending the stock for purchase.
+ Our common stock is defined as penny stock under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, and the rules promulgated thereunder. The SEC has adopted regulations that define penny stock to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These rules include the following requirements:
+ broker-dealers must deliver, prior to the transaction a disclosure schedule prepared by the SEC relating to the penny stock market;
+ broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative; 
+ broker-dealers must disclose current quotations for the securities;
+ if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market; and 
+ a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customer s account and information on the limited market in penny stocks. 
+ Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser s written consent to the transaction prior to sale. If our common stock remains subject to these penny stock rules these disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result, fewer broker-dealers may be willing to make a market in our stock, which could affect a shareholder s ability to sell their shares.
+ The stock price of our common stock in the public market may be volatile and subject to numerous factors.
+ Any trading market for our shares will most likely be very volatile and subject to numerous factors, many beyond our control. Some factors that may influence the price of our shares are:
+ our ability to develop our patents and technology into commercially viable products;
+ our ability to achieve and maintain profitability; 
+ changes in earnings estimates and recommendations by financial analysts; 
+ actual or anticipated variations in our quarterly and annual results of operations;
+ changes in market valuations of similar companies;
+ announcements by us or our competitors of significant contracts, new products or drugs, acquisitions, commercial relationships, joint ventures or capital commitments; and
+ general market, political and economic conditions.
+ In the past, following periods of extreme volatility in the market price of a particular company's securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert management's time and attention, which would otherwise be used to benefit our business.
+ Any trading market could be restricted because of state securities Blue Sky laws that prohibit trading absent compliance with individual state laws.
+ Transfer of our common stock may be restricted under the securities laws promulgated by various states and foreign jurisdictions, commonly referred to as Blue Sky laws. Individual state Blue Sky laws could make it difficult or impossible to sell our common stock in those states. A number of states require that an issuer s securities be registered in their state, or appropriately exempted from registration, before the securities can trade in that state. We have no immediate plans to register our securities in any particular state. Absent compliance with such laws, our common stock may not be traded in such jurisdictions. Whether stockholders may trade their shares in a particular state is subject to various rules and regulations of that state.
+ Future operating results are difficult to predict.
+ We will likely experience significant quarter-to-quarter fluctuations in revenues, if any, and net income (loss) in the future. Until we are able to emerge from the development stage, we are not likely to realize any significant revenues and our quarter-to-quarter comparisons of historical operating results will not be a good indication of future performance. It is likely that in some future quarter, operating results may fall below the expectations of securities analysts and investors, which could have negative impact on the price of our common stock.
+ Effective voting control of our company is held by directors and certain principal stockholders.
+ Approximately 64% of our outstanding shares of common stock are held by directors and a small number of principal (5%) stockholders. These persons have the ability to exert significant control in matters requiring stockholder vote and may have interests that conflict with other stockholders. As a result, a relatively small number of stockholders acting together have the ability to control all matters requiring stockholder approval, including the election of directors and approval of other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company. It could also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock.
+ We do not expect to pay dividends in the foreseeable future, which could make our stock less attractive to potential investors.
+ We anticipate that we will retain any future earnings and other cash resources for operation and business development and do not intend to declare or pay any cash dividends in the foreseeable future. Any future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.
+ In the event we issue additional common stock in the future, current stockholders could suffer immediate and significant dilution, which could have a negative effect on the value of their shares.
+ We are authorized to issue 100 million shares of common stock, of which 50,131,972 shares are unissued. Included in this number are 8,997,300 shares reserved for the issuance upon the exercise of warrants. Our board of directors has broad discretion for future issuances of common stock, which may be issued for cash, property, services rendered or to be rendered, or for several other reasons. We also could possibly issue shares to make it more difficult or to discourage an attempt to obtain control of the company by means of a merger, tender offer, proxy contest, or otherwise. For example, if in the due exercise of its fiduciary obligations the board determines that a takeover proposal was not in the company's best interests, unissued shares could be issued by the board without stockholder approval. This might prevent, or render more difficult or costly, completion of an expected takeover transaction.
+ We do not presently contemplate additional issuances of common stock in the immediate future, except to raise addition capital, although we presently do not have an agreement or understanding to sell additional shares. Our board of directors has authority, without action or vote of our stockholders, to issue all or part of the authorized but unissued shares. Any future issuance of shares will dilute the percentage ownership of existing stockholders and likely dilute the book value of the common stock, which could cause the price of our shares to decline and investors in the shares to lose all or a portion of their investment.
+ The existence of warrants, options, debentures or other convertible securities would likely dilute holdings of current stockholders and new investors.
+ As of March 31, 2014, we had 8,997,300 warrants outstanding to purchase the shares of our common stock at the exercise price of $0.25. Presently, there are no other options, warrants or other rights outstanding to purchase our common stock. Management could decide in the future to issue additional convertible securities, such as funding instruments or incentive options to key employees. The issuance of new convertible securities and/or the exercise of outstanding options or convertible securities would further dilute the interests of all of our existing stockholders. Future resale of common shares issuable on the exercise of convertible securities may have an adverse effect on the prevailing market price of our common stock. Furthermore, holders of convertible securities may have the ability to exercise them at a time when we would otherwise be able to obtain additional equity capital on terms more favorable to us.
+ As an emerging growth company, we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. 
+ We are an "emerging growth company," as defined in the JOBS Act. Accordingly, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. Additionally, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to take advantage of the benefits of this extended transition period and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 
+ As long as we are an emerging growth company, we cannot predict if investors will find our common stock less attractive because we may rely on exemptions provided by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
+ 
+ 
+
+ 
+
+ USE OF PROCEEDS
+ 
+
+ The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus.
+ 
+
+ MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS 
+ 
+ Our common stock is quoted on the OTC Bulletin Board under symbol ESAQ.OB . Our shares have been publicly traded since March 4, 2014. Prior to March 2014, there was no public market for our common stock. Also, there can be no assurance that a sustainable public trading market will develop for our common stock. As of the date hereof, there are 102 stockholders of record of our common stock.
+ 
+
+ Penny Stock Rule
+ 
+ It is unlikely that our securities will be listed on any national or regional exchange or The Nasdaq Stock Market in the foreseeable future. Therefore our shares most likely will be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for broker-dealer transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
+ 
+
+ The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: 
+ 
+
+ registered and traded on a national securities exchange meeting specified criteria set by the SEC;
+ 
+
+ authorized for quotation on The Nasdaq Stock Market;
+ 
+
+ issued by a registered investment company;
+ 
+
+ excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or
+ 
+
+ exempted from the definition by the SEC.
+ 
+
+ Broker-dealers who sell penny stocks to persons other than established customers and accredited investors, are subject to additional sales practice requirements. An accredited investor is generally defined as a person with assets in excess of $1,000,000, excluding their principal residence, or annual income exceeding $200,000, or $300,000 together with their spouse. 
+ 
+
+ For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and receive the purchaser's written consent to the transaction prior to the purchase. Additionally, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent to clients disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock and may affect the ability of stockholders to sell their shares.
+ 
+
+ These requirements may be considered cumbersome by broker-dealers and impact the willingness of a particular broker-dealer to make a market in our shares, or they could affect the value at which our shares trade. Classification of the shares as penny stocks increases the risk of an investment in our shares.
+ 
+
+ Rule 144
+ 
+
+ A total of 36,777,000 shares of our common stock presently outstanding and not being registered for resale under this prospectus, are deemed to be restricted securities as defined by Rule 144 under the Securities Act of 1933 (the Securities Act ). Rule 144 is the common means for a stockholder to resell restricted securities and for affiliates, to sell their securities, either restricted or non-restricted control shares. The SEC amended Rule 144, effective February 15, 2008.
+ 
+ Under the amended Rule 144, an affiliate of a company filing reports under the Exchange Act who has held their shares for more than six months, may sell in any three-month period an amount of shares that does not exceed the greater of:
+ 
+
+ the average weekly trading volume in the common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale, or
+ 
+
+ 1% of the shares then outstanding.
+ 
+
+ Sales by affiliates under Rule 144 are also subject to certain requirements as to the manner of sale, filing appropriate notice and the availability of current public information about the issuer. 
+ 
+
+ A non-affiliate stockholder of a reporting company who has held their shares for more than six months, may make unlimited resales under Rule 144, provided only that the issuer has available current public information about itself. After a one-year holding period, a non-affiliate may make unlimited sales with no other requirements or limitations. 
+ 
+ An important exception to the availability of the amended Rule 144 is that Rule 144 is not available for either a reporting or non-reporting shell company, unless the company:
+ 
+
+ has ceased to be a shell company;
+ 
+
+ is subject to the Exchange Act reporting obligations;
+ 
+
+ has filed all required Exchange Act reports during the preceding twelve months; and
+ 
+
+ at least one year has elapsed from the time the company filed with the SEC, current Form 10 type information reflecting its status as an entity that is not a shell company. 
+ 
+ On May 29, 2012, we filed a Form 8-K Current Report announcing that were completed the Acquisition Agreement and that we were no longer considered a shell company. The information included in the Form 8-K was intended to be adequate information that would otherwise be included in a registration statement. Accordingly, our stockholders, both affiliates and non affiliates, are eligible to use Rule 144 since May 29, 2013, one year from the initial filing of the Form 8-K.
+ 
+
+ We cannot predict the effect any future sales under Rule 144 may have on the market price of our common stock, if a market for our shares develops, but such sales may have a substantial depressing effect on such market price.
+ DIVIDEND POLICY
+ 
+ We have not declared nor paid any cash dividend on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant.
+ 
+
+ PLAN OF DISTRIBUTION
+ 
+
+ Commencing the date of this prospectus, selling stockholders identified herein may offer and sell up to 16,754,028 shares of our common stock. The shares will be offered at market prices as it is quoted on the OTCBB, or at privately negotiated prices. The shares are quoted on the OTCBB under the symbol ESAQ . 
+ 
+
+ The term "selling stockholders" includes pledges, transferees or other successors-in-interest selling shares received from the selling stockholders as pledges, assignees, borrowers or in connection with other non-sale-related transfers. This prospectus may also be used by transferees of selling stockholders, including broker-dealers or other transferees who borrow or purchase the shares to settle or close out short sales. Selling stockholders will act independently of the company in making decisions with respect to the timing, manner and size of each sale or non-sale related transfer. We will not receive any of the proceeds from sales by the selling stockholders.
+ 
+ We expect selling stockholders will sell their shares primarily through the over-the-counter at prevailing market prices. Selling stockholders may sell, from time-to-time in, one or more transactions at or on any stock exchange, market or trading facility on which the shares are traded, or in private transactions. Sales may be made at fixed or negotiated prices, and may be affected by means of one or more of the following transactions, which may involve cross or block transactions:
+ 
+
+ 
+ 
+ 
+ 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;
+
+ 
+ 
+ 
+ 
+ settlement of short sales;
+
+ 
+ 
+ 
+ 
+ transactions in which broker-dealers may agree with one or more selling stockholders to sell a specified number of such shares at a stipulated price per share;
+
+ 
+
+ 
+ 
+ 
+ through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or
+
+ 
+ 
+ 
+ 
+ a combination of any of the above or any other method permitted pursuant to applicable law.
+
+ 
+
+ Selling stockholders may also sell shares under existing exemptions under the Securities Act, such as Rule 144 if available, rather than under this prospectus. Each selling stockholder has the sole discretion to not accept any purchase offer or make any sale if they deem the purchase price to be unsatisfactory at a particular time. To the extent required, this prospectus may be amended and supplemented from time to time to describe a specific plan of distribution.
+ 
+ Broker-dealers engaged by selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders or, if any broker-dealer acts as agent for the purchase of shares, from the purchaser in amounts to be negotiated. Selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
+ 
+ In connection with sales of common stock or interests therein, selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales in the course of hedging the positions they assume. Selling stockholders may engage in short sales, puts and calls or other transactions in our shares or derivatives of our securities, and may sell and deliver shares in connection with these transactions.
+ 
+ Selling stockholders and broker-dealers or agents involved in an arrangement to sell any of the offered shares may, under certain circumstances, will be deemed an "underwriter" within the meaning of the Securities Act. Any profit on such sales and any discount, commission, concession or other compensation received by any such underwriter, broker-dealer or agent, may be deemed an underwriting discount and commission under the Exchange Act. No selling stockholder has informed us that they have an agreement or understanding, directly or indirectly, with any person to distribute the common stock. If a selling stockholder notifies us that they have a material arrangement with a broker-dealer for the resale of their shares, we will be required to amend the registration statement, of which this prospectus is a part, and file a prospectus supplement to describe such arrangement.
+ 
+ We have agreed to pay all fees and expenses related to the registration of the common stock, including SEC filing fees. Each selling stockholder will be responsible for all costs and expenses in connection with the sale of their shares, including brokerage commissions or dealer discounts. We will indemnify selling stockholders against certain losses, claims, damages and liabilities, including certain liabilities under the Securities Act.
+ 
+
+ Common shares sold pursuant to this prospectus will be considered freely tradable in the hands of persons acquiring the shares, other than our affiliates.
+ 
+ Selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which provisions may limit the timing of purchases and sales of our common stock by them. The foregoing may affect the marketability of such securities. To comply with the securities laws of certain jurisdictions, if applicable, the common stock will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers.
+ 
+
+ Selling stockholders and others participating in the sale or distribution of the shares offered hereby, are subject to Regulation M of the Exchange Act. With certain exceptions, Regulation M restricts certain activities of, and limits the timing of purchases and sales of shares by, selling stockholders, affiliated purchasers and any broker-dealer or other person participating in the sale or distribution. Under Regulation M, these persons are precluded from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security subject to the distribution until the distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of these limitations may affect the marketability of the shares offered by this prospectus.
+ 
+
+ Except as set forth in the footnotes, no selling stockholder is a broker-dealer or an affiliate of a broker-dealer. 
+ 
+
+ SELLING STOCKHOLDERS
+ 
+
+ We are registering the common stock offered for resale pursuant to this prospectus in order to afford stockholders the opportunity to sell their shares in a public transaction. Selling stockholders are offering up to 16,754,028 shares of our common stock. The following table provides information regarding the beneficial ownership of our common stock being offered by selling stockholders. Each selling stockholder s percentage of ownership depicted below is based on 49,868,028 shares outstanding as of the date of this prospectus. Shares of common stock underlying warrants held by that selling stockholder that are exercisable within 60 days of July 21, 2014 are included. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other selling stockholder. The table includes the number of shares owned beneficially by each selling stockholder, the number of shares that may be offered for resale and the number of shares to be owned beneficially by each selling stockholder after the offering. The table has been prepared on the assumption that all the shares of common stock offered hereby will be sold. 
+ 
+
+ Of the 16,754,028 shares offered, 5,902,000 shares, or approximately 35%, are being offered by 8 stockholders considered to be affiliates, whether as an officer, director, promoter or principal (5%) stockholders. These selling stockholders are as follows: 
+ 
+
+ 
+ Anna Gluskin, Chief Executive Officer and Director 1,344,000 shares
+ Mirjana Hasanagic, President and Director 849,600 shares 
+ Brian Lukian, Chief Financial Officer, Secretary, Treasurer and Director 1,147,200 shares
+ Joseph Schwarz, Chief Scientific Officer 668,000 shares
+ Michael Weisspapir, Chief Medical Officer 668,000 shares
+ Rose Perri, 23.7% shareholder* 1,147,200 shares
+ Anthony Pascual, employee ** 43,000 shares
+ Dinushi Gangodawilage, employee ** 35,000 shares 
+ 
+
+ * Holds investment and voting control of TGT Investments Group Corp. a privately held investment holding company.
+ ** The Company issued 43,000 and 35,000 shares to Mr. Pascual and Mr. Gangodawilage, respectively, in March 2014 for services they had previously provided to the Company as office staff on an independent contractor basis. 
+ 
+
+ 4,884,000 shares and warrants to purchase 3,663,000 shares are held by 22 investors who invested an aggregate of $1,221,000 in two private placements in March and June of 2014. 
+ 
+
+ In computing the number of shares beneficially owned by a selling stockholder and the percentage ownership of that selling stockholder, we have included all shares of common stock owned or beneficially owned by that selling stockholder. Each selling stockholder may offer shares for sale, from time-to-time, in whole or in part. Except where otherwise noted, each selling stockholder named below has, to the best of our knowledge, sole voting and investment power with respect to the shares beneficially owned by them.
+ 
+
+ Any or all of the securities listed below may be retained by any of the selling stockholders and, therefore, no accurate forecast can be made as to the number of securities that will be held by the selling stockholders upon termination of this offering. The selling stockholders are not making any representation that any shares covered by this prospectus will be offered for sale. 
+ The selling stockholders have not had a material relationship with us within the past three years other than as described above or in the footnotes to the table below or as a result of their acquisition of our shares or other securities. 
+
+ 
+ 
+
+ Name
+ Number of
+ Shares Owned(1)
+ Number of Shares
+ Being Registered
+ Number of
+ Shares Owned
+ After Offering
+ Percentage
+ After Offering
+
+ Mirjana Hasanagic 
+ 3,486,800 (2)
+ 849,600
+ 2,637,200(2)
+ 5.3%
+
+ Anna Gluskin
+ 5,852,000 (3)
+ 1,344,000
+ 4,508,000(3)
+ 9.0%
+
+ Rose Perri
+ 12,007,600 (4)
+ 1,147,200
+ 10,860,400(4)
+ 21.8%
+
+ Brian Lukian
+ 2,507,600 (5)
+ 1,147,200
+ 1,360,400(5)
+ 2.7%
+
+ Joseph Schwarz 
+ 3,064,000 (6)
+ 668,000
+ 2,396,000(6)
+ 4.8%
+
+ Bill Abajian
+ 1,265,000 (7)
+ 830,000
+ 435,000(7)
+ 0.9%
+
+ Slava Jarnitskii
+ 1,729,700 (8)
+ 988,400
+ 741,300(8)
+ 1.5%
+
+ Michael Weisspapir 
+ 3,064,000 (9)
+ 668,000
+ 2,396,000(9)
+ 4.8%
+
+ Anson Investments Master Fund LP (10)
+ 700,000(11)
+ 700,000 (11)
+ -
+ 0.0%
+
+ Barry Honig
+ 1,400,000(12)
+ 1,400,000(12)
+ -
+ 0.0%
+
+ Cranshire Capital Master Fund Ltd. (13)
+ 787,500(14)
+ 787,500(14)
+ -
+ 0.0%
+
+ Bibicof Family Trust (15)
+ 350,000(16)
+ 350,000(16)
+ -
+ 0.0%
+
+ Iroquois Master Fund Ltd. (17)
+ 700,000(18)
+ 700,000(18)
+ -
+ 0.0%
+
+ Kingsbrook Opportunities Master Fund LP (19)
+ 700,000(20)
+ 700,000(20)
+ -
+ 0.0%
+
+ Betsy & Michael Brauser Charitable Family Foundation Inc. (21)
+ 700,000(22)
+ 700,000(22)
+ -
+ 0.0%
+
+ Richard Molinsky
+ 175,000(23)
+ 175,000(23)
+ -
+ 0.0%
+
+ Rockmore Investment Master Fund (24)
+ 350,000(25)
+ 350,000(25)
+ -
+ 0.0%
+
+ Sandor Capital Master Fund (26)
+ 875,000(27)
+ 875,000(27)
+ -
+ 0.0%
+
+ The Special Equities Group LLC (28)
+ 700,000(29)
+ 700,000(29)
+ -
+ 0.0%
+
+ Good Energy Services LLC (30)
+ 350,000(31)
+ 350,000(31)
+ -
+ 0.0%
+
+ Valeri Hranovich
+ 14,000(32)
+ 14,000(32)
+ -
+ 0.0%
+
+ Ali McGrogan
+ 140,000(33)
+ 140,000(33)
+ -
+ 0.0%
+
+ Alex Nova Inc. (34)
+ 70,000(35)
+ 70,000(35)
+ -
+ 0.0%
+
+ Karen de la Merced
+ 42,000(36)
+ 42,000(36)
+ -
+ 0.0%
+
+ Damir Hasanagic
+ 80,500(37)
+ 80,500(37)
+ -
+ 0.0%
+
+ Goran Bajic
+ 21,000(38)
+ 21,000(38)
+ -
+ 0.0%
+
+ Bryan Issard
+ 14,000(39)
+ 14,000(39)
+ -
+ 0.0%
+
+ Drinka Uzeirbegovic
+ 14,000(40)
+ 14,000(40)
+ -
+ 0.0%
+
+ Khazak Group Consulting Corp. (41)
+ 69,000 (42)
+ 69,000 (42)
+ -
+ 0.0%
+
+ Leonard Neilson
+ 200,000
+ 200,000
+ -
+ 0.0%
+
+ Robert Nickolas Jones
+ 30,628
+ 30,628
+ -
+ 0.0%
+
+ Michael Theodor
+ 12,000
+ 12,000
+ -
+ 0.0%
+
+ Anthony Pascual
+ 43,000
+ 43,000
+ -
+ 0.0%
+
+ Dinushi Gangodawilage
+ 35,000
+ 35,000
+ -
+ 0.0%
+
+ Anita Kapoor
+ 10,000
+ 10,000
+ -
+ 0.0%
+
+ Merle Conradi Larsen
+ 15,000
+ 15,000
+ -
+ 0.0%
+
+ The Global iGroup (43)
+ 50,000
+ 50,000
+ -
+ 0.0%
+
+ Peter Proszanski
+ 50,000
+ 50,000
+ -
+ 0.0%
+
+ David Himelfarb
+ 50,000
+ 50,000
+ -
+ 0.0%
+
+ Kingston Advisors (44)
+ 350,000(45)
+ 350,000(45)
+ -
+ 0.0%
+
+ Elisa Smilovits
+ 14,000(46)
+ 14,000(46)
+ -
+ 0.0%
+
+ 
+ 
+ 16,754,028
+ 
+ 
+
+ (1) Includes 8,997,300 warrants as if there were exercised.
+ (2) Includes warrants to purchase 637,200 shares of common stock.
+ (3) Includes warrants to purchase 1,008,000 shares of common stock.
+ (4) Includes 1,147,200 shares and warrants to purchase 860,400 shares held by TGT Investments Group Corp., of which investment and voting control is held by Rose Perri.
+ (5) Includes warrants to purchase 860,400 shares of common stock.
+ (6) Includes warrants to purchase 396,000 shares of common stock
+ (7) Includes warrants to purchase 435,000 shares of common stock. 
+ (8) Includes warrants to purchase 741,300 shares of common stock. 
+ (9) Includes warrants to purchase 396,000 shares of common stock
+ (10) Adam Spears, as the director of MSV Advisors, Inc., the advisor of Anson Investments Master Fund LP, is deemed to have investment and voting control over shares held by Anson Investments Master Fund LP. 
+ (11) Includes warrants to purchase 300,000 shares of common stock.
+ (12) Includes warrants to purchase 600,000 shares of common stock.
+ (13) Cranshire Capital Advisors, LLC ( CCA ) is the investment manager of Cranshire Capital Master Fund, Ltd. ( Cranshire Master Fund ) and has voting control and investment discretion over securities held by Cranshire Master Fund. Mitchell P. Kopin ( Mr. Kopin ), the president, the sole member and the sole member of the Board of Managers of CCA, has voting control over CCA. As a result, each of Mr. Kopin and CCA may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by Cranshire Master Fund. 
+ (14) Includes warrants to purchase 337,500 shares of common stock.
+ (15) Harvey Bibicof, as the trustee of the Bibicoff Family Trust, is deemed to have investment and voting control over shares held by the Bibicof Family Trust. 
+ (16) Includes warrants to purchase 150,000 shares of common stock.
+ (17) Iroquois Capital Management LLC ( Iroquois Capital ) is the investment manager of Iroquois Master Fund Ltd. ( IMF ). Consequently, Iroquois Capital has voting control and investment discretion over securities held by IMF. As managing members of Iroquois Capital, Joshua Silverman and Richard Abbe make voting and investment decisions on behalf of Iroquois Capital in its capacity as investment manager to IMF. As a result of the foregoing, Mr. Silverman and Mr. Abbe may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange of 1934, as amended) of these securities held by IMF. Notwithstanding the foregoing, Mr. Silverman and Mr. Abbe disclaim such beneficial ownership. 
+ (18) Includes warrants to purchase 300,000 shares of common stock.
+ (19) Kingsbrook Opportunities Master Fund LP is the investment manager of Kingsbrook Opportunities Master Fund LP ( Kingsbrook Opportunities ) and consequently has voting control and investment discretion over securities held by Kingsbrook Opportunities. Kingsbrook Opportunities GP LLC ( Opportunities GP ) is the general partner of Kingsbrook Opportunities and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Opportunities. KB GP LLC ( GP LLC ) is the general partner of Kingsbrook partners and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Partners. Ari J. Storch, Adam J. Chill and Scott M. Wallace are the sole managing members of Opportunities GP and GP LLC and as a result may be considered beneficial owners of any securities deemed beneficially owned by Opportunities GP and GP LLC. Each of Kingsbrook Partners, Opportunities GP, GP LLC and Messrs. Storch, Chill and Wallace disclaim beneficial ownership of these securities 
+ (20) Includes warrants to purchase 300,000 shares of common stock.
+ (21) Michael Brauser is deemed to have investment and voting control over shares held by the Betsy & Michael Brauser Charitable Family Foundation Inc. These shares are jointly held with his wife. 
+ (22) Includes warrants to purchase 300,000 shares of common stock.
+ (23) Includes warrants to purchase 75,000 shares of common stock.
+ (24) Bruce Bernstein is deemed to have investment and voting control over shares held by Rockmore Investment Master Fund.
+ (25) Includes warrants to purchase 150,000 shares of common stock.
+ (26) John S. Lemak is deemed to have investment and voting control over shares held by Sandor Capital Master Fund. 
+ (27) Includes warrants to purchase 375,000 shares of common stock.
+ (28) Jonathan Schechter is deemed to have investment and voting control over shares held by The Special Equities Group LLC. Based upon representations of the selling stockholder, the Company believes that the selling stockholder acquired the securities identified above in the ordinary course of business and has no agreements or understandings, directly or indirectly, regarding the distribution of these securities. The Special Equities Group LLC is affiliated with a broker-dealer, but is not itself a broker-dealer. Its affiliate Chardon Capital Markets LLC received a finder s fee in connection with our March 2014 private placement. 
+ (29) Includes warrants to purchase 300,000 shares of common stock.
+ (30) Maritch Energy Services, LLC ( Maritch ) and Cottonwood Investments, LLC ( Cottonwood ) are the members of Good Energy Services LLC. Maritch has voting control and investment control over shares held by Good Energy Services LLC. Mr. William Pritchard has voting control over Maritch and Mr. Gary Adams has voting control over Cottonwood. 
+ (31) Includes warrants to purchase 150,000 shares of common stock.
+ (32) Includes warrants to purchase 6,000 shares of common stock.
+ (33) Includes warrants to purchase 60,000 shares of common stock.
+ (34) Aleksandar Novicic is deemed to have investment and voting control over shares held by Alex Nova Inc. 
+ (35) Includes warrants to purchase 30,000 shares of common stock.
+ (36) Includes warrants to purchase 18,000 shares of common stock.
+ (37) Includes warrants to purchase 34,500 shares of common stock.
+ (38) Includes warrants to purchase 9,000 shares of common stock.
+ (39) Includes warrants to purchase 6,000 shares of common stock.
+ (40) Includes warrants to purchase 6,000 shares of common stock.
+ (41) David Khazak is deemed to have investment and voting control over shares held by Khazak Group Consulting Corp.
+ (42) Includes warrants to purchase 150,000 shares of common stock.
+ (43) Brent DeRouen is deemed to have investment and voting control over shares held by The Global iGroup. 
+ (44) William Pritchard is deemed to have investment and voting control over shares held by Kingston Advisors.
+ (45) Includes warrants to purchase 6,000 shares of common stock.
+ (46) Includes warrants to purchase 27,000 shares of common stock.
+ 
+
+ 
+
+ BUSINESS
+ 
+
+ We are primarily engaged in the development of novel formulations of natural compounds and pharmaceutical products. We intend to accomplish this by developing our proprietary self-emulsifying drug delivery systems, predominantly forming nanoemulsions. Although we have not finalized any products and are in the early stages of research, our goal is to be able to develop patentable formulations of pharmaceutical, nutraceutical dietary supplements and consumer health products. 
+ 
+
+ Our self-emulsifying drug delivery technology includes two different approaches that we believe could ultimately improve solubility of poorly soluble compounds and provide new methods of delivery. These perceived approaches consist of (i) a self-nanoemulsifying vehicles for oral or topical use, and (ii) a technological approach intended to improve solubility of incorporated compounds. We expect that our technologies can be applied to products based on natural compounds and well-established pharmaceuticals with known biological activities. 
+ 
+
+ In developing our proposed products, we intend to use modern delivery technologies. Some examples are:
+ 
+
+ nanoemulsification and self-nanoemulsification; 
+ polymer-lipid mixed micelles; and
+ solubility improvement of poorly soluble compounds for molecules with known biological activity and well established safety profiles. 
+ 
+
+ We are presently applying our technology only to known pharmaceutical compounds that have been previously approved by the Food and Drug Administration ( FDA ). Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act permits a company to apply for FDA approval of a New Drug Application ( NDA ) without conducting the full complement of safety and efficacy trials. An applicant under Section 505(b)(2) may use the original filer s information and rely on published studies to demonstrate the safety and effectiveness of the new drug based on a known compound. Because we intend to apply our technology only to previously approved pharmaceutical compounds, we believe that Section 505(b)(2) could possibly be available to us. If we are permitted to use Section 505(b)(2), it would likely decrease requirements for preclinical investigations and clinical testing and accelerate the overall approval time for our products, although there can be no assurance of this. 
+ 
+
+ Some of our proposed products under development are based on existing natural compounds. Many of these proposed products are made of essential oils and plant extracts. Our proposed products comprise excipients listed in the FDA Inactive Ingredients Guide that we believe are safe and approved for human consumption. Additionally, we believe that these proposed products can be manufactured using common equipment. We anticipate that we will be able to apply self-emulsifying technologies for development of a variety of pharmaceuticals and natural products for different applications.
+ 
+
+ In October 2012, our CEO, Anna Gluskin, contributed to the company the corporate entity Eastgate Pharmaceuticals Inc., a Province of Ontario, Canada, corporation, of which Ms. Gluskin was the sole shareholder, officer and director. Thus, Eastgate Pharmaceuticals became and will operate as our wholly owned subsidiary. Initially, we deposited into Eastgate Pharmaceuticals the $100,000 proceeds from a demand promissory note for use by the company. Subsequently in December 2012, Eastgate Pharmaceuticals entered into a a distribution agreement with Mediq Dansmark A/S. We anticipate that we may conduct many of our future operations in Canada through this subsidiary.
+ 
+
+ Glossary of Terms
+ 
+
+ To better understand the information discussed herein, we are including the following description of some of the terms used herein.
+ 
+
+ Bioavailability. A measurement of the rate and extent to which a drug is absorbed into the blood stream. An increase of bioavailability of 50% may allow for a decrease in the necessary dosage of the drug by 1.5 times, subsequently diminishing the side effects.
+ 
+
+ Bioadhesion. A property of a substance to adhere to body tissues and remain there for an extended period of time.
+ 
+
+ Chylomicrons. Chylomicrons are lipoprotein particles formed from digested food lipids, created by the absorptive cells of the small intestine. They transport required lipids to the liver, spleen, cardiac and skeletal muscle tissue, where their content is unloaded by the activity of the enzymes. Chylomicrons have a diameter 
+ 
+
+ 5
+ 
+
+ 
+
+ of 75 to 1,200 nanometers ( nm ). They are released into lymphatic vessels in the small intestine and are then secreted into the bloodstream.
+ 
+
+ Emulsion. A mixture of two liquids that are normally not miscible (unblendable). In oil-in-water emulsion, for example, liquid oil is dispersed in the water with help of surfactant. 
+ 
+
+ Excipient. Generally an inert or inactive material used as a carrier for an active ingredient or drug.
+ 
+
+ Hydrophobic compounds. Compounds that are repelled by water and are usually insoluble in water. Examples of hydrophobic compounds include oils, fats, waxes and greasy substances. The word hydrophobic is constructed of two Greek words; hydro water, and phobe fear, which means something with a fear of water.
+ 
+
+ Homogeneous vehicle of water miscible non-irritating polar solvents and pharmaceutically acceptable surfactants. Relates to efficient vehicle for enhanced local and transdermal delivery of hydrophobic poorly soluble compounds.
+ 
+
+ In situ. Describes the process happening in the moment of combining of two different phases or components. Nanoemulsion forms in situ after combining of SNEDDS (defined below) and water media without use of any special equipment or application of additional force.
+ 
+
+ Micelles and polymer-lipid micelles. A micelle is an aggregate of surfactant molecules, having polar heads and non-polar tails. A typical micelle in aqueous solution forms an aggregate with the hydrophilic "head" regions in contact with while the hydrophobic tails form the micelle core. The driving force for spontaneous micelle formation is the hydrophobic interaction. Combination of some surfactants, lipidic components and polymeric molecules leads to formation of polymer-lipid mixed micelles. These mixed micelles demonstrate high drug loading and improved stability 
+ 
+
+ Nanoemulsion. Nanoemulsion is thermodynamically stable emulsion where two immiscible liquids (water and oil phases) are mixed to form a biphasic system by means of an appropriate surfactants. Nanoemulsion droplet sizes fall typically in the narrow range of 10-200 nm and show narrow size distributions. The use of nanoemulsions as drug carriers show promise for the future of cosmetics, diagnostics, drug therapies, and biotechnology. 
+ 
+
+ Nanoemulsification and self-nanoemulsifying drug delivery system (SNEDDS). Self-microemulsifying drug delivery (SMEDDS) or self-nanoemulsifying drug delivery sysstems (SNEDDS) are homogenous mixtures of natural or synthetic oils, surfactants and, sometimes, one or more biologically active compounds. During combining of self-emulsifying composition with aqueous media, such as saliva, blood, gastrointestinal (GI) fluid and other, a fine oil-in-water (o/w) emulsion with average droplets size smaller than 300 nm, usually in range 10-100 nm forms immediately ( in situ nanoemulsification). Fine oil droplets are absorbed rapidly transmucosally, transdermally or in the gastro-intestinal tract. In contrast to traditional submicron emulsions, SNEDDS are physically stable formulations that are easy to manufacture. Additionally, SNEDDS may improve the rate and extent of drug absorption and pharmacokinetics parameters of lipophilic drugs.
+ 
+
+ Surfactants. A surfactant is a compound that stabilizes mixtures of oil and water by reducing the surface tension at the interface between the oil and water phases. Because water and oil do not dissolve in each other, a surfactant has to be added to the mixture to keep droplets from merging and separating into layers.
+ 
+
+ Product Overview
+ 
+
+ Our goal is to work towards development of novel patentable formulations of pharmaceutical and natural products. The following depicts those products we plan to develop. However, we are in the early stages of research and there is no assurance that we will be able to finalize and market any commercially viable products.
+ 
+
+ Pharmaceutical products in development
+ 
+
+ Lorazepam oral spray intended for treatment of acute seizures and based on our proprietary self-nanoemulsifying composition.
+ Ketoconazole 2% topical ointment intended for treatment of superficial fungal infections and based on use of our proprietary solubilization platform.
+ Metformin chewable/sublingual tablet based on proprietary composition and intended to allow effective taste masking of incorporated Metformin.
+ 
+
+ Natrural products and dietary supplements in development
+ 
+ E-DROPS NANO self-nanoemulsifying composition containing natural essential oils for oral administration.
+ PURALEN - self-emulsifying composition of essential oils for oral administration.
+ GLUCORRECT soft gelatin capsules with combination of plant extract (standardized Banaba leaf extract, containing 18% of Corosolic acid) and lipoic acid in proprietary self-nanoemulsifying composition.
+ URBAN POWER soft gelatin capsules with combination of plant extracts (standardized Ursolic acid from Sage and Banaba leaf extract with 18% of Corosolic acid) in proprietary self-nanoemulsifying composition.
+ VITAMIN D3 NANOEMULSION Nanoemulsion with Cholecalciferol (vitamin D3).
+ CLEANEZZE Hand sanitizer containing essential oil.
+ 
+
+ Business Strategy 
+ 
+
+ Our primary business strategy capitalizes on the growing interest in the following areas:
+ 
+
+ 1. Developing innovative therapeutic products. Our goal is to discover, develop and commercialize innovative therapeutic products into novel dosage forms using our delivery technologies by incorporating existing, poorly soluble compounds having known biological activity and well established safety profiles.
+ 
+
+ 2. Development of novel natural products and dietary supplements. We believe that people are increasingly interested in alternative approaches to health care. We intend to apply our technological approaches to developing natural health products and dietary supplements.
+ 
+
+ Technology and Products
+ 
+
+ Our Technology 
+ 
+
+ Our research is focused on establishing that our technology can improve solubility of poorly soluble drugs. Our technologies are in the early stage of development. Numerous studies will have to be conducted to support our current hypothesis about our technologies. To date, we have done a limited amount of work with our proposed products and do not have sufficient knowledge as to whether any will be successful or our technologies validated. We are partially relying on the research data performed by other scientist that was published in scientific journals. There are no assurances that third party findings will be replicated by our own research in the future. Our proposed products, based on our technology, will have to be supported by our own extensive research that will take a long time and significant resources to accomplish. Some of the relevant findings published in scientific literature used as a basis for our technology and the proposed products are presented below.
+ 
+
+ There are several scientific reviews describing the use of self-emulsifying formulations for improvement of solubility and bioavailability of poorly soluble compounds. Referencing a review by He C-X. et al, (2010), at least 40% of new pharmacologically active chemical entities identified by high-throughput screening have a problem with water solubility. Poor water solubility correlates with numerous issues such as impaired bioavailability and increased cost of drug products. Oral administration of poorly water-soluble drugs can result in low drug dissolution rate and poor absorption in the gastrointestinal tract, whereas intravenous administration of such compounds accompanied by adverse effects and toxic reactions as a result of the precipitation and aggregation of poorly soluble drugs. Therefore, efforts have been made to improve the solubility of the drug candidates. The usual formulation strategy is the conversion of a drug into a salt form by pH adjustment, if possible. If the drug is intrinsically insoluble, there are still various strategies available, such as the use of co-solvents, inclusion complexes, nanosuspensions, micelles, liposomes, polymeric nanoparticles, micro- and nanoemulsions or solid dispersions.2 
+ 
+
+ Kohli K. et al. (2010) describes self-emulsifying drug delivery systems as a vital tool in solving low bioavailability issues of poorly soluble drugs. Hydrophobic drugs can be dissolved in these systems, designed for oral administration. When such system is released in the lumen of the gastrointestinal tract, it disperses to form a fine micro- or nanoemulsion with the aid of gastrointestinal fluid. This leads to in situ solubilization of drug that can subsequently be absorbed dominantly via the lymphatic pathway, bypassing the hepatic first-pass effect. This article presents a scientific body of various published reports on diverse types of self-emulsifying formulations with emphasis on their formulation, characterization and in vitro analysis, with examples of currently marketed preparations.3
+ 
+
+ Chen H. et al., (2011) in the article Nanonization strategies for poorly water-soluble drugs , discusses the use of nanoemulsions for successful oral, topical and ophthalmic application.4 
+ 
+
+ Our nanoemulsion based delivery platform, when fully developed and approved, can be applicable in several types of dosage forms:
+ 
+
+ 1) Liquid formulations for oral administration. Self-nanoemulsifying delivery system applicable for lorazepam oral spray, liquid forms of vitamin D3, nanoemulsion of essential oils (E-drops nano). We believe the technology could eliminate product loss due to adhesion to glass walls or surfaces.
+ 
+
+ 2) Topical formulations containing polar solvents. This approach is intended to improve solubility of poorly soluble compounds and may prevent drug precipitation. For example, solubility of Ketoconazole in the proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation, the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. We plan to use this technology in our proposed topical antifungal composition of Ketoconazole.
+ 
+
+ 3) Oral solid dosage forms. Self-microemulsifying compositions for incorporation of poorly soluble compounds, including plant extracts and natural components along with different lipids or essential oils, into gelatin capsules. The capsule dissolves in the stomach and releases a fine emulsion with biologically active components.
+ 
+ Proposed Products
+ 
+
+ Pharmaceutical prescriptions
+
+ Lorazepam oral spray for emergency treatment of acute seizures
+ 
+
+ Control of prolonged acute severe seizures (Cluster Seizures, Status Epilepticus) usually requires hospitalization and emergency treatment by means of intravenous anticonvulsant drugs. Lorazepam is an approved benzodiazepine drug with known anticonvulsant activity and relatively low level of side effects. Administration of anticonvulsants by routes more convenient than intravenous injection (for example buccal or nasal), has been actively studied, but to the best of our knowledge, to date no buccal or nasal medications have been approved in North America. Accordingly, we believe there is an unmet need for a convenient, fast acting treatment of the acute seizures, particularly in out-of-hospital settings, which does not require parenteral administration.
+ 
+
+ Our proposed Lorazepam oral spray for transmucosal delivery is based on the proprietary waterless self-nanoemulsifying formula, which is designed to prevent precipitation of the active ingredient after contact with saliva. Although in the early stages of research, we believe that the spray, when developed, could provide fast onset of action and enhance drug absorption through the oral mucosa. Our experiments in animals have shown fast onset (3-5 minutes) and effective anti-convulsant action of Lorazepam spray, comparable with parenterally administered Lorazepam injectable solution in the same dose.
+ 
+
+ We expect that when fully developed and tested, the oral spray formulation of Lorazepam will be capable of providing a fast and effective treatment of acute seizures in the hospital, in outpatient settings or in the home. This novel form of the anticonvulsant would be a convenient alternative to injectable Lorazepam for efficient control of epilepsy emergencies. 
+ 
+
+ Lorazepam oral spray is still in the research stage and our goal is to develop it with the following features:
+ 
+
+ Easy and fast non-invasive administration;
+ Fast onset of action;
+ Suitable for self-administration;
+ Can be administered in a hospital or outpatient setting; and
+ Easy and convenient control of delivered doses.
+ 
+
+ 
+
+ Commercialization and potential development
+ 
+
+ Management believes that the large number of annual incidence of epileptic seizures and acute repetitive seizures in the United States creates a potential for Lorazepam spray. Currently, patients with prolonged acute seizures must be transported to a hospital and treated with intravenous infusion of Lorazepam or Diazepam. Due to delay of transportation and late beginning of the treatment, acute seizures can last for extended period, causing brain damage, disability and possibly death. We expect that Lorazepam oral spray, if finalized and made available, could ultimately be used in out-of-hospital settings shortly after a seizure begins. 
+ 
+
+ If initial investigations in animals and optimization of the formulation of transmucosal Lorazepam are successful, the spray could be manufactured for toxicological, safety and pharmacokinetics investigations. Analytical development, product optimization and stability program for the selected dosage form will be carried out in accordance with good laboratory practice (GLP) and good manufacturing practice (GMP) requirements. 
+ 
+
+ Required safety pharmacology and toxicology programs will be conducted using the final formulation in accordance with current regulations. Size and duration of toxicology and safety pharmacology program and clinical development program will be established after meeting with health regulators.
+ 
+
+ The estimated duration of product development is 24 to 36 months for pre-clinical studies, including toxicology and safety pharmacology in accordance with Canadian requirements, with an estimated cost of approximately $6.0 million. Clinical trials can start within three years after the start of the project. Because the proposed product is based on a long approved and well-known drug with good safety profile, and the proposed dosage is in the approved dosage range, we believe that a shortened clinical development could possibly be sufficient for marketing approval in Canada. We estimate the cost of the clinical trials program in Canada to be approximately $13 million. We also believe that Lorazepam oral spray in the U.S. may satisfy development program requirements outlined in Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act. However, there is no assurance that we will be able to use the shortened approval process in Canada or that Section 505(b)(2) will be available in the U.S.
+ We are presently in the research phase of developing formulation of Lorazepam Oral Spray. There is no assurance that the product will be able to reach proposed results and efficacy or be commercially viable.
+ 
+
+ 2% Ketoconazole antifungal ointment
+ 
+
+ Ketoconazole is a synthetic drug used to treat fungal infections. Structurally, Ketoconazole belongs to an Imidazole class of antifungals compounds. Topical preparations of Ketoconazole are used to treat superficial fungal infections of the skin or nails. 
+ 
+
+ We are developing what we believe to be a novel topical formulation of 2% Ketoconazole ointment. Ketoconazole is a drug with very low solubility, but it completely dissolves in a proprietary vehicle in the form of the water washable ointment. Solubility of Ketoconazole in the vehicle for proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. The novel solubilizing formulation prevents Ketoconazole from precipitation on contact with body tissues and a combination of polar solvents retain the drug in an active dissolved state.
+ 
+
+ Commercialization potential and development
+ 
+
+ 2% Ketoconazole gel (Xolegel 2%) is intended for the topical treatment of seborrheic dermatitis and has a retail price of approximately $300 for a 60 gram tube. The efficacy of this alcohol based formulation in treatment of superficial fungal infections is found to be about 25% % (XOLEGEL GEL, 2%, FDA prescription information). We plan to test the ability of our proposed formulation of Ketoconazole, when developed, to demonstrate antifungal activity for susceptible topical fungal strains.
+ 
+
+ Due to the well-known active pharmaceutical ingredient and inactive components used in our formulation of Keteoconazole, we believe 2% Ketoconazole ointment may satisfy development program requirements outlined in Section 505(b)(2) of Federal Food, Drug and Cosmetic Act. We estimate that product development cost in Canada will be approximately $4.5 million for pre-clinical studies, including toxicology and safety pharmacology and will take from 18 to 24 months. Clinical trials can start within 28 to 32 months after commencing the project and will cost approximately $10.0 million to $12.0 million. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.
+ 
+
+ We are presently in the research phase of developing topical formulation of 2% Ketoconazole ointment. There is no assurance that the product will be able to reach proposed results and efficacy.
+ 
+
+ Metformin Chewable Tablets (Taste Masked)
+ 
+
+ Metformin is a widely prescribed drug for treatment of type 2 diabetes. It is available in the United States and Canada by prescription in tablets of 500, 850 and 1000 mg and recommended dose can reach 3000 mg per day. Metformin use is often associated with stomach disturbances such as diarrhea, nausea/vomiting, flatulence, asthena, indigestion and abdominal discomfort. The big Metformin tablet is difficult to swallow and the unpleasant taste prevents patients from chewing the tablets.
+ 
+
+ Our proposed novel taste-masked composition of Metformin is intended to be chewed or administered sublingually as lozenges. We believe this method of administration may be more convenient for patients with difficulties in swallowing. Our investigation has demonstrated good taste-masking properties of tablets, prepared using our proprietary composition and process.
+ 
+
+ Our goal for this proposed product is to develop a patentable tablet formulation and process and that the tablet can be manufactured using standard pharmaceutical equipment. All ingredients are USP/NF or pharmaceutical grade and listed in FDA Inactive Ingredients Guide and Canadian List of Acceptable Non-Medicinal Ingredients. 
+ 
+
+ Because Metformin is a well-known drug, we believe that Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act requirements may be applicable. We have not yet approached any agency regarding the Metformin product and estimate approximately 24 months and $2.0 million to complete formulation development of our proposed Metformin tablets. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.
+ 
+
+ We are presently in the research phase of developing a chewable Metformin tablet. There is no assurance that the product will be able to reach proposed results and efficacy.
+ 
+
+ Natural health products
+ 
+
+ E-drops Nano nanoemulsion of essential oils combination for oral administration
+ 
+
+ An innovative combination of essential oils for maintaining urinary system in healthy conditions was discovered by Dr. Enes Hasanagic, who originated a mixture of several essential oils, given orally. E-drops developed by Dr. Hasanagic have become popular in Central and Eastern Europe.
+ 
+
+ The primary limitation for wide use of this product is a strong astringent taste and some stomach irritation resulting is consumer dissatisfaction. Using a proprietary technology, we are developing a process that can incorporate the essential oils into a self-nanoemulsifying composition, which forms nanoemulsion when added to water. We believe the resulting nanoemulsion will have a more pleasing taste and will reduce the loss of active components due to adhesion to walls of the cup. We have determined that droplet size of the formed emulsion is around 100 to 200 nm. The main active ingredient of the E-drops Nano is Juniper extract in form of steam distilled essential oil. According to CFR 21, Juniper essential oil is a Generally Recognized As Safe ( GRAS ) material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, 310.545 part (8)(ii) of FDA HHS). The properties of Juniper extract are described in scientific literature as a diuretic, carminative and digestive aid. 5 Nano E-drops has received a Natural Product Number from Health Canada (NPN 80030783).
+ 
+
+ PURALENTM: Essential oils combination for oral administration
+ 
+
+ PURALEN is a combination of essential oils, similar to E-drops. PURALEN forms a relatively coarse emulsion upon contact with water (5-100 micrometers as estimated by microsopical examination). PURALEN contains Juniper essential oil. According to CFR 21, Juniper essential oil is a GRAS material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, 310.545 part (8)(ii) of FDA HHS). 
+ 
+
+ GluCorrectTM: Soft gelatin capsules with Banaba extract in self-emulsifying formulation for oral administration
+ 
+
+ We believe that natural products could be a helpful additive to diet and exercise. Several medicinal plants have been studied for potential carbohydrate regulating activity including Lagerstroemia speciosa (Banaba), Eriobotrya japonica (Loquat), Ternstroemia gymnanthera (Japanese Cleyera) and others. One of the bioactive substances found in these plants is Corosolic acid, a sterol type molecule. A study reported in 2006 by Japanese researchers showed that Corosolic acid significantly affects glucose transport across cell membranes. A distinctive feature of Corosolic acid is not only the stimulation of glucose transport, but also possible suppresses the growth of the fat cells. 6 It has been shown in animals that extracts of Lagersrtroemia speciosa activate glucose transport to adipocytes, similar to insulin.7 
+ 
+
+ Animal and human studies as well as in vitro investigations indicate that Banaba leaf extracts demonstrate glucose regulating properties.8 Based on the studies conducted to date, no adverse effects have been reported in animals using either Corosolic acid or standardized Banaba extracts, nor have adverse events been observed or reported in controlled human clinical studies.9
+ 
+
+ We are developing the GluCorrect capsules based on self-nanoemulsifying formulation containing Banaba leaf extract and alpha-Lipoic acid. We are presently in the research phase of developing GluCorrect with the goal of eventually formulating a marketable capsule. There is no guarantee that the product will be able to reach proposed results and efficacy. 
+ 
+
+ URBAN POWERTM: Ursolic acid and Banaba extract combination in soft gelatin capsule for oral administration
+ 
+
+ URBAN POWER soft gelatin capsules will contain a combination of Banaba extract (18% Corosolic acid), pure Ursolic acid extracted from Sage and alpha-Lipoic acid. URBAN POWER will be based on a proprietary delivery system.
+ 
+
+ Ursolic acid is a natural compound, present in apple peels and many edible plants. Animal experiments have shown that ursolic acid reduced adiposity and blood glucose in non-obese mice and also reduces total body weight, white fat, glucose intolerance and hepatic steatosis in high fat-fed mice. 10
+ 
+
+ We are presently in the research phase of developing Urban Power with the goal of eventually formulating a marketable capsule. There is no assurance that the product will be able to reach proposed results and efficacy.
+ 
+
+ Other Proposed Products
+ 
+
+ In addition to the above product candidates, we believe that our technologies can be applied to additional products that could potentially compete with similar products already on the market. Using our existing technologies, we are developing with a goal of commercializing three new products:
+ 
+
+ Vitamin D3, our formulation of Vitamin D in nanoemulsion;
+ 
+
+ V-Clean, a vegetable wash with bactericidal components; and
+ 
+
+ Cleaneeze, a hand sanitizer containing essential oil.
+ 
+
+ None of the company s natural health products contain any new ingredients. All ingredients used in our natural health products are on the list of approved ingredients with the regulatory bodies. The FDA does not require any notification or registration for natural health products or dietary supplements. 
+ 
+
+ Government Regulation - Pharmaceutical products
+ 
+
+ Our research and development activities and the future manufacturing and marketing of our pharmaceutical products are subject to extensive regulation by the FDA in the United States, Health Canada in Canada and comparable designated regulatory authorities in other countries. Among other things, extensive regulations require us to satisfy numerous conditions before we can bring products to market. These regulations are not unique to us and they apply to all competitors in our industry. 
+ 
+
+ The following discussion summarizes the principal features of food and drug regulation in the United States and other countries as they affect our business. 
+ 
+
+ United States
+ 
+
+ All aspects of our research, development and foreseeable commercial activities relating to pharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States. United States federal and state statutes and regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of pharmaceutical products. The regulatory approval process, including clinical trials, usually takes several years and requires the expenditure of substantial resources. 
+ 
+
+ The steps required before a pharmaceutical product may be marketed in the United States include: 
+ 
+
+ Preclinical Development
+ 
+
+ Preclinical development includes laboratory evaluation of product chemistry and formulation, as well as animal studies to assess the efficacy and potential safety of the product. Preclinical safety tests must be conducted by laboratories that comply with government regulations regarding Good Laboratory Practice, or GLP regulations. We plan to conduct and submit the results of preclinical development to the FDA as part of our Investigational New Drug Application ( IND ) prior to commencing clinical trials. We may be required to conduct extensive toxicology studies as part of preclinical development. 
+ 
+
+ The results of these evaluations and tests are then submitted to the FDA, together with manufacturing information, analytical data, and protocols for clinical studies, in an IND, to receive an approval from the FDA that the clinical studies proposed under the IND are allowed to proceed.
+ 
+
+ Clinical trials
+ 
+
+ Based on preclinical testing, an IND is filed with the FDA to begin human testing of the drug. The IND becomes effective, if not rejected by the FDA, within 30 days. The IND must indicate the results of previous experiments, how, where and by whom the new studies will be conducted, the chemical structure of the compound, the possible mechanism of action, any toxic effects of the compound found in the animal studies and how the product is manufactured. All clinical trials must be conducted in accordance with good clinical practice ( GCP ), regulations. In addition, an Institutional Review Board ( IRB ), generally comprised of physicians at the hospital or clinic where the proposed studies will be conducted, must review and approve the IND. The IRB also continues to monitor the study. We must submit progress reports detailing the results of the clinical trials to the FDA at least annually. In addition, the FDA may, at any time during the 30-day period or at any time thereafter, impose a clinical hold on proposed or ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA. In some instances, the IND application process can result in substantial delay and expense.
+ 
+
+ Clinical trials involve the administration of a new drug to humans, under the supervision of qualified investigators using the protocol approved by the FDA and IRB, to establish the safety and efficacy of the product candidate for the intended use. 
+ 
+
+ Clinical trials are typically conducted in three sequential phases (Phase I, Phase II, and Phase III), but the phases may overlap. Phase I clinical trials test the drug on healthy human subjects for safety and other aspects, but usually not effectiveness. Phase II clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the drug for specific purposes, to determine dosage tolerance and optimal dosages, and to identify possible adverse effects and safety risks. When a product has shown evidence of efficacy and acceptable safety in Phase II evaluations, Phase III clinical trials are undertaken to evaluate and confirm clinical efficacy and to test for safety in an expanded patient population at several clinical trial sites in different geographical locations. Clinical trials need to be conducted in compliance with the FDA s Good Clinical Practice requirements.
+ 
+
+ After the completion of clinical trials, if there is substantial evidence that the drug is safe and effective, a New Drug Application ( NDA ) is filed with the FDA. The NDA must contain all of the information on the drug gathered to that date, including data from the clinical trials. NDAs are often over 100,000 pages in length.
+ 
+
+ NDA Submission
+ 
+
+ The results of pre-clinical studies, clinical studies, and adequate data on chemistry, manufacturing and control information to ensure reproducible product quality batch after batch, are submitted to FDA in an NDA to seek approval to market and commercialize the drug product for a specified use. The FDA reviews all submitted NDAs and is governed by the Prescription Drug User Fee Act ( PDUFA ) regarding response time to the application, which is generally 12 months (and shorter for a priority application). It may deny a NDA if it believes that applicable regulatory criteria are not satisfied. The FDA also may require additional clarifications on the existing application or even additional testing for safety and efficacy of the drug. 
+ 
+
+ In such an event, the NDA must be resubmitted with the additional information and, again, is subject to review before filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Federal Food, Drug and Cosmetic Act, the FDA has 365 days in which to review the NDA and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved.
+ 
+
+ The FDA is not bound by the recommendation of an advisory committee. If FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue either an approval letter, or an approvable letter that will likely contain a number of conditions that must be met in order to secure final approval of the NDA. When and if those conditions have been met to the FDA s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. If the FDA s evaluation of the NDA submission or manufacturing facilities is not favorable, the FDA may refuse to approve the NDA or issue a not approvable letter.
+ 
+
+ If the FDA approves the NDA, the drug becomes available for physicians to prescribe. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional post marketing studies, or Phase IV studies, to evaluate long-term effects of the approved drug.
+ 
+
+ Section 505(b)(2)
+ 
+
+ An application under section 505(b)(2) of Federal Food, Drug and Cosmetic Act contains full safety and effectiveness reports, but allows at least some of the information required for approval to come from studies not conducted by or for the applicant. This application can only be used for drugs that are similar or equivalent to the ones already approved by the FDA in an NDA for another company. The applicant does not need to get permission from the original filer to use their information and it allows the applicant to rely on studies published in the scientific literature to demonstrate the safety and effectiveness of new drug. The 505(b)(2) application is intended to encourage sponsors to develop innovative medicines using currently available products by significantly reducing the time and money to bring new application of an old drug to market. There is no assurance that any of our proposed products will satisfy the requirements for Section 505(b)(2) approval, or that we will be successful in completing the shortened approval process for any product. If we are unable to use the 505(b)(2) process, we will experience a significant increase in development expenses and approval time will be considerably longer. This could ultimately preclude the marketing of our proposed products, which could have a serious negative affect to our business plan and potential for future revenues. 
+ 
+
+ Natural Health Products
+ 
+
+ Manufacturing of natural health products for human consumption requires compliance with current GMP regulations. Health Canada Natural Health Products Directorate encourages registration of the natural health products in accordance with current regulations and obtaining a Natural Product Number ( NPN ). We have applied for an NPN for each of our proposed nutraceuticals formulations. Currently we have NPN number for our nanoemulsion formulation for Nano E-drops (NPN 80030783), Vitamin D3 nanoemulsion (NPN 80037273), Hand sanitizer Cleanezze (NPN 80041150), essential oil combination Wartzz-off (NPN 80041153) and vitamin complex Shield-X (NPN 80041141). An application for GluCorrect has been accepted and we expect to receive NPN for Glucorrect and our other proposed products in the foreseeable future. 
+ 
+
+ In the United States, FDA regulates both finished dietary supplement products and dietary ingredients under a different set of regulations than those covering "conventional" foods and drug products (prescription and Over-the-Counter). Under the Dietary Supplement Health and Education Act of 1994 ( DSHEA ), the dietary supplement or dietary ingredient manufacturer is responsible for ensuring that a dietary supplement or ingredient is safe before it is marketed. FDA is responsible for taking action against any unsafe dietary supplement product after it reaches the market. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements. 
+ 
+
+ For European Union ( EU ) countries, Natural Health Products usually can be registered as food supplements . Essential oils nanoemulsion (Nano E-drops) was successfully registered as food supplement in Latvia (registration No. 10352) and placed into the EU database of registered food supplements. It simplifies and accelerates registration and approval of the product in other EU countries. We also have received an import license in Uzbekistan to sell Nano E-Drops in that country. 
+ 
+
+ 
+
+ Marketing and Distribution
+ 
+
+ We plan to market our completed products through collaborative arrangements with companies that have well-established pharmaceutical and nutraceutical health products marketing and distribution capabilities, including expertise in the regulatory approval processes in their respective jurisdictions.
+ 
+
+ Currently we have several NPNs in Canada and registration as food supplement in Latvia (EU) for Nano E-Drops as well as import license for Nano E-Drops in Uzbekistan. 
+ 
+
+ Nutraceuticals have become an important part of mainstream health care. We believe the market for nutraceuticals is growing. Although public awareness of nutraceuticals is increasing, only a small percentage of North Americans actually use nutraceuticals on a regular basis. Thus we believe there is a potential new market for these products for the following reasons:
+ 
+
+ Increased use of nutraceutical products for the over-50 population segment, whose numbers are increasing;
+ Increased awareness that nutraceuticals is an important part of mainstream health care; and
+ Price increases.
+ 
+
+ Marketing Strategies
+ 
+
+ We have formulated a strategy that we believe will differentiate us as a company by: 
+ 
+
+ focusing on science;
+ developing unique nutraceuticals and related products;
+ securing a proprietary position for our products;
+ advertising aggressively and market through all appropriate distribution channels using all professional means; and
+ providing information by a company website to be developed.
+ 
+
+ Following this strategy, we believe we can gain access to many revenue generating channels through classic pharmaceuticals and other health care products. We further believe there are greater consumer demands, market growth potential and both real and perceived usefulness. We can increase market share by reducing market share of competitors. This strategy will capitalize on the market development to date and capture a share of markets held by existing nutraceuticals. The key benefit is that we have carefully chosen products for the pipeline with the intent to maximize the therapeutic value of their discoveries and technology. This strategy requires extensive advertising in mainstream media, including infomercial, interactive TV, direct mail, independent sales reps and educational inserts/newsletters. Product studies will support this marketing strategy. In this context, the company will pursue preliminary inquiries from favored vendors.
+ 
+
+ Management plans to explore new markets for products through strategic positioning. This future strategy will involve developing specialty catalogues, placement on retail shelves of health food stores, educational product inserts/newsletters, media appearances discussing product, and independent sales reps. 
+ 
+
+ We also intend to engage multi-level marketing companies. This strategy would likely involve creating private labels for a large customer. A major component of this strategy is the effect of product identity. This channel of distribution usually requires more price mark-up than the product would tolerate. As of the date hereof, we have not entered into any agreement or understanding with any prospective marketing company.
+ 
+
+ We further intend to keep capital outlay at a minimum by licensing and/or franchising our products to a brand-name company. This strategy would add value to the product in the form of brand name loyalty, manufacturing strength, and a strong sales/service force already in place. 
+ 
+
+ 
+
+ 6
+ 
+
+ 
+
+ Marketing Plan
+ 
+
+ In moving from the start-up stage into the first growth stage, we must identify and match market segments with appropriate distribution channels. Our goal is to expand regionally, both in Canada and the U.S., based on existing markets and consumer profiles. Once we realize regional sales growth and product recognition, we plan to implement a national and international marketing strategy. At such time as we reach this level, management anticipates it will employ a major marketing communications agency. 
+ 
+
+ Our marketing and sales outline is as follows:
+ 
+
+ Marketing Function
+ 
+
+ A complete review and analysis of the proposed product s market.
+ 
+
+ Use of groups conducted with the professional community and general consumers to identify professional and consumer preferences.
+ 
+
+ Based on research results, create a product identity.
+ 
+
+ Form product identity, establish professional and consumer strategic directions, which would affect product design, packaging, advertising, consumer promotion, and product publicity.
+ 
+
+ Develop and launch a marketing plan with all elements and budget for both professional and consumer.
+ 
+
+ Actual implementation of the plan to include product design changes, packaging, advertising, consumer promotion, display, and product publicity.
+ 
+
+ Consider using a sales organization for retail sales and a broker for the remainder of sales.
+ 
+
+ Initially, we intend to focus on marketing our proposed natural health products and on establishing distribution networks. We intend to market products as they become ready for sale, including satisfaction of any regulatory requirements. Initially during the next twelve months, we plan to market only natural products and hope to add new natural products during the next three years. Presently, we do not completed development of any proposed products for commercial marketing. Those products that we believe may be marketable in the next twelve months include the following:
+ 
+
+ E-drops Nano
+ Vitamin D3
+ Cleanezze
+ V-Clean
+ Wartzz-off
+ GluCorrectTM
+ URBAN POWERTM 
+ PURALENTM
+ 
+
+ Our plan is to provide either a finished product or product in bulk to distributors with regulatory support in order to register the product within specific jurisdictions. In December 2012, through our wholly owned subsidiary Eastgate Pharmaceuticals Inc., we engaged Mediq Dansmark A/S to market four of our natural products, Vitamin D3, V-Clean, Cleaneeze and Wartzz-Off. Mediq distributes throughout Scandinavia and approximately 14 countries throughout Europe. The agreement provides that delivery of product will be made against purchase orders issued by Mediq. The company shall acknowledge Mediq s purchase orders within ten business days after receipt, including the requested deliver date. Mediq will endeavour to place orders in minimum volume of 5,000 units per order. 
+ 
+
+ During the next three-year period, we intend to continue development of our proposed pharmaceutical products and carry on our research to satisfy the more stringent requisite pre-clinical and clinical requirements of the regulatory agencies. Because of the uncertainty in regards to funding and uncertainty in regards to regulatory approval, we are unable to precisely estimate when proposed pharmaceutical products will be available for sale. We currently have the development of Lorazepam Oral spray as our top priority, with the development of Metformin tablet and Ketoconazole ointment following shortly thereafter. Because we intend to pursue co-development partners for all our pharmaceutical products to help with funding, product development priorities may change. It is not possible to indicate at this time which pharmaceutical product will be able to be available on the market first.
+ 
+
+ We are presently in discussions with other potential distributors in the United States and Canada. We also intend to introduce products using e-commerce and through our Internet website. We intend to consider other marketing and licensing opportunities with respect to our prospective pharmaceutical products once initial development milestones have been met. 
+ 
+
+ Manufacturing
+ 
+
+ We intend to use third party manufacturers for our products. Currently we have a signed agreement with Nutralab Ltd. (Markham, Ontario) to manufacture several of our products, such as Nano E-Drops, PURALEN, vitamin D3, GluCorrect in soft gelatin capsules and URBAN POWER soft gelatin capsules. The initial batch of 9,000 bottles of Nano E-drops was successfully manufactured, packaged and labelled at Nutralab Ltd. in full compliance with GMP requirements. The agreement was assigned to us by NanoEssential Ltd. as part of the Acquired Products.
+ 
+
+ We have also selected Vesta Pharmaceuticals Ltd. of Indianapolis, Indiana as the manufacturer of chewable tablets, such as GluCorrect (Banaba extract), although we do not have a definitive agreement.
+ 
+
+ Raw Material Supplies 
+ 
+
+ Excipients used in our formulations are available from numerous sources in sufficient quantities for manufacturing purposes. We believe raw materials will be available in sufficient quantities for commercial purposes when required.
+ 
+
+ We also believe future development and marketing partners under licensing and development agreements, if any, will provide, or assist in obtaining, pharmaceutical compounds that are used in products covered under such agreements. 
+ 
+
+ Components used in the production of our consumer products are available from a number of potential suppliers. We have not secured commercial supply agreements with any supplier referenced below as the components are readily available in the commercial quantities.
+ 
+
+ We have selected Citrus and Allied Essences Ltd. of Lake Success, New York as a supplier of Natural essential oils, suitable for oral human consumption (FCC and USP/NF grades). American Lecithin will be the supplier of Lecithin.
+ 
+
+ Compendial high purity oils, acetylated glycerides and pharmaceutically acceptable surfactants are being supplied by Kerry Bio-Science by way of Nealanders International, Inc., Mississauga, Ontario.
+ 
+
+ Grain alcohol is supplied by Commercial Alcohols Inc., Toronto, Ontario.
+ 
+
+ OptiPure (Chemco International/Kenco group), Los Angeles, California and Sabinsa Corp., East Windsor, New Jersey, are suppliers of active natural ingredients.
+ 
+
+ Intellectual Property 
+ 
+
+ Patents are a key determinant of market exclusivity for most branded pharmaceutical products. Protection for individual products or technologies extends for varying periods, in accordance with the expiration dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country. 
+ 
+
+ We have one US patent application for nanoemulsion for oral administration of essential oils (application # 2013/0029978 A1 Medicinal Compositions And Method For Treatment Of Urinary Tract Infections). Several patent applications are in preparation and will be filed in 2013 or 2014 after obtaining of supporting animal experimental data, provided we have sufficient funding. 
+ 
+
+ We also have developed brand names and trademarks for products in all areas. We consider the overall protection of our patent, trademark and other intellectual property rights to be of material value and acts to protect these rights from infringement. 
+ 
+
+ Our long-term success will substantially depend upon our ability to obtain patent protection for our technology and our ability to protect our technology from infringement, misappropriation, discovery and duplication. We cannot be sure that any future patent applications will be granted, or that any patents which we own or obtain in the future will fully protect our position. 
+ 
+
+ Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. We believe that our existing technology and the patents that we hold or for which we have applied do not infringe anyone else's patent rights. We believe our patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues. 
+ 
+
+ We also rely on technological know-how s, composition s trade secrets and other unpatented proprietary information. We will seek to protect this information, in part, by confidentiality agreements with our employees, consultants, advisors and collaborators.
+ 
+
+ Competition
+ 
+
+ Our future success depends, in part, upon our ability to develop products and achieve market share at the expense of existing and more established and future products in the relevant target markets. Existing and future products, therapies, technological approaches or delivery systems will compete directly with our products that are used to treat the same medical conditions. Competing products may provide greater therapeutic benefits for a specific indication, or may offer comparable performance at a lower cost.
+ 
+
+ Management recognizes that competition in the development of novel drug delivery methods and formulations is intense. Several companies work in the field of use of colloidal delivery systems, including nano-and microemulsions. Most competitors have significantly longer operating histories, more advanced technology and greater financial resources. Additionally, most of our competitors have significantly greater experience in
+ 
+
+ developing drugs;
+ undertaking preclinical testing and human clinical trials;
+ obtaining FDA and other regulatory approvals of drugs;
+ formulating and manufacturing drugs; and
+ launching, marketing, distributing and selling drugs.
+ 
+
+ Companies that we are in competition with include, but are not limited to Pfizer, Wyeth, Upsher-Smith Laboratories, Stiefel Laboratories, Merck, BMS, Boston Therapeutics, Biovail and others. We believe that we could possibly compete with these companies because we have several unique methods and novel technological approaches that could potentially allow us to reach proposed targets and develop formulations with improved properties. 
+ 
+
+ Our scientific team is experienced in the field of developing novel types of delivery systems. This experience includes technical transfer and products launch and manufacturing along with patents and patent applications for multiple compositions. 
+ 
+
+ Developments by competitors may render our products or technologies obsolete or non-competitive. Alternatively, competitors may challenge our patents and prevail in a court of law rendering our products unmarketable, even if they are successfully developed, tested and approved.
+ 
+
+ Lorazepam spray
+ 
+
+ We believe that currently there are no approved oral sprays containing lorazepam or other benzodiazepines that could treat severe epileptic seizures and be suitable for use in non-hospital settings. 
+ 
+
+ Pfizer/Wyeth markets an injectable Lorazepam branded ATIVAN that is used to treat severe repetitive seizures (status epilepticus). It is also used before surgeries or procedures to cause drowsiness, decrease anxiety, and cause forgetfulness about the procedure or surgery. This drug may also be used to cause drowsiness in patients who need a tube and machine to help with breathing (intubated), to prevent nausea and vomiting in patients on chemotherapy, and to treat a mental/mood disorder (delirium). Lorazepam is also available in tablet form and form of oral solution to relieve anxiety and promote sleep.
+ 
+
+ Several companies are developing novel, non-injectable, fast acting medicines for treatment of acute seizures. These companies include large and medium size pharmaceutical companies, as well as universities, government agencies and other private and public research organizations. Examples include Upsher-Smith Laboratories, ViroPharma, Valeant Pharmaceuticals International, Medir Pharmaceuticals (The Netherlands). In particular, Upsher-Smith Laboratories, has successfully advanced Midazolam Intranasal Spray through several Phase I and Phase II trials, demonstrating improved control of partial and generalized seizures over placebo. In 2011, Upsher-Smith initiated a global double-blind placebo-controlled Phase III study under a special protocol assessment agreement with FDA. 
+ 
+
+ Currently Diazepam rectal gel 5 mg/ml (Diastat , Valeant Pharmaceuticals International) is the only non-injectable product, approved in the United States and Canada for treatment of cluster seizures. Due to obvious limitations and inconvenience, it is highly desirable to have an alternative non-invasive anti-seizure preparation. We believe that our proposed oral spray of Lorazepam, when fully development and marketed, could satisfy the need in emergency treatment of status epilepticus and acute seizures.
+ 
+
+ 2% Ketoconazole ointment
+ 
+
+ There are a number of preparations currently on the market containing Ketoconazole, including tablets (200 mg), shampoo (1% and 2%), cream (2%), gel (2%) and foam (2%). We consider our direct competition to be 2% Ketoconazole gel from Barrier Therapeutics, Inc. / Stiefel Laboratories, Inc., marketed under the brand name Xolegel , 2% Ketoconazole cream from JSJ Pharmaceuticals marketed under the brand name Kuric , and 2% Ketoconazole foam marketed by Stiefel Laboratories, Inc. under the brand name Extina Foam. Ketoconazole tablets are available in generic form and are marketed by a number of generic drug manufacturers.
+ 
+
+ Topical formulations of Ketoconazole can be used for treatment of seborrheic dermatitis. Topical Ketoconazole is used also for treating ringworm, jock itch, athlete's foot, dandruff, tinea versicolor and other skin fungal infections, susceptible to Ketoconazole. We believe that our proposed Ketoconazole formulation when fully developed and marketed, could provide efficient relief and an acceptable cure rate in the treatment of susceptible infections.
+ 
+
+ Metformin 
+ Metformin hydrochloride oral dosage forms are manufactured by many pharmaceutical companies, such as Merck, BMS, Boston Therapeutics, Biovail, Ranbaxy, Alphapharm, Shionogi and Teva Pharmaceuticals. Recently Boston Therapeutics filed an Abbreviated New Drug Application (ANDA) with FDA for chewable dosage form of Metformin. 
+ 
+
+ Existing oral dosage forms for Metformin (Glucofage ) and generics include tablets (500, 850 and 1000 mg) and oral solution 500 mg/5ml (Riomet ). We believe that there is no sublingual or chewable tablet or lozenge of Metformin available. We further believe that our proposed Metformin sublingual / chewable tablet could possibly improve patient compliance due to masking the unpleasant taste of the drug. There is no assurance that we will be able to obtain FDA approval for the proposed chewable Metformin tablet.
+ 
+
+ Research and Development
+ 
+
+ Following the acquisition of the Acquired Products in 2012, we expended $105,422 during 2012 on research and development and $62,746 during the first six months of 2013. It is our goal to conduct our research programs as necessary funds are available. The specific requirements for our various product candidates are as follows:
+ 
+
+ Pharmaceutical prescriptions
+ Lorazepam oral spray for acute seizures emergency treatment.
+ 2% Ketoconazole ointment for treatment of susceptible skin fungal infections.
+ Metformin Chewable Tablets.
+ 
+ Our three proposed products above are all pharmaceutical prescription products and require the FDA approval process as discussed above. The pre-clinical process could take three years or more and require up to $20 million for each product. We anticipate that we will proceed with the research process as funds are available. We will most likely seek approval first in the U.S. and Canada.
+ 
+ Natural health products (nutraceuticals)
+ E-drops Nano
+ PURALEN
+ VitaminD3 nanoemulsion
+ Cleanezze
+ V-Clean
+ GluCorrect
+ Urban Power
+ Wartzz
+ 
+ We believe that the eight proposed products above are all natural health products and do not require FDA approval as discussed above. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements. We anticipate that all the above products will be available to be marketed in the next 12 months. 
+ Our business plan is to market only natural products in the first fiscal year and add additional new natural products each fiscal year for at least the first three years. The estimated cost of development using our self-emulsifying vehicle delivery system is approximately $200,000 to $500,000 for each product. Our plan is to first complete development of Nano E-drops and PURALEN, followed by Vitamin D3, GluCorrect, Wartzz, Clanezze, V-Clean and Urban Power. We have not made a determination as to the next natural products that we will concentrate efforts, although future development will depend primarily on available funds. 
+ 
+
+ The pharmaceutical prescription products program will commence when we are able to secure funding that is adequate to complete the more comprehensive and costly approval process required for pharmaceutical products. We currently intend to focus on developing and marketing of Lorazepam Oral spray as our top priority. Subsequently, we plan to focus on finalizing development of Metformin and Ketoconazole.
+ 
+ We presently do not have any firm agreement or understanding that will provide adequate funding to execute our business plan, although management continues to explore possible funding opportunities. However, anticipate having products available for sale during 2014 that could provide some cash flow, although there is no assurance that we will realize any proceeds from sales or, that any proceeds realized will be sufficient to execute our business plan. If we are unsuccessful in raising sufficient capital, our timetable for completing development, gaining necessary regulatory approval and marketing our products would be significantly lengthened. 
+ 
+
+ Employees
+ 
+
+ Currently, we have three full time and one part time employee. Our directors and officers are devoting their time to the company in developing our products. Management is presently reviewing the near term possibility of engaging qualified, full-time personnel to assist in developing and marketing our products. We may use non-employee consultants to assist us in formulating a research and development strategy, preparing regulatory submissions, developing protocols for clinical trials, for designing, equipping and staffing future manufacturing facilities and for business development. We may find it necessary to periodically hire part-time clerical help on an as-needed basis.
+ 
+
+ Consultants and advisors usually have the right to terminate their relationships on short notice. Loss of some of these key consultants or advisors could interrupt or delay development of one or more of our products or otherwise adversely affect our business plans.
+ 
+
+ We expect to continue to need qualified scientific personnel and personnel with experience in clinical testing, government regulation and manufacturing. We may have difficulty in obtaining qualified scientific and technical personnel as there is strong competition for such personnel from other pharmaceutical and biotechnology companies, as well as universities and research institutions. Our business could be materially harmed if we are unable to recruit and retain qualified scientific, administrative and executive personnel to support our expanding activities, or if one or more members of our limited scientific and management staff were unable or unwilling to continue their association with us. 
+ 
+ Properties 
+ 
+
+ On October 31, 2012 we entered into a lease agreement for a laboratory facility and office space. The lease has a term of 55 months with an expiration date of May 31, 2017. The lease obligations are $66,619 for 2014, $68,400 for 2015, $68,400 for 2016, and $28,500 for 2017.
+ 
+
+ Legal Proceedings 
+ 
+
+ From time-to-time, we may be involved in various claims, lawsuits, and disputes with third parties incidental to the normal operations of our business. As of the date of this prospectus, we are not aware of any material claims, lawsuits, disputes with third parties or regulatory proceedings that would have a material affect on our company.
+ 
+
+ 
+
+ MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
+ AND RESULTS OF OPERATIONS
+ 
+ The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this prospectus.
+ 
+
+ The following selected comparative financial information has been derived from and should be read in conjunction with the company s financial statements for the years ended December 31, 2013 and 2012 and for the three months ended March 31, 2014 and 2013.
+ 
+
+ 7
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ Year Ended
+ 
+ 
+ Year Ended
+
+ 
+ 
+ 
+ December 31,
+ 2013
+ 
+ 
+ December 31,
+ 2012
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Revenues
+ 
+ $
+ -
+ 
+ $
+ -
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Operating expenses
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Professional fees
+ 
+ 
+ 52,524
+ 
+ 
+ 116,874
+
+ Research and development
+ 
+ 
+ 132,092
+ 
+ 
+ 105,422
+
+ General and administrative
+ 
+ 
+ 1,445,912
+ 
+ 
+ 383,501
+
+ General and administrative
+ 
+ 
+ 25,554
+ 
+ 
+ -
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total operating expenses
+ 
+ 
+ 1,656,082
+ 
+ 
+ 605,797
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Loss from operations
+ 
+ 
+ (1,656,082)
+ 
+ 
+ (605,797)
+
+ Interest expense
+ 
+ 
+ (64,234)
+ 
+ 
+ (17,023)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss
+ 
+ $
+ (1,720,316)
+ 
+ $
+ (622,820)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total assets
+ 
+ $
+ 71,755 
+ 
+ $
+ 104,500 
+
+ Working capital
+ 
+ $
+ (2,398,474)
+ 
+ $
+ (609,008)
+
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ From inception on September 8, 1999 Through March 31, 2014
+
+ 
+ 
+ 
+ 
+ For the Three Months Ended
+
+ 
+ 
+ 
+ 
+ March 31,
+
+ 
+ 
+ 
+ 
+ 2014
+ 
+ 
+ 2013
+
+ Revenues
+ $
+ - 
+ 
+ $ 
+ - 
+ 
+ 
+
+ $
+ 
+
+ -
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Operating Expenses
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Professional fees
+ 
+ 49,906 
+ 
+ 
+ 3,586 
+ 
+ 219,304
+
+ 
+ Research and development
+ 
+ 117,697
+ 
+ 
+ 37,995
+ 
+ 
+ 355,211
+
+ 
+ General and administrative
+ 
+ 809,538
+ 
+ 
+ 113,689
+ 
+ 
+ 2,743,149
+
+ 
+ Marketing and selling
+ 
+ 4,960
+ 
+ 
+ -
+ 
+ 30,514
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total operating expenses
+ 
+ 982,101
+ 
+ 
+ 155,270
+ 
+ 3,348,178
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Loss from Operations
+ 
+ (982,101)
+ 
+ 
+ (155,270)
+ 
+ (3,348,178)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Interest expense
+ 
+ (22,114)
+ 
+ 
+ (11,222)
+ 
+ (120,561)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net loss
+ $
+ (1,004,215)
+ 
+ $
+ ( 166,492)
+ $
+ ( 3,468,739)
+
+ 
+
+ 
+
+ 
+
+ 
+
+ Results of Operations
+ 
+Year ended December 31, 2013 compared to year ended December 31, 2012.
+ 
+
+ We have not recorded any revenues since inception. During the year ended December 31, 2013, our net loss was $1,720,316, compared to a net loss of $622,820 for the year ended December 31, 2012. The increased loss for 2013 of $1,097,496 was due to the increase in operating expenses to prepare the products to market in 2014. The individual expense explanations are detailed below.
+ 
+
+ 
+
+ Sales
+ 
+
+ We have not recorded any revenues since inception. The company expects to have sales starting in 2014 as a result of the intellectual property acquired in 2012 and the further development of these new products. The company will be in a position to market these products after completing equity financing in 2014.
+ 
+
+ Operating Expenses
+ 
+
+ Professional fees
+ During the year ended 2013, professional fees were $52,524 a decrease of $64,350 from $116,874 for the comparative year ended December 31, 2012. The 2012 professional fees included the non-repeating expenses related to the acquisition of the Acquired Products in May 2012. In 2013 the company had no unusual professional fees expenses other than normal periodic reporting obligations with the SEC.
+ 
+
+ Research and development
+ The Company has continued to be committed to moving forward with research and development. During the year ended December 31 2013 research and development expenses increased by $26,670 to $132,092 from the December 31, 2012 expense of $105,422. The increase was a result of the development of the new products, which we anticipate will become available for sale in 2014.
+ 
+
+ General and administrative
+ The company incurred $1,445,912 of general and administrative expenses for the year ended December 31, 2013. This is an increase of $1,062,411 from the $383,501 recorded in the year ended December 31, 2012. This increase was due to $1,005,000 accrued and unpaid remuneration for management. This represents 95% of the increase in general and administrative expenses, the remaining 5% of the increase can be attributed to the fact 2013 was a full year whereas 2012 general administrative started after finalizing the patent acquisition agreement on May 22, 2012. It should also be noted that no accrual was made for management remuneration in the year ended December 31, 2012.
+ 
+
+ Marketing and Selling
+ The company incurred $25,554 of marketing and selling expenses for the year ended December 31, 2013. This is an increase of $25,554 from nil expenses recorded in the year ended December 31, 2012. The company incurred marketing expenses in regards to the packaging and labeling of the products to be launched in 2014. In addition the company exhibited at trade shows to develop relationships with distributors.
+ 
+
+ Interest expense
+ 
+
+ Interest expense of $64,234 for 2013 increased by $47,211 from $17,023 for 2012. Interest expense is primarily attributed to an increase in loans from stockholders during 2013. The large increase in interest expense is attributed to the increase in loans from stockholders during the period. Since May 22, 2012 the operations of the company has been financed by loans from shareholders. During this period these loans have increased from $449,103 to $898,109 at December 31, 2013. 
+ 
+
+ Three months ended March 31, 2014 compared to the three months ended March 31, 2013.
+ 
+
+ We have not recorded any revenues since inception. During the three months ended March 31, 2014, our net loss was $1,004,215 compared to a net loss of $166,492 for the three months ended March 31, 2013. The increased loss for 2013 of $837,723 was due to the fact the company was more active in the quarter ended March 31 2014. Also in the comparative first quarter ended March 31, 2013 the company did not accrue compensation to management whereas in the quarter ended March 31, 2014 the company accrued $419,000. In addition the company paid $268,250 in common stock for services to consultants, whereas in the comparative quarter ended March 31, 2013 the company did not issue any stock for services.
+ 
+
+ Sales
+ 
+
+ We have not recorded any revenues since inception. The company expects to have sales later in 2014 as a result of the intellectual property acquired in 2012 and the further development and marketing of the new products.
+ 
+
+ Operating Expenses
+ 
+
+ Professional fees
+ During first quarter ended March 31, 2014, professional fees expenses were $49,906, an increase of $46,320 from the first quarter of 2013 professional fees expense of $3,586. The increase was a result of the successful financing activities in the first quarter ended March 31, 2014.
+ 
+
+ Research and development
+ Research and development costs consist of fees paid to consultants for laboratory evaluation of product chemistry and formulation as well as tests and studies to assess the efficacy and potential safety of our products. Also included in research and development are laboratory consumables.
+ 
+
+ During the first quarter ended March 31, 2014, research and development expenses of $117,697 increased by $79,702 from $37,995 for the first quarter of 2013. The increase was a result of the company s increased focus on development work to complete the product line.
+ 
+
+ General and administrative
+ During the first quarter of 2014, we incurred general and administrative expenses of $809,538, an increase of $695,849 from $113,689 for the first quarter of 2013. In the comparative first quarter ended March 31, 2013 the company did not accrue compensation to management whereas in the quarter ended March 31, 2014 the company accrued $419,000. In addition the company paid $268,250 in common stock for services to consultants, whereas in the comparative quarter ended March 31, 2013 the company did not issue any stock for services.
+ 
+
+ Interest expense
+ 
+
+ Interest expense of $22,114 for the first quarter ended March 31, 2014 an increase of $10,892 from $11,222 for the first quarter of 2013. The increase is attributed to an increase in loans from stockholders during the period. During all of the year ended December 31, 2013 the company relied on advances from related party to finance its operations.
+ 
+
+ 
+
+ Liquidity and Capital Resources
+ 
+
+ At March 31, 2014 we had a working capital deficit of $749,088, which is a decrease of $1,649,386 from the December 31, 2013 deficit balance of $2,398,474. The decrease in the deficit is a result of the equity raise of $1,145,500 combined with the conversion of $1,245,407 of accounts payable and accrued liabilities related party to equity as well as the fact the company paid $268,250 for services during the first quarter ended March 31, 2013 with the company s common stock. Offset by the above is the loss for the quarter ended March 31, 2014 of $1,004,215.
+ 
+
+ During the year ended December 31, 2013, ongoing expenses were paid by principal stockholders and through increased accounts payable. During the first quarter ended March 31, 2014 the stockholders contributed $65,808 in cash, repaid $9,590 and paid expenses directly on behalf of the company of $4,938. During this quarter the company also had an equity raise with proceeds of $1,145,500.. At March 31, 2014 and December 31, 2013, we had cash on hand of $783,956 and $458, respectively. At March 31, 2014 we had notes payable - related party of $959,265, compared to $898,109 at December 31, 2013. The increase represents additional contributions from stockholders during the first three months of 2014. Accrued interest related party at March 31, 2014 was $96,506 compared to $95,004 at December 31, 2013, which increase reflects the added interest on the payable related party, less $20,087 of accrued interest paid during the quarter. Accounts payable decreased from $421,439 at December 31, 2013, to $257,988 at March 31, 2014, primarily a result of the $80,407 of accounts payable that accepted the company s common stock in exchange for the accounts payable obligation.
+ 
+
+ 
+
+ At March 31, 2014, we had a stockholders deficit of $667,280 compared to a stockholders' deficit of $2,327,177 at December 31, 2013. The decrease in stockholders' deficit is primarily attributed to the equity raise combined with the conversion of accounts payable and accrued liabilities related party to equity.
+ 
+
+ As of March 31, 2014, we had cash on hand of $783,956. We believe that our available cash combined with continued advances from related party will be sufficient to carry on general corporate functions for the next six months, although we will need to limit cash outlays for research and product development until we can secure additional funds. We are presently investigating possible funding opportunities to arrange for additional funds, although we do not have any definitive agreement or arrangement for such funds. We expect that additional funding to proceed with development of the Acquired Products will most likely be from the sale of securities or from stockholder loans. We may not be successful in our efforts to obtain equity financing to carry out our business plan and there is doubt regarding our ability to complete our planned development program. We estimate that cash requirements for the next twelve months will be approximately $5,000,000. In the past year, we have relied on advances from related parties for financing our operations. We continue to explore potential funding opportunities, which may be in the form of debt or the sale of equity securities. In the event we are unsuccessful in arranging for outside funding, we will most likely continue to rely on related parties to provide funding, although there are no firm commitments or agreements with any related party to provide funds in the future.
+ 
+
+ Inflation
+ 
+ In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
+ 
+
+ Recent Accounting Pronouncements
+ 
+
+ The company has evaluated recent accounting pronouncements and their adoption has not had nor is not expected to have a material impact on the company s financial position or statements.
+ 
+
+ Off-balance Sheet Arrangements
+ 
+
+ We have no off-balance sheet arrangements.
+ 
+
+ Critical Accounting Policies
+ 
+
+ JOBS Act
+ 
+
+ The JOBS Act provides that, so long as a company qualifies as an emerging growth company, it will, among other things:
+ 
+
+ Be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;
+ 
+
+ Be exempt from the say on pay and say on golden parachute advisory vote requirements of the Dodd-Frank Wall Street Reform and Customer Protection Act (the Dodd-Frank Act ), and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act; and
+ 
+
+ Instead provide a reduced level of disclosure concerning executive compensation and be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor s report on the financial statements. 
+ 
+
+ It should be noted that notwithstanding our status as an emerging growth company, we would be eligible for these exemptions as a result of our status as a smaller reporting company as defined by the Exchange Act.
+ 
+
+ Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to take advantage of the benefits of this extended transition period and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 
+ 
+
+ Plan of Operation
+ 
+
+ Following the closing of the Acquisition Agreement we have become engaged in the development and ultimate formulation of other novel formulations of natural compounds and pharmaceutical products that have limitations in effective use for human consumption. We believe our self-emulsifying drug delivery technology can improve the efficacy of existing products and formulations based on natural or well-established compounds and known biologically active compounds. We intend to conduct our research and development through collaborative programs. We anticipate relying on arrangements with third party drug developers such as contract research organizations and clinical research sites for a significant portion of our product development efforts.
+ 
+
+ The Acquisition Agreement enabled us to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products. We have not formulated any final products or receive approvals from any regulatory agencies or generated any revenues from product sales. We have not been profitable since our inception through the current date.
+ We expect to incur significant operating losses for the next several years and until we are able to formulate a commercially viable product. We also expect to continue to incur significant operating and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we:
+ 
+
+ Continue to undertake formulation of novel products and subsequent preclinical and clinical trials for our product candidates;
+ 
+
+ Seek regulatory approvals for our product candidates;
+ 
+
+ Develop, formulate, manufacture and commercialize our products;
+ 
+
+ Implement additional internal systems and develop new infrastructure;
+ 
+
+ Acquire or in-license additional products or technologies, or expand the use of our technology;
+ 
+
+ Maintain, defend and expand the scope of our intellectual property; and
+ 
+
+ Hire qualified personnel.
+ 
+
+ Future product revenue will depend on our ability to develops, receive regulatory approvals for, and successfully market, our product candidates. In the event that our development efforts result in regulatory approval and successful commercialization of our product candidates, we will generate revenue from direct sales of our products and/or, if we license our products to future collaborators, from the receipt of license fees and royalties from licensed products.
+ 
+
+ Management estimates that our research and development expenses for the next 12 months will be approximately $3.0 million, primarily for research and pilot studies. We also estimate that other expenses, including personnel, general and administrative and miscellaneous expenses could be as much as $2.0 million during the same time period. Because we currently have no revenues, most likely the only source of funding these expenses will be through the private sale of our securities, either equity or debt. We are currently exploring possible funding sources, but we have not entered into any arrangements or agreements for funding as of this time. If we are unable to raise the necessary funding, our research and development plans will be delayed indefinitely. There can be no assurance that we will be able to raise the funds necessary to carry out our business plan on terms favorable to the company, or at all.
+ 
+
+ MANAGEMENT
+ 
+ Directors and Executive Officers
+ 
+ The following table sets forth the name, age and position of our present directors and executive officers.
+ 
+
+ 
+ Name
+ 
+ Age
+ 
+ Position Held with Eastgate
+
+ Anna Gluskin
+ 
+ 61
+ 
+ CEO and Director
+
+ Mirjana Hasanagic
+ 
+ 48
+ 
+ President and Director
+
+ Brian Lukian
+ 
+ 64
+ 
+ CFO and Director
+
+ Joseph Schwarz
+ 
+ 58
+ 
+ Chief Scientific Officer
+
+ Michael Weisspapir
+ 
+ 56
+ 
+ Chief Medical Officer
+
+ 
+
+ All directors serve for a one-year term until their successors are elected or they are re-elected at an annual stockholders' meeting. Officers hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated.
+ 
+ There is no arrangement, agreement or understanding between any of the directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Also, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs.
+ 
+
+ There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current offers or directors of are acting on behalf of, or will act at the direction of any other person. 
+ 
+
+ The business experience of each of the persons listed above during the past five years is as follows:
+ 
+
+ Anna Gluskin became a director and CEO on May 22, 2012. Ms. Gluskin has over 30 years experience in discovering and developing opportunities in the area of biotechnology pharmaceutical and consumer health products. She is currently managing her own investments related to consumer health products and drug delivery. From October 1997 to September 2010, Ms. Gluskin served as director, Chief Executive Officer and President of Generex Biotechnology Corporation, a company that has developed a proprietary alternative (non-invasive; non-injectable) drug delivery system. Ms. Gluskin was a Founder of Generex and was instrumental in raising capital for the company. Generex has developed an oral (buccal delivery insulin spray, Oral-lyn) and a platform from which a number of applications have been tested and others identified. An over-the-counter spray product pipeline was also developed and was marketed in a number of markets around the globe. From September 2010 to May 2012, Ms. Gluskin was exploring new business opportunities, which included examining new products and technologies and preliminarily organizing a scientific team. These efforts eventually led to the assignment of the products and technology representing the Acquired Products that Eastgate acquired from her in May 2012.
+ 
+
+ Prior to her position at Generex Biotechnology, Ms. Gluskin served as a director of Interlock Consolidated Corporation, a Canadian public company, engaged in the sale and fabrication of pharmaceutical manufacturing facilities. Ms. Gluskin successfully participated in the set-up of pharmaceutical facilities in Russia and other countries in Eastern Europe. Ms. Gluskin has a number of patents for innovative pharmaceutical drugs in her name. She holds a Master s Degree in Microbiology and Genetics from Moscow State University. She holds an equivalent degree from the University of Toronto. Ms. Gluskin also serves as CEO of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Ms. Gluskin s education, expertise and extensive experience in the pharmaceutical industry and with public companies qualify her as a member of our board of directors. 
+ 
+
+ Mirjana Hasanagic became a director and President on May 22, 2012. Ms. Hasanagic has over 20 years of managerial experience including marketing, budgeting and accounting, purchasing and inventory control and staff supervision. She has held various executive positions within pharmaceuticals and healthcare industries. From 2009 to 2012, she has served as President of Nano Essentials, Inc., a Toronto, Canada company developing products containing nano-sized delivery vectors. 
+ 
+
+ From 2000 to 2008, Ms. Hasanagic was president of Go Laser Inc., a Waterloo based company engaged in herbalism and alternative medicine to treat infections, skin ailments and viral diseases. Her interest and experience in natural health products and diagnostics has led her to develop formulations that provide better absorption and delivery with the goal of attaining long term recovery and/prevention. Ms. Hasanagic holds Medical Doctor (Alternative Medicine), Herbalism degree from Indian Board of Alternative Medicine and B.A., Philosophy, Linguistics & Literature from University of Sarajevo, Bosnia. On May 27, 2009, Ms. Hasanagic filed for protection under the bankruptcy laws in the District Court of the City of Waterloo, Ontario, Canada. The bankruptcy was discharged by the Court on February 28, 2010. Ms. Hasanagic also serves as President of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Ms. Hasanagic s education, expertise and extensive experience in the natural health products industry qualify her as a member of our board of directors. 
+ 
+
+ Brian Lukian became a director and CFO on May 22, 2012. Mr. Lukian has over 30 years of financial, strategic and business leadership experience in various industries and countries. Mr. Lukian served as Chief Financial Officer for Enhance Skin products of Denver, Colorado from August 2008 to May 2012, and for Quantum Materials Corp. of Phoenix, Arizona from November 2008 to June 2011. Both are reporting pubic companies with the SEC. Since January 2007, he has provided consulting services in regards to mergers and acquisitions, turnarounds, financings as well as business and industry analysis. From 2000 through 2006, he was employed as Chief Financial Officer and Chief Operating Officer for several public companies in Canada, for which he was responsible for public reporting requirements in Canada.
+ 
+
+ Mr. Lukian earned his certificate as a Chartered CPA, McGill University, while employed by Ernst & Young, Montreal, Canada and is a member of the Order of Certified Professional Accountants of Quebec. Mr. Lukian also held a United States Investment Bankers license, Series Seven. He received a Bachelor of Commerce from Loyola College, Montreal, Canada. Mr. Lukian also serves as CFO of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Mr. Lukian s education, expertise and accounting experience with public companies qualify him as a member of our board of directors. 
+ 
+
+ Joseph Schwarz became Chief Scientific Officer on May 22, 2012. Mr. Schwarz has a graduate degree in Polymer Chemistry from Moscow State University, and a PhD in Organic Chemistry from Zelinsky Organic Chemistry Institute (Academy of Science, Moscow), Laboratory of polynitrocompounds. He has more than 40 publications 8 issued US patents and approximately 20 US patent applications. He has more than 20 years in pharmaceutical R&D Experience. Mr. Schwarz is a pharmaceutical technology and formulation expert in sustained release formulations for oral, topical, transmucosal, ophthalmic and parenteral application; biodegradable nano- and micro particles for controlled drug delivery of small molecules, peptides and proteins; colloidal drug delivery systems nanoemulsions, micelles, hybrid nanoparticles; development and manufacturing of generic and brand pharmaceutical and cosmetic products. Mr. Schwarz served as Chief Scientist position (CS) at AlphaRx Canada from 2004 to 2011 and was Senior Manager/Formulation Development at Novopharm Pharmaceuticals LTD from 2003 to 2004. Mr. Schwarz also serves as Chief Scientific Officer of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Mr. Schwarz s education, expertise and extensive experience in the pharmaceutical industry qualify him to serve as our Chief Scientific Officer. 
+ 
+
+ Michael Weisspapir became Chief Medical Officer on May 22, 2012 and has over 25 years experience in pharmacology and drug development. His knowledge spans all stages of drug development including pharmacology, toxicology, pharmaceutical science and neuroscience. He is also experienced in immunomodulators, anti-inflammatory drugs, anticonvulsant, anticancer agents as well as different methods of administration including parenteral, oral, transdermal and topical applications.
+ 
+
+ Mr. Weisspapir has experience with new drug evaluation for efficacy and safety (immunomodulators, chemotherapeutic agents, NSAID, anticonvulsants, antioxidants). This includes design and implementation of animal models of different indications, implementation of in vivo and in vitro experimental protocols as well as with controlled drug delivery systems, submicron emulsion, nanoemulsions, biodegradable nanoparticulate systems (NSAID, SAID, tranquilizers, anticonvulsants, peptides, antibiotics). His most recent past work experience includes Chief Medical Scientist position (CMS) at AlphaRx Canada (2004 -2011).
+ 
+
+ Mr. Weisspapir currently holds three patents, has 20 patent applications and has been published in over 20 pharmacological and toxicological journals. Mr. Weisspapir holds a Medical Doctor degree and Ph.D. degree in Pharmacology- both from Chelyabinsk State Medical Institute, Russia. Mr. Weisspapir also serves as Chief Medical Officer of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Mr. Weisspapir s education, expertise and extensive experience in the pharmaceutical industry qualify him to serve as our Chief Medical Officer. 
+ 
+
+ Currently, each officer except for Ms. Gluskin devotes approximately 40 hours per week to the company, which is approximately 100% of their business time. Ms. Gluskin devotes approximately 90% of her time to the company.
+ 
+ Committees of the Board of Directors
+ 
+ No director is deemed to be an independent director. Currently we do not have any standing committees of the board of directors. Until formal committees are established, our board of directors will perform some of the functions associated with a nominating committee and a compensation committee, including reviewing all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation. The board will also perform the functions of an audit committee until we establish a formal committee.
+ 
+
+ Relationships and Related Party Transactions
+ 
+
+ Except as set forth below, we have not entered into any other material transactions with any officer, director, nominee for election as director, or any stockholder owning greater than five percent (5%) of our outstanding shares, nor any member of the above referenced individuals' immediate family.
+ 
+ On May 22, 2012, we acquired the Acquired Products from Anna Gluskin, our current President and CEO, pursuant to the Acquisition Agreement. In exchange for the Acquired Products, we issued 10 million shares of common stock to the following persons who subsequently became directors and/or executive officers of the company:
+ 
+
+ Anna Gluskin (Director and Chief Executive Officer) 3,500,000 shares
+ Mirjana Hasanagic (Director and President) 2,000,000 shares
+ Joseph Schwarz (Chief Scientific Officer) 2,000,000 shares
+ Michael Weisspapir (Chief Medical Officer) 2,000,000 shares
+ Brian Lukian (Director and Chief Financial Officer) 500,000 shares
+ 
+
+ The 10 million shares issued for the Acquired Products were valued at $0 for the assets and $50,000 for services ($0.005 per share). In connection with the Acquisition Agreement, we also issued 10 million shares of common stock (valued at $50,000 or $0.005 per share) to TGT Investments Group Corp. These shares were issued in consideration for $20,000 of expenses paid prior to the Acquisition Agreement of May 22, 2012 for product evaluation and for consulting services provided to the company for services in connection with negotiating and facilitating the Acquisition Agreement, valued at $30,000. TGT Investments Group Corp. is a privately held investment holding company 100% controlled by Rose Perri, who became a principal stockholder of the company.
+ 
+
+ On October 23, 2012, our President and CEO Ms. Gluskin loaned $100,000 to the company pursuant to the terms of a demand promissory note agreement. The note is unsecured, carries interest at the rate of 5% per annum and is payable on demand. The company will use the proceeds from the loan to conduct its general business operations until additional funding can be arranged, of which there can be no assurance. The largest principal amount outstanding during 2013 and as of the period ended March 31, 2014 was $100,000 and no payment of principal or interest has been made on the note. As of March 31, 2014, accrued interest on the note was $7,493.
+ 
+
+ From the years ended December 31, 2010 through March 31, 2014, the company recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders, as notes payable - related parties on its balance sheet. The notes bear interest of 10% per annum, are unsecured and due and payable upon demand. As of March 31, 2014 the notes payable - related parties was $959,265, including the $100,000 note to Ms. Gluskin and the following:
+ 
+
+ $4,600, plus $945 of accrued interest, payable to Anna Gluskin, our CEO and a principal stockholder;
+ 
+
+ $489,595, plus $33,915 of accrued interest, payable to Angara Enterprises a private corporation controlled by Anna Gluskin, our CEO and a principal stockholder;
+ 
+
+ $253,875, plus $39,634 of accrued interest, payable to Nano Essential, Inc., a private corporation deemed to be controlled by our President Mirjana Hasanagic and Ms. Gluskin; and 
+ 
+
+ $111,194 plus $14,518 of accrued interest, payable to TGT Investments Group Corp., a private corporation controlled by Rose Perri, a principal stockholder.
+ 
+
+ The amounts shown above represent the largest principal amount outstanding during the three-month period ended March 31, 2014 and principal payments of $9,590 and interest payments of $20,087 were made to Williams Investment Company, controlled by H. Deworth Williams, a former principal shareholder, during the period. No other payments were made on other principal and interest balances above. 
+ 
+
+ At December 31, 2013 the notes payable - related parties was $898,109, including the $100,000 note to Ms. Gluskin and the following:
+ 
+
+ $9,590, plus $20,087 of accrued interest, payable to William Investment Company, controlled by H. Deworth Williams a former principal stockholder; 
+ 
+
+ $4,600, plus $833 of accrued interest, payable to Anna Gluskin, our CEO and a principal stockholder;
+ 
+ $423,787, plus $22,613 of accrued interest, payable to Angara Enterprises a private corporation controlled by Anna Gluskin, our CEO and a principal stockholder;
+ 
+
+ $253,875, plus $33,374 of accrued interest, payable to NanoEssential, Inc., a private corporation deemed to be controlled by our President Mirjana Hasanagic and Ms. Gluskin; and 
+ 
+
+ $106,256 plus $11,837 of accrued interest, payable to TGT Investments Group Corp., a private corporation controlled by Rose Perri, a principal stockholder.
+ 
+
+ The amounts shown above represent the largest principal amount outstanding during the year ended ended December 31, 2013 and no payment of principal or interest was made during the period.
+ 
+
+ At December 31, 2012, the notes payable - related party balance due was $449,103, with accrued interest of $35,155 and as set forth below: 
+ 
+
+ $100,000, plus $1,260 of accrued interest, payable to Anna Gluskin per the October 23, 2012 note; 
+ $9,590, plus $19,128 of accrued interest, payable to William Investment Company; 
+ $4,600, plus $366 of accrued interest, payable to Anna Gluskin; 
+ $46,164, plus $2,488 of accrued interest, payable to Angara Enterprises; 
+ $220,302, plus $8,589 of accrued interest, payable to NanoEssential; and 
+ $68,447, plus $3,324 of accrued interest, payable to TGT Investments Group Corp.
+ 
+
+ At December 31, 2011, the only payable to a related party was $59,590, with accrued interest of $17,190, and at December 31, 2010, the related party payable was $53,035 plus accrued interest of $11,213, each payable to Williams Investment Company. The amounts shown represent the largest principal amount outstanding during the periods set forth. No payments of principal or interest have been made on the related party debts since they were incurred, except for the $50,000 payment made to Williams Investment Company on the closing of the Acquisition Agreement. 
+ 
+
+ On October 1, 2012, the company entered into a lease agreement for laboratory and office space through the assignment of an existing lease by NanoEssential, Inc., an affiliate of Ms. Gluskin. This lease has since been assigned. The lease had a term of 32 months, with an expiration date of May 31, 2015, and specified a monthly rate of $4,988 for 2012, $5,344 for 2013, and $5,700 for 2014 and 2015. The lease required minimum lease payments of $175,988 over the term of the lease. During the fiscal years ended December 31, 2012 and December 31, 2013, the company paid $14,963 and $0, respectively, in connection with this lease. The Company paid $0 in connection with this lease during the six months ended June 30, 2014. 
+ 
+
+ On March 14, 2014 the Board of Directors approved the conversion of $180,000 of accrued liability into shares of our common stock to Rose Perri. Ms. Perri is deemed to be a related party due to her control of TGT Investments Group Corp. As a result of this conversion, Rose Perri received 720,000 shares and 540,000 warrants to purchase our common stock for the period of five years at the price of $0.25 per share.
+ 
+
+ On March 14, 2014, the Company issued 4,660,000 units of its securities to its officers and directors with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. 
+ 
+
+ These units were issued in the amounts and to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Mirjana Hasanagic, Director
+ 576,000
+ 432,000
+
+ Anna Gluskin, Chief Executive Officer and Director
+ 864,000
+ 648,000
+
+ Rose Perri, 23% shareholder 
+ 720,000
+ 540,000
+
+ Brian Lukian, Chief Financial Officer and Director 
+ 720,000
+ 540,000
+
+ Joseph Schwarz, Chief Scientific Officer 
+ 480,000
+ 360,000
+
+ 
+
+ 
+ On June 6, 2014, the Company issued 140,000 shares of common stock to each of Michael Weisspapir and Joseph Schwarz officers of the Company. 
+ 
+
+ On June 9, 2014, the Company issued units of its securities to its officers and directors with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. These units are in the amounts and were issued to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Hasanagic, Mirjana
+ 273,600 
+ 205,200 
+
+ Gluskin, Anna
+ 480,000 
+ 360,000 
+
+ Rose Perri 
+ 427,200 
+ 320,400 
+
+ Lukian, Brian
+ 427,200 
+ 320,400 
+
+ Schwarz, Joseph
+ 48,000 
+ 36,000 
+
+ Weisspapir, Michael
+ 48,000 
+ 36,000 
+
+ Total
+ 2,452,400
+ 1,839,300
+
+ 
+
+ Following the issuances described above, there was no accrued compensation owed to officers and directors as of June 30, 2014.
+ 
+
+ Contributed Capital
+ 
+
+ During the year ended December 31, 2011, Geoff Williams, a former director, contributed various administrative services to the Company. These services included basic management and accounting services, and utilization of office space and equipment. The services have been valued at $3,000 for the year ended December 31, 2011.
+ 
+
+ During the year ended December 31, 2012, Anna Gluskin contributed various administrative services to the Company. These services include basic management and accounting services, and utilization of office space and equipment. The services have been valued at $6,000 for the years ended December 31, 2012.
+ 
+
+ There was no capital contribution recorded for the fiscal year ended December 31, 2013 or the quarter ended March 31, 2014. 
+ 
+
+ 8
+ 
+
+ EXECUTIVE COMPENSATION 
+ 
+
+ We have not paid any salaries or other compensation to officers, directors or employees for the years ended December 31, 2013 and 2012. Further, we have not entered into an employment agreement with any of our officers, directors or any other persons and no such agreements are anticipated in the immediate future. 
+ 
+
+ On March 14, 2014, the Company issued 4,660,000 units of its securities to its officers and directors with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. 
+ 
+
+ These units were issued in the amounts and to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Mirjana Hasanagic, Director
+ 576,000
+ 432,000
+
+ Anna Gluskin, Chief Executive Officer and Director
+ 864,000
+ 648,000
+
+ Rose Perri, >10% shareholder 
+ 720,000
+ 540,000
+
+ Brian Lukian, Chief Financial Officer and Director 
+ 720,000
+ 540,000
+
+ Joseph Schwarz, Chief Scientific Officer 
+ 480,000
+ 360,000
+
+ 
+
+ 
+ On June 6, 2014, the Company issued 140,000 shares of common stock to each of Michael Weisspapir and Joseph Schwarz officers of the Company. 
+ 
+
+ On June 9, 2014, the Company issued units of its securities to its officers and directors with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. These units are in the amounts and were issued to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Hasanagic, Mirjana
+ 273,600 
+ 205,200 
+
+ Gluskin, Anna
+ 480,000 
+ 360,000 
+
+ Rose Perri 
+ 427,200 
+ 320,400 
+
+ Lukian, Brian
+ 427,200 
+ 320,400 
+
+ Schwarz, Joseph
+ 48,000 
+ 36,000 
+
+ Weisspapir, Michael
+ 48,000 
+ 36,000 
+
+ Total
+ 2,452,400
+ 1,839,300
+
+ 
+
+ Following the issuances above, all outstanding accrued compensation was satisfied.
+ 
+
+ 
+
+ On May 20, 2014, the Board of Directors approved the adoption of a 2014 Equity Incentive Plan (the 2014 Plan ). The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The 2014 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company s employees, officers, directors and consultants. Pursuant to the terms of the 2014 Plan, either the Board or a board committee is authorized to administer the plan, including by determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards. Up to 20 million shares of common stock are issuable pursuant to awards under the 2014 Plan. Unless earlier terminated by the Board, the 2014 Plan shall terminate at the close of business on May 20, 2024.
+ STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
+ 
+ The following table sets forth information as of July 21, 2014, to the best of our knowledge, with respect to each person believed to be the beneficial owner of more than 5% of our outstanding common stock, each director and executive officer and by all directors and executive officers as a group. For purposes of disclosure, a person is deemed to be the beneficial owner of any shares of common stock (i) over which the person has or shares, directly or indirectly, voting or investment power, or (ii) of which the person has a right to acquire beneficial ownership at any time within 60 days after the date of this prospectus. Voting power is the power to vote or direct the voting of shares and investment power includes the power to dispose or direct the disposition of shares.
+ 
+
+ Unless otherwise noted, the address of each person below will be c/o Eastgate Acquisitions Corporation, 2681 East Parleys Way, Suite 204, Salt Lake City, Utah 84109. 
+ 
+
+ 
+ 
+ Name of Beneficial Owner
+ 
+ Number of
+ Shares(1)
+ 
+ Percent of
+ Class(2)
+ 
+
+ Directors and Officers
+ 
+ 
+ 
+ 
+ 
+
+ Anna Gluskin 
+ 
+ 5,852,000(3)
+ 
+ 
+ 9.9%
+ 
+
+ Mirjana Hasanagic
+ 
+ 3,486,800 (4)
+ 
+ 
+ 5.9%
+ 
+
+ Brian Lukian
+ 
+ 2,507,600 (5)
+ 
+ 
+ 4.3%
+ 
+
+ Joseph Schwarz
+ 
+ 3,064,000 (6)
+ 
+ 
+ 5.2%
+ 
+
+ Michael Weisspapir 
+ 
+ 3,064,000 (7)
+ 
+ 
+ 5.2%
+ 
+
+ 5% Stockholders
+ 
+ 
+ 
+ 
+ 
+ 
+
+ TGT Investments Group Corp.(8)
+ 
+ 12,007,600(9) 
+ 
+ 
+ 20.4%
+ 
+
+ Edward F. Cowle
+ 
+ 4,650,000 
+ 
+ 
+ 7.9%
+ 
+
+ All Directors and Officers as a group (5 persons)
+ 
+ 17,974,400
+ 
+ 
+ 30.5%
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ Note: Unless otherwise indicated, we have been advised that each person above has sole voting power over the shares indicated above. 
+ 
+
+ (1) Includes outstanding warrants as if they were exercised.
+ (2) Based upon 49,868,028 shares of common stock and 8,997,300 warrants outstanding on July 21, 2014.
+ (3) Includes warrants to purchase 1,008,000 shares of common stock.
+ (4) Includes warrants to purchase 637,200 shares of common stock.
+ (5) Includes warrants to purchase 860,400 shares of common stock.
+ (6) Includes warrants to purchase 396,000 shares of common stock.
+ (7) Includes warrants to purchase 396,000 shares of common stock.
+ (8) TGT Investments Group Corp. is a privately held investment holding company, of which investment and 100% voting control are held by Rose Perri. 
+ (9) Also included are 1,147,200 shares and 860,400 warrants owned directly by Rose Perri.
+ 
+
+ 
+
+ DESCRIPTION OF SECURITIES
+ 
+ Common Stock
+ 
+ Authorized and Outstanding
+ 
+
+ We are authorized to issue up to 100 million shares of common stock, par value $0.00001 per share, of which 49,868,028 shares are outstanding as of the date of this prospectus.
+ 
+
+ Voting Rights 
+ 
+
+ Each holders of our common stock has the right to cast one vote for each share of stock in their name on the books of our company, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including election of directors. There is no right to cumulative voting in election of directors. Except where a greater requirement is provided by statute, by our articles of incorporation or bylaws, the presence, in person or by proxy duly authorized, of one or more holders of a majority of the outstanding shares of our common stock constitutes a quorum for the transaction of business. The vote by the holders of a majority of outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger, or amendment of our articles of incorporation.
+ 
+
+ Dividends 
+ 
+
+ There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
+ 
+ Preemptive Rights
+ 
+
+ Holders of our common stock are not entitled to preemptive rights, and no redemption or sinking fund provisions are applicable to our common stock. 
+ 
+
+ Warrants
+ 
+ We have issued warrants to purchase, in the aggregate, 8,997,300 shares of common stock at an exercise price of $0.25 per share. Each warrant has a term of 5 years from the date of issuance. 
+ 
+
+ Registration Rights 
+ 
+
+ On December 31, 2012, we agreed to register up to 15,000,000 shares of common stock that we may issue to Kodiak Capital Group, LLC for a purchase price of $15,000,000. To date, no shares have been issued or registered, and our agreement with Kodiak expired December 31, 2013.
+ 
+
+ Transfer Agent
+ 
+ We have designated as our transfer agent VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598.
+ 
+
+ 
+
+ INDEMNIFICATION OF OFFICERS AND DIRECTORS 
+ 
+ Nevada Revised Statutes ( NRS ) Sections 78.7502, 78.751 and 78.752 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.
+ 
+
+ Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.
+ 
+
+ Under NRS Section 78.752, we are permitted to purchase and maintain insurance or make other financial arrangements on behalf of any director, officer, employee or other agent for liability arising out of his actions. No financial arrangement made pursuant to this subsection may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.
+ 
+ Any repeal or modification of these provisions approved by our stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of any of our directors or officers existing as of the time of such repeal or modification.
+ 
+ Our Restated Articles of Incorporation provide that we may indemnify any officer, director, employee, or agent of any officer, director, employee to the extent permitted by law. 
+ 
+
+ Our bylaws provide that we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation. partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees) judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with any such action, suit or proceeding, if he or she acted in good faith and in a manner he or she 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 or her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, will not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, he or she had reasonable cause to believe that his or her conduct was unlawful. No indemnification will be made in respect of any claim, issue, or matter as to which such a person will have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the corporation, unless and only to the extent that the court in which the action or suit was brought will determine on application that, despite the adjudication of liability but in view of all circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. We are permitted to purchase and maintain insurance on behalf of any person who is or was a director, employee, or agent against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such.
+ 
+
+ Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
+ 
+ LEGAL MATTERS
+ 
+ Our legal counsel, Sichenzia Ross Friedman Ference LLP, located at 61 Broadway, 32nd Floor, New York, NY 10006 will pass upon the validity of the issuance of the Common Stock offered under this prospectus.
+ 
+ EXPERTS
+ 
+ Our financial statements for the fiscal years ended December 31, 2013 and 2012 appearing in this prospectus have been audited by Sadler, Gibb & Associates, L.L.C, independent certified public accountants, Salt Lake City, Utah. Their report is given upon their authority as experts in accounting and auditing. 
+ 
+
+ 
+
+ 9
+ 
+
+ 
+
+ INTEREST OF NAMED EXPERTS AND COUNSEL
+ 
+ Sichenzia Ross Friedman Ference LLP will pass upon the validity of the common stock offered by the selling stockholders in this offering. Attorneys employed by this law firm received 100,000 shares of common stock issuable pursuant to a Consulting Agreement between the Company and Gregory Sichenzia, a partner of Sichenzia Ross Friedman Ference LLP.
+ 
+ WHERE YOU CAN FIND MORE INFORMATION
+ 
+ This prospectus is part of a registration statement that we filed with the SEC in accordance with its rules and regulations. This prospectus does not contain all of the information in the registration statement. For further information regarding both our company and the securities in this offering, we refer you to the registration statement, including all exhibits and schedules. You may inspect our registration statement, without charge, at the public reference facilities of the SEC s Washington, D.C. office, 100 F Street, NE, Washington, D.C. 20549 and on its Internet site at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room.
+ 
+ You also may request a copy of the registration statement and these filings by contacting us electronically at information@eastgatepharmaceuticals.com.
+ 
+ We are subject to the informational requirements of the Securities Exchange Act of 1934 and required to file annual, quarterly and current reports and other information with the SEC. These reports and other information may also be inspected and copied at the SEC s public reference facilities or its web site.
+ 
+
+ 10
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ 
+ (A Development Stage Company)
+ 
+ FINANCIAL STATEMENTS
+ 
+ December 31, 2013 and 2012
+ 
+ 
+ 
+
+ F-1
+ 
+
+ 
+
+ Eastgate Acquisitions Corporation
+ (A Development Stage Company)
+ Index to Financial Statements
+ 
+
+ 
+
+ 
+
+ Report of Independent Registered Public Accounting Firm F-3 
+ 
+
+ Balance Sheets as of December 31, 2013 and 2012 F-4
+ 
+
+ Statements of Operations for the Years Ended December 31, 2013 and 2012 and 
+ from inception on September 8, 1999 through December 31, 2013 F-5
+ 
+
+ Statements of Stockholders Deficit from inception on September 8, 1999 through
+ December 31, 2013 F-6
+ 
+
+ Statements of Cash Flows for the Years Ended December 31, 2013 and 2012 and 
+ from inception on September 8, 1999 through December 31, 2013 F-7
+ 
+
+ Notes to Financial Statements F-8
+ 
+
+ 
+
+ F-2
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+
+ 
+
+ To the Board of Directors
+ Eastgate Acquisitions Corporation
+ 
+
+ We have audited the accompanying consolidated balance sheets of Eastgate Acquisitions Corporation (the Company) as of December 31, 2013 and 2012 and the related consolidated statements of operations, stockholders deficit and cash flows for the years then ended and for the cumulative period from September 8, 1999 (date of inception) through December 31, 2013. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audit. 
+ 
+
+ We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
+ 
+
+ In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eastgate Acquisitions Corporation as of December 31, 2013 and 2012, and the results of their operations and cash flows for the years then ended and for the cumulative period from September 8, 1999 (date of inception) through December 31, 2013, in conformity with U.S. generally accepted accounting principles.
+ 
+
+ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had a working capital deficit of $2,327,6720 and accumulated losses of $2,464,524 for the period from inception through December 31, 2013 which raises substantial doubt about its ability to continue as a going concern. Management s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
+ 
+
+ 
+
+ /s/ Sadler, Gibb & Associates, LLC
+ 
+
+ Salt Lake City, UT
+ March 31, 2014 
+ 
+
+ 
+
+ 
+ 
+
+ F-3
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Balance Sheets
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ ASSETS
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 
+ 
+ 2013
+ 
+ 2012
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT ASSETS
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Cash
+ 
+ 
+ 458 
+ 
+ 
+ 100,000 
+
+ 
+ Prepaid Assets 
+ $
+ - 
+ 
+ $
+ 4,500 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Current Assets
+ 
+ 458 
+ 
+ 
+ 104,500 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ PROPERTY & EQUIPMENT, net
+ 
+ 71,297 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Long Term Assets
+ 
+ 71,297 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ TOTAL ASSETS
+ $
+ 71,755 
+ 
+ $
+ 104,500 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' DEFICIT
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT LIABILITIES
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Accounts payable
+ $
+ 421,439 
+ 
+ $
+ 229,250 
+
+ 
+ Accrued liabilities related party
+ 
+ 960,000 
+ 
+ 
+ - 
+
+ 
+ Capital lease obligation
+ 
+ 24,380 
+ 
+ 
+ - 
+
+ 
+ Accrued interest - related parties
+ 
+ 95,004 
+ 
+ 
+ 35,155 
+
+ 
+ Notes payable - related parties
+ 
+ 898,109 
+ 
+ 
+ 449,103 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Current Liabilities
+ 
+ 2,398,932 
+ 
+ 
+ 713,508 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ STOCKHOLDERS' DEFICIT
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Common stock;100,000,000 shares authorized,
+ 
+ 
+ 
+ 
+ 
+
+ 
+ at $0.00001 par value, 31,625,000 and 31,625,000
+ 
+ 
+ 
+ 
+ 
+
+ 
+ shares issued and outstanding, respectively
+ 
+ 316 
+ 
+ 
+ 316 
+
+ 
+ Additional paid-in capital
+ 
+ 134,884 
+ 
+ 
+ 134,884 
+
+ 
+ Subscription payable
+ 
+ 2,000 
+ 
+ 
+ 
+
+ 
+ Accumulated other comprehensive income
+ 
+ 147 
+ 
+ 
+ - 
+
+ 
+ Deficit accumulated during the development stage
+ 
+ (2,464,524)
+ 
+ 
+ (744,208)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Stockholders' Deficit
+ 
+ (2,327,177)
+ 
+ 
+ (609,008)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ TOTAL LIABILITIES AND STOCKHOLDERS'
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ DEFICIT
+ $
+ 71,755 
+ 
+ $
+ 104,500 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements
+
+ 
+
+ F-4
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Statements of Operations and Comprehensive Loss
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ From
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Inception on
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 8,
+
+ 
+ 
+ 
+ For the Years Ended
+ 
+ 1999 Through
+
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 
+ 2013
+ 
+ 2012
+ 
+ 2013
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ REVENUES
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Professional fees
+ 
+ 52,524 
+ 
+ 
+ 116,874 
+ 
+ 
+ 169,398 
+
+ 
+ Research and development
+ 
+ 132,092 
+ 
+ 
+ 105,422 
+ 
+ 
+ 237,514 
+
+ 
+ General and administrative
+ 
+ 1,445,912 
+ 
+ 
+ 383,501 
+ 
+ 
+ 1,933,611 
+
+ 
+ Marketing and selling
+ 
+ 25,554 
+ 
+ 
+ - 
+ 
+ 
+ 25,554 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Operating Expenses
+ 
+ 1,656,082 
+ 
+ 
+ 605,797 
+ 
+ 
+ 2,366,077 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LOSS FROM OPERATIONS
+ 
+ (1,656,082)
+ 
+ 
+ (605,797)
+ 
+ 
+ (2,366,077)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OTHER EXPENSE
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Interest expense
+ 
+ (64,234)
+ 
+ 
+ (17,023)
+ 
+ 
+ (98,447)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Other Expense
+ 
+ (64,234)
+ 
+ 
+ (17,023)
+ 
+ 
+ (98,447)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LOSS BEFORE INCOME TAXES
+ 
+ (1,720,316)
+ 
+ 
+ (622,820)
+ 
+ 
+ (2,464,524)
+
+ PROVISION FOR INCOME TAXES
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS
+ $
+ (1,720,316)
+ 
+ $
+ (622,820)
+ 
+ $
+ (2,464,524)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ BASIC LOSS PER SHARE
+ $
+ (0.05)
+ 
+ $
+ (0.03)
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ WEIGHTED AVERAGE 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NUMBER OF COMMON SHARES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OUTSTANDING
+ 
+ 31,625,000 
+ 
+ 
+ 23,865,437 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ COMPREHENSIVE LOSS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ A summary of the components of 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ other comprehensive loss for the
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ periods ended is as follows:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss
+ $
+ (1,720,316)
+ 
+ $
+ (622,820)
+ 
+ $
+ (2,464,524)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Other Comprehensive Income
+ 
+ 147 
+ 
+ 
+ - 
+ 
+ 
+ 147 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Comprehensive Loss
+ $
+ (1,720,169)
+ 
+ $
+ (622,820)
+ 
+ $
+ (2,464,377)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements
+
+ 
+
+ F-5
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Consolidated Statements of Operations and Comprehensive Loss
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Deficit
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Accumulated
+ 
+ Accumulated
+ 
+ Total
+
+ 
+ 
+ 
+ 
+ 
+ 
+ Additional
+ 
+ 
+ 
+ 
+ other
+ 
+ During the
+ 
+ Stockholders'
+
+ 
+ Common Stock
+ 
+ Paid-In
+ 
+ Subscriptions
+ 
+ comprehensive
+ 
+ Development
+ 
+ Equity
+
+ 
+ Shares
+ 
+ 
+ Amount
+ 
+ Capital
+ 
+ Payable
+ 
+ income
+ 
+ Stage
+ 
+ (Deficit)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance at inception on September 8, 1999
+ - 
+ 
+ $
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+
+ Common stock issued for cash on 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ September 8, 1999 at $0.0003 per share
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 384 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 500 
+
+ Net loss from inception on September 8, 1999
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ through December 31, 1999
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ Balance, December 31, 1999
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 384 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 500 
+
+ Net loss for the period from 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ January 1, 2000 through 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2004
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (3,320)
+ 
+ 
+ (3,320)
+
+ Balance, December 31, 2004
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 384 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (3,320)
+ 
+ 
+ (2,820)
+
+ Services contributed by shareholders
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 500 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 500 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2005
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (600)
+ 
+ 
+ (600)
+
+ Balance, December 31, 2005
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 884 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (3,920)
+ 
+ 
+ (2,920)
+
+ Services contributed by shareholders
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 1,700 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 1,700 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2006
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (5,555)
+ 
+ 
+ (5,555)
+
+ Balance, December 31, 2006
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 2,584 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (9,475)
+ 
+ 
+ (6,775)
+
+ Services contributed by shareholders
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 5,500 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 5,500 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2007
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (9,681)
+ 
+ 
+ (9,681)
+
+ Balance December 31, 2007
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 8,084 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (19,156)
+ 
+ 
+ (10,956)
+
+ Services contributed by shareholders
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2008
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (24,309)
+ 
+ 
+ (24,309)
+
+ Balance, December 31, 2008
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 14,084 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (43,465)
+ 
+ 
+ (29,265)
+
+ Services contributed by shareholders
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2009
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (23,649)
+ 
+ 
+ (23,649)
+
+ Balance, December 31, 2009
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 20,084 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (67,114)
+ 
+ 
+ (46,914)
+
+ Services contributed by shareholders 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+
+ Net loss for the year ended 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2010
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (24,354)
+ 
+ 
+ (24,354)
+
+ Balance, December 31, 2010 
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 26,084 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ (91,468)
+ 
+ 
+ (65,268)
+
+ Services contributed by shareholders 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 6,000 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2011 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (29,920)
+ 
+ 
+ (29,920)
+
+ Balance, December 31, 2011 
+ 11,625,000 
+ 
+ 
+ 116 
+ 
+ 
+ 32,084 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (121,388)
+ 
+ 
+ (89,188)
+
+ Services contributed by shareholders 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 3,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ - 
+ 
+ 
+ 3,000 
+
+ Common stock issued for services and payment 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ of related party notes payable
+ 20,000,000 
+ 
+ 
+ 200 
+ 
+ 
+ 99,800 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 100,000 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2012
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (622,820)
+ 
+ 
+ (622,820)
+
+ Balance, December 31, 2012
+ 31,625,000 
+ 
+ 
+ 316 
+ 
+ 
+ 134,884 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ (744,208)
+ 
+ 
+ (609,008)
+
+ Subscription payable
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2,000 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2,000 
+
+ Translation adjustment
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 147 
+ 
+ 
+ 
+ 
+ 
+ 147 
+
+ Net loss for the year ended
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ December 31, 2013
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 
+ 
+ 
+ (1,720,316)
+ 
+ 
+ (1,720,316)
+
+ Balance, December 31, 2013
+ 31,625,000 
+ 
+ $
+ 316 
+ 
+ $ 
+ 134,884 
+ 
+ $ 
+ 2,000 
+ 
+ $ 
+ 147 
+ 
+ $ 
+ (2,464,524)
+ 
+ $ 
+ (2,327,177)
+
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements
+ 
+
+ 
+
+ F-6
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Statements of Cash Flows
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ From
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Inception on
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 8,
+
+ 
+ 
+ 
+ 
+ 
+ For the Year Ended
+ 
+ 1999 Through
+
+ 
+ 
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 
+ 
+ 
+ 2013
+ 
+ 2012
+ 
+ 2013
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Net loss
+ 
+ $
+ (1,720,316)
+ 
+ $
+ (622,820)
+ 
+ $
+ (2,464,524)
+
+ 
+ Adjustments to reconcile net loss to net cash
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ used in operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Expenses paid on the Company's behalf
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ by a related party
+ 
+ 81,584 
+ 
+ 
+ 339,513 
+ 
+ 
+ 480,687 
+
+ 
+ 
+ Common stock issued for services
+ 
+ - 
+ 
+ 
+ 50,000 
+ 
+ 
+ 50,000 
+
+ 
+ 
+ Depreciation
+ 
+ 14,519 
+ 
+ 
+ - 
+ 
+ 
+ 14,519 
+
+ 
+ 
+ Services contributed by shareholders
+ 
+ - 
+ 
+ 
+ 3,000 
+ 
+ 
+ 34,700 
+
+ 
+ Changes in operating assets and liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Accrued interest
+ 
+ 59,849 
+ 
+ 
+ 17,965 
+ 
+ 
+ 95,004 
+
+ 
+ 
+ Prepaid asset
+ 
+ 4,500 
+ 
+ 
+ (4,500)
+ 
+ 
+ - 
+
+ 
+ 
+ Accounts payable
+ 
+ 192,189 
+ 
+ 
+ 216,842 
+ 
+ 
+ 421,439 
+
+ 
+ 
+ Accrued liabilities related party
+ 
+ 960,000 
+ 
+ 
+ - 
+ 
+ 
+ 960,000 
+
+ 
+ 
+ 
+ Net cash used in Operating Activities
+ 
+ (407,675)
+ 
+ 
+ - 
+ 
+ 
+ (408,175)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ INVESTING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Purchase of property and equipment
+ 
+ (22,273)
+ 
+ 
+ - 
+ 
+ 
+ (22,273)
+
+ 
+ 
+ 
+ Net Cash Used in Investing Activities 
+ 
+ (22,273)
+ 
+ 
+ - 
+ 
+ 
+ (22,273)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ FINANCING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Payments on capital lease obligation
+ 
+ (39,163)
+ 
+ 
+ - 
+ 
+ 
+ (39,163)
+
+ 
+ 
+ Proceeds from notes payable to related parties
+ 
+ 367,422 
+ 
+ 
+ 100,000 
+ 
+ 
+ 467,422 
+
+ 
+ 
+ Proceeds from subscription payable
+ 
+ 2,000 
+ 
+ 
+ - 
+ 
+ 
+ 2,000 
+
+ 
+ 
+ Common stock issued for cash
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 500 
+
+ 
+ 
+ 
+ Net Cash Provided (used in) by Financing Activities
+ 
+ 330,259 
+ 
+ 
+ 100,000 
+ 
+ 
+ 430,759 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ NET INCREASE (DECREASE) IN CASH
+ 
+ (99,689)
+ 
+ 
+ 100,000 
+ 
+ 
+ 311 
+
+ 
+ 
+ Effect of foreign currency translation adjustments
+ 
+ 147 
+ 
+ 
+ 
+ 
+ 
+ 147 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ CASH AT BEGINNING OF PERIOD
+ 
+ 100,000 
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ CASH AT END OF PERIOD
+ $
+ 458 
+ 
+ $
+ 100,000 
+ 
+ $
+ 458 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ CASH PAID FOR:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Interest
+ 
+ $ 
+ 4,386 
+ 
+ $ 
+ - 
+ 
+ $ 
+ 4,386 
+
+ 
+ 
+ Income Taxes
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ NON CASH FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Capital contribution by officer - payment of
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ related party payable on behalf of company
+ $ 
+ - 
+ 
+ $ 
+ 50,000 
+ 
+ $ 
+ 50,000 
+
+ 
+ 
+ Property & equipment purchased under
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ capital lease obligation
+ $ 
+ 63,543 
+ 
+ $ 
+ 
+ 
+ $ 
+ 63,543 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements.
+
+ 
+
+ F-7
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+ 
+
+ Nature of Business
+ Eastgate Acquisitions Corporation (The Company) was organized on September 8, 1999, under the laws of the State of Nevada. The Company is a development stage company which has limited history of operations is engaged in the research and development of drug delivery innovations for developing of improved novel formulations and alternative dosage forms of existing biologically active molecules. During the year ended December 31, 2012 the Company formed Eastgate Pharmaceuticals, Inc. as a wholly-owned subsidiary of the Company.
+ 
+
+ Principles of Consolidation
+ The consolidated financial statements include the accounts of Eastgate Acquisitions Corporation and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. 
+ 
+
+ Development Stage Company
+ The accompanying consolidated financial statements have been prepared in accordance with the provision of FASB ASC Topic 915, Development Stage Entities. 
+ 
+
+ Use of Estimates
+ The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
+ 
+
+ Cash and Cash Equivalents
+ For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
+ 
+
+ Property and Equipment
+ Property and equipment are recorded at cost and are depreciated when placed into service using the straight-line method based on their estimated useful lives of five year. Equipment under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases.
+ 
+
+ Research and Development Costs
+ The Company expenses research and development costs to operations as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including employee-related expenses; laboratory supplies and other direct expenses; third-party contractual costs relating to nonclinical studies and related contract manufacturing expenses, development of manufacturing processes and regulatory registration.
+ 
+
+ Impairment of Long-Lived Assets
+ The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ F-8
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ 
+
+ 
+
+ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+ 
+
+ Income Taxes
+ The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. 
+ 
+
+ ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
+ 
+
+ The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to net the loss before provision for income taxes for the following reasons:
+ 
+
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 2013
+ 
+ 2012
+
+ 
+ 
+ 
+ 
+ 
+
+ Income tax expense at statutory rate
+ $
+ (670,860)
+ $
+ (242,900)
+
+ Contributed services
+ 
+ 
+ 
+ 1,170
+
+ Stock issued for services
+ 
+ 
+ 
+ 39,000
+
+ Depreciation and amortization
+ 
+ 5,662
+ 
+ 
+
+ Change in valuation allowance
+ 
+ 665,198
+ 
+ 202,730
+
+ Income tax expense per books
+ $
+ -0-
+ $
+ -0-
+
+ 
+
+ Net deferred tax assets consist of the following components as of:
+
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 2013
+ 
+ 2012
+
+ 
+ 
+ 
+ 
+ 
+
+ NOL carryover
+ $
+ 961,102
+ $
+ 290,241
+
+ Valuation allowance
+ 
+ (961,102)
+ 
+ (290,241)
+
+ Net deferred tax asset
+ $
+ -0-
+ $
+ -0-
+
+ 
+
+ 
+
+ Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $2,322,844 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
+ 
+
+ 
+
+ Earnings (Loss) per Share
+ The Company has adopted ASC 260, Earnings Per Share, ( EPS ) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
+ 
+
+ The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
+ 
+
+ Comprehensive Loss
+ Other comprehensive loss, which includes only foreign currency translation adjustments, is shown in the Statement of Changes in Stockholder s Equity. 
+ 
+
+ 
+
+ 
+
+ 
+
+ F-9
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+ 
+
+ Foreign Currency Translation
+ Foreign denominated assets and liabilities of the Company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary s financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders equity.
+ 
+
+ Recent Accounting Pronouncements
+ The Company has evaluated recent accounting pronouncements and their adoption has not had nor is not expected to have a material impact on the Company s financial position or statements.
+ 
+
+ Accounting Basis
+ The basis is accounting principles generally accepted in the United States of America. The Company has adopted a December 31 fiscal year end.
+ 
+
+ NOTE 2 - GOING CONCERN
+ 
+
+ The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has accumulated deficit of $2,464,524 as of December 31, 2013. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time, raising substantial doubt about its ability to continue as a going concern.
+ 
+
+ Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
+ 
+ NOTE 3 - RELATED-PARTY TRANSACTIONS
+ 
+
+ Notes payable related parties
+ The Company has recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders as Notes payable - related parties on the balance sheet. The amounts comprising Notes payable related parties bear interest ranging from 5 percent per annum to 10 percent per annum, are unsecured and are due and payable upon demand. 
+ 
+
+ F-10
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ 
+
+ - During the years ended December 2013 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have paid for expenses on behalf of the Company of $81,584 and advanced cash to the Company of $367,422, As of December 31, 2012 they paid for expenses on behalf of the Company of $339,513 and advanced cash to the Company of $100,000. As of December 31, 2013 and 2012, the Company owes $95,004 and $35,155 of accrued interest to related parties, respectively, resulting from interest expense of $59,848 and $17,965, respectively. 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NOTE 3 - RELATED-PARTY TRANSACTIONS (CONTINUED)
+ 
+
+ - During 2012 in connection with the a agreement to purchase patents from a related party, an officer and director of the Company agreed to pay $50,000 to a former officer thus reducing the amount owed to that former officer by $50,000. As consideration to the officer and director for this $50,000 payment on behalf of the Company, 10,000,000 shares of common stock were issued to the officer and director. The amount for patents purchased valued at $0 and the related party debt paid by the officer of $50,000 and has been recorded as contributed capital in equity (See Note 6).
+ 
+
+ 
+
+ Officer Compensation
+ During the year ended December 31, 2012, the former CEO contributed various administrative services to the Company. These services include basic management and accounting services and utilization of office space and equipment and were recorded as contributed capital of $3,000 for the year ended December 31, 2012. In the last 6 months of 2012 the Company has a new CEO who personally financed most of the operations to December 31, 2013. In the year ended December 31, 2012 the Company did not record any compensation for the new CEO. In the year ended December 31, 2013 the Company recorded compensation expense of $216,000 which is recorded in accrued liabilities related party. In addition, services provided by other officers and management of the Company amounting to an expense of $744,000 was recorded in accrued liabilities related party. 
+ 
+
+ NOTE 4 PROPERTY & EQUIPMENT AND CAPITAL LEASE OBLIGATION
+ On January 4, 2013 the Company entered into a capital lease agreement to purchase equipment. The lease has a term of 19 months starting January 4, 2013 with the final payment due on August 1, 2014. The lease specifies a monthly rate of $3,600. The lease requires minimum lease payments of $68,400 over the term of the lease. The lease was initially recorded at $63,543, which is the present value of the minimum lease payments (less no executor cost) using the Company s incremental borrowing rate of 10%. During the twelve months ended December 31, 2013 the Company paid principal of $39,163 ($0 during 2012) against the capital lease obligation and corresponding interest of $4,037, leaving an amount owing at the end of the period of $24,380 ($0 at December 31, 2012), $0 of which is a long-term obligation.
+ Pursuant to ASC 840-30 for capital leases, the equipment was recorded at the same value as the initial capital lease obligation of $63,543. Also during the twelve months ending December 31, 2013, the Company purchased additional equipment for cash of $22,273. The estimated useful life of all equipment purchased during the year ended December 31, 2013 is 5 years. Depreciation expense of $14,519 and $0 was recorded during the year ended December 31, 2013 and December 31, 2012, respectively, which leaves a net balance in Property & Equipment of $71,297 and $0 at December 31, 2013 and December 31, 2012, respectively.
+ 
+
+ F-11
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ The costs and accumulated depreciation of property and equipment are summarized as follows:
+ 
+
+ 
+ 
+ 
+ December 31,
+ 
+ December 31,
+
+ 
+ 
+ 2013
+ 
+ 2012
+
+ 
+ 
+ 
+ 
+ 
+
+ Lab Equipment
+ $
+ 85,816 
+ $
+ -0-
+
+ Less: Accumulated Depreciation
+ 
+ (14,519)
+ 
+ -0-
+
+ Property and Equipment, Net
+ $
+ 71,297
+ $
+ -0-
+
+ 
+
+ Depreciation expense amounted to $14,519 and $0 for the years ended December 31, 2013 and 2012, respectively.
+ 
+
+ 
+
+ 
+
+ 
+
+ NOTE 5 COMMITMENTS AND CONTINGENT LIABILITIES
+ 
+
+ Operating Lease
+ The Company has assumed a lease agreement from a company controlled by the CEO on October 31, 2012 for the use of operating space owned by a third party, which expires on May 16, 2017.
+ 
+
+ Aggregate minimum annual lease commitments of the Company under non-cancelable operating leases as of December 31, 2013 are as follows:
+ 
+
+ 
+ 
+ 
+ Year Amount
+
+ 
+ 
+ 
+
+ 2014
+ $
+ 66,619
+
+ 2015
+ 
+ 68,400
+
+ 2016
+ 
+ 68,400
+
+ 2017
+ 
+ 28,500
+
+ Thereafter
+ 
+ 0
+
+ Total Minimum Lease Payments
+ $
+ 231,919
+
+ 
+
+ Lease expense amounted to $69,984, $14,963 and $0 for the years ended December 31, 2013, 2012 and 2011, respectively.
+ 
+
+ F-12
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ 
+
+ The preceding data reflects existing leases and does not include replacements upon their expiration. In the normal course of business, operating leases are generally renewed or replaced by other leases. 
+ 
+
+ Capital Lease
+ The Company has entered into capital lease agreement for the use of laboratory equipment.
+ 
+
+ The last payment for this lease will be July 1, 2014. Total payments during 2014 will be $25,200
+ 
+
+ Lease expense amounted to $39,163 and $0 for the years ended December 31, 2013 and 2012, respectively.
+ 
+
+ NOTE 6 STOCKHOLDERS EQUITY
+ 
+
+ During the years ended December 31, 2013 and 2012, an officer of the Company has contributed various administrative services to the Company. These services include basic management and accounting services, and utilization of office space and equipment. These services have been valued at $500 per month of service and have been recorded as capital contributions of $-0- and $3,000 as of the periods ending December 31, 2013 and December 31, 2012, respectively. In May 2012 the CEO left the Company. The new CEO s compensation is documented in Note 3. 
+ 
+
+ As stated above in Note 3, on May 22, 2012 pursuant to a patent acquisition agreement, the Company issued 10,000,000 shares of common stock valued at $0.005 per share to a Company officer in exchange for patent rights contributed, and forgiveness of debt to a related party of $50,000. Also pursuant to the patent acquisition agreement, the Company issued an additional 10,000,000 shares of common stock to a third party in exchange for services, valued also at $0.005 per share.
+ 
+
+ Subscription Payable
+ 
+
+ In December 2013 the Company received a deposit of $2,000 for the purchase of the Company s common stock. The Board approved this issue in March 2014.
+ 
+
+ 
+
+ NOTE 7 - SUBSEQUENT EVENTS
+ 
+
+ In accordance with ASC 855 Company management reviewed all material events through the date of this report.
+ 
+
+ In March 2014, the Company completed private placement transaction with certain investors that resulted in $1,145,500 in net proceeds to the Company. Pursuant to the terms of the transaction, the Company sold 4,640,000 Units, each consisting of one share of our common stock and 0.75 warrants to purchase one share of our common stock at $0.25 per share exercisable for a period of five years. Each Unit was priced at $0.25 per Unit. The Company issued a total of 4,640,000 shares and 3,480,000 five year warrants as a result of this transaction. The Company paid $110,000 and issued 1,000,000 shares of our common stock, valued at $250,000 to Chardan Capital Markets, LLC as commissions for their services in connection with this transaction.
+ 
+
+ On March 14, 2014, our Board of Directors approved an offer to convert $1,165,000 of accrued liabilities to 4,660,000 Units at $0.25 per Unit. Each Unit consists of one share of our common stock and 0.75 warrants to purchase one share of our common stock at $0.25 per share exercisable for a period of five years from the date of the grant. Included in this amount of accrued liabilities is $960,000 in deferred executive compensation due to executives and directors of the company.
+ 
+
+ On March 21, 2014, our Board of Directors approved an offer to convert $80,410 of accounts payable to 321,628 shares of our common stock at $0.25 per share.
+ 
+
+ On March 21, 2014, our Board of Directors ratified the issuance of 1,553,000 shares of our common stock to our consultants and advisors for services rendered. The shares were valued at $0.25 per share, or $388,266. for the purposes of this transaction.
+ 
+
+ 
+
+ F-13
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ 
+ (A Development Stage Company)
+ 
+ FINANCIAL STATEMENTS
+ 
+ March 31, 2014 and 2013
+ 
+ 
+ 
+
+ F-14
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Balance Sheets
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ ASSETS
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ March 31,
+ 
+ December 31,
+
+ 
+ 
+ 
+ 
+ 2014
+ 
+ 2013
+
+ 
+ 
+ 
+ 
+ (Unaudited)
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT ASSETS
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Cash
+ 
+ $
+ 783,956 
+ 
+ $
+ 458 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Current Assets
+ 
+ 783,956 
+ 
+ 
+ 458 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OTHER ASSETS
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Property & Equipment ,net
+ 
+ 67,006 
+ 
+ 
+ 71,297 
+
+ 
+ Sales tax receivable
+ 
+ 14,802 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Long Term Assets
+ 
+ 81,808 
+ 
+ 
+ 71,297 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ TOTAL ASSETS
+ $
+ 865,764 
+ 
+ $
+ 71,755 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' DEFICIT
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ CURRENT LIABILITIES
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Accounts payable
+ $
+ 257,988 
+ 
+ $
+ 421,439 
+
+ 
+ Accrued liabilities related party
+ 
+ 205,180 
+ 
+ 
+ 960,000 
+
+ 
+ Capital lease obligation
+ 
+ 14,105 
+ 
+ 
+ 24,380 
+
+ 
+ Accrued interest - related parties
+ 
+ 96,506 
+ 
+ 
+ 95,004 
+
+ 
+ Notes payable - related parties
+ 
+ 959,265 
+ 
+ 
+ 898,109 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Current Liabilities
+ 
+ 1,533,044 
+ 
+ 
+ 2,398,932 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ STOCKHOLDERS' DEFICIT
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Common stock;100,000,000 shares authorized,
+ 
+ 
+ 
+ 
+ 
+
+ 
+ at $0.00001 par value, 43,319,628 and 31,625,000
+ 
+ 
+ 
+ 
+ 
+
+ 
+ shares issued and outstanding at March 31, 2014
+ 
+ 
+ 
+ 
+ 
+
+ 
+ and December 31, 2013, respectively
+ 
+ 433 
+ 
+ 
+ 316 
+
+ 
+ Additional paid-in capital
+ 
+ 2,795,924 
+ 
+ 
+ 134,884 
+
+ 
+ Subscription payable
+ 
+ - 
+ 
+ 
+ 2,000 
+
+ 
+ Accumulated other comprehensive income
+ 
+ 5,102 
+ 
+ 
+ 147 
+
+ 
+ Deficit accumulated during the development stage
+ 
+ (3,468,739)
+ 
+ 
+ (2,464,524)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Total Stockholders' Deficit
+ 
+ (667,280)
+ 
+ 
+ (2,327,177)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ TOTAL LIABILITIES AND STOCKHOLDERS'
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ DEFICIT
+ $
+ 865,764 
+ 
+ $
+ 71,755 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements
+
+ 
+
+ F-15
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Statements of Operations and Comprehensive Loss
+
+ (Unaudited)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ From
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Inception on
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 8,
+
+ 
+ 
+ 
+ For the Three Months Ended
+ 
+ 1999 Through
+
+ 
+ 
+ 
+ March 31,
+ 
+ March 31,
+
+ 
+ 
+ 
+ 2014
+ 
+ 2013
+ 
+ 2014
+
+ REVENUES
+ $
+ - 
+ 
+ $
+ - 
+ 
+ $
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OPERATING EXPENSES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Professional fees
+ 
+ 49,906.00 
+ 
+ 
+ 3,586.00 
+ 
+ 
+ 219,304.00 
+
+ 
+ Research and development
+ 
+ 117,697.00 
+ 
+ 
+ 37,995.00 
+ 
+ 
+ 355,211.00 
+
+ 
+ General and administrative
+ 
+ 809,538.00 
+ 
+ 
+ 113,689.00 
+ 
+ 
+ 2,743,149.00 
+
+ 
+ Marketing and selling
+ 
+ 4,960.00 
+ 
+ 
+ - 
+ 
+ 
+ 30,514.00 
+
+ 
+ 
+ Total Operating Expenses
+ 
+ 982,101.00 
+ 
+ 
+ 155,270.00 
+ 
+ 
+ 3,348,178.00 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LOSS FROM OPERATIONS
+ 
+ (982,101.00)
+ 
+ 
+ (155,270.00)
+ 
+ 
+ (3,348,178.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ OTHER EXPENSE
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Interest expense
+ 
+ (22,114.00)
+ 
+ 
+ (11,222.00)
+ 
+ 
+ (120,561.00)
+
+ 
+ 
+ Total Other Expense
+ 
+ (22,114.00)
+ 
+ 
+ (11,222.00)
+ 
+ 
+ (120,561.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ LOSS BEFORE INCOME TAXES
+ 
+ (1,004,215.00)
+ 
+ 
+ (166,492.00)
+ 
+ 
+ (3,468,739.00)
+
+ PROVISION FOR INCOME TAXES
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ NET LOSS
+ $
+ (1,004,215.00)
+ 
+ $
+ (166,492.00)
+ 
+ $
+ (3,468,739.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ BASIC LOSS PER SHARE
+ $
+ (0.03)
+ 
+ $
+ (0.01)
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ WEIGHTED AVERAGE NUMBER OF COMMON 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ SHARES OUTSTANDING
+ 
+ 33,416,788.00 
+ 
+ 
+ 31,625,000.00 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ COMPREHENSIVE LOSS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ A summary of the components of other comprehensive
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ loss for the periods ended is as follows:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss
+ $
+ (1,004,215.00)
+ 
+ $
+ (166,492.00)
+ 
+ $
+ (3,468,739.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Foreign currency translation adjustment
+ 
+ 4,955.00 
+ 
+ 
+ - 
+ 
+ 
+ 5,102.00 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Total Comprehensive Loss
+ $
+ (999,260.00)
+ 
+ $
+ (166,492.00)
+ 
+ $
+ (3,463,637.00)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements
+
+ 
+
+ 
+
+ F-16
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ EASTGATE ACQUISITIONS CORPORATION
+
+ (A Development Stage Company)
+
+ Consolidated Statements of Cash Flows
+
+ (Unaudited)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ September 8,
+
+ 
+ 
+ 
+ 
+ 
+ For the Three Months Ended
+ 
+ 1999 Through
+
+ 
+ 
+ 
+ 
+ 
+ March 31,
+ 
+ March 31,
+
+ 
+ 
+ 
+ 
+ 
+ 2014
+ 
+ 2013
+ 
+ 2014
+
+ OPERATING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ Net loss
+ 
+ $
+ (1,004,215)
+ 
+ $
+ (166,492)
+ 
+ $
+ (3,468,739)
+
+ 
+ Adjustments to reconcile net loss to net cash
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ used in operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Expenses paid on the Company's behalf
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ by a related party
+ 
+ 4,938 
+ 
+ 
+ 33,229 
+ 
+ 
+ 485,625 
+
+ 
+ 
+ Common stock issued for services
+ 
+ 268,250 
+ 
+ 
+ - 
+ 
+ 
+ 318,250 
+
+ 
+ 
+ Depreciation
+ 
+ 4,291 
+ 
+ 
+ 3,971 
+ 
+ 
+ 18,810 
+
+ 
+ 
+ Services contributed by shareholders
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ 34,700 
+
+ 
+ Changes in operating assets and liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Accrued interest
+ 
+ 1,502 
+ 
+ 
+ 10,250 
+ 
+ 
+ 96,506 
+
+ 
+ 
+ Prepaid asset
+ 
+ - 
+ 
+ 
+ - 
+ 
+ 
+ - 
+
+ 
+ 
+ Accounts payable
+ 
+ (83,044)
+ 
+ 
+ 44,271 
+ 
+ 
+ 338,395 
+
+ 
+ 
+ Accrued liabilities related party
+ 
+ 410,180 
+ 
+ 
+ - 
+ 
+ 
+ 1,370,180 
+
+ 
+ 
+ Sales tax recoverable
+ 
+ (14,802)
+ 
+ 
+ - 
+ 
+ 
+ (14,802)
+
+ 
+ 
+ 
+ Net cash used in Operating Activities
+ 
+ (412,900)
+ 
+ 
+ (74,771)
+ 
+ 
+ (821,075)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ INVESTING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Purchase of property and equipment
+ 
+ - 
+ 
+ 
+ (4,648)
+ 
+ 
+ (22,273)
+
+ 
+ 
+ 
+ Net Cash Used in Investing Activities 
+ 
+ - 
+ 
+ 
+ (4,648)
+ 
+ 
+ (22,273)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ FINANCING ACTIVITIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Payments on capital lease obligation
+ 
+ (10,275)
+ 
+ 
+ (9,708)
+ 
+ 
+ (49,438)
+
+ 
+ 
+ Proceeds from notes payable to related parties
+ 
+ 65,808
+ 
+ 
+ - 
+ 
+ 
+ 533,230 
+
+ 
+ 
+ Payments on notes payable related parties
+ 
+ (9,590)
+ 
+ 
+ - 
+ 
+ 
+ (9,590)
+
+ 
+ 
+ Common stock issued for cash
+ 
+ 1,145,500 
+ 
+ 
+ - 
+ 
+ 
+ 1,146,000 
+
+ 
+ 
+ 
+ Net Cash Provided (used in) by Financing Activities
+ 
+ 1,191,443 
+ 
+ 
+ (9,708)
+ 
+ 
+ 1,620,202 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ NET INCREASE (DECREASE) IN CASH
+ 
+ 778,543 
+ 
+ 
+ (89,127)
+ 
+ 
+ 778,854 
+
+ 
+ Effect of foreign currency translation adjustments
+ 
+ 4,955 
+ 
+ 
+ - 
+ 
+ 
+ 5,102 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ CASH AT BEGINNING OF PERIOD
+ 
+ 458 
+ 
+ 
+ 100,000 
+ 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ CASH AT END OF PERIOD
+ $
+ 783,956 
+ 
+ $
+ 10,873 
+ 
+ $
+ 783,956 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ CASH PAID FOR:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Interest
+ 
+ $ 
+ 20,087 
+ 
+ $ 
+ 973 
+ 
+ $ 
+ 4,952 
+
+ 
+ 
+ Income Taxes
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ NON CASH FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ Capital contribution by officer - payment of
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ related party payable on behalf of company
+ $ 
+ - 
+ 
+ $ 
+ - 
+ 
+ $ 
+ 50,000 
+
+ 
+ 
+ Property & equipment purchased under
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ capital lease obligation
+ $ 
+ - 
+ 
+ $ 
+ 63,543 
+ 
+ $ 
+ 63,543 
+
+ 
+ 
+ Common stock issued to pay liabilities
+ $
+ 1,245,407
+ 
+ $
+ -
+ 
+ $
+ 1,245,407
+
+ 
+ 
+ Common stock issued subscription payable
+ $ 
+ 2,000
+ 
+ $ 
+ - 
+ 
+ $ 
+ 2,000
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ The accompanying notes are an integral part of these condensed consolidated financial statements.
+
+ 
+
+ F-17
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Condensed Notes to Financial Statements
+ March 31, 2014 and December 31, 2013
+ 
+
+ NOTE 1 - CONDENSED FINANCIAL STATEMENTS
+ 
+
+ The accompanying financial statements have been prepared by the Eastgate Acquisitions Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2014, and for all periods presented herein have been made.
+ 
+
+ Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013 audited financial statements. The results of operations for the periods ended March 31, 2014 and 2013 are not necessarily indicative of the operating results for the full years.
+ 
+
+ NOTE 2 - GOING CONCERN
+ 
+
+ The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has accumulated deficit of $3,468,739 as of March 31, 2014. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time, raising substantial doubt about its ability to continue as a going concern.
+ 
+
+ Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
+ 
+
+ NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
+ 
+
+ Principles of Consolidation
+ The consolidated financial statements include the accounts of Eastgate Acquisitions Corporation and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. 
+ 
+
+ Use of Estimates
+ The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
+ 
+
+ Cash and Cash Equivalents
+ For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+ 
+
+ Research and Development Costs
+ The Company expenses research and development costs to operations as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including employee-related expenses; laboratory supplies and other direct expenses; third-party contractual costs relating to nonclinical studies and related contract manufacturing expenses, development of manufacturing processes and regulatory registration.
+ 
+
+ Foreign Currency Translation
+ Foreign denominated assets and liabilities of the Company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary s financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders equity.
+ 
+
+ Recent Accounting Pronouncements
+ The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company s financial position or statements.
+ 
+
+ NOTE 4 RELATED-PARTY TRANSACTIONS
+ 
+
+ Notes payable related parties
+ The Company has recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders as Notes payable - related parties on the balance sheet. The amounts comprising Notes payable related parties bear interest ranging from 5 percent per annum to 10 percent per annum, are unsecured and are due and payable upon demand. 
+ 
+
+ During the three months ended March 31, 2014 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have paid for expenses on behalf of the Company of $4,938 and advanced cash to the Company of $65,808 and repaid $9,590. During the year ended December 2013 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have paid for expenses on behalf of the Company of $81,584 and advanced cash to the Company of $367,422. As of March 31, 2014 and December 31, 2013, the Company owed $96,506 and $95,004 of accrued interest to related parties, respectively, resulting from interest expense of $21,589 and $59,848, respectively. 
+ 
+
+ 
+
+ F-18
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Notes to Consolidated Financial Statements
+ December 31, 2013 and 2012
+ 
+
+ NOTE 5 SALES TAX RECEIVABLE
+ 
+
+ The Company recovers sales tax paid, for which returns are filed on annual basis. At March 31, 2014, $14,802 was claimed as recoverable compared to the December 31, 2013 balance of $0. Sales tax recoverable is a result of sales tax paid on eligible expenses.
+ 
+
+ NOTE 6 STOCKHOLDERS EQUITY
+ 
+
+ During the quarter ended March 31, 2014 the Company has sold 4,640,000 Units consisting of one share of common stock and a warrant to purchase 0.75 of share for cash pursuant to private placement agreement at the price of $0.25 per share. As a result of this transaction, the Company issued 4,640,000 shares of common stock and 3,480,000 warrants to purchase our common stock for five years at $0.25 per share. The Company issued 1,000,000 shares and paid $110,000 in cash in a finder s fee in connection with this transaction.
+ 
+
+ F-19
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Condensed Notes to Financial Statements
+ March 31, 2014 and December 31, 2013
+ 
+
+ During the quarter ended March 31, 2014 the Company has issued 4,660,000 Units consisting of one share of common stock and a warrant to purchase 0.75 of share for in satisfaction of accrued liabilities at the price of $0.25 per share. As a result of this transaction, the Company issued 4,660,000 shares of common stock and 3,495,000 warrants to purchase our common stock for five years at $0.25 per share. The Units were issued on the same terms as the Units issued in connection with the private placement transaction.
+ 
+
+ The assumptions used to estimate the fair value of the warrants using the Black-Scholes pricing model were as follows:
+ 
+
+ 
+ Issue Date
+ March 21, 2014
+
+ Expected volatility 
+ 208.65 %
+
+ Expected term 
+ 2.5 years
+
+ Risk-free interest rate 
+ 1.73 %
+
+ Expected dividend yield
+ $0
+
+ 
+
+ As of March 31, 2014, the Company had 6,975,000 warrants to purchase common stock. All outstanding warrants have a weighted average price of $0.25 per share and have a weighted average remaining life of 5 years.
+ 
+
+ The following table summarizes warrants that are issued, outstanding and exercisable
+ 
+
+ 
+ 
+ 
+ 
+ 
+ Warrants Issued & Outstanding
+
+ Exercise
+ 
+ Expiration
+ 
+ March 31
+ 
+ December 31
+
+ Price
+ 
+ Date
+ 
+ 2014
+ 
+ 2013
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ $0.25 
+ 
+ March 14, 2019
+ 
+ 3,495,000 
+ 
+ - 
+
+ $0.25 
+ 
+ March 21, 2019
+ 
+ 3,480,000 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 6,975,000 
+ 
+ - 
+
+ 
+
+ During the quarter ended March 31, 2014 the Company issued a total of 1,073,000 shares of common stock to employees and consultants for services rendered at the price of $0.25 per share.
+ 
+
+ During the quarter ended March 31, 2014 the Company issued 321,628 shares of common stock to vendors in satisfaction of accounts payable and accrued liabilities at the price of $0.25 per share.
+ 
+
+ NOTE 7 SUBSEQUENT EVENTS
+ 
+
+ In accordance with ASC 855 Company management reviewed all material events through the date of this report and determined that there are no material subsequent events to report. 
+ 
+
+ F-1
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Condensed Notes to Financial Statements
+ March 31, 2014 and December 31, 2013
+ 
+
+ PART II
+ INFORMATION NOT REQUIRED IN PROSPECTUS
+ 
+ Item 13. Other Expenses of Issuance and Distribution
+ 
+ The following table sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions, all of which shall be borne by the Company. All of such fees and expenses, except for the SEC Registration Fee, are estimated:
+ 
+
+ 
+
+ 
+ SEC registration fee
+ 
+ $
+ 2,422.36
+ 
+
+ Transfer agent s fees and expenses
+ 
+ $
+ 500.00
+ *
+
+ Legal fees and expenses
+ 
+ $
+ 5,000.00
+ *
+
+ Printing fees and expenses
+ 
+ $
+ 3,500.00
+ *
+
+ Accounting fees and expenses
+ 
+ $
+ 7,500.00
+ *
+
+ Miscellaneous fees and expenses
+ 
+ $
+ 2,500.00
+ *
+
+ Total
+ 
+ $
+ 21,422.36
+ *
+
+ * Estimated
+ 
+
+ Item 14. Indemnification of Directors and Officers.
+ 
+
+ Nevada Revised Statutes ( NRS ) Sections 78.7502, 78.751 and 78.752 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.
+ 
+
+ Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.
+ 
+
+ Under NRS Section 78.752, we are permitted to purchase and maintain insurance or make other financial arrangements on behalf of any director, officer, employee or other agent for liability arising out of his actions. No financial arrangement made pursuant to this subsection may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court.
+ 
+ Any repeal or modification of these provisions approved by our stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of any of our directors or officers existing as of the time of such repeal or modification.
+ 
+ Our Restated Articles of Incorporation provide that we may indemnify any officer, director, employee, or agent of any officer, director, employee to the extent permitted by law. 
+ 
+
+ Our bylaws provide that we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation. partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees) judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with any such action, suit or proceeding, if he or she acted in good faith and in a manner he or she 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 or her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, will not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, he or she had reasonable cause to believe that his or her conduct was unlawful. No indemnification will be made in respect of any claim, issue, or matter as to which such a person will have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the corporation, unless and only to the extent that the court in which the action or suit was brought will determine on application that, despite the adjudication of liability but in view of all circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. We are permitted to purchase and maintain insurance on behalf of any person who is or was a director, employee, or agent against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such.
+ 
+
+ Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
+ 
+
+ Item 15. Recent Sales of Unregistered Securities.
+ 
+
+ Fiscal Year Ending December 31, 2011
+ 
+
+ None. 
+ 
+
+ Fiscal Year Ending December 31, 2012
+ 
+
+ Upon closing the Patent Acquisition Agreement the company issued 10 million shares of common stock to the seller, Anna Gluskin and/or her assigns, in exchange for the assignment of the acquired products and technology. The company also issued an additional 10 million shares of common stock to TGT Investments Group Corp. in consideration for services rendered for and monies advanced to Eastgate. The following persons received the above referenced shares pursuant to the Patent Acquisition Agreement:
+ 
+
+ Anna Gluskin - 3,500,000 shares
+ Mirjana Hasanagic - 2,000,000 shares
+ Joseph Schwarz - 2,000,000 shares
+ Michael Weisspapir - 2,000,000 shares
+ Brian Lukian - 500,000 shares
+ TGT Investments Group Corp. 10,000,000 shares
+ 
+ The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
+ 
+
+ Fiscal Year Ending December 31, 2013
+ 
+
+ None. 
+ 
+
+ Six Months Ended June 30, 2014
+ 
+
+ On March 14, 2014, the Company issued 4,660,000 units of its securities to its officers, directors and certain consultants with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. 
+ 
+
+ 
+
+ These units were issued in the amounts and to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Mirjana Hasanagic, Director
+ 576,000
+ 432,000
+
+ Anna Gluskin, Chief Executive Officer and Director
+ 864,000
+ 648,000
+
+ Rose Perri, 23% shareholder
+ 720,000
+ 540,000
+
+ Brian Lukian, Chief Financial Officer and Director
+ 720,000
+ 540,000
+
+ Joseph Schwarz, Chief Scientific Officer
+ 480,000
+ 360,000
+
+ Bill Abajian
+ 180,000
+ 135,000
+
+ Slava Jarnitskii
+ 640,000
+ 480,000
+
+ Michael Weisspapir, Chief Medical Officer 
+ 480,000
+ 360,000
+
+ Total
+ 4,660,000
+ 3,495,000
+
+ 
+
+ II-1
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Condensed Notes to Financial Statements
+ March 31, 2014 and December 31, 2013
+ 
+
+ On March 21, 2014, the Company issued 4,640,000 units of its securities in a private placement at a purchase price of $0.25 per unit. Each unit consisted of one share of common stock and a warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. The Company issued an aggregate of 4,640,000 shares of common stock and warrants to purchase 3,480,000 shares of common stock. The Company issued an additional 1,000,000 shares and paid $110,000 in cash in finder s fees. The securities referenced above were sold and issued to accredited investors, as such term is defined in the Securities Act and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) and Regulation D (Rule 506) under the Securities Act of 1933, as amended, and corresponding provisions of state securities laws.
+ 
+
+ On March 21, 2014, the Company issued 1,073,000 shares of its common stock to consultants for services rendered at the price of $0.25 per share and issued 321,628 shares of common stock to vendors for satisfaction of accounts payable and accrued liabilities at price of $0.25 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
+ 
+
+ On June 6, 2014, the Company issued 244,000 units of its securities in a private placement at a purchase price of $0.25 per unit. Each unit consisted of one share of common stock and a warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. The Company issued an aggregate of 244,000 shares of common stock and warrants to purchase 183,000 shares of common stock. The securities referenced above were sold and issued to accredited investors, as such term is defined in the Securities Act and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) and Regulation D (Rule 506) under the Securities Act of 1933, as amended, and corresponding provisions of state securities laws.
+ 
+
+ On June 6, 2014, the Company issued 3,852,000 shares of common stock to employees and consultants for services rendered at the price of $0.25 per share. Included in these shares were 140,000 shares issued to each of Michael Weisspapir and Joseph Schwarz, officers of the Company. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. 
+ 
+
+ On June 9, 2014, the Company issued 2,452,400 units of its securities to its officers, directors and certain consultants with each unit consisting of one share of common stock and a five year warrant to purchase 0.75 shares of common stock at an exercise price of $0.25 per share. These units are in the amounts and were issued to the individuals set forth below in satisfaction of accrued liabilities. 
+ 
+
+ 
+ Name
+ Shares
+ Warrants
+
+ Hasanagic, Mirjana
+ 273,600
+ 205,200
+
+ Gluskin, Anna
+ 480,000
+ 360,000
+
+ Rose Perri
+ 427,200
+ 320,400
+
+ Lukian, Brian
+ 427,200
+ 320,400
+
+ Schwarz, Joseph
+ 48,000
+ 36,000
+
+ Bill Abajian
+ 400,000
+ 300,000
+
+ Slava Jarnitskii
+ 348,400
+ 261,300
+
+ Weisspapir, Michael
+ 48,000
+ 36,000
+
+ Total
+ 2,452,400
+ 1,839,300
+
+ 
+ The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.
+ 
+
+ II-3
+ 
+
+ 
+
+ EASTGATE ACQUISITIONS CORPORATION
+ (A Development Stage Company)
+ Condensed Notes to Financial Statements
+ March 31, 2014 and December 31, 2013
+ 
+
+ Item 16. Exhibits and Financial Statement Schedules
+ 
+ a) Exhibits
+ 
+
+ Exhibit No. Exhibit Name 
+ 2.1 Patent Acquisition Agreement (1)
+ 2.2 First Addendum to Patent Acquisition Agreement (1)
+ 3.1 Articles of Incorporation and Certificates of Amendments (4)
+ 3.3 Bylaws (9)
+ 3.4 Certificates of Amendment filed March 8, 2002 (6)
+ 3.5 Certificates of Amendment filed November 14, 2006 (6)
+ 3.6 Certificates of Amendment filed October 24, 2007 (6)
+ 3.7 Certificates of Amendment filed August 3, 2009 (6)
+ 3.8 Certificates of Amendment filed November 10, 2011(6)
+ 3.9 Restated Articles of Incorporation filed August 15, 2013 (7)
+ 5.1Opinion of Sichenzia Ross Friedman Ference LLP (9)
+ 10.1 Agreement for Private Label & Custom Manufacturing (3)
+ 10.2 Investment Agreement with Kodiak Capital Group, LLC(4)
+ 10.3 Registration Rights Agreement with Kodiak Capital Group, LLC (4)
+ 10.4 Demand Promissory Note Issued to Anna Gluskin (4)
+ 10.5 Securities Purchase Agreement with Anna Gluskin (4)
+ 10.6 Agreement for distribution of products with Mediq Denmark A/S (6)
+ 10.7 Lease Agreement between Nano Essentials, Inc. and Ogen Investments, Inc.(7)
+ 10.8 Assignment of Lease Agreement between Nano Essentials and Eastagate Pharmaceuticals, Inc. (5)
+ 10.10 Description of Verbal Agreement Concerning Related Party Debt to Anna Gluskin (6)
+ 10.11 Description of Verbal Agreement Concerning Related Party Debt to Williams Investment
+ Company (6)
+ 10.12 2014 Equity Incentive Plan (8)
+ 10.13 Consulting Agreement with Gregory Sicheniza (8)
+ 10.14 Finder s Fee/Non-Disclosure/Non-Circumvention Agreement with Chardan Capital Markets LLC (9)
+ 10.15 Form of Warrant issued to investors and officers, directors, employees and consultants (9)
+ 10.16 Form of Subscription Agreement used in March and June 2014 Private Placements (9)
+ 21.1 Subsidiaries (4)
+ 23.1 Consent of Sichenzia Ross Friedman Ference LLP (Included in Exhibit 5.1) (9)
+ 23.2 Consent of Saddler Gibb and Associates LLC*
+ 24.1 Power of Attorney (9)
+ 
+
+ (1) Previously filed as an exhibit to Form 8-K on May 29, 2012.
+ (2) Previously filed as an exhibit to Form 10-SB on November 2, 2007.
+ (3) Previously filed as an exhibit to Form S-1 on November 20, 2012.
+ (4) Previously filed as an exhibit to
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001115128_quotient_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001115128_quotient_prospectus_summary.txt
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@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms Coupons, the company, we, us and our in this prospectus refer to Coupons.com Incorporated and its consolidated subsidiaries. Overview We operate a leading digital promotion platform that connects great brands and retailers with consumers. Over 2,000 brands from more than 700 consumer packaged goods companies, or CPGs, and many of the leading grocery, drug and mass merchandise retailers use our promotion platform to engage consumers at the critical moments when they are choosing which products they will buy and where they will shop. We deliver digital coupons to consumers, including coupons and coupon codes, and display advertising through our platform which includes our web, mobile and social channels, as well as those of our CPGs, retailers, and our extensive network of approximately 30,000 third-party websites, or publishers, that display our coupon and advertising offerings on their websites. During 2013, we generated revenue from over 1.3 billion transactions in which consumers selected a digital coupon or redeemed a coupon code offered through our platform, an increase of 43% over the same period in 2012. In 2013, 315 billion total coupons were distributed, representing an aggregate discount value of $510 billion, with 2.8 billion redeemed representing an aggregate discount value of $3.5 billion, according to an annual industry report by NCH Marketing Services, Inc., or NCH, a provider of coupon audit and settlement services. Increasingly, CPGs and retailers are directing a greater proportion of their spending to digital promotions. Our platform serves three key constituencies: more than 700 CPGs representing over 2,000 brands; retailers operating approximately 58,000 store locations in North America; and consumers who (i) made an average of approximately 17 million monthly unique visits to Coupons.com and our other sites during 2013, (ii) visited the sites of our CPGs, retailers and publishers, and (iii) downloaded our mobile apps more than seven million times. The combination of our CPGs, retailers, publishers and consumers, all served by our promotion platform, has resulted in powerful network effects, which we believe to be a significant competitive advantage. Our large and growing base of retailers integrated into our platform has allowed us to attract, retain and grow the digital promotion spending of leading CPGs. The breadth of our offerings from these leading brands enables us to attract and retain a growing and more diverse range of retailers, publishers and consumers. Additional offerings on our platform, in particular point of sale solutions, increase consumer engagement and retailer integration, which enhance the value offered to CPGs. We generate revenues primarily from digital promotion transactions. Each time a consumer selects a digital coupon on our platform by either printing it for physical redemption at a retailer or saving it to a retailer online account for automatic digital redemption, we are paid a fee which is not Table of Contents dependent on the digital coupon being redeemed. For coupon codes, we are paid a fee when a consumer makes a purchase using a coupon code from our platform. If we deliver a digital coupon or coupon code on a retailer s website or through its loyalty reward program, or the website of a publisher, we generally pay a distribution fee to the retailer or publisher which is included in our cost of revenues. We also generate advertising revenues through the placement of online advertisements from CPGs and retailers which are displayed with our coupon offerings on our websites and those of our publishers. We are paid a fee for the display of advertisements on a per impression or a per click basis. Advertising placements are generally sold as part of insertion orders for coupons as an integrated sale and not as a separate transaction. Our CPG customers include many of the leading food, beverage, drug, personal and household product manufacturers. We primarily generate revenue from CPGs through coupons offered through our platform and to a lesser degree, through the sale of advertising. Our retailers include leading grocery, drug and mass market retailers which distribute and accept coupons offered through our platform. Our retailers also include a broad range of specialty stores, including clothing, electronics, home improvement and many others which offer codes through our platform. In 2012, we generated revenues of $112.1 million, representing 23% growth over 2011, a net loss of $59.2 million, representing an increase of 158% over 2011, and an Adjusted EBITDA loss of $47.3 million, representing an increase of 233% over 2011. During 2013, we generated revenues of $167.9 million, representing 50% growth over 2012, a net loss of $11.2 million, representing a decrease of 81% over 2012, and Adjusted EBITDA of $1.7 million, as compared to an Adjusted EBITDA loss of $47.3 million in 2012. For information on how we define and calculate Adjusted EBITDA, and a reconciliation of net loss to Adjusted EBITDA, see the section titled Summary Consolidated Financial and Other Data Non-GAAP Financial Measures below. Industry Overview Since Coca-Cola introduced a coupon in the late 1800s, CPGs and retailers have used coupons and other promotions as a core tool to increase sales and drive awareness of their products. Newspapers and direct mail have traditionally been the primary channels for distributing coupons, but particularly with the decline in newspaper readership, the effectiveness of traditional channels has declined. In contrast to traditional promotions, digital coupons are redeemed at higher rates and are more effective. According to an annual industry report by NCH, in 2013, digital coupons (including print-at-home and paperless coupons) represented less than 1% of total U.S. CPG coupon distribution volume, but accounted for over 10% of total U.S. CPG coupon redemptions, illustrating the greater effectiveness of digital coupons. We believe that the simplicity of digital coupons is broadening the demographic reach and driving the increased use of digital coupons. According to a study by eMarketer, Inc., a market research company, 97 million U.S. adults will use digital coupons in 2013. Many of the digital coupons are offered through grocery store loyalty programs. According to the 2013 Colloquy Loyalty Census from LoyaltyOne, a provider of loyalty program services, total memberships in grocery-store loyalty programs totaled approximately 172.4 million in 2012. The combination of continued CPG and retailer promotion spending, strong consumer demand for digital coupons and the greater effectiveness of digital coupons will offer significant opportunities for a solution that can effectively bring together CPGs, retailers and consumers on a digital promotion platform that addresses the challenges that each face, further accelerating the shift from traditional to digital promotions. Table of Contents Table of Contents Challenges for CPGs and Brands difficulty engaging consumers at scale; difficulty coordinating promotional channels that are optimized to their retail distribution channels; complexity of reaching consumers at the moments critical to influencing their purchase decisions; difficulty of integrating with retailer promotion efforts; inability to measure and improve the effectiveness of promotions; and lack of security. Challenges for Retailers coordinating CPG promotional spending to drive benefits to the retailer; difficulty in engaging digitally savvy consumers with retailer promotions; and improving the efficiency of redeeming all forms of coupons. Challenges for Consumers traditional and digital coupons may not be available in the form that a consumer finds easiest to use; difficulty in finding coupons for preferred brands and retailers; and lack of personalization. Our Solution We offer a comprehensive digital promotion platform that allows us to connect CPGs and retailers with consumers. Why CPGs and their Brands Choose Us Our platform s increasing effectiveness has driven growth in the use of our platform by CPGs. The cohort of all CPGs that used our platform during 2011 increased their promotion spending with us two years later during 2013 by 52% over the amount spent by such cohort during 2011. Such revenue represented 74% of our total revenues in 2013 as compared to 90% of our total revenues in 2011. During 2013, we generated 26% of our revenue, or $43.0 million, from customers who were not CPGs which had used our platform during 2011. Broad and effective reach. We generated revenue from over 1.3 billion transactions pursuant to which consumers selected a coupon or redeemed a code offered through our platform during 2013. Multi-channel engagement with consumers at key purchasing decision moments. Our platform allows CPGs to better engage with consumers by enabling multiple touchpoints during a consumer s shopping experience. For example, a consumer can use our mobile app while they are walking through the aisle of a retailer, find a coupon for their favorite detergent, save the coupon directly to the retailer s loyalty program and receive the discount automatically at the point of sale without the need to present a physical coupon. Table of Contents TABLE OF CONTENTS Prospectus Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001211759_connecture_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001211759_connecture_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and is a brief overview of key aspects of the offering. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes and the information set forth in the sections titled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Some of the statements in this prospectus constitute forward-looking statements. See the section titled Special Note Regarding Forward-Looking Statements and Industry Data for more information. CONNECTURE, INC. Overview We are a leading web-based consumer shopping, enrollment and retention platform for health insurance distribution. Our solutions support the industry evolution towards a consumer-centric experience that is transforming how health insurance is purchased and distributed. We offer a personalized health insurance shopping experience that recommends the best fit insurance plan based on an individual s preferences, health status, preferred providers, medications and expected out-of-pocket costs. Our customers are health insurance marketplace operators, such as health plans, brokers and exchange operators, that must distribute health insurance in a cost-effective manner to a growing number of insured consumers. Our solutions automate key functions in the health insurance distribution process, allowing our customers to price and present plan options accurately to consumers and efficiently enroll, renew and manage plan members. The United States health insurance marketplace is undergoing a tremendous structural change that is fundamentally altering how health insurance is purchased and distributed. More consumers now have access to health insurance with more plan options and places to buy their insurance than ever before. As a result, consumers need effective decision support tools to help them optimize their health insurance choices. Concurrently, health plans and brokers that have traditionally distributed a more limited set of plans to employers through group coverage must now cost-effectively sell insurance in the more fragmented individual market and in public and private exchanges, which are online marketplaces sponsored either by a non-government entity, such as an employer, insurance broker or other distributor (in the case of private exchanges) or by a federal or state government entity (in the case of public exchanges) for health insurance and related products that allow individuals and businesses to compare products and make purchases directly from health plans. These changes are driving significant demand for innovative technology solutions to more effectively help consumers navigate the new health insurance marketplace and for health plans, brokers and other aggregators of covered lives to deploy cost-effective distribution channels. We have a 15-year history of providing technology-enabled health plan sales automation solutions. In 2013, our solutions were used by plan sponsors, brokers and consumers representing over 20 million lives, or annual shoppers, and facilitated over $130 billion of annual plan premiums. As of September 30, 2014, our expanding customer base included more than 70 health plans, including 20 of the top 25 health plans (based on total enrollment). Our personalized health insurance shopping experience is available to all 52 million Medicare beneficiaries through our provision of shopping, price comparison, plan ranking and enrollment software for Medicare.gov and 1-800-Medicare call center agents. We estimate that approximately four million Medicare beneficiaries used our software in the 2013 to 2014 enrollment period. As of September 30, 2014, our technology powered more than 30 private, state and federal exchanges. As of December 31, 2013 and September 30, 2014, total stockholders deficit was $106.1 million and $122.9 million, respectively. For the year ended December 31, 2013 and the nine months ended September 30, 2014, our net loss was $26.4 million and $14.9 million, respectively. Over the same periods, our adjusted EBITDA loss was $17.3 million and $5.3 million, respectively. Please refer to Consolidated Selected Financial Table of Contents Data Adjusted Gross Margin and Adjusted EBITDA in this prospectus for a discussion of the limitations of adjusted EBITDA and a reconciliation of adjusted EBITDA to net loss, the most comparable generally accepted accounting principles measurement. Industry Background The United States health insurance industry is responsible for the administration of healthcare benefits to over 200 million individuals covered by commercial health insurance and is experiencing a structural transformation in which shopping for and enrollment in health insurance products is transitioning from a group-based distribution model to an individual consumer marketplace. This transformation, in conjunction with regulatory and competitive pressure on distribution and overhead costs, places substantial new business and technology requirements on health plans, brokers and aggregators of covered lives and has created an attractive growth opportunity in the markets we serve. Consumer-centric marketplace. We estimate that approximately 100 million individuals will be shopping for and enrolling in health insurance annually through the individual market and public and private exchanges by 2018. This evolution is being driven by a shift in responsibility for health insurance purchasing from employers to individuals, placing increased importance on better, more informed decision-making, and is changing where these purchases are being made. This trend is evident in several key market segments: Individual Insurance Market: The Patient Protection and Affordable Care Act, or PPACA, which mandates broader health insurance coverage, is expected to drive growth in the under-65 individual market from 20 million lives in 2012 to 57 million in 2017 and create new opportunities for health plans, brokers and retailers (or other aggregators of covered lives) to sell directly to individuals. Employer-sponsored Insurance Market: For individuals who currently receive insurance through their employers, employees are increasingly bearing a greater share of the cost of these benefits. This trend creates an increased need for employees to engage in the shopping experience, purchase the appropriate levels of coverage and understand the overall financial implications. Exchange-based Insurance Market: Employers are expected to move approximately 40 million lives to private exchanges by 2018 as a mechanism to make health insurance a defined contribution benefit and decouple benefit expenses from medical cost inflation trends. Medicaid Market: As a result of expanded eligibility under PPACA, average monthly Medicaid enrollment is expected to expand from approximately 58 million individuals in 2013 to approximately 73 million individuals by 2024, creating new opportunities for Medicaid managed care organizations to expand into the individual market. Medicare Market: We believe that the number of participants in Medicare Advantage and Medicare Supplement plans will increase from approximately 25 million individuals in 2013 to approximately 32 million individuals in 2018 and that there will be increased movement from group Medicare Advantage plans to retail Medicare Advantage plans. Pressure to manage distribution costs and operating expenses. Health plans and brokers are under increasing pressure to lower distribution costs. Recent federal restrictions on health plan profitability and increased competition for members on exchanges have driven health plans to find ways to better manage areas of non-medical cost structure, such as sales commissions and internal information technology development. As a result, health plans have undertaken efforts to lower brokerage commissions and to implement innovative third-party technologies to reduce investment in internally-developed software. Similarly, brokers who now face depressed commissions from health plans need to leverage technology-based, automated processes to sell more cost-effectively and to identify product cross-selling opportunities. Table of Contents Table of Contents Increasing opportunity for technology. As shopping and enrollment in health insurance transitions to an individual, retail-oriented consumer marketplace, there is significant opportunity for intuitive, web-based technologies to automate and lower the cost of health insurance distribution, as well as increase enrollment opportunities and member retention. As of 2012, approximately $25.0 billion was spent to distribute health insurance annually. As technology becomes increasingly critical to support a more consumer-centric shopping and enrollment process, we believe, based on our assumptions and estimates, that $3.4 billion was spent annually on technology to automate health insurance distribution as of 2013 and that this amount will increase to $5.2 billion by 2017. The Connecture Platform We are a leading web-based consumer shopping, enrollment and retention platform for health insurance distribution. Our solutions support the industry evolution towards a consumer-centric experience that is transforming how health insurance is purchased and distributed. We simplify the health insurance shopping experience with data-driven, personalized plan comparison and shopping tools that empower individual consumers who are now faced with more decisions to make better health insurance choices. For health plans, brokers and exchange operator customers, we deliver a powerful and unified distribution platform that we believe increases their revenue opportunity as they serve a growing, but fragmented insured population, while also reducing the costs associated with acquiring new and retaining current members. We automate the following key functions of the health insurance distribution process: Rate Setting and Modeling: prices and presents plan options accurately to consumers; Shopping and Quoting: allows consumers to view and compare plans; Application and Enrollment: streamlines application and enrollment operations; Renewal Management: streamlines the renewal process; Member Management: updates plan details based on members work or life changes; and Exchange Integration: connects to state and federal exchanges to determine subsidy eligibility. We believe the breadth, depth and scale of the Connecture solutions across key functional areas are critical to our success in the complex and changing health insurance marketplace for the following reasons: Our personalized and data driven shopping experience helps consumers make better purchasing decisions. We believe that our interactive and intuitive health insurance shopping experience offers better decision support for consumers. Our solutions offer personalized health plan recommendations based on the individual s self-entered preferences, health status, preferred providers, medication and expected out-of-pocket costs. Our data-driven recommendations engine also uses empirical data, a consumer s actual claims experience and proprietary algorithms to find the best matches among available plan options. We believe that our personalized shopping experience results in a more effective health plan selection that represents the best match given historical and expected levels of healthcare utilization. Our unified platform across multiple product types is designed to maximize enrollment and member retention. Our platform is designed to deliver a seamless shopping and enrollment mechanism in a marketplace that is characterized by a wide range of potential insurance alternatives and changing insurance eligibility for both currently and previously insured individuals. For brokers that seek to sell the full array of health insurance products, we believe we offer the only unified solution across a broad range of health insurance products, including subsidized and unsubsidized individual plans, group plans, Medicare Advantage, Medicare Supplement and Part D and Medicaid. For health plans that seek to minimize membership churn, our solution enables customers to enroll and retain members as their plan eligibility changes. Our solution integrates with the Federal Health Exchange and allows for calculation of subsidies. For the over-65 population, our solutions integrate Medicare Advantage, Medicare Supplement and Medicare Part D plan data which also allows senior retirees to make informed choices if they transition from a group plan to an individual plan. Table of Contents Table of Contents Our technology enables rapid deployment of public and private single- and multi-payer exchanges. Our technology allows our health plan, broker and aggregator customers to capitalize on the migration to public and private exchanges. Our exchange solutions allow quick deployment of a customized online marketplace where consumers can shop for a plan of their choice and employers or other plan sponsors can set defined contributions. For brokers that are looking to set up multi-payer exchanges, which are private exchanges generally promoted by third parties such as brokers or benefits consultants that offer a broad range of health plans for individuals to choose from, the breadth of our relationships with health plans and knowledge of locally-regulated insurance products allow us to rapidly implement exchanges. For health plans that are looking to sell single-payer exchanges, which are private exchanges that generally offer only plans sponsored by a single health plan, directly to employers, our ability to offer easy-to-use technology that can handle the broader eligibility needs of employees and their dependents allows them to offer a complete integrated solution. We have an established track record of scalability and reliability with our more than 30 exchange customers. Our Competitive Strengths We believe we have the following key competitive strengths: Health plan shopping and enrollment leadership. We have a 15-year history in the technology-enabled health plan shopping and enrollment market: Leadership in the commercial under-65 health insurance market with over one million enrollments in the one-year period ending March 31, 2014, the date of the closing of the first enrollment period under PPACA; Nearly ten years as the web-based technology solution for Medicare.gov; Technology utilized in leading public and private exchange solutions; and Relationships with a broad range of health plans and brokers, including 20 of the top 25 health plans (based on total enrollment). Domain and technology development expertise. The health insurance market is characterized by high levels of regulation associated with the many plan types that can be sold to eligible individuals and how information related to these plans is presented and marketed. We believe our knowledge of the complex health insurance market and our proven ability to innovate positions us to be a continued leader in our industry. Further, our technology assists our customers to compete more effectively by allowing them to introduce new products, enter new markets and change pricing and benefit designs dynamically and efficiently. Configurable and scalable platform to meet customer needs. Our platform is designed to handle both high degrees of configurability and significant growth in users without requiring major software re-engineering or capital expenditures by our customers, allowing us to scale rapidly. We offer a platform that is comprehensive across key sales automation functions and also has individual software applications that can integrate with common existing customer software. We deliver quick deployment solutions in the cloud as well as large scale enterprise solutions. Today, our technology is used by many of the largest health plans and brokers, and we also power the country s largest multi-payer exchange, Medicare.gov, and successfully handle approximately two million Medicare Advantage and Medicare Part D electronic enrollments. Large and valuable database of health plan and drug cost information and ancillary products. We believe that our large database of health plan and drug cost information enables us to deliver higher value to our customers and consumers. We are a primary source of health plan and pharmacy data for Medicare products available on Medicare.gov, and the broad range of our health plan relationships makes us a valuable and extensive source of permission-based health plan information. These data are critical for consumers to make difficult decisions about trade-offs between plan premiums vs. out-of-pocket costs, physician network and pharmaceutical formularies. We believe our large dataset of health plan and drug cost information powers our empirically-driven recommendations Table of Contents Table of Contents engine that provides consumers more precise decision-support tools. In addition, our platform also supports many ancillary products such as dental, life insurance, critical illness and wellness. Tenured, experienced management team. Our management team has significant experience in high growth healthcare, technology and consulting companies, including Truven Health Analytics (formerly Thomson Reuters Healthcare), Optum (part of UnitedHealth Group), Ernst & Young, PricewaterhouseCoopers and Accenture. Our management team has been responsible for driving innovation in the healthcare information technology industry. We believe we have the management team in place to continue developing and marketing innovative solutions that meet the needs of our customers. Visible, recurring software and technology services revenue model. Our business is characterized by high customer retention rates and recurring revenue. Most of our revenue is derived from multi-year contracts for software and services. In the past two years, our customer revenue retention rate has exceeded 95% and recurring revenue has grown to approximately 70% of revenue. As a result, we have significant visibility into future financial performance. As of September 30, 2014, we had $87.5 million of business in contracted backlog and a deferred revenue balance of $80.9 million that we expect to recognize in subsequent years. Our Growth Strategy Key elements of our growth strategy include the following: Add new customers and expand covered lives within our existing base of health plans and brokers. We believe our market leadership positions us to take advantage of key industry trends. We intend to continue engaging additional top national and regional health plans and brokers as they seek innovative solutions to maximize enrollment and retention while minimizing costs as they capitalize on the opportunity to serve the over 100 million expected members in individual and exchange markets. We also believe new market entrants such as retailers and Accountable Care Organizations, or ACOs, present new customer categories for us. Leverage core technology to establish leadership in the private health plan exchange business. As more small and medium sized employers move away from defined benefit plans and towards defined contribution plans, the number of health exchanges, both single- and multi-payer, are expected to significantly increase. Unlike a defined benefit plan, in which employers provide a standard set of health benefits and cover a substantial portion of the health insurance premiums, under a defined contribution plan, employers make cash contributions to health savings accounts that employees can use to purchase insurance products of their choosing. This model allows employers to more accurately predict and limit healthcare costs, while also affording employees a greater number of choices relative to a defined benefit plan. As employers move their employees to defined contribution plans, employers can utilize our software to create private exchanges that allow employees to select their own health benefits. We intend to leverage our technological expertise and our long-lasting relationships with health plans to continue capturing these emerging exchanges, as well as single and multi-payer private exchanges sponsored and/or purchased by insurance brokers and agents serving their individual consumer, employer group and retiree customer bases. We are currently a leader in the retiree exchange space, an industry providing online private exchanges for both retirees under 65 years old and Medicare beneficiaries that is at the forefront of exchange technology adoption, and we believe that our capabilities there position us for further growth in other exchanges. We believe there is a significant opportunity to provide full service private exchange solutions that integrate call center capabilities. Further penetrate our existing customer base. We believe there is a significant opportunity in our existing customer base to cross-sell our full set of applications, as most of our customers utilize less than half of what we are able to offer. Additionally, many of our customers could utilize our solutions across other products within their overall set of offerings, such as a health plan expanding from individual to group product offerings. For example, we initially provided limited solutions to a regional subsidiary of a national customer and then were Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including "Risk Factors" beginning on page 11 and the financial statements and related notes thereto included in this prospectus. Unless the context indicates otherwise, as used in this prospectus, the terms "Marinus," "we," "us," "our," "our company" and "our business" refer to Marinus Pharmaceuticals, Inc. Overview Our Company We are a clinical stage biopharmaceutical company focused on developing and commercializing innovative neuropsychiatric therapeutics. Our clinical stage product candidate, ganaxolone, is a small molecule that is a synthetic analog of allopregnanolone, an endogenous neurosteroid produced in the central nervous system that modulates the brain neurotransmitter gamma-aminobutyric acid, or GABA. Our lead indication for ganaxolone is as an adjunctive, or add-on, therapy for the treatment of partial, also known as focal, onset seizures in adults with epilepsy. By targeting the same spectrum of GABAA receptors as endogenous allopregnanolone, ganaxolone delivers its therapeutic benefit through a natural mechanism that we believe may offer safety and efficacy advantages compared to other marketed antiepileptic medications. We have completed a Phase 2 clinical trial in 147 patients with focal onset seizures demonstrating that patients who added ganaxolone to their medication regimen experienced a statistically significant reduction in seizures as compared to patients who added placebo. We are currently enrolling patients in a randomized Phase 2b clinical trial, which we intend to expand so that it may serve as one of our adequate and well-controlled clinical trials in a registration filing with the United States Food and Drug Administration, or FDA, or the European Medicines Agency, or EMA, for ganaxolone in epilepsy. We expect data from this trial in the second half of 2015. In addition, we believe ganaxolone has potential in a broad range of neuropsychiatric disorders, including orphan indications. We have generated proof-of-concept data for ganaxolone in the treatment of refractory pediatric seizures and as monotherapy for adult refractory focal onset seizures. We currently have a Phase 2 proof-of-concept pediatric clinical trial in progress for ganaxolone as a treatment for behaviors in Fragile X Syndrome, or FXS, and we are initiating an expanded access protocol under our epilepsy investigational new drug application, or IND, for the use of ganaxolone in the treatment of PCDH19 female pediatric epilepsy. Both disorders have been related to mutations affecting neurosteriod signaling at extrasynaptic GABAA receptors and we believe both are potential orphan indications. We plan to pursue other potential indications related to our mechanism when non-dilutive opportunities arise. Ganaxolone Mechanism of Action The effects of allopregnanolone have been studied for over two decades and its role in controlling seizures and improving anxiety, mood and sleep through positive modulation of GABAA type receptors is well documented. Despite these positive characteristics, we believe allopregnanolone is not suitable for chronic use due to potential undesired steroidal effects. Ganaxolone was designed to have the same GABA modulation effects as allopregnanolone without steroidal effects. Ganaxolone and allopregnanolone differ from other GABA agents by interacting with unique binding sites on the GABAA receptor that are located both within, or synaptic, and outside, or extrasynaptic, the GABA synapse. Ganaxolone's activation of the extrasynaptic receptor is a unique mechanism that provides stabilizing effects that we believe differentiates it from other drugs that increase GABA signaling. Preclinical studies provide evidence that the GABA Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents modulatory activity of ganaxolone is responsible for its anticonvulsive activity in epileptic seizures and its antianxiety effects in FXS and other neuropsychiatric disorders. Our Pipeline We are developing ganaxolone for multiple neuropsychiatric indications, including the following: We have global rights to develop and commercialize ganaxolone, excluding Russia and certain other eastern European nations. We have seven United States patents and corresponding foreign patents and patent applications directed to solid and liquid ganaxolone formulations and methods for the making and use thereof, the earliest of which will expire in 2026, excluding possible patent extension. We also have a United States patent and corresponding foreign patents and patent applications covering our ganaxolone synthesis process, the earliest of which will expire in 2030, excluding possible patent extension. Ganaxolone in Epilepsy Epilepsy affects approximately 50 million people globally, and over 5 million people are under treatment in the United States, Europe and Japan. According to IMS Health, global sales of antiepileptic drugs, or AEDs, were approximately $14 billion in 2011. Existing AEDs attempt to control seizures through a variety of mechanisms and are effective in reducing seizure frequency in many patients. Currently available medications create a number of side effects, including mood changes, increased cardiovascular risks, weight changes and potential reproductive toxicity. Approximately 60% of patients will achieve an adequate level of seizure control with a single AED, and the remainder will resort to using multiple drugs, or polypharmacy. Even with polypharmacy, approximately 30 to 35% of all patients do not reach an acceptable level of seizure control. We estimate that the market opportunity for this refractory patient population, which will be ganaxolone's initial target segment, will exceed $4 billion in the United States, Europe and Japan. We believe ganaxolone to be a first-in-class therapy with potential to provide meaningful treatment advantages for adults with focal onset seizures who do not achieve adequate seizure control from, have developed tolerance to, or have safety concerns with currently available medications. We believe ganaxolone, if approved, may provide the following benefits for patients: Efficacy for refractory patients with focal onset seizures. Our completed Phase 2 clinical trial in patients with refractory focal onset seizures demonstrated that patients who added ganaxolone to their Marinus Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 20-0198082 (I.R.S. Employer Identification Number) 142 Temple St., Suite 205 New Haven, CT 06510 (203) 315-0566 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents medication regimen experienced a statistically significant reduction in seizures as compared to patients who added placebo. Improved safety and tolerability profile. Ganaxolone was engineered to be a synthetic analog of a natural molecule, allopregnanolone. Completed preclinical safety studies and Phase 1 and 2 clinical trials involving approximately 1,000 subjects show ganaxolone to be generally safe and well-tolerated, without evidence of toxicity to heart, liver, blood or other body systems and without many of the side effects common to other AEDs. We believe this safety profile may make ganaxolone a treatment of choice in antiepileptic polypharmacy regimens. Improved reproductive toxicity profile. Based on ganaxolone's mechanism, and preclinical and clinical findings to date, we believe ganaxolone will offer a lower risk for reproductive toxicity than many currently available AEDs, which we believe would be an important safety differentiator for women of childbearing age. We have successfully completed a double-blind, randomized, placebo-controlled, Phase 2 clinical trial of ganaxolone as an adjunctive treatment in 147 patients with refractory focal onset seizures. Ganaxolone satisfied the primary efficacy endpoint of the study, a reduction in seizure frequency, and was considered to be generally safe and well tolerated. In this clinical trial, ganaxolone demonstrated a 20% mean seizure reduction from baseline compared to placebo in a difficult-to-treat refractory patient population. In the open label extension to the study, patients who were switched to ganaxolone from placebo experienced reductions in seizures similar to the ganaxolone group in the blinded study. Ganaxolone has also been studied in a Phase 2 proof-of-concept clinical trial as the sole treatment, or monotherapy, for adults with treatment resistant focal onset seizures in which the primary endpoint was duration of treatment prior to withdrawal from the trial due to seizures. In the trial, 50% of ganaxolone subjects completed the study compared to 25% of placebo subjects. In October 2013 we initiated a Phase 2b clinical trial in epilepsy patients with focal onset seizures to evaluate ganaxolone compared to placebo as adjunctive treatment for 12 weeks. This randomized, placebo-controlled trial was designed to enroll approximately 150 adult subjects with focal onset seizures. With the proceeds from this offering, we intend to increase the size of this trial to approximately 300 subjects in order to meet statistical power requirements so that it may be considered as an adequate and well-controlled trial in an FDA or EMA filing package for registration. We expect to complete this clinical trial in the second half of 2015. Ganaxolone in FXS FXS is a genetic condition that causes intellectual disability, behavioral and learning challenges and various physical characteristics. Approximately one million individuals in the United States have, or are at risk for developing, a Fragile X-associated disorder, with approximately 100,000 people having FXS. There are no known cures or approved therapies for FXS at the present time. Treatment approaches focus primarily on supportive care and medications addressing development delays, learning disabilities, and social and behavioral problems caused by the disease. FXS is caused by a genetic mutation. In animal models of this mutation certain brain regions show lower levels of the extrasynaptic GABAA receptors and reduction of proteins and enzymes responsible for GABA function. As a result of ganaxolone's ability to modulate GABA function, we believe that there is a strong rationale for studying ganaxolone for treatment of behaviors associated with FXS in children. We are currently conducting a Phase 2 proof-of-concept randomized, placebo-controlled, clinical trial in approximately 60 FXS patients. This trial is being conducted in collaboration with the MIND Institute at the University of California, Davis, which receives funding from the DoD for the trial. We expect the trial to be completed during the middle of 2015. Christopher M. Cashman President and Chief Executive Officer Marinus Pharmaceuticals, Inc. 142 Temple St., Suite 205 New Haven, CT 06510 (203) 315-0566 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents Ganaxolone in PCDH19 Female Pediatric Epilepsy We are also developing ganaxolone as a treatment for PCDH19 female pediatric epilepsy, a disorder in which a mutation of the PCDH19 gene causes deficits in GABAergic signaling. Although formal epidemiologic data is not available, results from diagnostic screenings indicate that approximately 10% of girls who have seizure onset before five years of age have PCDH19 mutations. We estimate the PCDH19 population to be approximately 15,000 to 30,000 patients in the United States. These patients typically experience clusters of seizures that can last from one day to weeks. Many of these patients will experience developmental delay, intellectual disability and behavioral problems. We believe that ganaxolone may be useful in treating patients with PCDH19 female pediatric epilepsy because it is a positive allosteric modulator of GABAA receptors and because of its safety profile and its availability in a liquid suspension and oral capsule form. We are initiating an expanded access protocol in approximately ten patients with PCDH19 female pediatric epilepsy under our epilepsy IND in the second half of 2014. This trial will provide proof-of-concept data, which we anticipate receiving in the first half of 2015. Additional Indications Due to its mechanism of action, we believe ganaxolone may have potential in a variety of neurologic and psychiatric disorders beyond our current clinical focus; however, we will need to undertake additional clinical studies in order to obtain additional labeled indications. Potential additional indications include generalized anxiety disorder, posttraumatic stress disorder and depression, multiple sclerosis, addictive behaviors such as alcoholism and smoking, attention deficit hyperactivity disorder, or ADHD, and orphan disorders such as Super Refractory Status Epilepticus, or SRSE, Neimann Pick Disease, Type C and certain autism subtypes. If we decide to pursue any additional indications for ganaxolone, we would need to undertake additional clinical trials. Ganaxolone Safety and Tolerability In Phase 1 and 2 clinical trials, ganaxolone has been administered in approximately 1,000 subjects at therapeutically relevant dose levels and treatment regimens for up to two years. In these clinical trials, ganaxolone was generally well tolerated with no adverse effects on cardiovascular, liver, blood or other systems. In animal studies there was no evidence of reproductive toxicity or other toxicities after long-term administration of ganaxolone. Our Strategy Our goal is to maximize the value of ganaxolone as a first-in-class innovative neuropsychiatric therapy with a portfolio of diversified indications. The key elements of our strategy to achieve this goal include: executing our registration studies and pursue regulatory approval for ganaxolone for adjunctive treatment of focal onset seizures and other epilepsy indications; expanding indications for ganaxolone, including use in pediatric seizure disorders; commercializing ganaxolone in the United States either alone or in collaboration with others; and establishing collaborations to develop and commercialize ganaxolone in territories outside the United States.
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1/A Amendment No. 4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FIGO VENTURES, INC. (Exact name of Registrant as specified in its charter) Nevada 1000 90-0338080 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 3270 Electricity Drive Windsor, Ontario Canada N8W 5JL (address of principal executive offices) Registrant s telephone number, including area code: 226-787-5278 Empire Stock Transfer Inc. 1859 Whitney Mesa Dr. Henderson, NV 89014 (Name and address of agent for service of process) COPIES OF COMMUNICATIONS TO: Cane Clark, LLP 3273 E. Warm Springs, Rd. Las Vegas, Nevada 89120 Fax: (702) 944-7100 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x CALCULATION OF REGISTRATION FEE TITLE OF EACH CLASS OF SECURITIES TO BE REGISTRATION AMOUNT TO BE REGISTERED(1) PROPOSED MAXIMUM OFFERING PRICE PER SHARE(2) PROPOSED MAXIMUM AGGREGATE OFFERING PRICE AMOUNT OF REGISTERED FEE(3) Common Stock 22,500,000 $ 0.32 $ 7,200,000.00 $ 927.36 (1) Represents 22,500,000 shares of the company s common stock issuable upon conversion of Convertible Promissory Notes, issued by the Company in favor of three note holders (the Convertible Notes ), in the principal amount of $45,000. (2) Calculated in accordance with Rule 457(c) of the Securities Act, based upon the average high and low prices reported on the OTCPink on April 10, 2013. (3) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. Summary FIGO Ventures, Inc. The Company We are a mineral exploration and exploitation company. On December 25, 2013, we entered into a Lease Assumption Agreement with Capital Gold Mining Resources SAS ( CGM ), a company domiciled in Bogota, Columbia, for mining concessions acquired by CGM for the mining operations of what is known as the Rafael mine. Mining concession contract No. 7092, registered with the Mining Registry on February 7, 2007, concerns the economic exploitation of gold, silver and concentrates located in the municipalities of San Rafael and San Carlos in the Department of Antioquia, Columbia. The concession contract covers an area of 233.5 hectares. We are an exploration stage company, and have not yet earned any revenues from our planned operations. We have acquired a right to the concession of the Rafael mine. As of January 31, 2014 and April 30, 2014, we had $0 cash on hand and current liabilities in the amount of $327,848 and $348,132, respectively. Accordingly, our working capital position as of January 31, 2014 and April 30, 2014 was ($327,848) and ($348,132), respectively. Since our inception through April 30, 2014, we have incurred a net loss of $738,094. We attribute our net loss to having no revenues to offset our expenses and the professional fees related to the creation and operation of our business. Our management estimates that, until such time that we are able to generate revenue from the extraction of gold on the Rafael mine we will continue to experience negative cash flow. We will need financing of approximately $755,000 for the next twelve months. We hope to raise funds from loans or the sale of our equity securities. At present, we have no arrangements or commitments to finance our operations. As such, our auditors have indicated in their report of our financial statements a substantial doubt about our continuing as a going concern. Our fiscal year end is July 31. Our principal offices are located at 3270 Electricity Drive, Windsor, Ontario Canada N8W 5JL. Our phone number is 226-787-5278. The Offering Securities Being Offered Up to 22,500,000 shares of our common stock underlying convertible promissory notes. We issued three convertible promissory notes on November 1, 2013 for a total of $45,000. The notes mature on November 30, 2015 and accrue interest at a rate of 12% per annum. The note principal and accrued interest are convertible at a price of $.00225 per share. Offering Price The offering price of the common stock is fixed $0.05 per share. Our common stock is quoted under the symbol FIGO on the OTCPink operated by OTC Markets Group, Inc. Our reporting is presently not current and we have a limited information designation attached to our symbol. We intend to apply to the OTCBB, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. PROSPECTUS FIGO VENTURES, INC. 22,500,000 SHARES OF COMMON STOCK INITIAL PUBLIC OFFERING Securities Issued and to be Issued 53,370,951 shares of our common stock are issued and outstanding as of the date of this prospectus. Upon the completion of this offering, if the convertible promissory notes are converted to common stock and the maximum number of shares of common stock is sold in this offering, the purchasers of 22,500,000 shares of our common stock will own 29% of the issued and outstanding shares of our common stock. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Summary Financial Information Balance Sheet Data As of July 31, 2013 (Derived from Restated Audited Financial Statements) As of January 31, 2014 (Derived from Restated Audited Financial Statements) As of April 30, 2014 (Derived from Unaudited Financial Statements) Cash $ 0 $ 0 $ 0 Total Assets $ 0 $ 50,000 $ 50,000 Liabilities $ 318,486 $ 333,243 $ 363,287 Total Stockholders Equity (Deficit) $ (318,486 ) $ (283,243 ) $ (313,287 ) Statement of Operations For the year ended July 31, 2012 (Derived from Restated Audited Financial Statements) For the year ended July 31, 2013 (Derived from Restated Audited Financial Statements) For the Six Months Ended January 31, 2014 (Derived from Restated Audited Financial Statements) For the Nine Months Ended April 30, 2014 (Derived from Unaudited Financial Statements) For the period from March 26, 2004 to April 30, 2014 (Derived from Unaudited Financial Statements) Revenue $ 0 $ 0 $ 0 $ 0 $ 0 (Loss) for the Period $ (950 ) $ (5,779 ) $ 14,757 $ (44,801 ) $ (738,094 )
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+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 deciding to invest in our common stock, you should read this entire prospectus carefully, including the sections of this prospectus entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes. Unless the context otherwise requires, references in this prospectus to the "company," "Adamas," "we," "us" and "our" refer to Adamas Pharmaceuticals, Inc. Adamas Pharmaceuticals, Inc. We are a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system, or CNS. We achieve this by enhancing the pharmacokinetic profiles of approved drugs to create novel therapeutics for use alone and in fixed-dose combination products. We are developing our lead wholly owned product candidate, ADS-5102, for a complication of Parkinson's disease known as levodopa induced dyskinesia, or LID, and as a treatment for chronic behavioral symptoms associated with traumatic brain injury, or TBI. We have successfully completed a Phase 2/3 clinical trial in which patients receiving ADS-5102 had a statistically significant 43% reduction in LID compared to their baseline LID experienced prior to taking ADS-5102, and we intend to initiate a Phase 3 registration trial of ADS-5102 in LID in 2014. Our late-stage therapeutics portfolio also includes an NDA-submitted fixed-dose combination product candidate, MDX-8704, being co-developed with Forest Laboratories, Inc., or Forest, for the treatment of moderate to severe dementia associated with Alzheimer's disease, and an approved controlled-release product, Namenda XR , which Forest developed and is marketing in the United States under a license from us. We plan to commercialize our wholly owned product candidates, if approved, by developing a specialty CNS sales force to reach high volume prescribing neurologists and psychiatrists in the United States. Our market opportunity We estimate that approximately 36 million people in the United States suffer from chronic CNS disorders such as Alzheimer's disease, Parkinson's disease, TBI, epilepsy, psychosis and depression. CNS diseases are frequently treated with multiple medications having different mechanisms of action with the goal of maximizing symptomatic benefits for patients. Existing CNS drugs often require frequent dosing and may have tolerability issues that limit the amount of the drug that can be taken each day. We believe that many CNS disorders could be better treated if the concentrations of existing CNS drugs as a function of time, or the pharmacokinetic profiles, are altered to enhance tolerability and efficacy and if these enhanced drugs are then combined with other existing CNS drugs to improve and streamline the management of these complicated conditions. Our strategy Our goal is to build an independent, CNS-focused specialty pharmaceutical company that creates and commercializes novel therapeutics that address significant unmet clinical needs. This goal is supported by a product development strategy that allows us to discover, patent, develop and commercialize novel therapeutics in a capital efficient manner. Our integrated process combines the following elements: Market attractiveness. We identify approved products that are sub-optimally utilized but, with pharmacokinetic enhancements, can significantly improve the treatment of chronic CNS conditions. Intellectual property. We seek to discover novel pharmacokinetic and pharmacodynamic relationships and to obtain patent protection for a range of dose strengths, pharmacokinetic AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents profiles, timing of administration and drug combinations as opposed to protecting just specific formulations. Regulatory pathways. We intend to use the regulatory pathway provided by Section 505(b)(2) of the U.S. Food, Drug and Cosmetic Act, or FDCA, to pursue approval for novel therapeutics based on existing drugs with less time and expense than are typically associated with the standard new drug approval pathway. Research and development. We have developed a core competency in identifying, formulating and manufacturing controlled-release drug products utilizing coated pellet technology. We are implementing our strategy by focusing on the following key objectives: Obtain FDA approval of ADS-5102 for LID; Develop ADS-5102 for the treatment of additional CNS indications; Commercialize ADS-5102 by developing a specialty sales force; Develop additional novel therapeutics based on existing CNS drugs; and Support Forest in the NDA review and anticipated commercialization of MDX-8704. Our therapeutics portfolio Our initial product and product candidates are based on pharmacokinetic enhancements of two approved CNS drugs, amantadine and memantine, which belong to a class of drugs known as aminoadamantanes. We selected aminoadamantanes as our initial area of focus because they have the ability to modulate multiple neurotransmitter systems, which are the molecular pathways that control brain function, and we believe aminoadamantanes potentially have broader therapeutic utility than previously realized. The following table describes our therapeutics portfolio: Product and Product Candidates Target Indication(s) Development Status Commercial Rights Wholly Owned ADS-5102 Levodopa-Induced Dyskinesia Phase 3 Adamas, worldwide Amantadine Traumatic Brain Injury Phase 2/3 ready Adamas, worldwide Undetermined Phase 2/3 planning Adamas, worldwide ADS-8800 series ADS-5102 based combination therapies Undetermined Research, Phase 2/3 planning Adamas, worldwide Partnered Namenda XR Memantine Moderate to severe Alzheimer's dementia Marketed U.S.-only; licensed to Forest MDX-8704 Memantine/Donepezil Moderate to severe Alzheimer's dementia NDA submitted U.S.-only; licensed to Forest Wholly owned product candidates. Our most advanced wholly owned product candidate is ADS-5102, a once-nightly, high dose, controlled-release version of amantadine designed to address many of the limitations of immediate-release amantadine. In patients taking ADS-5102, the amantadine plasma concentration achieved from the early morning through mid-day is approximately two-times that reached following administration of immediate-release amantadine, providing substantial benefit to Adamas Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Table of Contents patients as they engage in their daily activities. Further, the lower concentrations occurs in the evening, reducing the negative impact of amantadine's sleep-related side effects. We are developing ADS-5102 initially for treatment of LID. LID is a movement disorder that frequently occurs in patients with Parkinson's disease after long-term treatment with levodopa, the most widely-used drug for Parkinson's disease. Patients with LID suffer from involuntary non-purposeful movements and reduced control over voluntary movements. We estimate that in 2011 approximately 260,000 Parkinson's disease patients in the United States suffered from motor complications as a result of levodopa therapy and approximately 140,000 of these patients suffered from LID. There are no drugs for the treatment of LID that have been approved for marketing in the United States or Europe. As a result, clinicians typically manage LID by decreasing the dose of levodopa, which can exacerbate symptoms of the underlying Parkinson's disease. We selected LID as the initial indication for ADS-5102 based on results seen in investigator initiated clinical studies of amantadine and in established preclinical models. In our recently completed Phase 2/3 clinical study, ADS-5102 met its primary endpoint, reduction of LID, and several key secondary endpoints. If our anticipated Phase 3 registration trial of ADS-5102 is successful, we anticipate submitting a New Drug Application, or NDA, to the U.S. Food and Drug Administration, or FDA, for ADS-5102 in the first half of 2016. Amantadine has shown promising results in several other CNS indications, and we expect to initiate in late 2014 a Phase 2/3 study of ADS-5102 in a second CNS indication, possibly for the treatment of chronic behavioral symptoms associated with TBI. We anticipate initiating additional Phase 2/3 studies of ADS-5102 in one or more other indications by the end of 2015. We are investigating and will potentially develop additional products, our ADS-8800 series, based on combining ADS-5102 with approved CNS drugs. Each combination will be designed to provide clinical benefits in specific indications where it appears that including ADS-5102 in combination therapy can address a significant unmet clinical need. Furthermore, we believe our product development strategy is broadly applicable to addressing limitations of CNS drugs whose pharmacokinetic profiles limit dosing, and we intend to initiate additional programs in this area in 2015. We intend to use the regulatory pathway provided by Section 505(b)(2) of the FDCA to obtain approval for ADS-5102 and our other wholly owned product candidates. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. We believe this approach will be more time and capital efficient than the Section 505(b)(1) pathway typically used for new chemical entities. Partnered product and product candidate. Under our license agreement, Forest currently sells one product, Namenda XR, a treatment for moderate to severe dementia associated with Alzheimer's disease. Namenda XR, a controlled-release version of the approved CNS drug memantine, was launched in the United States in June 2013 and is part of Forest's $1.5 billion Namenda franchise. In addition, Forest and we are co-developing MDX-8704, a once-daily fixed-dose combination of Namenda XR and the FDA-approved CNS drug donepezil, for the treatment of moderate to severe dementia associated with Alzheimer's disease. Forest submitted an NDA to the FDA for MDX-8704 in February 2014 and will be responsible for marketing MDX-8704 in the United States if approved. We received from Forest a $65 million upfront payment in November 2012 and two $20 million development milestone payments in the fourth quarter of 2013 related to the completion of studies that support Forest's NDA filing for MDX-8704. We are eligible to receive up to an additional $55 million in payments based on the achievement of certain regulatory milestones prior to and including the first FDA approval of MDX-8704 and royalty payments related to sales of Namenda XR commencing in June 2018 and to sales of MDX-8704 commencing five years after its commercial launch in the United Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 42-1560076 (I.R.S. Employer Identification Number) 2200 Powell Street, Suite 220 Emeryville, CA 94608 (510) 450-3500 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents States. Forest has stated that it projects FDA approval and commercial launch of MDX-8704 in the first half of 2015. Our management team We are led by a team of executives and directors with significant experience in drug discovery, development and commercialization. In addition to co-founding Adamas, our chief executive officer co-founded CuraGen Corporation (acquired by Celldex Therapeutics, Inc.), and other members of our management team have held senior positions at Syntex, Bayer, Tularik and Elan. Members of our executive team have played leading roles in the development and commercialization of multiple significant drugs in a wide range of therapeutic areas. Our board of directors brings substantial, relevant experience in reimbursement, drug development and commercialization. Financial overview We have developed our current portfolio of late stage therapeutics in a capital efficient manner. As of December 31, 2013, we had raised a total of $87 million from equity financings, had received $105 million from our collaboration with Forest, had recognized $5 million in revenue from other sources and had $86 million in cash and cash equivalents and no debt obligations.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001333849_jaguar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001333849_jaguar_prospectus_summary.txt
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+consolidated financial statements included elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that is important to you in making a decision to invest in our common shares. Before making an investment decision, you should carefully read the entire prospectus, including the "Risk Factors" and "Important Information and Cautionary Statement Regarding Forward–Looking Statements" sections. You should also read carefully the consolidated financial statements and notes thereto and the other information about us that is contained in this prospectus, as well as our annual report on Form 20–F for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission on May 15, 2014. Unless the context indicates otherwise, when we refer to "we," "our," "us," "Jaguar," and "the Company" for purposes of this prospectus, we are referring to Jaguar Mining Inc. and its consolidated subsidiaries. Overview Jaguar Mining Inc. is a gold mining company engaged in gold production and in the acquisition, exploration, development and operation of gold mineral properties in Brazil. Jaguar plans to grow organically through the expansion of its existing operations and the advancement of its exploration properties. In addition, Jaguar may consider the acquisition and subsequent exploration, development and operation of other gold properties. For the years ended December 31, 2013, 2012 and 2011, Jaguar sold approximately 94,850 oz., 103,676 oz. and 155,525 oz. of gold and generated revenues of $134.1 million, $172.4 million and $243.1 million for the periods, respectively. Please see the section titled "Management s Discussion And Analysis Of Financial Condition And Results Of Operations" and the financial statements located after the text of this prospectus. Jaguar s Resources and Production In March 2014, Jaguar completed an internal reconciliation of its Mineral Resources and Reserves (the "Reconciliation"). The Reconciliation was prepared by the Company s technical services team under the supervision of Wilson Miola, Jaguar s Director of Engineering. Mr. Miola is a Qualified Person in accordance with NI 43–101. Please read the below in conjunction with our "Cautionary Note to U.S. Investors regarding Mineral Resource and Mineral Reserve Estimates." Based on the Reconciliation, as of December 31, 2013, through its wholly–owned subsidiaries, Minera o Serras do Oeste Ltda. ("MSOL"), Minera o Turmalina Ltda. ("MTL") and MCT Minera o Ltda. ("MCT"), Jaguar has interests in, and controls the mineral rights, concessions and licenses to the mineral resources and reserves set forth below. Jaguar s Mineral Resources are (i) Measured and Indicated Mineral resources of 167,607,470 tonnes with an average grade of 1.19 grams per tonne containing 6,392,430 ounces of gold and (ii) Inferred Mineral resources of 20,743,340 tonnes with an average grade of 2.03 grams per tonne containing 1,352,640 ounces of gold. Jaguar s Proven and Probable Mineral Reserves, which are included in the Measured and Indicated Mineral Resource figure above, are 69,309,920 tonnes with an average grade of 1.24 grams per tonne containing 2,767,690 ounces of gold. For more detailed information, please see the section titled "Business – Mineral Properties – Summary Mineral Resource and Mineral Reserve Estimates" below. Jaguar s Properties Jaguar s has two primary operating mining complexes: Turmalina and Caet , both of which are located in or adjacent to the Iron Quadrangle region of Brazil, a greenstone belt located east of the city of Belo Horizonte in the state of Minas Gerais. Jaguar s portfolio also includes the Gurupi Project in the state of Maranh o, the Pedra Branca Project in the state of Cear and the Paci ncia operation, which has been on care and maintenance since May 2012. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share(2) Proposed maximum aggregate offering price(1)(2) Amount of registration fee(3) Common shares, no par value to be sold by selling shareholders 67,767,975 $0.76 $51,503,661 $6,633.67 (1) The shares will be offered for resale by the selling shareholders pursuant to the shelf prospectus contained herein. Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional securities that may be offered or issued to prevent dilution resulting from splits, dividends or similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the bid and asked prices on July 30, 2014, as reported on the TSX Venture Exchange. (3) Calculated at a rate of $128 per $1,000,000 of the proposed maximum aggregate offering price. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine. TABLE OF CONTENTS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001335190_magnum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001335190_magnum_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides a brief overview of information contained elsewhere or incorporated by reference in this prospectus. Because it is abbreviated, this summary does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus, including the documents incorporated by reference, carefully before making an investment decision. Unless otherwise stated or the context otherwise requires, references in this prospectus to our company, we, us, our and ours refer to Magnum Hunter Resources Corporation and its subsidiaries. Our Company We are an independent oil and natural gas company engaged in the exploration for and the exploitation, acquisition, development and production of crude oil, natural gas and natural gas liquids resources in the United States. We are active in what we believe to be three of the most prolific unconventional shale resource plays in the United States, specifically, the Marcellus Shale in West Virginia and Ohio; the Utica Shale in southeastern Ohio and western West Virginia; and the Williston Basin/Bakken Shale in North Dakota. Our core oil and natural gas reserves and operations are primarily concentrated in West Virginia, Ohio and North Dakota. We are also engaged in midstream and oil field services operations, primarily in West Virginia and Ohio. Corporate Information Our principal executive offices are located at 777 Post Oak Boulevard, Suite 650, Houston, Texas 77056, and our telephone number at these offices is (832) 369-6986. Our website is www.magnumhunterresources.com. Information on, or accessible through, our website is not part of, and will not be deemed to be incorporated into, this prospectus or the registration statement of which this prospectus forms a part. Investors should not rely on any such information in deciding whether to purchase our common stock. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion dated July 21, 2014 PROSPECTUS Magnum Hunter Resources Corporation 4,300,000 Shares of Common Stock Table of Contents CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in this prospectus and filings made by us with the Securities and Exchange Commission, or SEC. Among the factors that could cause results to differ materially are those risks discussed in this prospectus and the periodic reports filed by us with the SEC, including our annual report on Form 10-K for the fiscal year ended December 31, 2013, as amended, and our quarterly report on Form 10-Q for the quarter ended March 31, 2014. You are urged to carefully review and consider the cautionary statements and other disclosures made in this prospectus and our filings incorporated by reference, specifically those under the heading Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements speak only as of the date of the document in which they are contained, and we do not undertake any duty to update any forward-looking statements except as may be required by law. Table of Contents The Offering Common Stock Offered by the Selling Stockholders: 4,300,000 shares. Common Stock Outstanding: 199,396,847 shares of common stock outstanding as of July 18, 2014. Use of Proceeds: We will not receive any of the proceeds from the sale of any shares of common stock by the selling stockholders. NYSE Symbol for Common Stock: MHR
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355489_srs_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355489_srs_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355491_sis_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355491_sis_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355519_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355519_sungard_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355556_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355556_sungard_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355557_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355557_sungard_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355622_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355622_sungard_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355625_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355625_sungard_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355628_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355628_sungard_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001355651_sungard_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001355651_sungard_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001358403_bellicum_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001358403_bellicum_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially Risk Factors beginning on page 12 and our financial statements and the related notes, before deciding to buy shares of our common stock. Unless the context requires otherwise, references in this prospectus to we, us and our refer to Bellicum Pharmaceuticals, Inc. Overview We are a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for various forms of cancer, including both hematological cancers and solid tumors, as well as orphan inherited blood disorders. Cellular immunotherapy has the potential to transform medicine by harnessing immune cells, principally T cells, to attack and eliminate harmful diseased cells in the body. Unlike traditional small molecule and biologic therapies which are predictably metabolized and eliminated from the body, cellular immunotherapies are unpredictable and uncontrollable. We are using our proprietary Chemical Induction of Dimerization, or CID, technology platform to engineer and then control components of the immune system in real time. By incorporating our CID platform, our product candidates may offer better safety and efficacy outcomes than are seen with current cellular immunotherapies. Our lead clinical product candidate, BPX-501, is an adjunct T-cell therapy administered after allogeneic hematopoietic stem cell transplantation, or HSCT, and is currently being evaluated in multiple Phase 1/2 clinical trials. Our next clinical product candidate, BPX-201, is a dendritic cell cancer vaccine in a Phase 1 clinical trial for the treatment of metastatic castrate-resistant prostate cancer, or mCRPC, targeting the prostate-specific membrane antigen, or PSMA. Dendritic cells are specialized cells that are key regulators of the immune system that process and present antigens on the cell surface to T cells in order to activate the T cells. We are also focused on developing next-generation chimeric antigen receptor, or CAR, T-cell therapies and T-cell receptor, or TCR, therapies and are planning to advance several product candidates into human clinical trials, including: (1) BPX-401, a CAR-T product candidate for hematological cancers that express the CD19 antigen, (2) BPX-601, a CAR-T product candidate for solid tumors overexpressing the prostate stem cell antigen, or PSCA, and (3) BPX-701, a TCR product candidate for solid tumors expressing the preferentially-expressed antigen in melanoma, or PRAME. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED DECEMBER 9, 2014 PRELIMINARY PROSPECTUS 6,250,000 Shares Common Stock Bellicum Pharmaceuticals, Inc. is offering 6,250,000 shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price of our common stock will be between $15.00 and $17.00 per share. We have applied to list our common stock on The NASDAQ Global Market under the symbol BLCM. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves risks. See Risk Factors beginning on page 12. 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. PER SHARE TOTAL Public Offering Price $ $ Underwriting Discounts and Commissions (1) $ $ Proceeds to Bellicum Pharmaceuticals, Inc. (before expenses) $ $ (1) We have agreed to reimburse the underwriters for certain expenses. See Underwriting. Certain of our existing stockholders and their affiliated entities have indicated an interest in purchasing up to approximately $40.0 million of shares of our common stock in this offering at the public offering price. However, because indications of interest are not binding agreements or commitments to purchase, these entities may determine to purchase more or fewer shares than they have indicated or not to purchase any shares in this offering. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 937,500 shares of common stock. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses will be $ . The underwriters expect to deliver the shares of common stock to purchasers on or about , 2014. Joint Book-Running Managers Jefferies Citigroup Piper Jaffray Co-Manager Trout Capital Prospectus dated , 2014 Table of Contents Neither we nor any of the underwriters has authorized anyone to provide you with information different from, or in addition to, that contained in this prospectus or any free writing prospectus prepared by or on behalf of us or to which we may have referred you in connection with this offering. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor any of the underwriters is making an offer to sell or seeking offers to buy these securities in any jurisdiction where or to any person to whom the offer or sale is not permitted. The information in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock and the information in any free writing prospectus that we may provide you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition, results of operations and future growth prospects may have changed since those dates. Through and including , 2014 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer s obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions. 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. We have obtained registered trademarks for Bellicum , CaspaCIDe and DeCIDE based on an intent to use in the United States. We are currently prosecuting registrations for the GoCAR-T and GOCART marks. This prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the or TM 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 licensor to these trademarks and trade names. We do not intend our use or display of other companies trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Table of Contents Our product candidate pipeline is set forth below: Our Proprietary CID Technology Platform We are developing next-generation product candidates in some of the most important areas of cellular immunotherapy, including HSCT, CAR T cell therapy, and dendritic cell vaccines. HSCT, also known as bone marrow transplantation, has for decades been curative for many patients with hematological cancers or orphan inherited blood disorders. However, application of HSCT is limited by graft-versus-host-disease, or GvHD, a condition in which the transplanted immune cells recognize the host cells as foreign and attack them. Since the transplanted cells can persist indefinitely, GvHD does not resolve by itself and is a major cause of transplant-related morbidity and mortality. CAR T cell therapy is an innovative approach in which a patient s T cells are genetically modified to carry CARs, which redirect the T cells against cancer cells. While high objective response rates have been reported in some hematological malignancies, serious and sometimes fatal toxicities have arisen in patients treated with CAR T cell therapies. These toxicities include instances in which the CAR T cells have caused high levels of cytokines due to over-activation, referred to as cytokine release syndrome , frequent transient neurologic toxicities and cases in which they have attacked healthy organs instead of the targeted tumor, leading to death. In solid tumors, where the behavior of CAR T cells is particularly unpredictable and results have been inconsistent, researchers are developing enhanced CAR T cell approaches called armored CARs that raise even greater safety concerns. Lastly, despite the integral role that dendritic cells play in the immune system, they are difficult to activate appropriately and as a result their use has delivered only modest therapeutic benefit. Table of Contents Our proprietary CID technology is designed to address these challenges. Events inside a cell are controlled by cascades of specialized signaling proteins. CID consists of molecular switches, modified forms of these signaling proteins, which are triggered inside the patient by infusion of a small molecule, rimiducid (AP1903), instead of by natural upstream signals. We include these molecular switches in the appropriate immune cells and deliver the cells to the patient in the manner of conventional cellular immunotherapy. We have developed two such switches: a safety switch designed to initiate programmed cell death, or apoptosis, of the immunotherapy cells, and an activation switch designed to stimulate activation and in some cases proliferation of the immunotherapy cells. Each of our technologies incorporates one of these switches, for enhanced, real-time control of safety and efficacy: CaspaCIDe is our safety switch, incorporated into our HSCT and TCR product candidates, where it is inactive unless the patient experiences a serious side effect. In that event, rimiducid is administered to fully or partially eliminate the cells, with the goal of terminating or attenuating the therapy and resolving the serious side effect. CIDeCAR consists of CAR T cells modified to include our CaspaCIDe safety switch and in which the CAR incorporates the signaling domains of two proteins, MyD88 and CD40. Together, these form our proprietary dual co-stimulatory domain, MC, which is designed to activate T cells in the presence of cancer cells more potently than co-stimulatory molecules CD28 and 4-1BB, which are used in current CAR T cell therapy. Incorporation of CaspaCIDe in a CIDeCAR product candidate is intended to allow the enhanced potency of MC co-stimulation to be deployed safely in patients. GoCAR-T consists of CAR T cells that are modified to include the proprietary dual co-stimulatory domain, MC. In contrast to CIDeCAR, MC is structured in GoCAR-T as a molecular switch, separate from the chimeric antigen receptor, which itself contains no co-stimulatory domains. GoCAR-T is designed to allow control of the activation and proliferation of the CAR T cells through the scheduled administration of a course of rimiducid infusions that may continue until the desired patient outcome is achieved. In the event of emergence of side effects, the level of activation of the GoCAR-T cells is designed to be attenuated by reducing the rimiducid administration schedule. DeCIDe consists of dendritic cells that are modified to include the same MC switch used in GoCAR-T. Upon exposure to rimiducid, dendritic cells containing DeCIDe become highly activated in a process that is less susceptible to being turned off by the immune system s natural inhibitory processes. By administering rimiducid after the patient has been vaccinated and the dendritic cells have had time to migrate to the draining lymph nodes, our DeCIDe product candidates are designed to be activated in a potent and long-lasting manner. By incorporating our novel switch technologies, we are developing product candidates with the potential to elicit positive clinical outcomes and ultimately change the treatment paradigm in various areas of cellular immunotherapy. Our clinical product candidates, each of which is a combination product of genetically modified immune cells and rimiducid, are described below. BPX-501. We are developing a CaspaCIDe product candidate, BPX-501, as an adjunct T-cell therapy administered after allogeneic HSCT, using donor stem cells. In a typical allogeneic HSCT procedure, a patient receives a full complement of immune cells including both donor stem cells and donor T cells. T cells in the transplant often cause serious and potentially fatal side effects, such as GvHD. BPX-501 is designed to decrease the risk of including T cells with the transplant by enabling the elimination of donor T cells through the triggering of the CaspaCIDe safety switch upon emergence of GvHD. In a 10-patient Phase 1 clinical trial with CaspaCIDe modified T cells, conducted by an academic collaborator, four patients developed GvHD after donor T-cell infusion. A single dose of rimiducid rapidly eliminated over 90% of the modified T cells and resolved GvHD in all four patients without recurrence of GvHD. These findings have been replicated in preliminary data from three patients in a second clinical trial of CaspaCIDe-modified T cells. BPX-501 is currently being evaluated in multiple Phase 1/2 clinical trials in the United States and Europe, with the first top-line data expected in the second half of 2015. Table of Contents BPX-201. We are developing a DeCIDe product candidate, BPX-201, as a dendritic cell cancer vaccine made from the patient s own white blood cells, designed to treat mCRPC. It targets the prostate specific membrane antigen, or PSMA, and uses our DeCIDe activation switch technology. BPX-201 is currently being evaluated in an 18-patient Phase 1 clinical trial for mCRPC. We are evaluating opportunities for BPX-201 in combination with other cancer immunotherapies, such as checkpoint inhibitors, which are antibodies designed to block certain inhibitory receptors on the surface of T cells, and thus potentiate the T cells ability to promote an immune response against cancer. We believe that the increased numbers of PSMA-specific T cells migrating to deposits of prostate cancer in the body that BPX-201 is designed to generate may serve as a substrate for checkpoint inhibitors, resulting in a synergistic, more potent anti-cancer immune response. In addition, our preclinical product candidates are designed to overcome the current limitations of CAR-T and TCR therapies and include the following: BPX-401. We are developing a CIDeCAR product candidate, BPX-401, as a next-generation CAR T cell therapy for hematological cancers that express the CD19 antigen. CD19 is an antigen expressed in many hematological cancers, including acute lymphocytic leukemia, or ALL, chronic lymphocytic leukemia, or CLL, and certain non-Hodgkin s lymphomas. We believe that, while the activity of CAR T cell therapy has been demonstrated in early-stage clinical trials by third party researchers in these indications, safety issues, such as cytokine release syndrome, a systemic inflammatory response that is produced by elevated levels of cytokines that are associated with T-cell activation and proliferation, remain a major concern, which may be addressed by BPX-401. BPX-601. We are developing a GoCAR-T product candidate, BPX-601, for solid tumors overexpressing PSCA, such as some prostate, pancreatic, bladder, esophageal and gastric cancers. We have obtained positive proof-of-principle data in an animal pancreatic tumor model, which we believe validate BPX-601 s activity and rimiducid s ability to modulate therapeutic effect. BPX-701. We are developing a CaspaCIDe TCR product candidate, BPX-701, in collaboration with Leiden University Medical Center, initially for the treatment of PRAME-expressing melanoma, sarcomas and neuroblastoma. Based on in vitro studies, BPX-701 has demonstrated strong affinity to panels of cancer cells presenting PRAME peptides and low affinity to non-tumor cells. In other in vitro studies, rimiducid administration has shown the ability to eliminate BPX-701 cells. We expect to file investigational new drug applications, or INDs, for BPX-701 in the second half of 2015 and for BPX-401 and BPX-601 in 2016. Our IND-enabling activities for each of these preclinical product candidates include manufacturing key components and developing a robust process to produce cell products that comply with regulations of the U.S. Food and Drug Administration, or FDA, and other regulatory agencies. We have developed an efficient and scalable process to manufacture genetically modified T cells of high quality and purity. This process is being implemented by our third-party contract manufacturers to produce BPX-501 for our clinical trials. We expect to leverage our resources, capabilities and expertise for the manufacture of our CAR-T and TCR product candidates. Strategy Our goal is to become a leading innovator in the field of cellular immunotherapy by maximizing the inherent potential of this therapeutic modality and developing medicines with a differentiated combination of safety and efficacy. The key elements of our strategy to achieve this goal are as follows: Pursue a broad development strategy that will maximize the market potential of BPX-501. We believe that BPX-501 will enable physicians to maximize the benefits of adjunct T-cell therapy for allogeneic HSCT, such as immune system recovery, prevention or treatment of relapse of underlying disease and improvement in stem cell engraftment, while mitigating safety issues associated with the therapy. Based on these attributes, BPX-501 may serve an integral role in the treatment paradigm for allogeneic HSCT in various diseases and increase the overall patient eligibility for the procedure. In Table of Contents order to make BPX-501 accessible to a broad group of patients and maximize the market potential of this product candidate, we are conducting multiple Phase 1/2 clinical trials that include U.S. and European protocols, adult and pediatric patients and different indications and usage of BPX-501. We expect to report data from these clinical trials and discuss registration trial design at an end-of-Phase 2 meeting with the FDA and European regulatory authorities in the first half of 2016. Focus on developing proprietary CAR-T and TCR product candidates with an improved safety and efficacy profile. We intend to build a robust clinical pipeline of our own novel CAR-T and TCR product candidates, which incorporate our proprietary switch technologies, CIDeCAR, GoCAR-T and CaspaCIDe, and focus on indications in which current CAR-T and TCR therapies have significant shortcomings. To this end, we are developing BPX-401 for hematological cancers expressing the CD19 antigen, BPX-601 for solid tumors overexpressing PSCA and BPX-701 for solid tumors expressing PRAME. We believe that these product candidates may address serious safety concerns associated with conventional CAR-T and TCR therapies and achieve higher overall potency and efficacy, thereby widening the therapeutic window compared to other CAR-T and TCR product candidates. We intend to dedicate significant resources in the near term to advance BPX-401, BPX-601 and BPX-701 as well as our other product candidates toward human proof-of-concept data. Selectively pursue partnerships and collaborations. Although our priority is to develop internal product candidates, we may pursue opportunistic partnerships and collaborations for our technologies, including CaspaCIDe and DeCIDe. In indications outside of our interest or expertise, we may structure transactions in which our molecular switches are incorporated into our partners CAR-T or TCR product candidates. We intend to build on our existing strong relationships with premier cancer research centers around the world to identify new opportunities and position our company at the forefront of innovations in the field of cellular immunotherapy. Continue to innovate around our proprietary CID platform. We believe that our CID platform can be further leveraged to discover other novel technologies and therapeutic applications to capitalize on additional market opportunities. We intend to evaluate BPX-201 and other product candidates based on our DeCIDe technology in combination with other cancer immunotherapy such as checkpoint inhibitors. We are also developing new switches and two-switch systems to provide greater control over cellular immunotherapy. Continue to strengthen our intellectual property profile. We believe that having a comprehensive patent estate that provides strong barriers to entry is critical to the success of our business. As such, our management team has made a concerted effort to develop and secure our intellectual property since inception. We currently own or have exclusive licenses to 74 issued patents and 45 pending patent applications. These patents and patent applications include composition and/or method of use claims in the United States, Europe and other jurisdictions. We intend to continue to strengthen our patent estate by developing and filing for patents on various aspects of our technologies and product candidates as well as through in-licensing activities with research institutions and other biopharmaceutical companies. Become a fully integrated cellular immunotherapy company. Developing product candidates for cellular immunotherapy is complex and requires significant in-house capabilities in various areas of drug development. Over the years we have built a solid foundation from which to fulfill the highly demanding clinical and regulatory requirements of genetically modified cellular immunotherapy, with expertise in research and discovery, clinical trial management, data analysis, manufacturing, quality assurance and regulatory affairs. We intend to use a portion of the net proceeds from this offering to continue hiring staff with necessary expertise and investing in infrastructure to support the growth of our clinical development activities and to enable us to become the leading cellular immunotherapy company. Table of Contents Recent Developments To enable further development of our proprietary technology and product candidates, we completed a private placement of $55 million of Series C convertible preferred stock in August 2014. Investors in the transaction included, among others, Baker Brothers, RA Capital Management, LLC, Perceptive Advisors, LLC, Jennison Associates LLC (on behalf of certain clients), Sabby Capital, LLC, Ridgeback Capital Management, venBio Select, Redmile Group, LLC and AJU IB Investment, as well as our then current investors, including AVG Ventures and Remeditex Ventures. Certain aspects of our platform technology are licensed from ARIAD Pharmaceuticals, Inc., or ARIAD. In October 2014, we amended our license agreement with ARIAD, pursuant to which we agreed to pay ARIAD $50 million in three tranched payments, including an initial payment of $15 million in connection with the execution of the amendment. In exchange, ARIAD gave us a fully paid-up license to its cell-signaling technology and agreed to return of all of the 677,463 shares of our common stock currently held by ARIAD at the time of the second tranche payment. The scope of the license and the field of use were also expanded as part of the amendment. The amended agreement gives us a worldwide exclusive license to ARIAD s cell-signaling technology for broad use in human cell therapies for all diseases on a royalty- and milestone-free basis. See Business Our License Agreements. Risks Associated With Our Business Our business is subject to numerous risks, as more fully described in the section entitled Risk Factors immediately following this prospectus summary. You should read these risks before you invest in our common stock. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy. In particular, risks associated with our business include: We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of uncertainty. We have never generated any revenue from product sales and may never be profitable. We have concentrated our therapeutic product research and development efforts on our CID platform, a novel therapeutic approach, and our future success depends on the successful development of this therapeutic approach. Our clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay regulatory approval and commercialization. We may not be successful in our efforts to use and expand our CID platform to build a pipeline of product candidates and develop marketable products. The FDA regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our product candidates. Further, the FDA may disagree with our regulatory plans and we may fail to obtain regulatory approval of our product candidates. Due to the novel nature of our technology and the potential for our product candidates to offer therapeutic benefit in a single administration, we face uncertainty related to pricing and reimbursement for these product candidates. Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our product candidates profitably. We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business. We have identified a material weakness in our internal control over financial reporting. If our internal control over financial reporting is not effective, we may not be able to accurately report our financial results or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price. Table of Contents Corporate Information We were incorporated in Delaware in July 2004. Our principal executive offices are located at 2130 W. Holcombe Blvd., Ste. 800, Houston, Texas and our telephone number is (832) 384-1100. Our corporate website address is www.bellicum.com. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. Implications of Being an Emerging Growth Company As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. An emerging growth company may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to: being permitted to present only two years of audited financial statements and only two years of related Management s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus; not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended; reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may use these provisions until the last day of our fiscal year following the fifth anniversary of the closing of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a large accelerated filer, our annual gross revenue exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. We have elected to take advantage of certain of the reduced disclosure obligations in the registration statement of which this prospectus is a part and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Table of Contents THE OFFERING Common stock offered by us 6,250,000 shares Common stock to be outstanding after this offering 24,782,240 shares Option to purchase additional shares We have granted to the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to 937,500 additional shares of common stock. Use of proceeds We estimate that we will receive net proceeds of approximately $90.2 million (or approximately $104.1 million if the underwriters option to purchase additional shares is exercised in full) from the sale of the shares of common stock offered by us in this offering, based on an assumed initial public offering price of $16.00 per share (the mid-point of the price range set forth on the cover page of this prospectus), and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for the following purposes: (1) $21.0 million to fund our ongoing and planned Phase 1/2 clinical trials of BPX-501, (2) $30.0 million to fund pre-clinical and Phase 1/2 clinical trial of BPX-401, BPX-601 and BPX-701 as well as preclinical development of our other CART and TCR programs, (3) $4.0 million to fund our ongoing Phase 1/2 clinical trial and our planned Phase 1/2 clinical trial of BPX-201 in combination with checkpoint inhibitors, (4) $11.0 million to fund the construction of tenant improvements and the purchase of capital equipment at our Houston facility, and (5) the remainder to fund other working capital purposes, including general operating expenses. See Use of Proceeds.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read and consider carefully the more detailed information in this prospectus, including the factors described under the heading Risk Factors in this prospectus beginning on page 11, the matters described in Management s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and related notes included in this prospectus, before making an investment decision. Prior to the effectiveness of the registration statement of which this prospectus forms a part, we will convert into a Delaware corporation, change our name to GeNO Healthcare Corp. and engage in other related transactions. See Corporate Conversion. Except where the context otherwise requires or where otherwise indicated, the terms GeNO, we, us, our, our company, the company, and our business refer, prior to the corporate conversion discussed below, to GeNO LLC and, after the corporate conversion, to GeNO Healthcare Corp. Overview We are a biopharmaceutical company focused on the design, development and commercialization of next-generation products to address unmet medical needs of patients with a variety of pulmonary and cardiac diseases. We are currently developing inhaled nitric oxide, or NO, products for use in the hospital setting and for longer-term applications outside of the hospital setting. These products, which are based on our novel GeNOsyl drug delivery technology, are comprised of a single-use drug cassette and either a portable console or wearable controller. Our product candidates are designed to deliver NO safely for a variety of therapeutic indications and to provide clinicians and other end-users with a solution that is more user-friendly than currently available NO delivery systems that use tanks of compressed gas. Nitric oxide is a naturally occurring molecule that is widely recognized as important in a number of biological processes. Inhaled NO is a potent, pulmonary-specific vasodilator, or a substance that dilates blood vessels. Once inhaled into the lungs, NO causes blood vessels to relax and widen, resulting in an increase in blood flow. This increase in blood flow allows tissues to receive more oxygen. NO exerts its effects locally and is metabolized quickly, thus minimizing the systemic adverse effects associated with other vasodilators. Vasodilator therapies are widely used in the hospital setting for patients with pulmonary and cardiac diseases. Current providers of NO therapies use tanks of compressed gas that contain NO diluted in pure nitrogen. While numerous academic-sponsored clinical trials have demonstrated the clinical utility of inhaled NO for a wide variety of indications, we believe that the commercial potential of inhaled NO has been hampered by the limitations of currently available NO delivery systems, including: the simultaneous delivery of small amounts of nitrogen dioxide, or NO2, which forms when NO from the delivery system is diluted in oxygen-enriched air prior to delivery to the patient and can cause increased airway resistance, airway inflammation and damage; the logistical concerns for hospitals associated with the delivery, handling, tracking, storage and return of tanks of compressed gas; the lack of portability of existing systems, which impair patient mobility and create obstacles for the use of inhaled NO outside of the hospital setting; and the safety risks associated with the use of tanks of compressed gas. Table of Contents EXPLANATORY NOTE GeNO LLC, the registrant whose name appears on the cover of this registration statement, was formed in 2006 as a Delaware limited liability company. Prior to effectiveness of this registration statement, GeNO LLC will convert into a Delaware corporation and change its name from GeNO LLC to GeNO Healthcare Corp. Shares of the common stock of GeNO Healthcare Corp. are being offered by the prospectus included in this registration statement. Table of Contents Our GeNOsyl drug delivery technology is designed to have a number of advantages over existing NO delivery systems, including: a significant reduction in the amount of NO2 that is delivered to the patient; the elimination of the logistical challenges and administrative costs associated with the use of tanks of compressed gas; portability that we believe will allow for the movement of patients within hospitals and between critical care centers and that may allow therapeutic NO to be delivered in a unit that can be worn comfortably by patients outside of the hospital setting and provide the potential to address large underserved chronic-care markets; the avoidance of risks associated with compressed gas delivery systems and the inclusion of redundancies to enhance patient safety; and the simplification of delivery of inhaled NO through the use of straightforward, intuitive user interfaces that do not require direct medical supervision. We are currently developing two next-generation drug products: GeNOsyl Acute DS, for use in the hospital setting, and GeNOsyl Chronic DS, a lightweight system that can be comfortably worn by patients with chronic diseases for use outside of the hospital setting. Both of these products under development operate by producing NO from NO2 liquid that is stored in a single-use drug cassette containing two proprietary reactor cartridges. The cassette is inserted into a console, in the case of GeNOsyl Acute DS, or a controller, in the case of GeNOsyl Chronic DS. The console or controller, as the case may be, converts the NO2 liquid into NO2 gas, which is then passed through the reactor cartridges and converted into therapeutic NO. We have a robust patent estate with currently issued U.S. patents having expiration dates ranging from 2022 to 2031. Our Pipeline We have full worldwide commercial rights for our entire portfolio of potential products. We intend to retain substantial global commercialization rights to our products but we may selectively partner with third parties to accelerate development and expand commercial opportunities. Our executive management team has substantial knowledge in nitric oxide chemistry and extensive experience developing, obtaining U.S. and other marketing approvals for, and commercializing novel drugs and devices to address, pulmonary and cardiac diseases. Our commercial and development plans for our GeNOsyl products are as follows: GeNOsyl Acute DS INDICATION TARGETED MILESTONE(S) TIMING United States Acute vasoreactivity testing in patients with pulmonary arterial hypertension (AVRT) End of Phase 2 meeting with FDA Initiate Phase 3 Trial Second quarter of 2014 Second half of 2014 New Drug Application, or NDA, Filing Second half of 2015 Reduced onset of right heart failure (RHF) associated with implantation of left ventricular assist device (LVAD) Meeting with FDA to discuss Phase 2 trial Second half of 2014 Initiate Phase 2 Trial First half of 2015 Hypoxic respiratory failure associated with persistent pulmonary hypertension of the newborn (HRF-PPHN) NDA Approval 2017 Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell securities, nor is it soliciting an offer to buy securities, in any jurisdiction where such offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 8, 2014 PRELIMINARY PROSPECTUS Shares Common Stock We are offering shares of our common stock. This is our initial public offering and no public market currently exists for our common stock. All of the shares of common stock are being sold by GeNO Healthcare Corp. We expect the initial public offering price per share to be between $ and $ . We have filed an application to list our common stock on The NASDAQ Global Market under the symbol GNO. Investing in our common stock involves a high degree of risk. Please read Risk Factors beginning on page 11. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discounts and Commissions Proceeds to GeNO, before expenses (1) (1) The underwriters will also be reimbursed for certain expenses incurred in this offering. See Underwriting for details. Delivery of the shares of common stock is expected to be made on or about , 2014. We have granted the underwriters an option for a period of 30 days to purchase an additional shares of our common stock. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . Jefferies Stifel Canaccord Genuity Prospectus Dated , 2014 Table of Contents INDICATION TARGETED MILESTONE(S) TIMING European Economic Area Pulmonary hypertension associated with cardiac surgical procedures Marketing Authorization End of 2015 HRF-PPHN Marketing Authorization End of 2015 GeNOsyl Chronic DS INDICATION TARGETED MILESTONE(S) TIMING Pulmonary hypertension secondary to idiopathic pulmonary fibrosis (PH-IPF)/ Pulmonary arterial hypertension (PAH) Complete Phase 2 Trial Enrollment Second half of 2014 End of Phase 2 Meeting with FDA to discuss Pilot Phase 2/3 Trial Second half of 2014 Initiate Pilot Phase 2/3 Trial Initiate Phase 3 Trials in Lead Indication First half of 2015 First half of 2016 We are developing GeNOsyl Acute DS in the United States for acute vasoreactivity testing, or AVRT, in patients with World Health Organization, or WHO, Group 1 pulmonary arterial hypertension, or PAH. Based on a retrospective analysis of clinical data and Phase 2 safety data obtained through the use of our first-generation product in AVRT, we are targeting commencement of a Phase 3 clinical trial of GeNOsyl Acute DS in this indication in the second half of 2014. In addition, we filed a new drug application, or NDA, with the U.S. Food and Drug Administration, or FDA, for our first-generation system in the delivery of NO to newborn infants with persistent pulmonary hypertension of the newborn, or HRF-PPHN. This system features our proprietary reactor cartridge conversion technology, but uses NO2 gas (rather than NO2 liquid) as the starting material for the production of NO. While the FDA accepted this NDA in October 2012, the agency issued a complete response letter in June 2013, indicating that additional data related to manufacturing and process controls of the delivery system were needed before the application could be approved. However, the FDA did not request that we perform additional clinical trials. At present, we plan to use this system only to generate data to support the development of GeNOsyl Acute DS and GeNOsyl Chronic DS. We are also developing GeNOsyl Acute DS in the European Economic Area, or EEA, for the treatment of pulmonary hypertension in patients who have undergone heart surgery, as well as in newborn infants with hypoxic respiratory failure associated with HRF-PPHN. In July 2013, we received a CE Certificate of Conformity from our notified body in respect of the design and manufacture of NO delivery systems. We expect, however, that GeNOsyl Acute DS and GeNOsyl Chronic DS will be regulated in the EEA as combination drug-delivery device products. Because NO is already authorized for use in the EEA in treating HRF-PPHN and pulmonary hypertension in patients who have undergone heart surgery, we expect to be able to obtain marketing authorization for GeNOsyl Acute DS following the successful completion of limited studies confirming the quality, safety and efficacy of the NO delivered using our proprietary delivery technology. We expect to complete these studies in the first half of 2015 and to seek marketing authorization for GeNOsylTM Acute DS for the treatment of pulmonary hypertension associated with cardiac surgery in the EEA by the end of 2015. We also intend to complete a 16-patient safety study in HRF-PPHN in the first half of 2015 and to seek marketing authorization for GeNOsylTM Acute DS for the treatment of HRF-PPHN in the EEA by the end of 2015. Concurrent with our development of GeNOsyl Acute DS, we are developing GeNOsyl Chronic DS for use in the treatment of PAH and pulmonary hypertension associated with idiopathic pulmonary fibrosis, or PH-IPF. We are currently conducting Phase 2 clinical trials in these indications using our first-generation drug delivery system. We observed statistically significant reductions in pulmonary arterial pressure and pulmonary vascular resistance in 13 patients enrolled in the first dose cohort of this trial. If these data are confirmed in later dose cohorts and we successfully complete this Phase 2 clinical program, Table of Contents This is a graphic description of the chemical conversion of N2O4 into therapeutic NO gas. The graphic depicts a prototype of our product candidate, which is currently under development. GeNO Healthcare Corp Therapeutic No Gas Antioxidant NO2 in Air Air NO2 Gas Heat N2O4 Liquid NITRIC OXIDE RESPIRATORY CARE Table of Contents we anticipate selecting either PAH or PH-IPF as our lead indication and plan on conducting two Phase 3 clinical trials of GeNOsyl Chronic DS in that indication beginning in the first half of 2016. Our Strategy Our goal is to build a sustainable biopharmaceutical company upon a foundation of inhaled nitric oxide products and product candidates that significantly advance patient care and overcome the limitations of the products that are commercially available today. The key elements of our strategy are as follows: Accelerate clinical development of GeNOsyl Acute DS in the United States. In the United States, we are required to conduct clinical trials to support an NDA, which must be approved by the FDA on an indication-by-indication basis, prior to beginning commercial sales. Our lead clinical indication in the United States is AVRT, which is a diagnostic procedure to determine whether a patient with PAH is a candidate for other types of therapies. American College of Cardiology guidelines provide for the use of inhaled NO for AVRT. Based on a retrospective analysis of clinical data and Phase 2 safety data obtained through the use of our first-generation product in AVRT, we anticipate commencing a pivotal Phase 3 clinical trial of GeNOsyl Acute DS for AVRT during the second half of 2014. Should data from the Phase 3 trial warrant, we would target filing an NDA for GeNOsyl Acute DS in this indication in the second half of 2015. In addition, we expect to conduct clinical development of GeNOsyl Acute DS to evaluate the prophylactic delivery of inhaled NO to minimize the onset of right heart failure in patients undergoing the implantation of a left ventricular assist device, or LVAD. We are targeting commencement of a Phase 2 clinical trial of GeNOsyl Acute DS in this patient population during the first half of 2015. Pursue Marketing Authorization of GeNOsyl Acute DS in the EEA. In the EEA, we are focusing our development efforts on seeking marketing authorization for GeNOsyl Acute DS for the treatment of pulmonary hypertension in patients who have undergone heart surgery, as well as in HRF-PPHN. We expect to begin limited safety studies confirming the quality, safety and efficacy of the NO delivered using GeNOsyl Acute DS in the first half of 2015 and, if those studies are successful, to seek marketing authorization for GeNOsyl Acute DS in the EEA. We are targeting receipt of marketing authorization for GeNOsyl Acute DS in the EEA by the end of 2015. Advance clinical development of the wearable GeNOsyl Chronic DS. Concurrent with our development of GeNOsyl Acute DS, we are pursuing development of GeNOsyl Chronic DS. Because GeNOsyl Chronic DS is designed to be lightweight and worn comfortably by patients, we believe it has the potential to be used where inhaled NO may have clinical utility outside of the hospital setting. We are currently conducting a Phase 2, open-label, dose-escalation study of inhaled NO produced using our first-generation drug delivery system in up to 75 patients with either PAH or PH-IPF. We observed statistically significant reductions in pulmonary arterial pressure and pulmonary vascular resistance in 13 patients enrolled in the first dose cohort of this trial. We expect to complete patient enrollment in the second half of 2014. Based on these and other data we plan to generate, we expect to select either PAH or PH-IPF as our lead chronic indication and initiate two Phase 3 clinical trials of GeNOsyl Chronic DS in that indication in the first half of 2016. Expand market opportunity for inhaled NO and develop other pipeline products. Our executive management team has substantial experience in nitric oxide chemistry as well as in developing and commercializing drugs and devices to address a broad range of pulmonary and cardiac diseases. As clinical programs of our GeNOsyl product candidates progress, we plan to evaluate additional potential labeled indications for inhaled NO delivered using our proprietary delivery systems and to expand our Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus. This is only
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+PROSPECTUS SUMMARY This summary highlights the information contained or incorporated by reference in this prospectus and is a brief overview of the key aspects of the offering. Because this is only a summary, it does not contain all of the information that may be important to you. Before investing in our common stock, you should read this entire prospectus, including the information set forth under the headings Risk Factors, Selected Historical Consolidated Financial and Operating Information and Our Business, as well as the Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes thereto that are incorporated by reference herein. Some of the statements contained or incorporated by reference in this prospectus constitute forward-looking statements. Please read Special Note Regarding Forward-Looking Statements for more information. For a description of some key mobile communications industry terms used in this summary and elsewhere in this prospectus, please read Description of Key Terms Used in Our Industry elsewhere in this prospectus. Unless the context otherwise requires, references in this prospectus to Mavenir Systems, Mavenir, we, our, us, and the company refer to Mavenir Systems, Inc. together with its subsidiaries. MAVENIR SYSTEMS, INC. Overview We are a leading provider of software-based telecommunications networking solutions that enable mobile service providers to deliver Internet Protocol (IP)-based voice, video, rich communications and enhanced messaging services to their subscribers globally. Our solutions deliver Rich Communication Services (RCS), which enable enhanced mobile communications, such as group text messaging, multi-party voice or video calling and live video streaming as well as the exchange of files or images, over existing 2G and 3G networks as well as next generation 4G Long Term Evolution (LTE) networks. Our solutions also deliver voice and data services over LTE and wireless (Wi-Fi) networks. In addition, we also offer Evolved Packet Core (EPC), a software-based, carrier grade solution that can be deployed on cloud-based infrastructures using Network Functions Virtualization (NFV) to rapidly scale capacity and adapt to new deployment models. We enable mobile service providers to offer services that generate increased revenue and improve subscriber satisfaction and retention, while allowing them to improve time-to-market of new services and reduce network costs. Our mOne Convergence Platform has enabled MetroPCS (now part of T-Mobile), a leading mobile service provider, to introduce the industry s first live network deployment of Voice over LTE (VoLTE) and the industry s first live deployment of next-generation RCS 5. The capabilities of smartphones and tablets have caused consumers to shift their communication preferences from traditional voice service to a combination of voice, video and messaging services, which are offered by rich communication services. Additionally, many consumers are using their mobile devices to browse the Internet, run software applications, access cloud-based services and consume, create and share rich multimedia and user-generated content. These trends have placed substantial capacity constraints on the existing networks of mobile service providers. According to the February 2014 Cisco Visual Networking Index report, the average smartphone and tablet generate 49 and 127 times more data traffic, respectively, than the average basic-feature cell phone. As a result, mobile data traffic is projected to continue to increase exponentially, driven by the rapid adoption of smartphones and tablets and the demand for enhanced and high-bandwidth mobile services such as video. In order to alleviate the resulting spectrum and network capacity challenges, mobile service providers are making significant investments to transition their networks to the 4G LTE standard for voice and data transmission over mobile networks, as that standard enables higher data speeds and allows more efficient use of the frequency spectrum. In a July 2014 report, Gartner estimated that worldwide annual spending on 4G LTE mobile infrastructure would grow at a compound annual growth rate (CAGR) of 29.8% from 2013 to 2018. Additionally, we believe that the overall addressable market represented by our technology platform represented an aggregate spend of $3.6 billion in 2013 and is forecast to reach $10.3 billion by 2018 according to Dell Oro Group, Infonetics and Mind Commerce, representing a 23% CAGR. Table of Contents Because our solutions are interoperable across network generations, we enable mobile service providers to leverage their existing investments in 2G and 3G networks while offering a seamless, cost-effective migration path to 4G LTE networks. We provide our solutions to over 120 mobile networks globally, including three of the top four mobile service providers in the United States and four of the top five pan-European mobile service providers in Western Europe, as measured by number of mobile device connections as of March 2014. Our end customers include AT&T, Deutsche Telekom, MetroPCS (now part of T-Mobile), T-Mobile USA, Tele 2, Vodafone and Telstra. Our solutions can be deployed on-premise within the mobile service provider s network or hosted in a mobile cloud environment. Our solutions enable mobile service providers to generate additional revenues by providing their subscribers with rich communications and cloud-based services similar to some of the most popular Over-The-Top (OTT) services, including: carrier-grade (at least 99.999% reliable), integrated communications services, including voice calling, video calling and messaging; a rich communications experience, with integrated one-to-one and group voice chat, video chat, messaging and sharing of content such as videos, images, links or locations; a single identity across multiple devices and services that allows seamless delivery of mobile services and applications globally; interworking with legacy short message service (SMS), which is an older technology used to convey short text messages, multimedia messaging service (MMS), which is an existing technology allowing delivery of images in a relatively low-resolution format, and social networks; and cloud-based delivery of next generation mobile communications, including voice, video, enhanced messaging, which includes voice and video mail and interworking with social media platforms, and storage of mobile subscriber content and media. We commenced operations in 2005 and began product sales in 2007. For the six months ended June 30, 2014, our revenue was $62.0 million, representing growth of 28.7% over the same period in 2013. For the year ended December 31, 2013, our revenue was $101.3 million, representing 37% year-over-year growth. For the year ended December 31, 2012, our revenue was $73.8 million, representing 53% year-over-year growth. For the year ended December 31, 2011, our reported revenue was $48.2 million (as adjusted), compared with $8.3 million for the year ended December 31, 2010, which growth includes the effect of our acquisition of Airwide Solutions in May 2011. In addition, our operating loss was $(4.5) million for the six months ended June 30, 2014, and was $(7.7) million, $(14.6) million and $(20.5) million for the years ended December 31, 2013, 2012 and 2011, respectively. Industry Background The market for mobile communications services is evolving rapidly, characterized by the following trends: Proliferation of Smartphones and Tablets. Global adoption of smartphones and tablets is in its early stages, and future growth is expected to accelerate as mobile subscribers increasingly rely on these powerful devices. Despite increased usage of smartphones, a November 2013 Ericsson publication estimated that smartphones accounted for only 25% to 30% of total global mobile subscriptions, highlighting the potential for growth in smartphone usage. Increased Use of Mobile Applications, Mobile Media and Cloud-Based Services. Smartphones and tablets are rapidly replacing desktop computers and laptops as the primary computing platform used for browsing the Internet, running software applications, accessing cloud-based services, and consuming media content such as streaming video and Internet radio. Also, many consumers are increasingly creating, sharing and accessing user-generated content, such as photos and videos, on their mobile devices through online services such as Facebook, Table of Contents Table of Contents Twitter, Instagram and YouTube. In addition, cloud-based storage is growing significantly as consumers purchase content from media services, such as Amazon, Apple and Google, and utilize online storage services to access their purchased content from multiple mobile device types. Furthermore, mobile subscribers are increasingly seeking more rich communication services, such as video chat, to enhance the communications experience on their mobile devices. These trends in consumer behavior related to mobile device usage are driving a substantial increase in the amount of mobile data traffic. Mobile Service Provider Challenges Proliferation of smartphones and tablets as well as increased use of mobile applications and cloud-based services by subscribers present the following challenges for mobile service providers: Strain on Existing Network Resources. Faced with increased subscriber demand for bandwidth-consuming mobile applications and cloud-based services, mobile service providers need to cost-effectively deploy scarce spectrum and address capacity constraints. Competition from Over-The-Top / Web Services. Over-The-Top (OTT) applications compete with services that are, or could be, offered by mobile service providers, reducing revenue sources that traditionally have gone to mobile service providers. For example, OTT services such as WhatsApp, Skype, Apple Facetime and Blackberry Messenger, allow consumers to engage in rich communications experiences in a simple, easy-to-use interface. Mobile service providers need a solution to compete with these OTT services that provide free and feature-rich alternatives to traditional voice and SMS services. Need to Offer Subscribers Enhanced Services. As mobile voice service access has become commoditized and average voice revenue per subscriber has decreased, mobile service providers are seeking to offer their subscribers new, differentiated services that increase revenue per subscriber, enhance customer satisfaction and improve subscriber retention. Migration Path to 4G LTE. As mobile service providers migrate to 4G LTE, they will look to minimize capital expenditures and operational costs, while maximizing subscriber usage of their network. Mobile service providers are seeking a common solution platform that can address existing 2G and 3G network requirements without requiring additional investments and that can also be utilized for next-generation 4G LTE network introductions. Benefits of 4G LTE The next generation of mobile technology, broadly defined as 4G, includes Long Term Evolution (LTE), Worldwide Interoperability Microwave Access (WiMAX) and Evolved High Speed Packet Access (HSPA+) and can be extended to include Wi-Fi. 4G LTE has been developed to handle mobile data more efficiently and allows for faster, more reliable and more secure mobile service than existing 2G and 3G networks. The faster data transfer capabilities of 4G LTE networks enable mobile subscribers to use a wide variety of bandwidth-intensive software applications and cloud-based services with a rich mobile computing experience. In addition to the benefits for mobile subscribers, 4G LTE technology is inherently more efficient and cost-effective, resulting in a better network infrastructure for mobile service providers. 4G LTE offers the opportunity to fundamentally lower the cost of network operational centers by leveraging technologies widely used in the IT industry, such as Network Functions Virtualization (NFV), which refers to the deployment of telecommunications application software on virtualized hardware platforms. Such technologies drive down network cost and complexity and increase network flexibility and responsiveness. 4G LTE is a new architecture that enables mobile service providers to offer a wide range of new services across their networks. Mobile service providers can deliver device independent services over 4G LTE networks Table of Contents TABLE OF CONTENTS Page PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This prospectus summary highlights selected information contained elsewhere in this prospectus and does not contain all the information that you should consider before investing in our common stock and warrants to purchase 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 and notes thereto before making an investment decision. In this prospectus, unless the context requires otherwise, references to Q, we, us, or the Company refer to Q Therapeutics, Inc. and its consolidated subsidiaries. Company Overview Q Therapeutics, Inc. (Q Therapeutics) is a Salt Lake City, Utah-based biopharmaceutical company that is developing human cell-based therapies intended to treat degenerative diseases of the brain and spinal cord, the primary components of the central nervous system (CNS). Q Therapeutics is a biotechnology company focused on the field of regenerative medicine. We are developing novel and proprietary cell-based therapies to treat severe, often life-threatening neurodegenerative diseases, with a first clinical program expected to be launched in Amyotrophic Lateral Sclerosis (ALS, also known as Lou Gehrig s disease) in early 2015. Upon successful initiation of our ALS clinical trial, we anticipate broadening our clinical program to additional neurodegenerative indications including Transverse Myelitis, Multiple Sclerosis and Spinal Cord Injury, and expanding preclinical studies in indications such as Stroke, Traumatic Brain Injury, Huntington s, Parkinson s and Alzheimer s diseases. The technology upon which these potential therapies are based was developed by Q Therapeutics co-founder Mahendra Rao, M.D., Ph.D., a leader in glial stem cell biology, during Dr. Rao s tenure as a Professor at the University of Utah and as Head of the Stem Cell Section in the Laboratory of Neuroscience at the National Institutes of Health (NIH) Institute of Aging. Dr. Rao was one of the first scientists to identify and seek patent coverage on stem cells and their progeny cells found in the CNS. After licensing Dr. Rao s technology from the University of Utah and NIH, Q Therapeutics commenced operations in the spring of 2004 to develop cell-based therapeutic products that can be sold as off-the-shelf pharmaceuticals. Q Therapeutics differentiated approach leverages the scientific findings and intellectual property developed by Dr. Rao, during his tenure at the University of Utah and as Head of the Stem Cell Section at the National Institutes of Health (NIH). Dr. Rao has rejoined Q Therapeutics as Chief Strategy Officer and Chair of our Scientific Advisory Board. The Rationale for Q-Cells Neurodegenerative diseases are by nature complex. Treatment modalities that have historically focused on single mechanisms of action have failed to show meaningful clinical benefits. Understanding the multi-factorial nature of these processes, Q Therapeutics patented cell-based platform takes a more holistic approach and leverages on utilizing human glial restricted progenitor cells (GRPs) and their progeny cells in the treatment of neurodegenerative diseases. Glial cells are the naturally occurring cells in the brain and spinal cord that serve to protect the health and function of neurons. In many neurodegenerative diseases, these native glial cells become diseased and subsequently die. When this occurs, the myriad repair functions that glial cells normally provide are lost, and the result is neuronal damage and destruction. Q Therapeutics has trademarked the glial restricted progenitor cells (GRPs) together with their progeny, under the name of Q-Cells . By enhancing the natural cellular machinery that enables healthy CNS systems to function, the administration of Q-Cells is expected to maintain and / or restore the integrity of existing neurons and protect their function and survival. We own exclusive worldwide rights to issued patents and numerous patent applications covering Q-Cells and their production through an agreement with the University of Utah, augmented by internally developed intellectual property. The patent portfolio includes 20 issued patents whose claims cover composition of matter, methods of production and methods of use of multiple cell types of the CNS (including Q-Cells) as well as cells of the peripheral nervous system, giving us a strong intellectual property position. This patent portfolio provides proprietary protection until 2030. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. DATED JUNE 4, 2014 PROSPECTUS (Subject to Completion) Q THERAPEUTICS, INC. Shares of Common Stock and Warrants to Purchase up to Shares of Common Stock This is Q Therapeutics, Inc. s initial public offering of Units, consisting of shares of common stock and warrants to acquire an aggregate of up to shares of common stock of Q Therapeutics. The warrants will be immediately exercisable and will expire on the fourth anniversary of their issuance date. We expect the initial public offering price to be between $[ ] and $[ ] per Unit. Each Unit consists of one share of common stock and one warrant exercisable for a quarter (.25) of a share of common stock. No Units will be issued, however, and purchasers will receive only shares of common stock and warrants. Our common stock is presently not traded or quoted on any market or securities exchange, but we intend to apply to have our common stock listed on the NASDAQ Capital Market under the symbol QCEL . Public trading of our common stock may never materialize or even if materialized, be sustained. WE ARE AN EMERGING GROWTH COMPANY UNDER THE FEDERAL SECURITIES LAWS AND WILL BE SUBJECT TO REDUCED PUBLIC COMPANY REPORTING REQUIREMENTS. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE REFER TO RISK FACTORS BEGINNING ON PAGE 6. Public offering price per Unit $ $ Underwriting discounts and commissions payable by us (1) (2) $ $ Proceeds, before expenses, to us $ $ (1) For the purpose of estimating the underwriter s fees, we have assumed that the underwriter will receive its maximum commission on all sales made in the offering. The underwriter will also be entitled to reimbursement of expenses up to a maximum of $[ ]. (2) We estimate the total expenses of this offering, excluding the underwriter fees, will be approximately $[ ]. Because there is no minimum offering amount required as a condition to closing in this offering, the actual public offering amount, underwriter fees, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering set forth above. See Underwriting beginning on page 27 of this prospectus for more information on this offering and the underwriter arrangements. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2014. Table of Contents The Process and Differentiation Q-Cells are administered into the brain and spinal cord. Once administered, Q-Cells predictably replicate and migrate within the CNS before fully differentiating into two mature glial cell subtypes, specifically: Oligodendrocytes, which form the insulating myelin layer around the axons of neurons, enabling their normal function for signal transmission, and Astrocytes, which protect and support neurons and axons through several pathways including the production of essential growth factors, other trophic factors and the removal of destructive toxins. Our pre-clinical research has demonstrated the ability of newly formed astrocytes and oligodendrocytes, derived from glial or Q-Cells, to repair and / or salvage neurons by tapping into the CNS natural support mechanism. The resulting effect has been modifying the course of these diseases, improving function and extending life span, in some instances. Specifically, glial / Q-Cells have been shown to halt neuronal degeneration and support neuronal health (demonstrated in ALS models; also relevant to other neurodegenerative diseases such as Huntington s, Parkinson s and Alzheimer s diseases); as well as provide myelin repair functions for diseases or injuries involving demyelination (e.g. relevant to MS, Transverse Myelitis, Stroke, Cerebral Palsy and Spinal Cord Injury). We believe that our approach, which leverages on salvaging and bolstering the function of the natural cellular mechanism of the CNS and existing neurons, represents a faster and more efficient approach to treat acutely debilitating neurodegenerative diseases than do alternative stem cell approaches. Specifically, Q-Cells are mature progenitor cells at an advanced stage of differentiation versus the more primitive, less differentiated, neural stem cells, which carry the risk of producing aberrant neuronal connections and harmful neuron formation. Also, Q-Cells are native to the normal central nervous system, exert local effects for neuronal repair and remain in the CNS. This is in contrast to Mesenchymal Stem Cells (derived from bone marrow blood or fat) that act systemically (immunomodulatory effects) and are short-lived after transplantation. Finally, Q-Cells appear to produce lasting benefits in animal models of disease. Clinical Trial Plans ALS We have chosen ALS as the lead clinical indication for Q-Cells for several reasons: Animal and human ALS disease data have shown glial cells to be defective in affected subjects Benefits have been obtained in animal studies with transplanted healthy glial cells Q-Cells produce both astrocytes and oligodendrocytes (glial cells) in animal models Q-Cells may be able to functionally replace diseased astrocytes and oligodendrocytes, thereby reducing motor neuron death and slowing or halting disease progression The unmet medical need for an effective treatment for this fatal disease is substantial. In January 2012, we held a pre-Investigational New Drug (IND) meeting with the Food and Drug Administration (FDA) to discuss Q-Cells for the treatment of ALS. The FDA required that we complete definitive Good Laboratory Practices (GLP) safety studies in preparation for our first-in-man clinical trial. In December 2012, we initiated these studies which will serve to demonstrate the local biodistribution and safety of Q-Cells within the CNS, among other parameters. Final data from these ongoing GLP safety studies is expected during the second half of 2014. To date, we have seen no safety issues associated with the administration of Q-Cells. We plan to complete all requisite GLP pre-clinical safety and device studies during the second half of 2014 with the intention of submitting our IND to the FDA shortly thereafter. Phase 1/2a Design We intend to initiate a Phase 1/2a open label study in patients with ALS. Our two initial clinical sites are Emory University School of Medicine and Johns Hopkins University School of Medicine; both institutions have a leadership position in ALS clinical research. We anticipate commencing enrollment in 12-15 ALS patients. It is anticipated that the two-site trial will be completed in 18-24 months pursuant to the initiation of enrollment. The endpoints of the trial include safety of Q-Cells administration as a primary measure, with surrogate measures of efficacy as secondary endpoints. These secondary endpoints will be measured using tests for muscle integrity (electrical impedance myography), muscle strength (handheld dynamometry), and respiratory function (forced vital capacity), as well as overall physical condition and function (ALSFRS-R). Given the open label nature of the trial, we expect to read out data starting in first half of 2015. Table of Contents Upon completion of the initial Phase 1/2a portion of the trial, we plan to meet with the FDA to discuss an extended Phase 2a trial consisting of up to 20 additional patients. We have had ongoing discussions with investigators at the University of California at San Francisco and the University of California at San Diego, as both have demonstrated interest in participating in an expanded trial. Future Clinical Trial and Product Development Efforts Following the initiation of our clinical trial with Q-Cells in ALS, we plan to pursue additional orphan indications, to demonstrate Q-Cells benefit in Transverse Myelitis, Spinal Cord Injury and Huntington s disease. We believe focusing on demonstrating the benefits Q-Cells in severe diseases with orphan populations (for which we seek Orphan Drug Designation with its additional benefits on market exclusivity) will enable us to attain an accelerated commercialization path while maintaining capital efficiency. We expect that this strategy will also enable us to enter into strategic partnerships with larger biotechnology, pharmaceutical or cell therapy companies to subsequently conduct trials for larger indications in addition to Orphan Disease Indications, which may include Multiple Sclerosis, Stroke, Traumatic Brain Injury, Parkinson s and Alzheimer s disease. Historical Financing Since inception, we have raised approximately $22.4 million in equity financing. In 2008, Invitrogen, Inc. (now Life Technologies, Inc.) invested $2.6 million into our platform. More recently, in 2011, Cephalon (now Teva Pharmaceutical Industries Ltd.), conducted extensive diligence prior to making an equity investment of $3.7 million into Q Therapeutics, following its 2010 investment in Mesoblast Ltd., another cell therapy company. We have also benefitted from over $4 million of non-dilutive grant funding, predominantly from the National Institutes of Health (NIH). These funds have enabled us to conduct studies in 5 distinct pre-clinical models of neurodegenerative disease including ALS, Multiple Sclerosis, Transverse Myelitis, Spinal Cord Injury and General Myelination Deficiency. The results of this work have been published in peer-reviewed journals including Nature Neuroscience, Cell Stem Cell, Regenerative Medicine, Glia, and the Journal of Neurotrauma. In addition, we have expanded our IP portfolio both through in house development and in-licensing, developed GLP/GMP manufacturing processes and worked closely with FDA to support our proposed IND filing in ALS. Emerging Growth Company Status We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the JOBS Act ) enacted into law on April 5, 2012, and we are eligible to take advantage of certain exemptions from various reporting requirements that are not available to other public companies. Many of these exemptions are also available to smaller reporting companies like us that have less than $75 million of worldwide common equity held by non-affiliates. Absent unforeseeable changed circumstances, however, we will not take advantage of those exemptions that are available to us solely as a result of our status as an emerging growth company, except with respect to allowable pre-offering communications in any future securities offerings. Section 107 of the JOBS Act 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. 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 are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision not to take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable. As an emerging growth company, the Company is exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002. Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the independent registered public accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company, the Company is also exempt from Section 14A and B of the Exchange Act which require shareholder approval of executive compensation and golden parachutes. 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 $1.0 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 $1.0 billion in non-convertible debt during the preceding three-year period. Table of Contents ABOUT THIS PROSPECTUS You should rely only on the information contained in or incorporated by reference in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of securities described in this prospectus. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus supplement, as well as information we have previously filed with the Securities and Exchange Commission and incorporated by reference herein, is accurate as of the date on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since those dates. CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or our future performance. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words estimate, anticipate, believe, expect, or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this prospectus, including the matters set forth under the captions Risk Factors and in our other filings with the Securities and Exchange Commission (SEC). These risks and uncertainties could cause our actual results to differ materially from those indicated in the forward-looking statements. We undertake no obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments. Although forward-looking statements in this prospectus reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading Risks Related to the Company s Business , as well as those discussed elsewhere in this prospectus. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We file reports with the SEC. You can read and copy any materials we file with the SEC at the SEC s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. Table of Contents Corporate History and Information Q Therapeutics, Inc. was incorporated in the state of Delaware on March 28, 2002. On October 13, 2011, Q Therapeutics merged with Q Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of Grace 2, Inc. On November 2, 2011, Grace 2 changed its name to Q Holdings, Inc. and on December 10, 2012 it changed its name to Q Therapeutics, Inc. Our headquarters are located at 615 Arapeen Drive, Suite 102, Salt Lake City, Utah 84108. Our telephone number is (801) 582-5400. Our website is http://www.qthera.com. The information contained on or accessible though our website is not part of this prospectus, other than documents that we file with the SEC that are incorporated by reference into this prospectus. Table of Contents
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including Risk Factors, Selected Consolidated Financial Data, Management s Discussion and Analysis of Financial Condition and Results of Operations, Business, and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms Aerohive Networks, Aerohive, Company, we, us, and our in this prospectus refer to Aerohive Networks, Inc. and our subsidiaries. AEROHIVE NETWORKS, INC. Overview Aerohive has designed and developed a leading cloud-managed mobile networking platform that enables enterprises to deploy a mobile-centric network edge. The point at which devices access the enterprise network is commonly referred to as the network edge. Managing the network edge is becoming more complex because of the proliferation of mobile devices and the ways in which such devices are used in business. Increasingly, employees and clients are using Wi-Fi-enabled smartphones, tablets, laptops and other mobile devices instead of desktop computers for mission-critical business applications. As the difficulty and complexity of managing the network edge expands, our platform offers cost-efficiency, scalability, reliability, manageability and ease of deployment and ease of use. Additionally, our platform gives end-customers context-based visibility and policy enforcement, providing a high level of intelligence to the network. Our hardware products include intelligent access points, routers, gateways and switches. These products are managed by our Cloud Services Platform, which delivers cloud-based network management and mobility applications giving end-customers a single, unified and contextual view of the entire network edge. As of December 31, 2013, we had approximately 13,100 end-customers worldwide. We define end-customers as holding or having held licenses to our products and software subscriptions and services. We sell through a network of certified resellers and distributors to a wide variety of industry verticals. Our efforts to date have focused on distributed enterprises, K-12 and higher education. Within distributed enterprises, we have operated with vertical market-specific focus on the healthcare and retail industries and state and local government, and we have operated with a general approach to other markets, including manufacturing, utilities, transportation, finance and other professional services. Our revenue increased from $34.0 million in 2011 to $71.2 million in 2012 and to $107.1 million in 2013, representing a compound annual growth rate of 77%. Our net loss increased from $14.8 million in 2011 to $24.7 million in 2012 and to $33.2 million in 2013. Our Industry Trends in enterprise mobility, including the proliferation of mobile devices, increased bring your own device, or BYOD, utilization, enterprise adoption of cloud and the adoption of mobile-first applications are significantly increasing the importance of wireless inside the enterprise. Users expect ubiquitous and all high-quality connectivity to support their wireless devices, even while using high-bandwidth, latency-sensitive applications. Wi-Fi has become the standard for wireless access in the enterprise and is increasingly replacing wired Ethernet as the standard access technology. Enterprises Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission of which this preliminary prospectus is a part is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion. Dated March 17, 2014. 7,500,000 Shares Aerohive Networks, Inc. Common Stock This is an initial public offering of shares of common stock of Aerohive Networks, Inc. Prior to this offering, there has been no public market for our common stock. We currently estimate that the initial public offering price per share will be between $9.00 and $11.00. Our common stock has been approved for listing on the New York Stock Exchange under the symbol HIVE . We are an emerging growth company , as defined under the federal securities laws and are subject to reduced public company reporting requirements. See Risk Factors on page 13 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. The underwriters have the option to purchase up to an additional 1,125,000 shares from us at the initial public offering price, less the underwriting discount. The underwriters expect to deliver the shares against payment in New York, New York on , 2014. Goldman, Sachs & Co. BofA Merrill Lynch Piper Jaffray William Blair JMP Securities Stephens Inc. Prospectus dated , 2014. Table of Contents want to deploy secure and reliable Wi-Fi ubiquitously across their distributed locations, from the corporate headquarters down to the smallest branch offices. The network edge provides device connectivity and we believe is the ideal point to provide advanced functions, such as authentication, security, quality of service, intelligence and client management. These functions can be provided at the edge using fewer networking resources than had they been applied at the core. For example, fewer processing resources are required to apply functions on the relatively small bandwidth at the network edge as compared to applying such functions at the network s core. Moreover, security, including firewalls, can be applied at the edge, blocking unwanted traffic before it reaches the core, reducing bandwidth used within the network. Similarly, quality of service management, such as bandwidth limiting and resource prioritization, can be applied at the edge, either reducing bandwidth consumption further into the network, or prioritizing traffic to clients to more efficiently utilize scarce wireless spectrum, leading to improved performance. Historically, the network edge has been wired-centric, where wireless networks were deployed as an overlay network, added on top of existing wired networks, to support a small number of mobile devices. The mobile device explosion is changing the primary form of network access from wired to wireless. In addition, the increasing number of connected devices, the variety of individual users device types and ownership and the wide array of applications accessed by these devices are all creating the need for increased intelligence at the network edge. As a result, enterprise networks need to transition from their existing wired-centric network edge to a mobile-centric network edge. This mobile-centric network edge provides a new level of mobile intelligence for the enterprise. It can also unify wireless and wired networks with integrated network and policy management. Legacy networking products suffer from a number of key limitations, including high cost, difficulty of scaling, complexity of deployment, lack of context, limited security enforcement and lack of unification. In response to these limitations, many vendors are attempting to adapt their existing products or add new alternative products. This leads to massive complexity with multiple approaches driven by customer size, scale and deployment plan. As a result, enterprises are seeking a unified, intelligent and simplified mobile network that can be cost-effectively deployed across the enterprise. Enterprises already invest significantly in expanding their wireless networks as they become the primary form of access at the network edge. According to Dell Oro Group, a market research firm, the Enterprise WLAN market, which includes enterprise-class access points, controllers and access management software, is projected to grow from $3.9 billion in 2013 to $6.5 billion by 2018, representing an 10.5% compounded annual growth rate. In order to deliver a fully unified mobile-centric network edge, a new networking platform would also need to address the Ethernet Edge Switch market, which has been estimated by Dell Oro Group to be $10.1 billion in size in 2013, and the Branch Router market, which has been estimated by Infonetics, an international marketing research and consulting firm, to be $1.6 billion in size in 2013. Our Platform Our leading cloud-managed mobile networking platform enables enterprises to deploy a mobile-centric network edge. Our platform leverages the power of the cloud and of our distributed, controller-less architecture to deliver unified, intelligent, simplified networks that can be cost-effectively deployed. Our scalable and flexible platform makes enterprise-class wireless available to enterprises regardless of their level of IT resources and enables a consistent network architecture to be deployed across enterprises of all sizes. Table of Contents Table of Contents Our platform delivers the following key benefits to customers: Simplicity of one architecture. Our platform provides a single architecture across our entire wired and wireless portfolio that scales to support all deployment scenarios. Lower cost to deploy. Our distributed, controller-less architecture eliminates the need for costly controllers and delivers significant capital and operating expense cost savings. Scalability. Our platform is highly scalable. By eliminating the controller and its resulting requirement to purchase capacity in fixed units and by leveraging our cloud management capabilities, our end-customers can scale deployments linearly as their needs grow. Ease of deployment and management by leveraging the cloud. Our platform eases the deployment of the services and applications that deliver the mobile-centric network edge by leveraging the cloud. Context-based visibility and control. Our platform gives customers the ability to see network usage and apply network policy based on granular, data-rich context, providing a high level of intelligence to the network. Robust security enforcement at the edge. Our platform enforces robust security policy at the network edge instead of at a centralized controller, which eliminates the need for customers to choose between security, performance and cost effectiveness. Our platform provides this security capability without additional costly licenses. Unification of wired and wireless networks. Our platform unifies management across wired, wireless and client devices allowing consistent context-based policy to be applied across the infrastructure and providing a unified and contextual view of the mobile-centric network edge. Reduced operating cost and complexity. The unification and simplification provided by our software eases administration and ongoing operating cost. Our Strategy Our objective is to maintain a leadership position in the enterprise wireless market while continuing to increase the penetration of our mobile-centric network edge solution. The key elements of our strategy to achieve this objective are: Continue to innovate and maintain a market leadership position. We intend to capitalize on and extend our substantial investment in developing, evangelizing and selling our controller-less wireless networks and cloud-managed networks as the industry increasingly embraces these approaches. Rapid customer acquisition. We intend to continue to rapidly acquire new customers through our high-velocity, low-friction go-to-market strategy. Expand within our existing end-customer base. We intend to continue to sell additional products and software subscriptions and service to our existing customer base as they scale their deployments. Leverage our vertical integration expertise. We intend to leverage our growing experience with end-customers in specific verticals to increase market penetration. Further develop our channel relationships. We intend to further invest in our channel relationships to increase our sales reach in new markets. Table of Contents Table of Contents Risks Affecting Us Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled Risk Factors immediately following this prospectus summary. These risks include the following: We have a history of losses, our losses have been increasing year over year and we may not achieve profitability in the future. We have a limited operating history, which makes it difficult to evaluate our prospects and future financial results and may increase the risk that we will not be successful. Our operating results may fluctuate significantly, from quarter to quarter and year to year, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations of investors or analysts. The seasonality of our business creates significant variance in our quarterly revenue, which makes it difficult to compare our financial results on a quarter-by-quarter basis. The market and demand for our products and services may not develop as we expect. A significant portion of our sales are concentrated in the education and healthcare industries, which may cause us to have longer sales cycles and be subject to program funding constraints. Our sales cycles often require significant time, effort and investment and are subject to risks beyond our control. We need to develop new products and continue to make enhancements to our existing products to remain competitive in a rapidly changing market. Our gross margin will vary over time and may decline in the future. We and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting, and if we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results in a timely manner. Our products utilize cloud-managed solutions, and our future growth relies in significant part on continued demand for cloud-managed solutions and our ability to deliver such solutions. We plan to target new industry verticals and geographies to diversify our customer base and expand our channel relationships, which could result in higher research and development and sales and marketing expenses, and if unsuccessful could reduce our operating margin. We base our inventory purchasing decisions on our forecasts of customers demand, and if these forecasts are inaccurate our revenue, gross margin and liquidity could be harmed. Corporate Information In March 2006, we incorporated our business in the State of Delaware. Our principal executive offices are located at 330 Gibraltar Drive, Sunnyvale, CA 94089. Our telephone number at that location is (408) 510-6100. Our website address is www.aerohive.com. Information on our website is not part of this prospectus and should not be relied upon in determining whether to invest in our common stock. The Aerohive Networks design logo and the marks Aerohive , HiveManager and HiveOS are the property of Aerohive Networks, Inc. This prospectus contains additional trade names, Table of Contents Table of Contents trademarks and service marks of other companies. We do not intend our use or display of other companies trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of, us by any of these companies. Implications of Being an Emerging Growth Company As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements 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 management s discussion and analysis; an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting; an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements; reduced disclosure about our executive compensation arrangements; and exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a shareholder approval of any golden parachute arrangements. We will remain an emerging growth company until the earliest to occur of: the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and the last day of the fiscal year ending after the fifth anniversary of our initial public offering. We may choose to take advantage of some, but not all, of the available benefits under the JOBS Act. We are choosing to irrevocably opt out of the extended transition periods available under the JOBS Act for complying with new or revised accounting standards, but we intend to take advantage of the other exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary may not contain all the information that may be important to you. You should read this entire prospectus, including the financial data and related notes, before making an investment decision. See the section entitled Risk Factors on page 5 for a discussion of certain factors to be considered in connection with making an investment in the notes being offered under this prospectus. The Company Jazz Technologies, Inc., through its wholly owned subsidiaries, is an independent pure-play semiconductor foundry focused on specialty process technologies for the manufacture of analog and mixed-signal semiconductor devices. Typically, pure-play foundries do not offer products of their own, but focus on producing integrated circuits, or ICs, based on the design specifications of their customers. We manufacture semiconductors for our customers primarily based on third party designs and our own process technology and engineering support. We also provide design support and complementary technical services. ICs manufactured by us are incorporated into a wide range of products in diverse markets, including cellular phones, wireless local area networking devices, digital TVs, set-top boxes, gaming devices, switches, routers and broadband modems. Our principal executive offices are located at 4321 Jamboree Road, Newport Beach, California 92660, and our telephone number is (949) 435-8000. The Offering Securities Offered Under This Prospectus We previously issued $58,307,000 aggregate principal amount of 8% Convertible Senior Notes due December 2018. The notes are convertible, under specified circumstances, into ordinary shares of our parent company, Tower Semiconductor, Ltd. The selling security holders identified herein may, from time to time, use this prospectus to resell the notes. Use of Proceeds The notes covered by this prospectus are being offered by certain selling security holders and not by our company. Consequently, our company will not receive any proceeds from the sale of these notes. Summary of the Terms of the Notes Issuer Jazz Technologies, Inc., a Delaware corporation. Notes Offered $58,307,000 aggregate principal amount of 8% senior convertible notes due December 2018. Maturity Date December 31, 2018. Interest 8% per year, payable semiannually in arrears in cash on July 15 and January 15, commencing on July 15, 2014. Guarantees The notes are fully and unconditionally, and jointly and severally, guaranteed on an unsecured senior basis by our domestic subsidiaries. Ranking The notes are unsecured senior obligations of our company and rank equally with all of our existing and future unsecured senior debt and senior to all of our existing and future subordinated debt. The notes effectively rank junior to any of our existing and future secured debt to the extent of the value of the assets securing such debt. As of March 31, 2014, the notes rank (1) equally with approximately $49 million principal amount of other unsecured senior debt, which constitute of the notes due June 2015 of our company and the guarantors and (2) effectively subordinated to our up to $70 million Wells Fargo credit line, under which our actual borrowings as of March 31, 2014 were $19 million. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer Smaller reporting company o (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Proposed Maximum Proposed Maximum Amount of Title of Each Class of Amount to be Offering Aggregate Registration Securities to be Registered Registered Price per Unit (1) Offering Price (1) Fee 8% Convertible Senior Notes due 2018 $ 58,307,000 100 % $ 58,307,000 $ 7,510 Guarantees of 8% Convertible Senior Notes due 2018 (2) (3 ) Total $ 58,307,000 $ 58,307,000 $ 7,510 (1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (2) See the following page for a table of guarantor registrants. (3) Pursuant to Rule 457(n), no additional registration fee is payable with respect to the guarantees. 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 SEC acting pursuant to said Section 8(a), may determine. Conversion Privilege Subject to compliance with the provisions of the indenture governing the notes, the holder of a note is entitled, at its option, at any time prior to the maturity date, to convert the note or any portion of the principal amount thereof that is an integral multiple of U.S. $1,000 into ordinary shares of our parent company, Tower Semiconductor, Ltd, at the conversion rate and under other conditions as provided in the indenture. See "Description of the Notes Conversion Privilege." Change of Control If we experience specific kinds of change of control events, we must offer to repurchase the notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See "Description of the Notes Change of Control." Certain Covenants The indenture governing the notes contains certain customary covenants including covenants restricting our ability and the ability of our subsidiaries to, among other things, incur additional debt, incur additional liens, make specified payments and make certain asset sales. Each of these covenants is subject to important exceptions and qualifications. See "Description of the Notes Certain Covenants." Absence of Trading Market for Notes We do not intend to apply for a listing of the notes on any securities exchange, quotation system or on PORTAL. Accordingly, we cannot assure you that a liquid market for the notes will develop or be maintained. Trustee U.S. Bank National Association
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+This summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read the entire prospectus carefully, including the section entitled Risk Factors and our financial statements and the related notes included elsewhere in this prospectus before making an investment decision to purchase shares of our common stock. In this prospectus, unless we indicate otherwise or the context requires: our company, we, our, ours and us refer to LVB Acquisition, Inc. and its consolidated subsidiaries; LVB refers to LVB Acquisition, Inc.; Biomet refers to Biomet, Inc., our direct operating subsidiary; and 2007 Acquisition refers to the acquisition of our company by funds affiliated with our Principal Stockholders (as defined herein) in 2007. We refer to a fiscal year ending on May 31 of any year as a fiscal year. For example, we refer to the year ended May 31, 2013 as fiscal 2013. Biomet Group Overview We are one of the largest orthopedic medical device companies in the world, with operations in more than 50 locations and distribution in more than 90 countries. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. Since our founding in 1977, we have grown to nearly 9,000 employees and generated more than $3.0 billion of net sales in our most recent fiscal year. We have continually increased annual revenues, with fiscal 2013 representing our 36th consecutive year of net sales growth. In addition, we increased our net income over the prior year in 26 of the 29 years between our founding and the 2007 Acquisition. In each subsequent fiscal year, we have incurred annual net losses but have increased our Adjusted net income (as defined herein) over the prior year in four of five years. We believe our success is largely attributable to our dedication to excellence in product engineering and innovation, and our responsiveness to our customers through service and support. In recent years, we have built on our core competencies in hip and knee products by expanding our business in higher-growth categories, such as sports medicine, extremities and trauma, and in our higher-growth international markets. We operate globally in markets that we estimate collectively exceed $40 billion in annual sales. Our product categories include: Reconstructive Products Hips and Knees: Orthopedic reconstructive implants are used to replace joints that have deteriorated as a result of disease (principally osteoarthritis) or injury. Our fiscal 2013 net sales were $632.7 million (20.7% of total net sales) for hip products and $940.0 million (30.8% of total net sales) for knee products, representing a combined increase of over two additional percentage points of global market share since the beginning of 2007. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Preliminary Prospectus dated April 11, 2014 PROSPECTUS Shares Biomet Group, Inc. Common Stock This is our initial public offering of common stock. Biomet Group, Inc. is offering shares of common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $ and $ per share. We have applied to list our common stock on the under the symbol BMET . Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 17. Per Share Total Public offering price $ $ Underwriting discount $ $ Proceeds to us (before expenses) $ $ We have granted the underwriters the right to purchase up to additional shares of common stock at the offering price less the underwriting discount if the underwriters sell more than shares of common stock in this offering. The underwriters can exercise this right at any time and from time to time, in whole or in part, within 30 days after the offering. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares of common stock will be made on or about . BofA Merrill Lynch Goldman, Sachs & Co. J.P. Morgan Citigroup Wells Fargo Securities Barclays Morgan Stanley The date of this prospectus is , 2014. Table of Contents MARKET AND INDUSTRY DATA AND FORECASTS This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. See Business and Management s Discussion and Analysis of Financial Condition and Results of Operations. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. Table of Contents Sports, Extremities and Trauma (S.E.T.) Products: In sports medicine, we primarily manufacture and market a line of procedure-specific products for the repair of soft tissue injuries, most commonly used in the knee and shoulder. Extremity systems comprise a variety of joint replacement systems, primarily for the shoulder, elbow and wrist. Trauma hardware includes internal and external fixation devices used by orthopedic surgeons to set and stabilize fractures. Our fiscal 2013 net sales for S.E.T. products were $600.1 million (19.7% of total net sales). Spine, Bone Healing and Microfixation Products: Our spinal products include traditional, minimally-invasive and lateral access spinal fusion and fixation systems, implantable electrical stimulation products for spinal applications and osteobiologics (including allograft services). Our bone healing products include non-invasive electrical stimulation devices designed to stimulate bone growth in the posterior lumbar spine and appendicular skeleton. Our microfixation products primarily include neuro, craniomaxillofacial, or CMF, and cardiothoracic products for fixation and reconstructive procedures. Our fiscal 2013 net sales for spine, bone healing and microfixation products were $408.8 million (13.4% of total net sales). Dental Reconstructive Products: Our dental reconstructive products are designed to enhance oral rehabilitation through the replacement of teeth and the repair of hard and soft tissues. These products include dental reconstructive products and related instrumentation, bone substitute materials, regenerative products and materials, computer-aided design/computer-aided manufacturing, or CAD/CAM, copings and implant bridges. Our fiscal 2013 net sales for Dental Reconstructive products were $257.0 million (8.4% of total net sales). Cement, Biologics and Other Products: We manufacture and distribute numerous other products, including bone cement and accessories, autologous blood therapy products and services, operating room supplies, general surgical instruments, wound care products and other surgical products. Our fiscal 2013 net sales for cement, biologics and other products were $214.3 million (7.0% of total net sales). Consistent with our heritage of engineering excellence and innovation, our product portfolio incorporates a number of advanced, highly-differentiated technologies that are applicable across multiple product categories, allowing us to magnify their market impact and leverage our research and development investments. These cross-platform technologies include specialized materials designed to improve the longevity of implants, proprietary surfaces and coatings to promote biologic fixation, and patient-specific implants and positioning guides designed using CT or MRI imaging data. We believe our culture promotes teamwork, decentralized decision-making and the empowerment of our can-do family of team members. Our One Surgeon. One Patient. philosophy reminds us that each device we make represents a singular event that will change a patient s life, encouraging us to approach our work as if each patient were a friend or family member. We owe our engineering-driven, entrepreneurial spirit in large measure to the inspiration of our founders, including Dane A. Miller, Ph.D., a materials science and biomedical engineer who served as our former long-term CEO and remains a member of our Board of Directors. Our products are marketed by more than 3,000 sales representatives worldwide. We believe that the strength and stability of our sales force differentiates us and creates opportunities for us to further penetrate our markets. In the United States, our products are marketed primarily through a network of exclusive independent distributors and sales agents who carry a broad range of our products. Outside the United States, we tailor our approach to distribution by product group and geographic market, and we utilize a combination of direct sales representatives, independent third-party distributors and independent commissioned sales agents. Table of Contents Our Business Improvement Initiatives In connection with the 2007 Acquisition, we strengthened our existing management team with additional experienced medical device executives. Our management team has driven constant currency net sales performance at or above the global market rate in 22 of 27 quarters beginning in fiscal year 2007 in our core hip and knee businesses through innovation, which has resulted in net sales for these products growing by over $500 million to $1,572.7 million for fiscal 2013 a combined increase of over two additional percentage points of global market share. In addition, we have put in place a number of significant ongoing improvement initiatives designed to continue to position us for success, including: Growing our S.E.T. business. Increasing scale, through internal development and acquisitions, in our higher-growth S.E.T. businesses, which we have grown to over $600 million of net sales in fiscal 2013, representing approximately 20% of our total net sales. Expanding international presence. Expanding our market presence globally through increased product penetration in both developed and emerging markets. Our net sales outside the United States and Europe have grown from $205.1 million for fiscal 2007 to $480.5 million for fiscal 2013. Repositioning spine, bone healing and microfixation. Repositioning our spine, bone healing and microfixation business (including our former EBI business) for future growth by divesting our low-growth bracing business, optimizing the management of our trauma business by moving it into S.E.T. and bolstering our spine business with our acquisition of Lanx, Inc. in 2013, which we refer to as the 2013 Spine Acquisition. Redeploying capital for attractive growth opportunities. Redeploying capital, including investing $520.2 million for acquisitions in markets and products where we see attractive growth opportunities, such as our 2012 acquisition of Johnson & Johnson/DePuy s trauma business, which we refer to as the 2012 Trauma Acquisition, and the 2013 Spine Acquisition. Investing in research and development. Increasing our investment in research and development spending to expand and further develop our continuing pipeline of products. For example, we recently launched our G7TM Acetabular System for hips and expect to launch our Vanguard XP Knee System in the second half of calendar year 2014. We also are investing in programs beyond our core markets, including longer-term opportunities in biologics (biologically derived products) that have the potential to address significant unmet clinical needs. Since fiscal 2007, our research and development spending has grown by more than 59% to $150.3 million for fiscal 2013. Enhancing our efficiency. Implementing operational initiatives to enhance growth and profitability, including the rationalization of our manufacturing operations, enhancement of strategic sourcing programs and improvement of our global supply chain. For example, by June 30, 2014 we will have reduced our global manufacturing footprint from 18 plants in fiscal 2007 to 11 plants, while increasing worldwide manufacturing production. These and other initiatives have resulted to date in annual cash savings of more than $170 million. Our Markets We operate globally in markets that we estimate collectively exceed $40 billion in annual sales. Based on industry data for 2013, we believe the total sales in these markets include approximately $13 billion for hip and knee products, approximately $10 billion for S.E.T. products, approximately $11 billion for spine, bone Table of Contents healing and microfixation products, approximately $3.5 billion for dental reconstructive products and approximately $5 billion for cement, biologics and other products. We believe that numerous factors will continue to drive growth within our markets, including, but not limited to: Favorable demographics of an active, aging population. Growing evidence of the health benefits and cost effectiveness of joint replacement. Relatively low, but growing, penetration rates for orthopedic implant procedures. Increased global demand for reconstructive products from younger patients. Technological advances expanding the addressable market. Our Competitive Strengths We believe the following strengths provide us with a number of significant, long-term competitive advantages: Strong global brand and reputation among clinical thought leaders. We believe that the Biomet brand is one of the most recognized names in orthopedics. Since our founding, our name has become associated with innovation, customer and clinician responsiveness, teamwork, clinical success and technological advances. Engineering excellence, innovation and clinical success. For over 35 years, we have applied advanced engineering and manufacturing technology to the development of highly durable joint replacement systems. We have introduced a number of innovative products a history of firsts that have advanced joint replacement. For example, we were the first and only company to receive FDA approval for a free-floating meniscal-bearing partial knee; the first company to infuse Vitamin E into polyethylene hip, knee and shoulder bearings designed to improve implant longevity; and an early and leading proponent of using porous plasma spray titanium alloy coating to allow for biologic fixation in reconstructive products. In addition, we have a track record, demonstrated by a large body of clinical data, of developing durable and long-lasting products. We continue to innovate by adding new products to our pipeline, including our Vanguard XP Knee System, which we expect to launch commercially in the second half of calendar year 2014. Strong, enduring relationships with clinicians. As a result of surgeon satisfaction with our products, responsiveness and service, we enjoy long-standing relationships with surgeons that often commence during the surgeons residency training programs. Our support of medical education programs provides important training opportunities for orthopedic surgeons early in their careers. Supporting hands-on training provides opportunities for residents, fellows and attending surgeons to experience the benefits of our products. We offer surgeons numerous options to allow them to provide the best available care to their patients through training programs and service offerings as well as by creating uniquely-designed instruments and implant products. Breadth of product portfolio. We provide our customers with products across a broad spectrum of musculoskeletal procedures. We believe the breadth of our product offerings creates opportunities for our sales force to develop and strengthen surgeon relationships. For example, a surgeon who has experienced clinical success with our reconstructive hips and knees may be more inclined to use our S.E.T. products than the products of a competitor that does not have as complete a product offering. In addition, we believe our ability to provide a large portfolio of products is attractive to hospitals as they consolidate sourcing. We also believe that the breadth of our product portfolio allows us to leverage innovative, cross-platform technologies across product categories. Experienced and stable sales force. We have worked to attract and retain a qualified, well-trained and motivated sales force of 3,000 sales representatives throughout the world. Our sales representatives provide a Table of Contents high level of customer service and support to surgeons and hospitals. This comprehensive support includes providing tools to assist the surgeon and hospital in pre-operative planning, ensuring delivery of required instruments and implants, working alongside the operating room staff to streamline intra-operative workflow, and product and technical support as needed during surgical procedures. We believe the strength of the relationship between our sales representatives and our customers is a differentiating factor driving our success. Global reach and scale of operations. We have a global footprint with worldwide distribution and products sold in more than 90 countries around the world. In fiscal 2013, 39% of our net sales were outside the United States. Our global infrastructure, scale and reach, including manufacturing facilities in eight countries, enable us to sell and support our products in orthopedic device markets around the world. Proven and experienced leadership team. We have a highly experienced management team at both the corporate and operational levels, with significant expertise in the orthopedic industry. Members of our senior management team, which consists of 11 executives, have an average of 22 years of healthcare industry experience, predominantly in orthopedics. Together with our heritage of engineering and clinical excellence, our management team is an important part of our success with our customers. Our Strategies for Growth We intend to enhance our position as a leading orthopedic medical device company by pursuing the following growth strategies: Drive above-market growth in our core hip and knee businesses through innovation. We plan to continue to innovate to address unmet clinical needs in our hip and knee replacement markets, which have been our largest product categories and are expected to grow steadily. Since fiscal 2007, we have launched numerous new technologies within our hip and knee businesses, including our G7TM Acetabular System for hips, and we expect to launch our Vanguard XP Knee System in the second half of calendar year 2014. Continue to invest in and grow our S.E.T. business. With a market-leading brand in each of sports medicine, extremities and trauma, we believe that our S.E.T. business is well-positioned to expand. We are focused on growing the S.E.T. business through internal development and complementary acquisitions, such as our 2012 Trauma Acquisition. We intend to continue leveraging our technologies in each category to cross-sell a broad portfolio of products. Further penetrate attractive international markets where we have an established presence. We intend to expand the geographic presence of each of our product categories. We believe there are considerable opportunities for global expansion as healthcare spending increases in international markets, which accounted for more than 40% of the global orthopedic market in 2012. We plan to strengthen our position in under-penetrated regions, including both developed and emerging markets, where we believe there are further opportunities for meaningful growth. We intend to deploy incremental resources to capture attractive market opportunities including through increased investment in medical education and training. Continue to transform our Spine, Bone Healing and Microfixation business. We have repositioned our spine, bone healing and microfixation business (including our former EBI business) and enhanced our competitive position by, among other things: divesting our low-growth bracing business; optimizing the management of our trauma business by moving it into S.E.T.; enhancing our spinal product offering with the 2013 Spine Acquisition; and increasing our investment in microfixation. The result of these changes is three well-positioned, focused businesses, each with dedicated marketing, medical education, research and development and sales force units. Table of Contents Restore profitable growth in Dental. We have taken steps to restore profitable growth in our dental business, which is under new leadership. For example, we are introducing differentiated products, such as our recently introduced T3 dental implant; supporting clinicians with practice building, training and education offerings; and investing in sales force expansion in key markets. Weaker economic conditions in recent years have decreased patient demand for dental implants, but we are beginning to see global sales growth return and we believe that we are well-positioned to grow market share. Invest in longer-term biologics opportunities. We are making considerable investments in programs in our biologics business that have the long-term potential to address significant unmet clinical needs in new markets, including: an autologous therapy to treat early stage osteoarthritis; an autologous treatment for critical limb ischemia that has the potential to help patients avoid amputation; and a red blood cell processing solution for restoring the ability of aged, donated red blood cells to carry oxygen. We continue to evaluate markets internally and externally that provide opportunities to drive future growth. Focus on cost effective clinical solutions to address the evolving healthcare market. We are intensely focused on developing technologies and systems to meet the evolving needs of our customers, including reducing costs and improving patient experience by increasing operating room efficiency and shortening patient recovery times. Leverage existing infrastructure and sales growth to increase operating profits and net income. Since fiscal 2007, we have implemented operational initiatives to enhance growth and profitability, resulting in annual cash savings to date of more than $170 million. We intend to continue to implement operational improvements to reduce our cost of sales and selling, general and administrative expenses. Selectively pursue strategic acquisitions. We intend to selectively pursue strategic acquisitions that meet our return objectives, provide us with new or complementary technologies, enable us to compete further in market segments where we already have a presence and allow us to leverage our distribution capability or increase market penetration. Principal Stockholders Private equity funds affiliated with the Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG (which we refer to collectively as our Principal Stockholders) and their co-investors currently own, through LVB Acquisition Holding, LLC, or LVB Holding, % of our outstanding common stock. In 2007, our Principal Stockholders entered into an Amended and Restated Limited Liability Company Operating Agreement of LVB Holding, and we entered into a management services agreement with certain affiliates of our Principal Stockholders. Upon the completion of this offering, we expect that our Principal Stockholders will dissolve LVB Holding and enter into a stockholders agreement and that we will pay a one-time fee under the management services agreement. See Certain Relationships and Related Party Transactions Management Services Agreement and Certain Relationships and Related Party Transactions Stockholders Agreement. Following the completion of this offering, our Principal Stockholders and their co-investors will together own approximately % of our outstanding common stock, or % if the underwriters option to purchase additional shares is fully exercised. As a result, we expect to be a controlled company within the meaning of the corporate governance requirements of the on which we have applied to list our shares of common stock. See Risk Factors Risks Related to our Organization and Structure We will be a controlled company within the meaning of the stock exchange rules and we will qualify for exemptions from certain corporate governance requirements. The Blackstone Group. Blackstone is a leading global alternative asset manager and provider of financial advisory services, with Total Assets Under Management of $265.8 billion as of December 31, 2013. Table of Contents Blackstone s alternative asset management businesses include investment vehicles focused on private equity, real estate, hedge fund solutions, non-investment grade credit, secondary funds and multi-asset class exposures falling outside of other funds mandates. Blackstone also provides a wide range of financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory, capital markets and fund placement services. Goldman, Sachs & Co. Founded in 1869, Goldman, Sachs & Co., or Goldman Sachs, is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. GS PIA focuses on large, high quality companies with strong management in order to fund acquisition or expansion across a range of industries and geographies. Since 1986, GS PIA and its predecessor business areas have invested approximately $90 billion through a combination of external investment funds and firm capital. GS Capital Partners VI fund, the sixth in a series of global diversified private equity funds formed since 1992, was formed in 2007 with $20.3 billion in commitments. Kohlberg Kravis Roberts & Co. Founded in 1976 and led by Henry Kravis and George Roberts, Kohlberg Kravis Roberts & Co., or KKR, is a leading global investment firm with $94.3 billion in assets under management as of December 31, 2013. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR & Co. L.P. is publicly traded on the New York Stock Exchange (NYSE: KKR) and KKR, as used in this prospectus, includes its subsidiaries, their managed investment funds and accounts, and/or their affiliated investment vehicles, as appropriate. TPG. TPG is a leading global private investment firm founded in 1992 with $55.7 billion of assets under management as of September 30, 2013 and offices in San Francisco, Fort Worth, Austin, Beijing, Chongqing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, S o Paulo, Shanghai, Singapore and Tokyo. TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings. The firm s investments span a variety of industries, including healthcare, financial services, travel and entertainment, technology, energy, industrials, retail, consumer, real estate and media and communications. Corporate Information Our business, in the form of Biomet, Inc., an Indiana corporation, was founded in 1977. From December 1982 to September 2007, Biomet, Inc. s common stock traded under the symbol BMET on the NASDAQ Global Market. In September 2007, Biomet, Inc. de-listed its common stock from the NASDAQ Global Market upon completion of the second-step merger effected in connection with the 2007 Acquisition. To effect the second-step merger, a subsidiary of a LVB Acquisition, Inc. merged with and into Biomet, Inc., with Biomet, Inc. continuing as the surviving company after the merger as a wholly-owned subsidiary of LVB Acquisition, Inc. Prior to the closing of this offering, LVB Acquisition, Inc. will be renamed Biomet Group, Inc. Biomet, Inc., which is our operating entity, will remain a wholly owned subsidiary of Biomet Group, Inc. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana, and our telephone number is (574) 267-6639. Our corporate website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase our common stock. Table of Contents
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+PROSPECTUS SUMMARY The following summary provides an overview of certain information contained elsewhere in this prospectus. Because this is a summary, it does not contain all of the information you should consider before investing in our Series C Preferred Stock or common stock. You should read this entire prospectus carefully before making a decision about whether to invest in our Series C Preferred Stock or common stock. Unless the context requires otherwise or unless otherwise noted, all references in this prospectus to the Company, GreenHunter, we, us or our are to GreenHunter Resources, Inc. and its consolidated subsidiaries. Overview of GreenHunter Resources, Inc. GreenHunter Resources, Inc. is a diversified water resource, waste management and environmental services company headquartered in Grapevine, Texas that specializes in the unconventional oil and natural gas shale resource plays. Through our wholly owned subsidiary GreenHunter Water, LLC, which we refer to in this prospectus as GreenHunter Water, we provide Total Water Management Solutions in the oilfield. We understand that there is no single solution to exploration and production fluids management, and this understanding shapes our technology-agnostic approach to services. GreenHunter Water s approach to water management includes fixed-facility and mobile water treatment systems (Frac-Cycle ), an expanding portfolio of UIC Class II Salt Water Disposal wells with advanced hauling and fresh water logistics services, a next-generation modular above-ground storage tank system (MAG Tank ), and compliance tracking technologies (RAMCAT ) that allow shale producers to reduce costs while they account for their fluids from cradle-to-grave and adhere to emerging regulations. Oil and natural gas wells generate produced water which is water from underground formations that is brought to the surface during the normal course of oil or gas production operations. Since this water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons. We have identified water reuse and water management in the oil and natural gas industry as a significant growth opportunity for the foreseeable future and are continuously exploring various alternatives to continue to develop this segment of our operations through existing relationships, joint ventures, targeted acquisitions and development of water management technologies. We have acquired or leased properties in the Marcellus Shale and Utica Shale, Eagle Ford Shale, Bakken Shale and Mississippi Lime areas located in Appalachia, South Texas, Eastern Montana and Oklahoma, respectively. We have developed commercial water service facilities on most of these properties and we have the intention to further develop barge transport capabilities along existing navigable inland waterways in the Appalachian region. In addition, we are currently deploying a modular above-ground temporary water storage system in the Marcellus Shale and we are installing an onsite semi-portable water treatment facility in this region. In response to requests from current and prospective customers, we have designed and engineered, fabricated and patented a proprietary next-generation modular above-ground water storage system (MAG Tank ). We continue to evaluate alternatives and may in the future license from third parties new technologies to treat water and other fluids associated with the production of oil and natural gas for reuse. For more information about us, see the section entitled Business beginning on page 39 of this prospectus. Recent Developments Acquisition of White Top Oilfield Construction, LLC and Black Water Services, LLC On December 31, 2012, we completed an acquisition of two oilfield water service and construction companies that provide services to oil and natural gas producers in the Eagle Ford Shale. The two entities, White Top Oilfield Construction, LLC ( White Top ) and Black Water Services, LLC ( Black Water ), with common management, have been providing services since 2008 to operators active in the Eagle Ford Shale play of South Texas. Combined assets include vacuum water trucks, dump trucks, drilling rig wash trailers and heavy equipment located in Louise, Wharton County, Texas. White Top and Black Water service exploration and production operators predominantly concentrated in the Texas counties of Gonzales, Karnes and DeWitt. The companies were acquired for an aggregate $1,200,000 in cash, 41,000 shares of our Series C Preferred Stock, and 589,657 shares of our common stock. Table of Contents CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to Be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(3) Amount of Registration Fee(5) 10% Series C Cumulative Preferred Stock, par value $0.001 per share 181,786 $3,490,292 $450 Common Stock, par value $0.001 per share, issuable upon the conversion of the Series C Preferred Stock 5,077,811 (4) Common Stock, par value $0.001 per share, underlying common stock purchase warrants held by the selling stockholders 282,778 $377,509 $49 Common Stock, par value $0.001 per share, held by the selling stockholders 150,835 $201,365 $26 (1) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, the number of shares being registered on behalf of selling stockholders shall be adjusted to include any additional shares that may become issuable as a result of any dividend, split, combination or similar transaction. (2) The proposed maximum offering price per share will be determined from time to time by the selling stockholders in connection with, and at the time of, the sale by the selling stockholders of the shares of Series C Preferred Stock and common stock registered hereunder. (3) Estimated solely for the purposes of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low trading prices for the Series C Preferred Stock and the common stock on the NYSE MKT on December 11, 2013. (4) No registration fee is required with respect to the common stock pursuant to Rule 457(i) under the Securities Act, as amended. (5) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Acquisition of Barging Terminal Facility in Wheeling, West Virginia On March 13, 2013, we acquired a 10.8 acre barging terminal facility located in Wheeling, West Virginia for $750,000 through a new 10.5 year variable-rate loan facility with a bank that also included an additional $350,000 of borrowing capacity for construction and refurbishment purposes. The variable interest rate is based on the prime rate of the 10 largest U.S. banks. The $350,000 borrowing capacity has been fully utilized. Sale of Salt Water Disposal Well to Sable Environmental SWD 4, LLC On June 10, 2013, GreenHunter Water closed on the sale for $5.2 million of a salt water disposal well and associated equipment located in South Texas pursuant to an Asset Purchase Agreement with Sable Environmental SWD 4, LLC. At-the-Market Offering Subsequent to December 31, 2012, we issued the remaining common stock and Series C Preferred Stock available to be sold under our at-the-market offering program. The net cash proceeds received upon issuance of these securities was $5.2 million for the issuance of 221,946 shares of our common stock and 265,436 shares of our Series C Preferred Stock. Appointment of Julie Silcock to Our Board of Directors On January 8, 2013, Julie Silcock, Managing Director and Co-Head of Houlihan Lokey s investment banking practice in the Southwest region of the U.S., was appointed to serve on our board of directors. Ms. Silcock has more than 25 years of experience advising companies across all industries on mergers and acquisitions, equity and debt capital market transactions, private debt and equity placements, and high-yield offerings. Appointment of Ronald McClung as Senior Vice President and Chief Financial Officer Our board of directors appointed Ronald McClung Senior Vice President and Chief Financial Officer effective September 1, 2013. Mr. McClung is a Certified Public Accountant (CPA) and brings more than twenty years of both public and private company audit, treasury, risk management, SEC public company reporting, Sarbanes-Oxley Act compliance, due diligence and acquisition integration experience. 2013 Private Placement of Series C Preferred Stock and Warrants to Purchase Common Stock On September 19, 2013, we closed a private placement with accredited investors of an aggregate of 181,786 shares of Series C Preferred Stock and warrants to purchase an aggregate of 282,778 shares of common stock for $2.25 per share (with an expiration date of September 19, 2018), for aggregate gross proceeds of approximately $3.2 million. We retained MLV & Co. LLC as the placement agent for the offering, and we paid MLV & Co. LLC a commission of 150,835 shares of our common stock (having a value of approximately 5.5% of the gross proceeds of the private placement based on the closing price of our common stock on September 18, 2013). We intend to use the proceeds for general corporate purposes. In connection with the private placement, we entered into a registration rights agreement in which we agreed to, within 90 days of the closing of the private placement, file this registration statement with the SEC covering the resale of the Series C Preferred Shares and the shares of common stock underlying the common stock purchase warrants. We also agreed to use commercially reasonable efforts to have this registration statement declared effective as soon as practicable. We further agreed to register the resale of the shares of common stock issued to MLV & Co. LLC in connection with the private placement. Employee Stock Options During October 2013 we issued to employees stock options to purchase an aggregate of 250,000 shares of our common stock at an exercise price of $1.33 per share and an aggregate of 20,000 shares of our common stock at an exercise price of $1.37 per share. Second Lien Credit Facility On October 30, 2013, the Company executed a non-binding letter of intent to enter into a second lien credit facility in the amount of $35 million for a term of four and one-half years with a lending institution. The proceeds are intended for use to provide us growth capital. Our legal counsel and the lender(s) legal counsel are working on definitive legal documents, and we anticipate closing on the credit facility in early 2014. Our operating and investing cash flow plans are dependent on closing the credit facility. In the event we are unsuccessful in closing the facility, we will be required to seek other sources of financing. Those sources of financing may be on less favorable terms, and will likely delay our plans for building our business. Closing of Private Placement of Unsecured Term Notes and Warrants to Purchase Common Stock On November 14, 2013, the Company closed a private placement of approximately $1.5 million aggregate principal amount of our Unsecured Term Notes due one year from the date of issuance together with 129,777 common stock purchase warrants. Each warrant entitles the holder to purchase one share of our common stock at a price of $2.25 per share. These warrants have an expiration date of five years from the date of issuance. Fifteen separate individuals or entities purchased the notes including two members of our senior management, including our chairman, Gary C. Evans. We will use the net proceeds from this offering for the sole purpose of building MAG Tank panel inventory, our state of the art above-ground modular storage tank. Credit Support from Gary C. Evans, Our Chairman On December 12, 2013, Gary C. Evans, our chairman, loaned us $1.5 million and we issued to Mr. Evans an unsecured promissory note in the amount of $1.5 million principal (simple interest of 13% per annum) together with a warrant to purchase up to 107,142 shares of our common stock at $0.01 per share. The warrant expires five years from the date of its issuance. Mr. Evans made the loan under a letter agreement (which expired on December 31, 2013) whereby he had agreed to fund, if necessary, our liquidity needs through December 31, 2013 up to a maximum of $2 million (which amount includes the $1.5 million received on December 12, 2013). We will pay principal and all accrued interest on the promissory note on or before March 1, 2014, unless extended at our option for thirty days. In addition, we may prepay the promissory note in whole or in part at any time. Appointment of Gary C. Evans as Interim Chief Executive Officer and Kirk J. Trosclair as Chief Operating Officer On January 15, 2014, our board of directors appointed Gary C. Evans, who serves as chairman of our board of directors, to serve as our interim Chief Executive Officer, and appointed Kirk J. Trosclair to serve as our Chief Operating Officer, following the resignation, effective as of January 15, 2014, of Jonathan D. Hoopes as a board member, interim Chief Executive Officer, President and Chief Operating Officer. There was no disagreement between Mr. Hoopes and us at the time of his resignation. Sale of Salt Water Disposal Well to Sable Environmental SWD 5, LLC On January 28, 2014, GreenHunter Water sold a saltwater disposal well and associated equipment and certain real property located in Karnes County, Texas for aggregate consideration of approximately $3.9 million pursuant to an Asset Purchase Agreement with Sable Environmental SWD 5, LLC. GreenHunter Water received $1 million in cash at closing and a promissory note for approximately $2.9 million with an interest rate of 10% per annum and maturity date of January 31, 2016. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS SUBJECT TO COMPLETION, DATED FEBRUARY 4, 2014 GREENHUNTER RESOURCES, INC. 181,786 Shares of 10% Series C Cumulative Preferred Stock 5,511,424 Shares of Common Stock This prospectus relates to the resale by the selling stockholders named in this prospectus of up to (i) 181,786 shares of our 10% Series C Cumulative Preferred Stock, par value $0.001 per share, which we refer to as our Series C Preferred Stock, and 5,077,811 shares of our common stock, par value $0.001 per share, which we refer to as our common stock, issuable upon the conversion of the Series C Preferred Stock as further described herein, (ii) 282,778 shares of common stock underlying common stock purchase warrants held by the selling stockholders, and (iii) 150,835 outstanding shares of common stock held by the selling stockholders. All of the shares of Series C Preferred Stock offered hereby, the common stock purchase warrants, and the outstanding shares of common stock referred to above were originally issued to the selling stockholders in connection with a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, which we refer to as the Securities Act, on September 19, 2013, as further described herein. We are not selling any shares of Series C Preferred stock or common stock under this prospectus and will not receive any proceeds from the sale of Series C Preferred Stock or common stock by the selling stockholders. The shares of Series C Preferred Stock and common stock to which this prospectus relates may be offered and sold from time to time directly by the selling stockholders, or alternatively through underwriters or broker-dealers or agents, on a continuous or delayed basis. The shares of Series C Preferred Stock and common stock may be sold in one or more transactions, at fixed prices, at prevailing market prices at the time of sale or at negotiated prices. For additional information on the methods of sale, you should refer to the Plan of Distribution beginning on page 74 of this prospectus. This prospectus describes the general terms of the Series C Preferred Stock and the common stock and the general manner in which the selling stockholders will offer such securities. The specific terms of any offering may be included in a supplement to this prospectus. The names of any underwriters will be stated in a supplement to this prospectus. We will pay all expenses associated with this registration statement, including filing and printing fees, our legal and accounting fees and expenses, costs associated with clearing the securities for sale under applicable state securities laws, listing fees, fees and expenses of one legal counsel to the selling stockholders, and the selling stockholders reasonable expenses in connection with the registration of the securities offered by this prospectus. The selling stockholders will pay all discounts, commissions, and fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the securities being sold. Our Series C Preferred Stock is listed on the NYSE MKT under the ticker symbol GRH.PRC, and our common stock is listed on the NYSE MKT under the ticker symbol GRH. On February 3, 2014, the closing price of our Series C Preferred Stock and our common stock as reported on the NYSE MKT were $18.82 and $1.09, respectively. Investing in our Series C Preferred Stock and common stock involves significant risks. You should carefully consider the risk factors beginning on page 4 of this prospectus before purchasing any of the Series C Preferred Stock or common stock offered by this prospectus. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 2014. Table of Contents Executive Offices Our principal executive offices are located at 1048 Texan Trail, Grapevine, Texas 76051, and our telephone number is (972) 410-1044. Our website is www.greenhunterresources.com. Additional information that may be obtained through our website does not constitute part of this prospectus. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements and the notes to the financial statements included in this prospectus. Unless otherwise expressly stated or the context indicates otherwise, references in this prospectus to the "Company", "we", "us" and "our" include Armco Metals Holdings, Inc. and its consolidated subsidiaries; references in this prospectus to MT means metric tons, references in this prospectus to PRC or China means People s Republic of China. Our Company We engage in the business of metal ore trading and distribution and scrap metal recycling. Our operations are conducted primarily in China. In our metal ore trading and distribution business, we import, sell and distribute to the metal refinery industry in China, a variety of metal ore that includes iron, chrome, nickel, copper and manganese ore, as well as non-ferrous metals, and coal. We obtain these raw materials from global suppliers primarily in Brazil, India, Indonesia, Ukraine and the United States and distribute them in China. In addition, we provide sourcing and pricing services for various metals to our network of customers. In our scrap metal recycling business, we recycle scrap metal at our recycling facility and sell the recycled product to steel mills in China for use in the production of recycled steel. Our recycling facility commenced formal operations in the third quarter of 2010, and is located in Banqiao Industrial Zone, part of Lianyungang Economic Development Zone, in the Jiangsu province of China. For the years ended December 31, 2012 and 2011, we reported net losses of $2,609,336 and $3,345,004, and our net loss for the nine months ended September 30, 2013 was $3,687,143. Corporate History, Structure and Key Events We were formerly known as Cox Distributing, Inc., which was founded as an unincorporated business in January 1984 and became a C corporation in the State of Nevada on April 6, 2007. Cox Distributing, Inc. was founded by Stephen E. Cox, our former president and chief executive officer, and engaged in the distribution of organic fertilizer products used to improve soil and growing conditions for the potato farmers of eastern Idaho. Prior to June 27, 2008, Mr. Cox was our only employee. On June 27, 2008, we entered into a share purchase agreement with Armco Metals International Limited, formerly known as Armco & Metawise (H.K) Limited, or Armco HK, and Feng Gao, the sole shareholder of Armco HK. In connection with the acquisition, we purchased from Ms. Gao 100% of the issued and outstanding shares of Armco HK s capital stock for $6,890,000 by delivery of our purchase money promissory note. In addition, we issued to Ms. Gao a stock option entitling Ms. Gao to purchase a total of 5,300,000 shares of our common stock exercisable at $1.30 per share which expired on September 30, 2008 and 2,000,000 shares exercisable at $5.00 per share which expired on June 30, 2010. On August 12, 2008, Ms. Gao exercised her option to purchase and we issued 5,300,000 shares of our common stock in exchange for our $6,890,000 note held by Ms. Gao. Prior to the acquisition, there were 10,000,000 shares of our common stock issued and outstanding. In connection with the acquisition, 7,694,000 shares of common stock held by Mr. Cox were cancelled, leaving 2,306,000 shares of common stock issued and outstanding. The 5,300,000 shares issued to Ms. Gao represented approximately 69.7% of our then issued and outstanding common stock giving effect to the cancellation of 7,694,000 shares of our common stock owned by Mr. Cox. No additional common stock was issued to Mr. Cox in connection with the acquisition. After the cancellation of 7,694,000 shares of common stock, Mr. Cox held 6,200 shares. These shares were exchanged on December 30, 2008 for all of the assets and liabilities of our fertilizer business, after which time we no longer operated the fertilizer business and Mr. Cox was no longer a shareholder. As a result, for financial statement reporting purposes, the merger between us and Armco HK was treated as a reverse acquisition with Armco HK deemed the accounting acquirer and our company deemed the accounting acquiree under the purchase method of accounting in accordance with paragraph 805-40-05-2 of the FASB Accounting Standards Codification. The reverse merger is deemed a capital transaction and the net assets of Armco HK (the accounting acquirer) were carried forward to us (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilized our capital structure and the assets and liabilities of Armco HK which were recorded at historical cost. As a result of our reverse acquisition of Armco HK, we have assumed the business and operations of Armco HK with our principle activities engaged in the import, export and distribution of ferrous and non-ferrous ore and metals. On June 27, 2008, we amended our articles of incorporation to change our name to China Armco Metals, Inc. to better identify the Company with the business conducted, through its wholly owned subsidiaries in China, import, export and distribution of ferrous and non-ferrous ores and metals, and processing and distribution of scrap steel. Armco HK was incorporated on July 13, 2001 under the laws of the Hong Kong Special Administrative Region, or HK SAR, of the PRC. On March 22, 2011, Armco HK amended its Memorandum and Articles of Association, and changed its name from Armco & Metawise (H.K) Limited to its current name. On January 9, 2007, Armco HK formed Armco (Lianyungang) Renewable Metals, Inc. , or Renewable Metals, a wholly-owned foreign enterprise, or WOFE, subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Renewable Metals engages in the processing and distribution of scrap metal. On December 28, 2007, Armco HK entered into a share transfer agreement with Renewable Metals, whereby Armco HK transferred to Renewable Metals all of its equity interest in Henan Armco and Metawise Trading Co., Ltd., or Henan Armco, a company incorporated on June 6, 2002 in the City of Zhengzhou, Henan Province, PRC and under common control of Armco HK. Henan Armco engages in the import, export and distribution of ferrous and non-ferrous ores and metals. On December 1, 2008, Armco HK transferred its 100% equity interest in Renewable Metals to our company. On June 4, 2009, the Company formed Armco (Lianyungang) Holdings, Inc., or Lianyungang Armco, a WOFE subsidiary in the City of Lianyungang, Jiangsu Province, PRC. Lianyungang Armco currently has no material business operations. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion, dated February 12, 2014 ARMCO METALS HOLDINGS, INC. 3,231,604 Shares of Common Stock This prospectus relates to the sale of up to a total of 3,231,604 shares of common stock of Armco Metals Holdings, Inc., a Nevada corporation, that may be sold from time to time by the selling stockholder named in this prospectus and its successors and assigns. The shares of common stock subject to this prospectus include: (i) 47,022 shares of common stock issued as commitment shares in connection with that certain securities purchase agreement dated November 4, 2013, which we refer to herein as the Purchase Agreement; (ii) 1,440,000 shares issuable upon conversion by the selling stockholder of the principal and interest underlying our 4% convertible notes due November 7, 2014, which we refer to herein as the Initial Convertible Notes; and (iii) 1,674,904 shares issuable upon conversion by the selling stockholder of the principal and interest underlying our 4% Convertible Notes to be issued after the effectiveness of this registration, upon the terms and subject to the conditions of the Purchase Agreement, which we refer to herein as the Additional Convertible Notes. Our common stock is listed for quotation on the NYSE MKT marketplace under the symbol AMCO . On January 24, 2014, the most recent day that our stock traded, the last reported price per share of our common stock was $0.39. You are urged to obtain current market quotations of our common stock before purchasing any of the shares being offered for sale pursuant to this prospectus. Following the effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered hereby may be effected in one or more transactions that may take place on the NYSE MKT marketplace, including ordinary brokers transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling stockholder. The selling stockholder and intermediaries through whom such securities are sold may be deemed underwriters within the meaning of the Securities Act of 1933, as amended, with respect to the securities offered hereby, and any profits realized or commissions received may be deemed underwriting compensation. An investment in our securities is highly speculative, involves a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See Risk Factors beginning on page 6 of this prospectus. Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2014. On July 16, 2010, we formed a new subsidiary named Armco Metals (Shanghai) Holdings, Ltd., or Armco Shanghai. Armco Shanghai serves as our China operations headquarters and oversees the activities of the company regarding financing and international trading. On July 3, 2013, we filed a certificate of amendment to articles of incorporation to change our corporate name to Armco Metals Holdings, Inc. Our organization structure is summarized below: Securities Purchase Agreement and Senior Convertible Note On November 7, 2013, or the Closing Date, we consummated the transactions contemplated by that certain securities purchase agreement, or the Purchase Agreement, dated November 4, 2013 with Hanover Holdings I, LLC, a New York limited liability company, or Hanover. Pursuant to the Purchase Agreement, Hanover purchased from the Company a senior convertible note with an initial principal amount of $450,000, or the Initial Convertible Note, for a purchase price of $300,000 (an approximately 33.33% original issue discount). Additionally, the Company has the right to require Hanover to purchase, on the 10th trading day after the effective date of the Registration Statement (defined below), or the Additional Closing Date, an additional senior convertible note with an initial principal amount of $500,000, or the Additional Convertible Note, for a purchase price of $500,000. The Initial Convertible Notes and the Additional Convertible Note are together referred to as the Convertible Notes. The Company may exercise its right to require Hanover to purchase the Additional Convertible Note on the Additional Closing Date by delivering to Hanover, on, or within 10 days following, the effective date of the Registration Statement, an irrevocable written notice that the Company has exercised its right to require Hanover to purchase the Additional Convertible Note. Pursuant to the Purchase Agreement, on the Closing Date, the Company issued the Initial Convertible Note to Hanover. With respect to the Initial Convertible Note, $50,000 of the outstanding principal amount of the Initial Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) will be automatically extinguished (without any cash payment by the Company) if (i) the Company has properly filed the Registration Statement with the Securities and Exchange Commission, or the SEC, on or prior to the Filing Deadline (defined below) covering the resale by Hanover of shares of the Company s common stock issued or issuable upon conversion of the Convertible Notes and (ii) no event of default, or an event that with the passage of time or giving of notice would constitute an event of default, has occurred on or prior to such date. Moreover, $100,000 of the outstanding principal amount of the Initial Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by the Company) if (i) the Registration Statement filed by the Company is declared effective by the SEC on or prior to the Effectiveness Deadline (defined below) and the prospectus contained therein is available for use by Hanover for the resale by Hanover of the shares of common stock issued or issuable upon conversion of the Convertible Notes and (ii) no event of default, or an event that with the passage of time or giving of notice would constitute an event of default, has occurred on or prior to such date. TABLE OF CONTENTS Page Number Prospectus Summary 2
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the "Risk Factors" section and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Our Company Overview Ophthotech is a biopharmaceutical company specializing in the development of novel therapeutics to treat diseases of the back of the eye, with a focus on developing therapeutics for age-related macular degeneration, or AMD. AMD is a disorder of the central portion of the retina, known as the macula, which is responsible for central vision and color perception. There are two forms of AMD, wet AMD and dry AMD. Our most advanced product candidate is Fovista, which is in Phase 3 clinical development for use in combination with anti-VEGF drugs that represent the current standard of care for the treatment of wet AMD. If our Phase 3 clinical development program progresses as planned and the results are favorable, we plan to submit applications for marketing approval for Fovista in 2016. Wet AMD is the leading cause of blindness in people over the age of 55 in the United States and the European Union. We are also developing our product candidate Zimura, with an initial focus on the treatment of geographic atrophy, a severe form of dry AMD, and expect to initiate a Phase 2/3 clinical trial of Zimura for this indication in late 2014 or early 2015. There are currently no therapies approved by regulatory authorities for geographic atrophy, which, according to a study published in the peer reviewed journal Ophthalmology, affects approximately 8 million people worldwide. Development of Fovista for the Treatment of Wet AMD We are developing our product candidate Fovista to be administered in combination with anti-VEGF drugs for the treatment of wet AMD. In 2012, we completed a large Phase 2b clinical trial in newly diagnosed wet AMD patients in which 1.5 mg of Fovista administered in combination with one of the standard of care drugs, Lucentis, demonstrated statistically significant superiority compared to Lucentis monotherapy based on the primary endpoint of mean change in visual acuity from baseline at 24 weeks. Patients receiving the combination of 1.5 mg of Fovista and Lucentis gained a mean of 10.6 letters from baseline on a standardized chart of vision testing compared to a mean gain of 6.5 letters from baseline for patients receiving Lucentis monotherapy, representing a 62% comparative benefit from baseline. Based on retrospective analyses of commonly evaluated parameters used in wet AMD trials, Fovista combination therapy resulted in improved visual outcome, with more patients experiencing vision gain and fewer patients experiencing vision loss, in a broad range of patient groups in this trial compared to Lucentis monotherapy. Fovista was generally well tolerated in this clinical trial. We have initiated a pivotal Phase 3 clinical program to evaluate the safety and efficacy of Fovista combination therapy for the treatment of newly diagnosed wet AMD patients compared to current standard of care anti-VEGF monotherapy. Our Phase 3 clinical program consists of three separate Phase 3 clinical trials, two of which will evaluate Fovista in combination with Lucentis and the other of which will evaluate Fovista in combination with each of Avastin or Eylea, the other two standard of care drugs. All three of these Phase 3 clinical trials will incorporate significant aspects from the design of our completed Phase 2b clinical trial. We plan to enroll a total of 1,866 patients at more than 225 centers internationally across the three trials. We have initiated enrollment in the two trials evaluating Fovista administered in combination with Lucentis. We expect to activate initial trial sites in the third trial in this Phase 3 clinical program in the United States by the end of the first quarter of 2014. We expect to have initial, top-line data from this Phase 3 clinical program available in 2016. If the results of this Phase 3 clinical program are favorable, we plan to submit applications for marketing approval for Fovista in both the United States and the European Union before the end of 2016. AMENDEMENT NO. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Wet AMD is characterized by abnormal new blood vessel formation, referred to as neovascularization, which results in blood vessel leakage and retinal distortion. If untreated, neovascularization in wet AMD patients typically results in formation of a scar, or fibrosis, under the macular region of the retina, which is referred to as subretinal fibrosis. A study on the burden of AMD published in 2006 in the peer reviewed journal Current Opinion in Ophthalmology estimated that 1,250,000 people in the United States suffer from wet AMD. In addition, AMD Alliance International reports that approximately 200,000 new cases of wet AMD arise each year in the United States. The percentage of individuals with wet AMD increases substantially with age, and we expect that the number of cases of wet AMD will increase with growth of the elderly population in the United States. The current standard of care for wet AMD is monotherapy administration of drugs that target vascular endothelial growth factor, or VEGF, one of several proteins involved in neovascularization. The anti-VEGF market for the treatment of wet AMD consists predominantly of two drugs that are approved for marketing and primarily prescribed for the treatment of wet AMD, Lucentis and Eylea, and off-label use of the cancer therapy Avastin. In 2012, annual worldwide sales of Lucentis and Eylea for all indications totaled approximately $4.8 billion. Avastin was used off-label to treat approximately 60% of Medicare beneficiaries in 2008 who received anti-VEGF therapy for wet AMD. Retinal specialists in the largest markets in the European Union use off-label Avastin to treat approximately 27% of patients with wet AMD. The use of anti-VEGF therapy has significantly improved visual outcomes for wet AMD patients compared to untreated patients newly diagnosed with wet AMD. However, we believe that persistence or growth of neovascularization and the development of fibrosis under the retina are involved in limiting the visual benefit from anti-VEGF monotherapy, and a significant unmet medical need remains. For example, based on results of third-party clinical trials, after one year of treatment with an anti-VEGF drug, approximately 18% to 22% of newly diagnosed wet AMD patients lost additional vision, defined as the loss of the ability to read one or more letters on a standardized chart of vision testing, and approximately 62% to 75% of newly diagnosed wet AMD patients did not achieve an ability to read an additional 15 or more letters on the standardized chart of vision testing. In addition, in 2013, the peer reviewed journal Ophthalmology published the results of an uncontrolled study of patients who had received two years of treatment with Lucentis in clinical trials and then received additional treatment with Lucentis at a physician's discretion for two more years. When assessed at their last evaluation in this study, approximately 46% of such patients had lost additional vision, defined as the loss of the ability to read one or more letters on a standardized chart of vision testing. Moreover, in 2013, Ophthalmology published the results of a separate follow-up study of a cohort of these same patients. When assessed approximately three years after completing their participation in the prior study, approximately one-third had poor outcomes, defined as the loss of the ability to read 15 or more letters on a standardized chart of vision testing, according to the study conclusions. In addition, approximately 57% of such patients had lost additional vision, defined as the loss of the ability to read one or more letters on a standardized chart of vision testing, compared to baseline prior to receiving therapy in the original clinical trials, and approximately 37% had visual acuity at the level of legal blindness, defined as visual acuity of 20/200 or worse. The study authors noted that wet AMD patients remain at risk for substantial visual decline. Based on our initial assessment of retinal images of patients who experienced loss of vision following treatment with either 1.5 mg of Fovista in combination with 0.5 mg of Lucentis or Lucentis monotherapy in our completed Phase 2b clinical trial, results from preclinical studies and our review of recent scientific literature, we believe that wet AMD patients who receive anti-VEGF monotherapy may remain at increased risk for the development of subretinal fibrosis. We believe that the development of subretinal fibrosis in these patients may, in part, be responsible for the deterioration of vision that many wet AMD patients experience over time, notwithstanding treatment with an anti-VEGF drug. OPHTHOTECH CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 20-8185347 (I.R.S. Employer Identification No.) One Penn Plaza, 19th Floor New York, New York 10119 (212) 845-8200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents In a study published in 2013 in American Journal of Ophthalmology, 40% of wet AMD patients exhibited subretinal fibrosis and retinal scarring after two years of treatment with Lucentis. According to a retrospective analysis of the Comparisons of AMD Treatment Trials published in 2013 in the peer reviewed Journal of Ophthalmology, 32% of newly diagnosed wet AMD patients developed retinal scarring after one year of treatment with either Lucentis or Avastin, while 45% of newly diagnosed wet AMD patients developed retinal scarring after two years of treatment with either Lucentis or Avastin. We believe that Fovista's mechanism of action, when administered in combination with an anti-VEGF drug, may result in two relevant biological responses: neovascular regression and inhibition of subretinal fibrosis. Fovista binds to and inhibits a protein known as platelet derived growth factor, or PDGF, causing the stripping of pericytes, which are cells that cover the outside of newly formed blood vessels. After the pericytes are stripped from the new blood vessels, endothelial cells lining the inside of the newly formed blood vessels are left unprotected and are highly vulnerable to the effects of anti-VEGF therapy. Fovista also inhibits migration of other retinal cells attracted by PDGF, such as retinal pigment epithelium, or RPE, cells and glial cells, which play a role in the formation of subretinal fibrosis. We further believe that the administration of Fovista in combination with anti-VEGF drugs in patients with wet AMD may cause regression of neovascularization and may inhibit subretinal fibrosis more effectively than anti-VEGF monotherapy. We believe that Fovista may provide meaningful added benefit in the treatment of wet AMD regardless of which anti-VEGF drug is administered in combination with Fovista. Development of Zimura with Initial Focus on Dry AMD We are developing our product candidate Zimura, which we previously referred to as ARC1905, with an initial focus on the treatment of geographic atrophy, a severe form of dry AMD. Zimura is an inhibitor of complement factor C5, which we refer to as C5, a protein that is associated with complement mediated inflammation and cell damage, which we believe may be involved in the development of dry AMD. Dry AMD is a significant cause of moderate and severe loss of central vision, affecting vision in both eyes in most patients. Dry AMD results in progressive and chronic degeneration of the macula characterized by variable thinning and dysfunction of retinal tissue. Dry AMD is typically associated with yellow-white dots or deposits under the retina, known as drusen. Unlike in wet AMD, there is a complete absence of pathological neovascularization in dry AMD. Deterioration of vision in dry AMD is usually gradual over a period of months and years and is considered irreversible. Significant vision loss results if dry AMD evolves into a more severe form of the disease known as geographic atrophy. Geographic atrophy appears as severe, abrupt and deep levels of macular tissue loss. In addition, dry AMD can also progress to wet AMD. Although dry AMD is the most common form of AMD, there are no therapies approved by the U.S. Food and Drug Administration, or FDA, or European Medicines Agency, or EMA, to treat this condition. According to a 2011 publication from AMD Alliance International, approximately 30 million people worldwide have some form of AMD, with dry AMD accounting for 85% to 90% of these cases. A study published in Ophthalmology in 2012 analyzing age and gender variations in AMD prevalence estimates that approximately 8 million dry AMD patients worldwide are affected by geographic atrophy. Multiple published studies have implicated local inflammation in the pathogenesis of dry AMD. Specifically, these studies suggest that the complement pathway, which consists of a series of proteins involved in the defense against infection and modulates a variety of immune and inflammatory responses, has a central role in dry AMD. The complement system is generally tightly regulated and requires the proper balance of activation and inhibition of proteins to function properly. Poorly regulated or aberrant activation of proteins in the complement pathway without a balanced or proportional inhibition of other proteins may result in the production of immune mediated inflammation, or inflammation that is triggered by activation of the immune response, and damage to David R. Guyer, M.D. Chief Executive Officer Ophthotech Corporation One Penn Plaza, 19th Floor New York, New York 10119 (212) 845-8200 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents normal tissue. We believe that excessive activation of C5, which is one of the complement proteins, and the resulting formation of downstream complement molecules, results in tissue damage that plays an important role in the development of both dry AMD and certain forms of wet AMD. Our product candidate Zimura is designed to inhibit C5 activation. We have completed a small, multicenter, uncontrolled, open label Phase 1/2a clinical trial evaluating the safety and tolerability of Zimura administered as a monotherapy to patients with geographic atrophy. We did not observe any evidence of drug related adverse events in this clinical trial. We observed a trend in this clinical trial, in favor of the higher of two dose groups, of a relative reduction in the mean growth of the geographic atrophy lesion area, as measured by an independent reading center, at 24 weeks. When the injections were administered in a reduced dosing schedule during the subsequent 24 weeks, this relative trend in reduced growth in geographic atrophy lesion area was no longer present. We believe this apparent trend in reduction of growth in geographic atrophy lesion area when Zimura was dosed more frequently, together with the relative loss of the benefit when Zimura was dosed less frequently, may suggest a possible drug effect. In addition, recently released clinical data from a third party targeting the complement pathway also exhibited a trend in reduction of geographic atrophy growth with a pronounced effect in patients with specific biomarkers. Based on the results of our Phase 1/2a clinical trial and the recent results from the third-party clinical trial, we plan to initiate a Phase 2/3 clinical trial to evaluate the safety and efficacy of Zimura monotherapy in patients with geographic atrophy in late 2014 or early 2015. We also plan to evaluate Zimura and Fovista to be administered in combination with anti-VEGF drugs for the treatment of a subpopulation of wet AMD patients who do not respond adequately to treatment with anti-VEGF monotherapy or for whom anti-VEGF monotherapy fails, who we refer to as anti-VEGF resistant, and who are believed to have complement mediated inflammation. We plan to initiate a Phase 2 clinical trial of Zimura and Fovista administered in combination with an anti-VEGF drug in this second indication in 2015. Our Strategy Our goal is to become a leading biopharmaceutical company focused on developing and commercializing novel therapeutics to treat diseases of the back of the eye, with a particular focus on AMD. The key elements of our strategy to achieve this goal are: Complete Phase 3 clinical program evaluating Fovista administered in combination with anti-VEGF drugs for the treatment of wet AMD and, if successful, seek marketing approval for Fovista in this indication. We have initiated a pivotal Phase 3 clinical program evaluating Fovista administered in combination with anti-VEGF drugs for the treatment of newly diagnosed wet AMD patients. Based on our estimates regarding patient enrollment, we expect to have initial, top-line data from this Phase 3 clinical program available in 2016. Our Phase 3 clinical trials will continue after such submissions in accordance with the protocols for these trials. Further evaluate the potential benefit of Fovista in wet AMD, when administered in combination with anti-VEGF drugs, and in other ophthalmic diseases and conditions. We are planning to initiate a Phase 2 clinical trial to assess whether the use of Fovista in combination with anti-VEGF drugs can reduce the number and frequency of intravitreal injections required to effectively treat wet AMD. In addition, we are planning to initiate a Phase 2 clinical trial of Fovista in combination with anti-VEGF drugs for the treatment of anti-VEGF resistant wet AMD patients. We plan to initiate these two clinical trials in 2014 and expect to receive initial results from these two clinical trials in 2015. We are also planning to initiate a Phase 2 clinical trial to assess whether the use of Fovista in combination with anti-VEGF drugs can inhibit the development of subretinal fibrosis in wet AMD patients. We plan to initiate this clinical trial in 2014 and expect to receive initial results from this clinical trial in late 2015 or early 2016. We are also evaluating other ophthalmic conditions for which we believe Fovista treatment may be beneficial. We are Copies to: David E. Redlick, Esq. Brian A. Johnson, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 7 World Trade Center, 250 Greenwich Street New York, New York 10007 Telephone: (212) 230-8800 Fax: (212) 230-8888 Richard D. Truesdell, Jr., Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 Fax: (212) 701-5800 Table of Contents planning to supply Fovista for a clinical trial to be conducted by the National Eye Institute, part of the U.S. National Institutes of Health, to evaluate Fovista's potential to inhibit the visual loss resulting from retinal complications associated with von Hippel-Lindau disease, an inherited disease characterized by multiple benign and malignant tumors and cysts in the eye and other organs. We expect this clinical trial will commence in late 2014. We are also planning to initiate, potentially in 2015, a clinical trial to assess the potential therapeutic benefit of Fovista, and in particular its potential to inhibit the development of retinal scarring, in proliferative vitreoretinopathy, a complication associated with retinal detachment. Advance the development of Zimura for the treatment of AMD. We are developing our product candidate Zimura, with an initial focus on the treatment of geographic atrophy, a severe form of dry AMD. We plan to initiate a Phase 2/3 clinical trial in patients with geographic atrophy in late 2014 or early 2015 and expect to receive interim results from this clinical trial in 2016. We also plan to initiate in 2015 a Phase 2 clinical trial evaluating the safety and efficacy of Zimura and Fovista administered in combination with an anti-VEGF drug in anti-VEGF resistant wet AMD patients who are believed to have complement mediated inflammation. Maximize commercial potential of Fovista and Zimura. We have retained worldwide commercialization rights to Fovista and Zimura. If either of Fovista or Zimura receives marketing approval, we plan to commercialize such product candidate in the United States with our own focused, specialty sales force. We expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize Fovista and Zimura in markets outside the United States. Opportunistically in-license or acquire products, product candidates and technologies. We believe that our focus on diseases of the back of the eye and our experienced management team will make us an attractive collaborator or acquirer for companies seeking to out-license or sell rights to complementary products, product candidates or technologies in our area of focus. We generally expect that we will not engage in early stage research and drug discovery and will thus avoid the related costs and risks of these activities. Potential for Fovista in Wet AMD We intend to seek a broad label for Fovista for the treatment of patients with wet AMD in combination with anti-VEGF drugs. We believe that Fovista may provide meaningful added benefit in the treatment of wet AMD regardless of which anti-VEGF drug is administered in combination with Fovista. We also believe that Fovista may have the potential to inhibit the development of subretinal fibrosis, thereby improving longer-term visual outcomes for wet AMD patients. Visual Acuity Benefit. In our Phase 2b clinical trial, we observed a visual benefit in patients treated with the combination of 1.5 mg of Fovista and Lucentis that was evident early in and sustained over the course of treatment. The relative magnitude of visual benefit increased over the study period. We believe that these results suggest that Fovista may provide benefit to patients when used in combination with Lucentis. We also believe that these results may be supported by Fovista's proposed mechanism of action, which we believe, when administered in combination with an anti-VEGF drug, may result in two relevant responses: neovascular regression and inhibition of subretinal fibrosis. Phase 3 Clinical Trials Build Upon and Incorporate Phase 2b Clinical Trial Design. Two of the three Phase 3 clinical trials included in our Phase 3 clinical program are evaluating the safety and efficacy of Fovista administered in combination with Lucentis. We believe that the following Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents aspects of our two Phase 3 clinical trials of Fovista administered in combination with Lucentis may reduce the risk that we will have unexpected outcomes in these two clinical trials: We have made no meaningful changes to the inclusion and exclusion criteria in these Phase 3 clinical trials from those we used in our Phase 2b clinical trial. We have not changed the primary endpoint, mean change in visual acuity from baseline, that we used in our Phase 2b clinical trial. However, we will assess mean change in visual acuity from baseline in these Phase 3 clinical trials at 12 months, instead of at 24 weeks as in our Phase 2b clinical trial. We are further improving our ability to detect any statistically significant differences in outcomes between the treatment and control arms of our Phase 3 clinical trials by substantially increasing both the number of patients who will receive 1.5 mg of Fovista administered in combination with Lucentis and the number of patients who will receive Lucentis monotherapy as compared to our Phase 2b clinical trial. We are using a dose of Fovista that exhibited a favorable safety profile in our Phase 2b clinical trial. To support our efforts to seek a broad label for Fovista, we plan to include a third Phase 3 clinical trial to evaluate the safety and efficacy of Fovista administered in combination with each of Avastin or Eylea compared to Avastin or Eylea monotherapy. Potential to Enhance Efficacy of Current Standard of Care. Based on results of third-party clinical trials, after one year of treatment with an anti-VEGF drug, approximately 18% to 22% of newly diagnosed wet AMD patients lost additional vision, defined as the loss of the ability to read one or more letters on a standardized chart of vision testing, and approximately 62% to 75% of such patients did not achieve an ability to read an additional 15 or more letters on the standardized chart of vision testing. Data from two large, recently published third-party clinical studies show that 40% to 45% of wet AMD patients develop subretinal fibrosis after two years of treatment with an anti-VEGF drug. We believe that Fovista may enhance the regression of neovascularization and may also inhibit the development of subretinal fibrosis in the eye when administered in combination with an anti-VEGF drug, and therefore may potentially provide meaningful added benefit in the treatment of wet AMD as compared to anti-VEGF monotherapy. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware of before making an investment decision. These risks are
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. Before deciding to invest in shares of our common stock, you should read this summary together with the more detailed information, including our consolidated financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in "Risk Factors," our consolidated financial statements and related notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included elsewhere in this prospectus. CARE.COM, INC. Our Mission Our mission is to improve the lives of families and caregivers by helping them connect in a reliable and easy way. Our solutions help families to make informed decisions in one of the most important and highly considered aspects of their family life finding and managing quality care for their family their children, parents, pets and other loved ones. In providing families a comprehensive marketplace for care, we are building the largest destination for quality caregivers to find fulfilling employment and career opportunities globally. We strive to help our members families and caregivers pursue their passions and fulfill the basic human need of caring for each other. Our Company We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In 2013, we had an average of over 6.3 million unique visitors to our platform each month, including approximately 2.2 million visitors per month from mobile devices. We help families address their particular lifecycle of care needs, which includes child care, senior care, special needs care and other non-medical family care needs such as pet care, tutoring and housekeeping. In the process, we also help caregivers find rewarding full-time and part-time employment opportunities. In 2013, 60% of all job postings were for part-time care services, with the remaining 40% seeking full-time care. We believe the scale and breadth of our services, combined with our commitment to delivering the best possible member experience for families and caregivers, have made us the most trusted and leading brand for finding and managing family care. Our platform provides families with robust solutions. Our consumer matching solutions our core offering allow families to search for, qualify, vet, connect with and ultimately select caregivers in a low-cost, reliable and easy way. Based on an internal survey of the families who subscribe to our consumer matching solutions, on average four out of five of these families find their caregiver on Care.com. Our platform also provides caregivers with solutions to create personal profiles, describe their unique skills and experience, and otherwise differentiate and market themselves in a highly fragmented marketplace. In addition to our core consumer matching solutions, we offer our members innovative products and services to facilitate their interaction with caregivers. We provide solutions intended to improve both the ease and reliability of the care relationship in the home. One product area we are particularly focused on is consumer payments. Through our consumer payments solutions, families can not only electronically pay a caregiver, they can also subscribe for tax preparation services through our Care.com HomePay product. This product offering deepens our relationship with our members and could dramatically enhance the lifetime value associated with each member. We have expanded our marketplace beyond families and caregivers. We also serve employers by providing access to our platform to over 600,000 employer-sponsored families. In addition, we serve care-related businesses such as day care centers, nanny agencies and home care agencies who wish to Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents market their services to our care-seeking families and recruit our caregiver members. These businesses improve our member experience by providing additional caregiving choices for families and employment opportunities for caregivers. We have experienced rapid growth in revenue and members. Our members grew from 1.9 million as of September 30, 2010 to more than 9.1 million as of September 28, 2013, representing a 70% compounded annual growth rate. Our revenue has grown from $12.9 million for the fiscal year ended December 31, 2010 to $48.5 million for the fiscal year ended December 31, 2012, representing a 94% compounded annual growth, primarily driven by our consumer matching solutions. Revenue for the nine months ended September 28, 2013 increased to $59.0 million, representing an 81% increase from the $32.6 million of revenue generated during the nine months ended September 30, 2012. We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million in 2012. Our Market Opportunity The market for care is large and highly fragmented. We believe that our target market includes all households with income greater than $50,000 and 15% of households with income less than $50,000, in each case with either a child under the age of 18 or a senior over the age of 65. According to the U.S. Census Bureau, there were 42 million such households in the United States in 2010. The needs of families seeking care are diverse, taking many different forms depending on the circumstances and life stage of the family. According to IBIS research, in 2012, an aggregate of $243 billion was spent in the United States on care, including day care, in-home care providers, housekeepers, nursing care facilities, tutoring and pet care. In other industry marketplaces, such as online travel, vacation rentals, and general merchandise, companies that provide marketing and payment solutions receive between 3% and 15% of gross spend. We believe that in the marketplace for care, companies that provide marketing and payment solutions could receive a similar amount of the gross spend. We believe there are several key demographic trends contributing to the large and growing total addressable market for online care marketplaces, including a significant percentage of dual-income and single-parent households with children and an increasing aging population with a high preference for home care. We believe these factors are also driving employers to provide family-care related benefits to their employees in order to reduce costs associated with care-related absences and increase employee productivity, engagement and loyalty. Despite the size and growth of the care market, there has historically been no proven, efficient and cost-effective way for families to connect with quality caregivers and for caregivers or care-related businesses to target a large number of families. Traditional alternatives employed by families, including word-of-mouth, directories, job boards and placement agencies, generally suffer from one or more of the following limitations: limited reach, lack of a comprehensive solution to address diverse and evolving care needs, and high cost. These traditional alternatives also typically do not provide a convenient way for families to manage the financial relationship with their caregiver. In addition, caregivers and care-related businesses lack a cost-effective way to promote their services, to target families at scale and, in the case of care-related businesses, to recruit caregivers efficiently. Our Solutions Our suite of products and services enables families to manage their diverse and evolving care needs, caregivers to find jobs and manage their careers and businesses to recruit employees and advertise their business profiles. Care.com, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 7389 (Primary Standard Industrial Classification Code Number) 20-5785879 (I.R.S. Employer Identification No.) 201 Jones Road, Suite 500 Waltham, MA 02451 (781) 642-5900 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents Efficient, Reliable and Affordable Way for Families and Caregivers to Connect and Manage Their Care and Career Needs Our comprehensive and differentiated platform provides significant benefits to our members, including: Efficient and reliable way for families to find quality caregivers. Our members have access to easy-to-use job posting tools, powerful search features, detailed caregiver profiles, an online safety center and background check services, all of which are designed to empower our members to make efficient and informed decisions about their caregivers. Efficient way for caregivers to target large, qualified audiences and professionalize their careers. Caregivers can easily create detailed profiles to market themselves to a large qualified audience of families searching for care. In addition, we provide caregivers with access to services, educational resources and content to help professionalize and manage their careers. Easy-to-use and secure communication tools. We provide a cross-platform suite of communication tools to enable easy and efficient communication between families and caregivers. These easy-to-use tools are built around a monitored messaging system that members access through the Care.com website and mobile apps. Comprehensive solutions. Through our platform, families have access to a broad range of care solutions to address their diverse and evolving care needs, including childcare, tutoring, senior care options and housekeeping, as well as payment services to help manage the financial relationship with their caregivers. Likewise, caregivers can apply to jobs in any category of care posted by families or by care-related businesses. Cost-effective alternative. Families are provided free access to search, post a job and preview detailed caregiver profiles. Families pay a subscription fee, ranging from approximately $37 for a monthly subscription to $147 for an annual subscription, to contact an unlimited number of caregivers through our platform during the term of the subscription, including nannies, babysitters, pet sitters and tutors. Our caregiver members can apply to jobs through our platform and target families and care-related businesses at no cost. Anytime, anywhere access. Our services are available across multiple platforms and mobile devices to ensure that our members access Care.com easily and conveniently wherever they go. We provide our services through mobile apps on iOS and Android devices. We also make our website experience available on personal computers and mobile web browsers. Across these platforms, members are able to access our core features for finding care and jobs and for paying caregivers. Easy-to-Use Payment Offerings Our tax and payments solutions are designed to make it easier for families to manage the financial relationship with their caregivers. We offer a payroll and tax product for families that employ a household worker and a convenience payments solution that enables families to make electronic payments to a caregiver from a computer or mobile device. Comprehensive Care Solution for Employers We provide a comprehensive suite of care services for employers to offer to their employees, including our consumer matching solutions, payment offerings, back-up care services and care concierge services. In addition to helping employees better manage the balance between work and home life, these services are designed to benefit employers by promoting increased productivity, engagement and loyalty and reduced care-related absences. Sheila Lirio Marcelo President Care.com, Inc. 201 Jones Road, Suite 500 Waltham, MA 02451 (781) 642-5900 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Efficient Marketing and Recruiting Channel for Care-Related Businesses We provide a highly targeted suite of marketing and recruiting solutions for care-related businesses to reach our large database of families and caregivers. Our Competitive Strengths Largest Global Marketplace Focused on Care We are the world's largest online marketplace for finding and managing family care with more than 9.7 million members, including approximately 5.2 million families and 4.5 million caregivers, spanning 16 countries. In the United States, our service is available nationwide, with our member families residing in 83% of all zip codes and our member caregivers residing in 81% of all zip codes. Additionally, in the 20 most populated metro areas in the United States, we have at least 5,000 caregivers within a 10 mile radius of 85% of the zip codes of such metro area and at least 1,000 caregivers within a 10 mile radius of 98% of the zip codes of such metro area, where the zip codes of a metro area include all zip codes within 30 miles of the relevant city center. High Quality Match Rate Based on our high match rate of paying members with caregivers, we believe our breadth of selection and our matching algorithms enhance the effectiveness of our marketplace and the value we offer to both families and caregivers. In the United States, our member surveys indicate that approximately four out of five families that subscribe to our consumer matching solutions successfully find a caregiver. Furthermore, our surveys indicate that families who hire caregivers using our platform have a high degree of satisfaction with the caregivers they find: 85% of responding families indicate that they are satisfied with their caregiver, and almost 50% indicate that they are extremely satisfied with their caregiver, responding with a score of ten out of ten. Growing and Engaged Membership Over the last five years, we have expanded from 500,000 members to more than 9.7 million members. In 2013, on average, a new job was posted on our platform more frequently than every 30 seconds, and a new job application was submitted more frequently than every two seconds. This highly engaged membership helps improve the effectiveness of our services and increases the lifetime value of our members. Powerful Network Effects As more families use our services, we attract more caregivers seeking a large pool of families in need of their services. Similarly, the increasing number of caregivers using our services has attracted more families. This cycle has driven more and more people to use our services and has resulted in a significant percentage of our new members coming from unpaid sources. In 2012, a majority of our paying families originated from unpaid sources. Trusted and Recognized Brand We have invested in building a differentiated member experience for finding care. This investment includes the ongoing prioritization of features and processes that we believe contribute to the quality of our marketplace. We believe our product investments, combined with our investments in national brand advertising and our domain name itself, have established the Care.com brand as a leading and trusted brand for finding care. Copies to: John H. Chory, Esq. Susan L. Mazur, Esq. Latham & Watkins LLP 1000 Winter Street, Suite 3700 Waltham, MA 02451 Telephone: (781) 434-6700 Facsimile: (781) 434-6601 Diane Musi, Esq. General Counsel Care.com, Inc. 201 Jones Road, Suite 500 Waltham, MA 02451 Telephone: (781) 642-5900 Facsimile: (781) 736-7975 Patrick O'Brien, Esq. Thomas Holden, Esq. Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, MA 02199 Telephone: (617) 951-7000 Facsimile: (617) 951-7050 Table of Contents Our Growth Strategy Attract More Members to Our Platform We are still early in the penetration of our addressable market. In order to grow our membership, we intend to increase our investments in various marketing channels, including television, online search and community groups and forums, to increase brand awareness in the United States among families and caregivers. We also intend to increase our member base by selling our services to more employers who will offer our platform as a benefit to their employees. Increase Revenue per Member As we improve our user experience and expand our product and service offerings, our revenue per member has increased. We intend to further increase revenue per member by introducing new products which are targeted at recurring uses, such as our recently introduced convenience payments and "date night" products and by increasing the cross-selling and merchandising of our existing products, such as HomePay and senior care services, within our existing membership base and via the employer channel. In addition, we intend to continue to engage our non-paying members with content and resources to drive higher conversion of members to paying members. Expand and Increase Adoption of Our Payment Offerings We believe there is significant opportunity for us to grow our consumer solutions offerings by offering new payment solutions, such as our recently-launched convenience payments product, and increasing the percentage of Care.com members that use our HomePay product. Grow Our International Business We are currently operating in 16 countries and in 7 languages. We intend to grow our international business by focusing on raising awareness of our services in these markets. Attract More Care-Related Businesses to Our Platform Our recently-launched recruiting and marketing solutions for care-related businesses provide us with additional growth opportunities. We are still early in the penetration of the addressable client base for these services and believe there is a significant runway for future growth for both of these solutions. Selectively Pursue Acquisitions and Strategic Relationships In 2012, we acquired Besser Betreut GmbH, or Betreut, Breedlove & Associates, L.L.C., or Breedlove, and Parents in a Pinch, Inc., and in 2013 we acquired the assets of the Big Tent public groups platform. These acquisitions further our strategy of growing our membership and increasing the value we offer. In the future, we may selectively pursue acquisitions that complement our existing business, enhance the user experience of our services, represent a strong cultural fit and are consistent with our overall growth strategy. In addition, we may enter into various strategic relationships to provide a more comprehensive offering to our members. Selected Risk Factors Our business is subject to numerous risks and uncertainties. Please carefully read "Risk Factors" beginning on page 10 for a more complete explanation of the risks involved before investing in our common stock. For example, any of the following risks may negatively affect our business, competitiveness Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents or growth strategy, which could cause the price of our common stock to decline, and result in a loss of a part or all of your investment: We may not maintain our current rate of revenue growth; We have a history of cumulative losses and expect to have operating losses as we continue to grow our business; We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful; If the revenue generated by new paying members differs significantly from our expectations, or if our membership acquisition costs increase, we may not be able to recover our membership acquisition costs or generate profits from these investments; Our business depends on the strength of our brand, which we have built by providing families and caregivers efficient, reliable and affordable services for finding quality caregivers and fulfilling jobs. If the services we provide fail to meet our members' expectations, the trust members have placed in our brand may be damaged, and we may be unable to maintain or expand our base of members and paying members; and Our revenue and operating results could vary significantly from period to period and be unpredictable, which could cause the market price of our common stock to decline. Company Information We were incorporated in Delaware on October 27, 2006. Our executive offices are located at 201 Jones Road, Suite 500, Waltham, MA 02451 and our telephone number is 781-642-5900. Our website address is www.care.com. The information contained in, or accessible through, our website does not constitute part of this prospectus, and investors should not rely on any such information in deciding whether to purchase our common stock. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the 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 $1.0 billion, or (c) in which we become a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the "JOBS Act," and references herein to "emerging growth company" shall have the meaning associated with such term in the JOBS Act. For fiscal periods prior to fiscal 2013, we operated and reported on a calendar basis fiscal year. Beginning in fiscal 2013, we began to operate and report using a 52 or 53 week fiscal year ending on the Saturday closest to December 31. Accordingly, our fiscal quarters end on the Saturday that falls closest to the last day of the third month of each quarter. We use various trademarks, trade names and design marks in our business, including without limitation "Care.com" and "Betreut.de." This prospectus also contains trademarks and trade names of other businesses that are the property of their respective holders. Unless the context otherwise requires, we use the terms "Care.com," "our company," "we," "us" and "our" in this prospectus to refer to Care.com, Inc. and its subsidiaries. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities To Be Registered Amount To Be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(2) Amount of Registration Fee(3) Common Stock, $0.001 par value per share 6,152,500 $16.00 $98,440,000 $12,680 (1)Includes shares that the underwriters have the option to purchase to cover over-allotments, if any. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)Registration fee of $10,304 was previously paid in connection with the initial filing of this Registration Statement. The amounts paid in connection with this filing for the aggregate registration fee of $12,680, which includes $10,304 previously paid and $2,376 for the additional amount of $18,440,000 of securities included in this amendment to the Registration Statement, is offset by the $10,304 previously paid. The number of shares of our common stock to be outstanding after this offering is based on the number of shares of our common stock outstanding as of September 28, 2013 and excludes: 3,553,291 shares of common stock issuable upon exercise of stock options outstanding as of September 28, 2013, at a weighted-average exercise price of $4.27 per share; 80,697 shares of common stock issuable upon exercise of warrants outstanding as of September 28, 2013, at a weighted-average exercise price of $1.69 per share; 178,410 shares of common stock reserved as of September 28, 2013 for future issuance under our 2006 Stock Incentive Plan; 4,112,048 shares of our common stock reserved for future issuance under our 2014 Incentive Award Plan, which will become effective on the day prior to the public trading date of our common stock, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan; and 191,278 shares of our Series E redeemable preferred stock (or an equivalent number of shares of our common stock in the event our Series E redeemable preferred stock has been converted into common stock) we expect to issue to certain of our stockholders in the first quarter of 2014 as a result of the achievement of specified performance milestones in connection with a 2012 acquisition. Unless otherwise indicated, this prospectus reflects and assumes the following: the conversion of all outstanding shares of our redeemable convertible preferred stock into 21,299,378 shares of our common stock, which will occur automatically immediately prior to the closing of this offering; the filing of our restated certificate of incorporation and the adoption of our amended and restated by-laws upon the closing of this offering; and no exercise by the underwriters of their over-allotment option. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents SUMMARY CONSOLIDATED FINANCIAL DATA The following tables set forth a summary of our historical financial data as of, and for the period ended on, the dates indicated. The statement of operations data for the years ended December 31, 2011 and 2012 are derived from our audited financial statements included elsewhere in this prospectus. The statement of operations data for the nine months ended September 28, 2013 and balance sheet data as of September 28, 2013 have been derived from our unaudited financial statements appearing elsewhere in this prospectus. You should read this data together with our audited financial statements and related notes appearing elsewhere in this prospectus and the information under the captions "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results, and results for the nine months ended September 28, 2013 are not necessarily indicative of results to be expected for the full year ended December 28, 2013. Fiscal Year Ended Nine Months Ended December 31, 2011 December 31, 2012 September 30, 2012 September 28, 2013 (in thousands, except per share data) Revenue $ 26,006 $ 48,493 $ 32,567 $ 58,976 Cost of revenue 6,225 10,210 7,224 13,992 Operating expenses: Selling and marketing 22,480 35,916 27,919 43,852 Research and development 4,639 7,662 5,443 8,419 General and administrative 4,621 13,671 8,959 13,307 Depreciation and amortization 173 1,724 786 3,166 Total operating expenses 31,913 58,973 43,107 68,744 Operating loss (12,132 ) (20,690 ) (17,764 ) (23,760 ) Other (expense) income, net (20 ) (47 ) (45 ) (318 ) Loss before income taxes (12,152 ) (20,737 ) (17,809 ) (24,078 ) (Benefit from) provision for income taxes (317 ) 70 587 Net loss (12,152 ) (20,420 ) (17,879 ) (24,665 ) Accretion of redeemable convertible preferred stock (41 ) (48 ) (34 ) (42 ) Net loss attributable to common stockholders $ (12,193 ) $ (20,468 ) $ (17,913 ) $ (24,707 ) Net loss per share attributable to common stockholders: Basic and diluted $ (5.57 ) $ (7.97 ) $ (7.28 ) $ (8.36 ) Weighted-average shares used to compute net loss per share attributable to common stockholders: Basic and diluted 2,188 2,568 2,462 2,957 Pro forma net loss per share attributable to common stockholders: Basic and diluted $ (1.03 ) $ (1.00 ) Pro forma weighted average shares used to compute pro forma net loss per share outstanding: Basic and diluted 19,702 24,256 Table of Contents PROSPECTUS (Subject to Completion) Issued January 10, 2014 The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. 5,350,000 Shares COMMON STOCK (1)The pro forma balance sheet data give effect to the conversion of all outstanding shares of our redeemable convertible preferred stock into an aggregate of 21,299,378 shares of common stock upon the closing of this offering. (2)The pro forma as adjusted balance sheet data give effect to our issuance and sale of 5,350,000 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, which is the midpoint of the range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and short-term investments, working capital, total assets and total stockholders' equity by approximately $5.0 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Care.com is offering 5,350,000 shares of its common stock. This is our initial public offering and no public market exists for our shares. We anticipate that the initial public offering price will be between $14.00 and $16.00 per share. Table of Contents RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below before making a decision to invest in our common stock. Our business, operating results, financial condition or prospects could be materially and adversely affected by any of these risks and uncertainties. In that case, the trading price of our common stock could decline and you might lose all or part of your investment. In addition, the risks and uncertainties discussed below are not the only ones we face. Our business, operating results, financial performance or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. In assessing the risks and uncertainties described below, you should also refer to the other information contained in this prospectus before making a decision to invest in our common stock. Risks Related to Our Business We may not maintain our current rate of revenue growth. Our revenues have grown rapidly, increasing from $12.9 million in 2010 to $48.5 million in 2012, representing a compounded annual growth rate of 94%. Our continued revenue growth and the rate of our revenue growth depend largely on our ability to effectively and efficiently grow our membership, increase the number of members who pay for our products and services, increase the average revenue from our paying members and lengthen the time period existing and new members continue to pay for our products and services. We cannot assure you that we will be successful in continuing to expand our paying member base at the same rates, or at all. In addition, our revenue growth rate may decline if we are not successful in cross-selling new and existing products and services to our members, such as our consumer payments solutions, or in continuing to develop new products and services that members consider valuable. You should not rely on our historical rate of revenue growth as an indication of our future performance. If our growth rates were to decline significantly or become negative, it could adversely affect our financial condition and results of operations. We have a history of cumulative losses and expect to have operating losses as we continue to grow our business. We experienced net losses of $3.5 million in 2010, $12.2 million in 2011 and $20.4 million in 2012. We expect our operating expenses to increase significantly over the next several years, which is likely to lead to additional losses. Therefore, we may not achieve profitability in the immediate future, if ever. In particular, we intend to continue to invest substantial resources in marketing to acquire new, paying members. We also intend to hire additional personnel in marketing, operations, sales and other areas of our business and to introduce new products, services and features, each of which will increase our expenses with no assurance that we will generate sufficient revenue to reduce our losses or achieve profitability. In addition, as we prepare to become a public company, and as a public company, we are incurring and will continue to incur additional significant legal, accounting and other expenses that we did not have as a private company. We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. We have a limited operating history, and because the market for accessing care online is rapidly evolving and has not yet reached widespread adoption, it is difficult for us to predict our future operating results. In addition, much of our growth has occurred over the last two years, which makes it difficult for us to predict the expected length of paid memberships, revenue per member, member acquisition costs and other key performance indicators for our business. You should consider our business and prospects in light of the risks and difficulties we may encounter in this rapidly evolving market. These risks and difficulties include those described in this prospectus and our ability to, among other things: attract and retain members and maintain an appropriate family to caregiver ratio of active members; encourage paying members to stay longer and return as paying members sooner after their paid membership lapses; We have applied to list our common stock on the New York Stock Exchange under the symbol "CRCM." Table of Contents cross-sell our products and services to our new and existing members and continue to develop and diversify our product offerings for members; sell our services to employers and care-related businesses; provide our members with superior user experiences; motivate members to contribute additional, timely and accurate content to our marketplace; anticipate and react to changes in technology and challenges from existing and new competitors; maintain the strength and increase awareness of our brand; and manage and grow our international operations in existing markets. Failure to adequately address these risks and difficulties could harm our business and cause our operating losses to grow. In addition, if the demand for online care does not develop as we expect, or if we fail to address the needs of this demand, our business will be harmed. If the revenue generated by paying members differs significantly from our expectations, or if our membership acquisition costs increase, we may not be able to recover our membership acquisition costs or generate profits from these investments. We had $35.9 million in sales and marketing expenses in 2012 and $43.9 million in sales and marketing expenses during the nine months ended September 28, 2013. We expect to continue to make significant investments to acquire additional members, including advertising through television, online, local radio, direct mail, social media and other advertising campaigns. Our decisions regarding these investments are based on our anticipated marketing cost to acquire each additional paying member and our analysis of the revenue we believe we can generate per paying member over the expected lifetime of such membership. Currently, most of our paid memberships are monthly memberships, and the average paid membership length for our consumer matching solutions is approximately seven months. As a result, we must regularly replace paying members who allow their membership to lapse with new paying members either by converting existing non-paying members or by attracting new members to our service. Our anticipated member acquisition costs and our analysis of the revenue that we expect new paying members to generate over the life of the membership depends upon several estimates and assumptions, including lengthening paid memberships and increasing renewal rates, including conversion rates of existing members to paying members, future membership fees and our success in cross-selling existing and new products and services to members. If our estimates and assumptions regarding either our cost to acquire paying memberships or the revenue we can generate from those memberships over their lifetime prove incorrect, we may be unable to recover our member acquisition costs and our operating losses may increase. Similarly, if our member acquisition costs increase, the return on our investment may be lower than we anticipate irrespective of the revenue generated by new members. If we cannot generate profits from this investment, we may need to alter our growth strategy, and our growth rate and results of operations may be adversely affected. Our business depends on the strength of our brand, which we have built by providing families and caregivers efficient, reliable and affordable services for finding quality caregivers and fulfilling jobs. If the services we provide fail to meet our members' expectations, the trust members have placed in our brand may be damaged, and we may be unable to maintain or expand our base of members and paying members. Trust in our brand is essential to the strength of our business. Member awareness, and the perceived value, of our brand depends largely on the success of our marketing efforts and our ability to provide a consistent, high-quality member experience. As a result, we must ensure that our new and existing members are satisfied with all of our products and services. Complaints or negative views of our products or services, caregivers or families, irrespective of their validity, could diminish members' confidence in and the use of our platform and adversely impact our brand. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for future filings. Investing in our common stock involves risks. See "Risk Factors" beginning on page 10. Table of Contents In addition, our member experience extends beyond the products and services that we offer through our website and to the point of service. As a result, actions taken by caregivers and families, which are outside of our control, could have a significant impact on our brand, and any illegal or otherwise harmful acts, even if only by one or a small number of our members, may have a significant negative impact on our brand. If our efforts to promote and maintain our brand are not successful or if our member experience is not otherwise positive, our operating results and our ability to attract and retain members may be adversely affected. Furthermore, an adverse, public event resulting from the actions of a caregiver on a competitor's platform could adversely affect us even if the caregiver has no relationship with our platform and reduce consumer confidence in seeking caregivers through an online platform. If we fail to manage our growth effectively, our business, operating and financial results may suffer. We have recently experienced, and expect to continue to experience, significant growth, which has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure. We expect that our growth strategy will require us to commit substantial financial, operational and technical resources, and we expect that our marketing cost per paying member will increase in the near term. Continued growth also could strain our ability to maintain reliable service levels for our members, to enhance our product offerings, to develop and improve our operational, financial and management controls, to continue to strengthen our reporting systems and procedures and to recruit, train and retain highly skilled personnel. As our operations grow in size, scope and complexity, we will need to scale our systems and infrastructure accordingly and may determine we need to open additional offices, add more network capacity and make other capital investments, which will require significant expenditures and allocation of valuable management resources. If we fail to maintain the necessary level of discipline and efficiency, or if we fail to allocate limited resources effectively in our organization as it grows, our business, operating results and financial condition may suffer. Our revenue and operating results could vary significantly from period to period and be unpredictable, which could cause the market price of our common stock to decline. Our operating results have fluctuated in the past, and may continue to fluctuate in the future, as a result of a variety of factors, many of which are outside of our control. As a result, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. In addition, we generally experience some seasonality fluctuations in our financial results due to heightened demand for caregivers from families at the beginning of the school year and at the beginning of the calendar year. Accordingly, purchases of subscriptions for our consumer matching solutions generally increase in the first and third quarters compared to the second and fourth quarters. Although historically our revenue has increased in each quarter as we have added members, in the future this seasonality may cause fluctuations in our financial results. In addition, other seasonality trends may develop, and the existing seasonality and consumer behavior that we experience may change. We have based our current and projected future expense levels on our operating plans and sales forecasts, and our operating costs are relatively fixed in the short term. As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect our financial results for a given quarter. PRICE $ A SHARE Table of Contents It is possible that our operating results in some periods may be below market expectations. This would likely cause the market price of our common stock to decline. In addition to the other risk factors listed in this section, our operating results may be affected by a number of factors, including: fluctuations in demand for our products and services; fluctuations in sales cycles for our products and services; general economic conditions in our domestic and international markets; our ability to develop and introduce new products and product enhancements that are attractive to our members; the mix of monthly memberships and annual memberships, as the amount of revenue recognized per month on an annual membership is less than a monthly membership; member acceptance of new product introductions; our ability to sell our services to employers and care-related businesses; any significant changes in the competitive dynamics of our markets, including new entrants or substantial discounting of products; any decision to increase or decrease operating expenses in response to changes in the marketplace or perceived marketplace opportunities; our ability to derive benefits from our investments in sales, marketing, engineering or other activities; volatility in our stock price, which may lead to higher stock compensation expenses; and unpredictable fluctuations in our effective tax rate due to disqualifying dispositions of stock from our stock incentive plan, changes in the valuation of our deferred tax assets or liabilities, changes in actual results versus our estimates or changes in tax laws, regulations, accounting principles or interpretations thereof. We depend on highly skilled personnel to grow and operate our business, particularly our chief executive officer, and if we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively. Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly-skilled personnel. Our ability to execute efficiently depends upon contributions from all of our employees, in particular our senior management team. Key institutional knowledge remains with a small group of long-term employees and directors whom we may not be able to retain. We do not have employment agreements other than offer letters with any key employee, including our chief executive officer, and we do not maintain key person life insurance for any employee other than our chief executive officer. In addition, from time to time, there may be changes in our senior management team that may be disruptive to our business. If our senior management team, including any new hires that we may make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed. Our growth strategy also depends on our ability to expand and retain our talent pool. Identifying, recruiting, training and integrating qualified individuals requires significant time, expense and attention. In addition to hiring new employees, we must continue to focus on retaining our best talent. Competition for these resources in the Boston area, where our headquarters is located, is intense. If we are not able to effectively increase and retain our talent, our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed. We believe that our culture has the potential to be a key contributor to our success. As we grow, if we do not continue to develop our corporate culture it could harm our ability to foster the innovation, creativity and teamwork we believe we need to support our growth. Price to Public Underwriting Discounts and Commissions Proceeds to Care.com(1) Per Share $ $ $ Total $ $ $ Table of Contents Finally, we utilize off-shore resources through third parties over whom we have limited control to assist us in developing certain products and features. If any of these third parties terminates their relationship with us or fails to provide adequate services, it could cause delays in our release of new product offerings and/or features and harm our business. The number of our registered members is significantly higher than the number of our paying members and substantially all of our revenue is derived from our paying members. The number of registered members in our marketplace is significantly higher than the number of paying members because some members choose to register, but not become paying members, and others become paying members, but choose not to renew their paid memberships. If we are not able to attract new registered members, convert registered members to paying members or retain our paying members for a longer period of time our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline. Therefore, we must provide features and products that demonstrate the value of our marketplace to our members and motivate them to become paying members. If we fail to successfully motivate our members to do so, our business and operating results could be adversely affected. Our international operations are subject to increased challenges and risks. In 2012, we launched our platform in the United Kingdom and Canada, and we acquired Besser Betreut GmbH, or Betreut, in Germany. While we intend to focus most of our international efforts on growing our existing international markets, we also may expand our international operations in the future. We have an even more limited operating history as a company outside the United States, and our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, regulatory systems and commercial infrastructures. This international expansion has required us, and will continue to require us, to invest significant funds and other resources. International expansion also subjects us to risks that we have not previously faced, including risks associated with: recruiting and retaining talented and capable employees in foreign countries; providing products and services across a significant distance, in different languages and among different cultures, including potentially modifying our solutions and features to ensure that they are culturally relevant in different countries; compliance with applicable foreign laws and regulations, which, in certain areas such as privacy and data protection, may be more restrictive than U.S. laws and regulations; compliance with anti-bribery laws, including without limitation compliance with the Foreign Corrupt Practices Act and the United Kingdom Bribery Act; currency exchange rate fluctuations; and higher costs of doing business internationally. If our revenue from our international operations does not exceed the expense of establishing and maintaining these operations, our business and operating results will suffer. (1) We have agreed to reimburse the underwriters for certain FINRA-related expenses. See "Underwriters." We have granted the underwriters the right to purchase up to an additional 802,500 shares of common stock to cover over-allotments at the initial public offering price less the underwriting discount. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2014. Table of Contents Many individuals are using devices other than personal computers to access the Internet. If users of these devices do not widely adopt solutions we develop for these devices, our business could be adversely affected. The number of people who access the Internet through devices other than personal computers, including personal digital assistants, smart phones and handheld tablets, has increased dramatically in the past few years and is projected to continue to increase. If we are unable to develop mobile solutions to meet the needs of our users, our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline. Additionally, as new devices and new platforms are continually being released, it is difficult to predict the problems we may encounter in developing versions of our solutions for use on these alternative devices, and we may need to devote significant resources to the creation, support and maintenance of such devices. In the future, we may encounter difficulties integrating our mobile app into mobile devices or we may experience problems in our relationships with providers of mobile operating systems or mobile application download stores, such as those of Apple or Google. It is also possible that our applications could receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which our products are listed in the Apple App Store. Any of these events could adversely affect our growth and our results of operations. We depend on search engines and job board sites to attract a significant percentage of our members, and if those businesses change their ranking or listings practices, algorithms or increase their pricing, it could impact our ability to attract new members. Many of our members locate our websites through search engines, such as Google, Yahoo! and Bing. Search engines typically provide two types of search results, algorithmic and purchased listings, and we rely on both types. Algorithmic listings cannot be purchased and are determined and displayed by a set of formulas designed by the search engine. Search engines revise their algorithms from time to time in an attempt to optimize search result listings. If the search engines on which we rely for algorithmic listings modify their algorithms in a manner that reduces the prominence of our listing, fewer potential members may find and click through to our websites. Additionally, our competitors' search engine optimization efforts may result in their websites receiving greater prominence in search result listings than ours, which could also reduce the number of potential members that visit our websites. We have experienced fluctuations in the prominence of our search result listings in the past and we anticipate fluctuations in the future. In addition, costs for purchased listings on search engines have increased in the past and may continue to increase in the future. Price increases could reduce the number of potential members that visit our websites and increase our costs. Any reduction in the number of users directed to our websites from search engines would harm our business and operating results. Job board sites are also an important source of our caregiver acquisition efforts. We derive much of that volume from organic search listings within those job boards. Should those job board aggregators deny our listings within their organic search listings, we would have to find alternative paid sources to acquire caregivers, which would increase our acquisition costs. Our business may be harmed if users view our marketplace as primarily limited to finding full-time caregivers for children. Our membership growth and engagement rates could be adversely affected if consumers perceive the utility of our marketplace to be limited to finding full-time caregivers for children. Despite the breadth of care needs that can be met through our platform, including after school care, occasional babysitting, senior care, pet care, tutoring and housekeeping, approximately 35% of job postings in 2013 were for full-time child caregivers. In addition, our convenience payments product, which may be useful to families who employ any type of caregiver part-time or full-time, child care or senior care, is still in the early stages of adoption among our membership base and we cannot be certain what the rate of adoption will be or if enough of our users will find it sufficiently useful for us to continue to support. If families and caregivers MORGAN STANLEY BofA MERRILL LYNCH J.P. MORGAN ALLEN & COMPANY LLC STIFEL , 2014. Table of Contents fail to utilize the breadth of the family care and other services available through our marketplace, our membership growth and engagement rates could be negatively impacted, and our business will be harmed. If we fail to expand and increase adoption of our consumer payments solutions, our results of operations and competitive position will suffer. As part of our growth strategy, we intend to grow our consumer payments solutions. Since our acquisition of Breedlove & Associates, L.L.C., or Breedlove, in August 2012, we have offered Care.com HomePay, a household employer payroll and tax product. Although an increasing percentage of our members are using HomePay, our growth and results of operations will be adversely affected if this trend does not continue. We also recently introduced a convenience payments product that allows families to make electronic payments to their caregivers using our mobile or desktop applications, and we intend to develop other payment and financial solutions to offer to our members as we expand our offerings and services. When we develop a new product, we typically incur expenses and expend resources upfront to market, promote and sell the new offering. Therefore, these new products must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market. If we fail to increase adoption of HomePay, or our convenience payments product or any other payments solutions we may offer do not achieve adequate acceptance in the market, our competitive position will be impaired, and our revenues could decline. Our independent registered public accounting firm has advised us that it has identified a material weakness in our internal control over financial reporting. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the preparation of the registration statement of which this prospectus forms a part, our independent registered public accounting firm discovered errors in our financial statements related to the accounting for intangible assets. Specifically, we erroneously recognized impairment charges related to certain acquired intangible assets that should not have been impaired and determined periodic amortization using inappropriate economic useful lives. The effect of these errors was material to our financial statements. As a result of these items, we concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2012. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness that was identified related to our lack of resources within our finance function required to analyze and account for complex non-routine transactions in a timely manner. Since January 1, 2013, we have taken steps to build a more experienced accounting and finance organization, including hiring a new chief financial officer, senior vice president of finance, assistant controller and senior accountant, and designing and implementing improved processes and controls. While we believe we have remediated the material weakness identified for fiscal 2012, we may identify additional related or unrelated material weaknesses or significant deficiencies in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price. In addition, implementing any appropriate changes to our internal controls may distract our officers and employees, entail substantial costs to implement new processes and modify our existing processes and take significant time to complete. Moreover, any such changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or Table of Contents Table of Contents consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business. Furthermore, investors' perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm our stock price and make it more difficult for us to effectively market and sell our products and services to new and existing customers, particularly our payroll, tax and compliance products and services. Data security and integrity are critically important to our business, and breaches of security, unauthorized disclosure of information about our members, denial of service attacks or the perception that member information is not secure could result in a material loss of business, substantial legal liability or significant harm to our reputation. We collect, process and store a large amount of consumer information, including financial information and sensitive personal information. This data is often accessed through transmissions over public and private networks, including the Internet. Despite our physical security measures, implementation of technical controls and contractual precautions designed to identify, detect and prevent the unauthorized access, alteration, use or disclosure of our data, there is no guarantee that these measures or any other measures can provide absolute security. Systems that access or control access to our services and databases may be compromised, as a result of criminal activity, negligence or otherwise. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Several recent, highly publicized data security breaches and denial of service attacks at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems. Unauthorized disclosure or use, or loss or corruption, of our data or inability of our members to access our systems could disrupt our operations, subject us to substantial legal liability, result in a material loss of business, and significantly harm our reputation. We are subject to diverse laws and regulations in the United States and foreign countries mandating notification to affected individuals in the event that personal data (as defined in the various governing laws) is accessed or acquired by unauthorized persons. In the United States, federal and state laws provide for more than 40 diverse notification regimes, all of which we are subject to. Germany also has breach notification laws, and the new laws being debated in Europe propose introducing a general mandatory breach notification requirement with which we would have to comply. Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability. We may continue to make acquisitions, which could require significant management attention, disrupt our business, result in dilution to our stockholders, and adversely affect our financial results. As part of our business strategy, we have made, and may in the future make, acquisitions to add specialized employees, complementary companies, products or technologies. For example, in the last 18 months, we acquired Betreut, Breedlove and Parents in a Pinch, Inc. (now known as Care Concierge, Inc.), or PIAP. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. Acquisitions may also involve the entry into geographic or business markets in which we have little or no prior experience. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown liabilities. For any such transaction, we may: issue additional equity securities that would dilute our stockholders; use cash that we may need in the future to operate our business; incur debt on terms unfavorable to us or that we are unable to repay; incur large charges or expenses or assume substantial liabilities; become subject to new laws and regulations about which we have limited prior experience or knowledge; encounter difficulties retaining key employees of the acquired companies; and become subject to adverse tax consequences, substantial depreciation or deferred compensation charges. Table of Contents Table of Contents Any of these risks could harm our business and operating results. In addition, for legal, technical or business reasons, we may not be able to successfully assimilate and integrate the business, technologies, solutions, personnel or operations of any company we acquire as quickly or fully as we would like. The integration of any acquired company may require, among other things, coordination of administrative, sales and marketing, accounting and finance functions, harmonization of legal terms and privacy policies and expansion of information and management systems. We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our platform is accessible, and our business is subject to risks of events outside of our control. Our members access information through our websites and mobile apps. Our reputation and ability to acquire, retain and serve our members depend upon the reliable performance of our websites and mobile apps and the underlying network infrastructure. We have previously experienced, and may experience in the future, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, computer viruses or physical or electronic break-ins, denial of service attacks, capacity constraints and fraud or security violations. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve the availability of our platform, especially during peak usage times and as our solutions become more complex and if our user traffic increases. If our platform is unavailable when users attempt to access it or it does not load as quickly as they expect, users may use other services and may not return to our platform as often in the future, or at all. This would negatively impact our ability to attract users and increase engagement on our website and mobile apps. We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our infrastructure to accommodate actual and anticipated changes in our business and in our technology, our business and operating results may be harmed. Substantially all of our communications, network and computer hardware used to operate our website at www.care.com are co-located in a single facility in Ashburn, Virginia. We do not own or control the operation of this facility. Our systems and operations are also vulnerable to damage or interruption from tornadoes, floods, fires, power losses, telecommunications failures or acts of war. For example, a significant natural disaster, such as a major snowstorm or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for such losses that may occur. In addition, acts of terrorism could cause disruptions in our business or the economy as a whole. We have implemented disaster recovery procedures that allow us to move our platform to a back-up data center in the event of a catastrophe. However, these procedures do not yet provide a real time back-up data center. Therefore, if our primary data center shuts down, there will be a period of time that our platform will remain unavailable while the transition to a back-up data center takes place. Interruptions or delays in service arising from our third-party vendors could impair the delivery of our service and harm our business. We rely in part upon third-party vendors to provide our convenience payments product and other services upon which we rely, including data center and Internet infrastructure services, credit card and payment processing services, background checking services, email management and delivery services, customer relationship management services and other services critical to our business. The operation of our product and service offerings could be impaired if the availability of these services is interrupted or limited in any way. We have contractual relationships with these parties but do not have physical control over their daily operations, which increases our vulnerability to problems with the services they provide. If any of these third-party service providers terminates their relationship with us, or does not provide an Table of Contents Table of Contents adequate level of service to our members, it would be disruptive to our business as we seek to replace the service provider or remedy the inadequate level of service. In addition, these service providers are vulnerable to damage or interruption from tornadoes, floods, fires, power loss, telecommunications failures and similar events. They also are subject to break-ins, sabotage, acts of vandalism, the failure of physical, administrative, and technical security measures, terrorist acts, human error, financial insolvency and other unanticipated problems or events. The occurrence of any of these events could result in interruptions in our service and unauthorized access to, or alteration of, the content and data contained on our systems and the content and data that these third-party vendors store and deliver on our behalf. We have experienced, and expect to continue to experience, interruptions and delays in service and availability for such elements. Any errors, failures, interruptions or delays experienced in connection with these third-party technologies and information services could negatively impact our relationship with our members, our brand and reputation and our ability to attract, retain and serve our members. If we or our service providers fail to process payment transactions effectively and accurately or fail to protect against potential fraudulent activities relating to payment transactions, we may incur expenses and suffer reputational harm. We offer household employer payroll and tax services through our subsidiary Breedlove. We also recently introduced an electronic payments solution through a third-party payments processor that allows families to make electronic payments to their caregivers through our website and mobile apps. It is possible that we or our service provider may make errors in processing payments or that funds may be misappropriated due to fraud. We may also make errors in calculating and remitting taxes to the Internal Revenue Service. In addition, the online tax preparation, payroll administration and online payments industries have increasingly been subject to fraudulent activities by third parties. In addition to any direct damages and potential fines we may incur as a result of payment processing errors or fraud relating to our payments products, negative publicity or a loss of confidence regarding these services could harm our business and damage our brand. We may not be able to compete successfully against current and future competitors. We are and will continue to be faced with many competitive challenges, any of which could adversely affect our prospects, results of operations and financial condition. With respect to our consumer matching solutions, we compete for families, caregivers, employers and care-related businesses with traditional offline consumer resources, online job boards and other, online care marketplaces. We also compete for a share of care-related businesses' overall recruiting and advertising budgets with traditional, offline media companies and other Internet marketing providers. Our principal competitors are Craigslist, a "free to consumer" website, and Sittercity, Inc., an online care specific marketplace. In the consumer payments market, our convenience payments product competes with other payment solutions such as PayPal and Google Payments, and HomePay competes with similar products offered by 4nannytaxes.com and GTM Payroll Services. In addition, we may in the future be subject to competition from companies that operate other online marketplaces and that decide to expand into the online care market or other established companies that decide to expand into the consumer payments market. These potential competitors may be larger and have more resources than we do, may enjoy substantial competitive advantages, such as greater name recognition, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. As a result, these potential competitors may be able to respond more quickly and effectively than we can to new or changing opportunities or technologies. Table of Contents To compete effectively for members, we must continue to invest significant resources in marketing and in the development of our products and services to enhance their value. To compete effectively for revenue from employers and care-related businesses, we must continue to invest in marketing and in growing our membership. Failure to compete effectively against our current or future competitors could result in loss of current or potential members, which could adversely affect our margins, and prevent us from achieving or maintaining profitability. We cannot assure you that we will be able to compete effectively for members in the future against existing or new competitors, and the failure to do so could result in loss of existing or potential members, reduced membership revenue, increased marketing or selling expenses or diminished brand strength, any of which could harm our business. We may incur liability or other expenses if members do not meet the expectations of other members they connect with through our platform, if caregivers or other users of our services engage in inappropriate, harmful or illegal conduct, or if we do not notify our members of alleged inappropriate or illegal conduct. Even though U.S. courts have held that online services companies are not responsible for the actions of their website users in many circumstances, and our terms of use state that any screening we perform on families and caregivers is limited, there is a low tolerance for failure when seeking care for a loved one. Therefore, families and caregivers may seek damages from us if a caregiver or family does not meet their expectations or causes them harm. These claims also may be brought under foreign laws, which often do not provide the same protections for online services companies as in the United States. Even if these claims do not result in liability to us, they may result in significant investigation or defense costs, as well as negative publicity. In addition, because there is a particularly low tolerance for failure when seeking care for a loved one, any such claims, events or publicity could have a significant adverse effect on our reputation and brand. Any of these results, particularly damages to our brand and reputation, could adversely affect our financial condition, business and operating results. Our subsidiary PIAP provides back-up child and elder care to families by directly assigning caregivers, some of whom are PIAP employees, to families in need of temporary care. The caregivers and families involved in these transactions are not required to be members of our consumer matching solutions. To the extent that a caregiver provided through our back-up services does not meet the expectations of a family or causes harm, we may be subject to claims from that family or from the employer that subscribed to this service and offered it as an employee benefit to the family. From time to time, we become aware of information relating to our members through complaints from other members, publicly available sources or otherwise, which results in our removal of the member from our marketplace. Because of the complex legal and regulatory environment in which our business operates, we generally do not advise other members when we decide to remove a particular member and, when we do advise members that we have removed a member, we generally do not tell them the reason for removal. As a result, a member who hires a caregiver through our platform may not be aware that the caregiver has subsequently been removed from our marketplace or the reason the caregiver was removed, and may seek to make a legal claim against us for failure to notify them of the removal or the reason for the removal. Any such claims, whether or not meritorious, or any claim by a caregiver that he or she should not have been so removed, may be a distraction to management, result in our incurring costs to defend the claim or otherwise harm our business and reputation. Adverse economic conditions may adversely impact our business. Our business depends on the overall demand for care. Our prospective members' employment and income impact their demand for care. Increased unemployment or a reduction in labor force participation could reduce the number of dual-income families a key component of our target market and therefore the number of families seeking care. In addition, if consumer spending is reduced due to a weak economy, families may decrease spending on care services they believe to be non-essential, such as housekeeping and tutoring, or reduce or eliminate certain activities that typically require the services of our caregivers, such You should rely only on the information contained in this prospectus and in any free writing prospectus we may authorize to be delivered or made available to you. We have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States. Table of Contents as date nights that require babysitters and vacations that may require pet sitters. As a result, weakened macroeconomic conditions could decrease the traffic on our platform, reduce sales of our products and services and delay adoption of new offerings. If we require additional funds from outside sources in the future, those funds may not be available on acceptable terms, or at all. We may require additional funds from outside sources in the future, and we may not be able to obtain those funds on acceptable terms, or at all. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we do not have, or are not able to obtain, sufficient outside funds, we may have to delay development of new product offerings. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs. We also may have to reduce marketing or other resources devoted to our products or cease operations. Any of these actions could harm our operating results. We use, store and, in some instances, share information collected from or about our members and site visitors and their devices, which may subject us to governmental and industry regulation and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business. We receive, store and process information from and about our members and website visitors and their devices, as well as information about HomePay and back-up care users, including name, contact information, and in some cases sensitive personal information, such as credit card numbers, tax return information, bank account numbers, social security numbers and other personal information such as criminal background information. In addition, our service enables our members to direct us to share information, including personal and background information, with other members and with third parties. Diverse legal and industry requirements in the regions where our members and site visitors reside may apply to our collection, use, storage and sharing information about such individuals, including to the extent that our members choose to share data about themselves or family members in connection with potential employment in the home setting. The scope of these privacy and data protection obligations are changing in substantial and unpredictable ways, subject to differing interpretations, and may be inconsistent between different regions or conflict with other rules. Some industry requirements subject us to payment card association operating rules, certification requirements and rules, including the Payment Card Industry Data Security Standard, or PCI DSS, a security standard with which companies that collect, store or transmit certain data regarding credit and debit cards, credit and debit card holders, and credit and debit card transactions are required to comply. Our failure to comply fully with the PCI DSS may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors and merchant banks. Such failure to comply fully may also subject us to fines, penalties, damages and civil liability, and may result in the loss of our ability to accept credit and debit card payments. In addition, there is no guarantee that PCI DSS compliance will prevent illegal or improper use of our services or the theft, loss or misuse of data pertaining to credit and debit cards, credit and debit card holders and credit and debit card transactions. We strive to comply with all applicable laws, policies, legal obligations and industry requirements relating to privacy and data protection, to the extent reasonably possible. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other Table of Contents privacy-related legal obligations, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our members and customers to lose trust in us, which could have an adverse effect on our business. Additionally, if third parties we work with, such as customers, vendors or developers, violate applicable laws, their contractual obligations to us or our policies, such violations may also put our members' information at risk and could in turn have an adverse effect on our business. Complying with existing and proposed laws, regulations and industry standards applicable to the collection, use, storage and sharing of data about our members and site visitors can be costly and can delay or impede the development of new products, result in negative publicity and reputational harm, increase our operating costs, require significant management time and attention, increase our risk of non-compliance and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices. Our business is subject to a variety of U.S. and foreign laws, some of which are unsettled and still developing and which could subject us to claims or otherwise harm our business. Federal, state, municipal and/or foreign governments and agencies have adopted and could in the future adopt, modify, apply or enforce laws, policies and regulations covering user privacy, data security, unfair and deceptive practices, payment processing, tax preparation and/or the collection, use, maintenance, processing, transfer, storage and/or disclosure of data associated with a unique individual, including in connection with potential employment and other activities. The regulatory environment for many of these laws is very unsettled in the United States and internationally, especially as it applies to the products and services we offer and to the operation of our business generally. Our operations are subject to numerous laws that regulate privacy, data security and the use of consumer background information. Certain of these laws provide for civil and criminal penalties for the unauthorized release of, or access to, this protected information or for not adopting processes or procedures for handling reported inaccuracies in this protected information. For example, in the United States we acquire information about our members from consumer credit reporting agencies and other third-party sellers of public data about unique individuals. We use this information in an effort to verify the accuracy of the information members provide about themselves and to further our business objective to maintain a trusted online community for our members. We also facilitate the sharing of third-party consumer reports and criminal background checks between members at the direction of the individual who is the subject of the report. The Fair Credit Reporting Act, or the FCRA, applies to consumer credit reporting agencies as well as data furnishers and users of consumer reports, as those terms are defined in the FCRA. The FCRA promotes the accuracy, fairness and privacy of information in the files of consumer reporting agencies that engage in the practice of assembling or evaluating information relating to consumers for certain specified purposes, including for employment. The FCRA limits the distribution and use of consumer reports and establishes consumer rights to access and dispute their own credit files, among other rights and obligations. Members who access consumer reports about job applicants via our service expressly agree to follow the FCRA requirements for employers. Violation of the FCRA can result in civil and criminal penalties. The U.S. Federal Trade Commission, the Consumer Financial Protection Bureau, and the State Attorneys' General, acting alone or in cooperation with one another, actively enforce the FCRA as do private litigants. Many states have enacted laws with requirements similar to the FCRA. Some of these laws impose additional, or more stringent, requirements than the FCRA. In addition, the payment processing and tax preparation industries are receiving heightened attention from federal and state governments. New legislation, regulation, public policy considerations, litigation by the government or private entities or new interpretations of existing laws may subject us to additional legal or regulatory oversight or obligations, restrict the types of products and services that we can offer or the prices we can charge, or otherwise cause us to change the way we operate our payment processing and tax preparation businesses or offer our payment processing and tax products and services. This in turn may Table of Contents increase our cost of doing business and limit our revenue opportunities. In addition, if our practices are not consistent with current or new interpretations of existing laws, we may become subject to lawsuits, penalties and other liabilities. If we are not able to comply with existing or new laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain solutions, which would negatively affect our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results. As we develop and sell new products, services and features, we may be subject to additional and unexpected regulations, which could increase our costs or otherwise harm our business. As we develop and sell new products, services and features to our members, we may become subject to additional laws and regulations, which could create unexpected liabilities for us, cause us to incur additional costs or restrict our operations. For example, we offer our convenience payments product to our members through a third party. If, in the future, we provide this product directly to our members, we would be subject to complex financial regulations. We may also become subject to financial regulations as we develop additional payment and financial solutions for our members. In addition, if we expand our offerings to include more personalized services, we may become subject to various laws and regulations relating to the protection of children, seniors and/or prospective employees. Our failure to accurately anticipate the application of laws and regulations that governmental organizations or others may claim are applicable to new products and services we may offer, or other failure to comply, could create liability for us, result in adverse publicity or cause us to alter our business practices, which could cause our revenue to decrease, our costs to increase or our business otherwise to be harmed. We could face liability or other expenses for information on or accessible through our online marketplace. A significant portion of the information available through our online marketplace, including job postings, caregiver profiles and photographs, is submitted by families, caregivers and third parties. We also allow care-related businesses and other third parties to advertise their products and services on our websites and include links to third-party websites. We could be exposed to liability with respect to this information. Members could assert that information concerning them on our website contains errors or omissions and/or seek damages from us for losses incurred if they rely upon incorrect information provided by our members, care-related businesses or others. We could also be subject to claims that the persons posting information on our websites do not have the right to post such information or are infringing the rights of third parties, such as copyrights in photographs and privacy and publicity rights. Among other things, we might be subject to claims that by directly or indirectly providing links to websites operated by third parties, we are liable for wrongful actions by the third parties operating those websites. These claims also may be brought under foreign laws that often do not provide the same protections for online services companies as in the United States. We could incur significant costs in investigating and defending against these claims even if they do not result in liability to us. We also allow families to submit reviews of caregivers. Our terms of use prohibit members from providing inaccurate, misleading, defamatory or false information to us or to any other user of our website and that all opinions expressed must be genuinely held. However, we do not have a regular practice of verifying the accuracy of all member content. There is a risk that a review or other content posted by a member may be considered defamatory or otherwise offensive, objectionable or illegal under applicable law. Therefore, there is a risk that publication on our website of our ratings and reviews may result in a suit against us for defamation, civil rights infringement, negligence, copyright or trademark infringement, invasion of privacy, personal injury, discrimination, or other legal claims. Even if these claims do not result in liability to us, they may result in costly and time-consuming litigation and/or injury to our reputation. Table of Contents If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights. We rely on a combination of intellectual property rights, including trade secrets, copyrights and trademarks, as well as contractual restrictions, to safeguard our intellectual property. We do not have any patents or pending patent applications. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy our digital content, aspects of our solutions for members, our technology, software, branding and functionality, or obtain and use information that we consider proprietary. Moreover, policing our proprietary rights is difficult and may not always be effective. As we expand internationally, we may need to enforce our rights under the laws of countries that do not protect proprietary rights to as great an extent as do the laws of the United States. Our digital content is not protected by any registered copyrights or other registered intellectual property. Rather, our digital content is protected by statutory and common law rights, user agreements that limit access to and use of our data and by technological measures. Compliance with use restrictions is difficult to monitor, and our proprietary rights in our digital content databases may be more difficult to enforce than other forms of intellectual property rights. As of December 31, 2013, we had three registered trademarks in the United States, including "Care.com", which is registered on the supplemental register, four registered trademarks in the EU and one registered trademark in each of Germany and Canada. Some of our trade names may not be eligible to receive trademark protection. Trademark protection may also not be available, or sought by us, in every country in which our service may become available. Competitors may adopt service names similar to ours, or purchase our trademarks and confusingly similar terms as keywords in Internet search engine advertising programs, thereby impeding our ability to build brand identity and possibly confusing consumers and caregivers. We currently hold the "Care.com", "Betreut.de", and "Breedlove.com" Internet domain names and various other related domain names. Domain names generally are regulated by Internet regulatory bodies. If we lose the ability to use a domain name in the United States or any other country, we would be forced to incur significant additional expense to market our solutions, including the development of a new brand and the creation of new promotional materials, which could substantially harm our business and operating results. The regulation of domain names in the United States and in foreign countries is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize the "Care" name or other names we utilize in all of the countries in which we currently intend to conduct business. In order to protect our trade secrets and other confidential information, we rely in part on confidentiality agreements with our personnel, consultants and third parties with whom we have relationships. These agreements may not effectively prevent disclosure of trade secrets and other confidential information, and may not provide an adequate remedy in the event of misappropriation of trade secrets or any unauthorized disclosure of trade secrets and other confidential information. In addition, others may independently discover trade secrets and confidential information and, in such cases, we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions, and failure to obtain or maintain trade secret protection, or our competitors being able to obtain our trade secrets or to independently develop technology similar to ours or competing technologies, could adversely affect our competitive business position. Table of Contents Assertions by third parties of infringement or other violation by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results. Internet, technology and social media companies are frequently subject to litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Some own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims against us. We have received in the past and may in the future receive notices asserting that we have infringed, misappropriated or otherwise violated a third party's intellectual property rights, and as we face increasing competition, the possibility of intellectual property rights claims against us grows. We cannot assure you that we are not infringing or violating any third-party intellectual property rights. We cannot predict whether assertions of third-party intellectual property rights or any infringement or misappropriation claims arising from such assertions will substantially harm our business and operating results. If we are forced to defend against any infringement or misappropriation claims, whether they are with or without merit, are settled out of court or are determined in our favor, we may be required to expend significant time and financial resources on the defense of such claims. Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys' fees, if we are found to have willfully infringed a party's patent or copyright rights; cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content or materials; and to indemnify our partners and other third parties. Royalty or licensing agreements, if required or desirable, may be unavailable on terms acceptable to us, or at all, and may require significant royalty payments and other expenditures. Any of these events could seriously harm our business, operating results and financial condition. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel. Our revenue may be negatively affected if we are required to charge sales tax or other transaction taxes on all or a portion of our past and future sales in jurisdictions where we are currently not collecting and reporting tax. We currently only charge and collect sales or other transaction taxes in certain of the jurisdictions where our members reside. A successful assertion by any state, local jurisdiction or country in which we do not charge and collect such taxes that we should be collecting sales or other transaction taxes on the sale of our products or services, or the imposition of new laws requiring the collection of sales or other transaction taxes on the sale of our products or services, could result in substantial tax liabilities related to past sales, create increased administrative burdens or costs, reduce demand for our products or services, decrease our ability to compete if competitors lower their fees to offset the tax but we do not or otherwise substantially harm our business and results of operations. Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results. Our provision for income taxes is subject to volatility and could be adversely affected by the following: changes in the valuation of our deferred tax assets; foreign or domestic income tax assessments and any related tax interest or penalties; expiration of, or lapses in, the research and development tax credit laws; tax effects of nondeductible compensation; adjustments to the pricing of intercompany transactions and transfers of intellectual property or other assets; Table of Contents changes in accounting principles; or changes in tax laws and regulations, including changes in taxation of the services provided by our foreign subsidiaries. Significant judgment is required to determine the recognition and measurement attributes prescribed in the accounting guidance for uncertainty in income taxes. The accounting guidance for uncertainty in income taxes applies to all income tax positions, including the potential recovery of previously paid taxes, that if settled unfavorably could adversely impact our provision for income taxes or additional paid-in capital. In addition, we are subject to the examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. The outcomes from these examinations might have a material and adverse effect on our operating results and financial condition. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2012, we had federal net operating loss carryforwards of $42.8 million and state net operating loss carryforwards of $40.2 million. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an "ownership change" generally occurs if there is a cumulative change in our ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We may have experienced an ownership change in the past and may experience ownership changes in the future as a result of this issuance or future transactions in our stock, some of which may be outside our control. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable income and taxes may be subject to significant limitations. Our international operations subject us to potentially adverse tax consequences. We generally conduct our international operations through wholly owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to transfer pricing regulations administered by taxing authorities in various jurisdictions. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position were not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. We may not be able to successfully prevent others, including copycat websites and mobile apps, from misappropriating our content in the future. From time to time, third parties have attempted to misappropriate our content through website scraping, search robots or other means. We have deployed several technologies designed to detect and prevent such efforts. However, we may not be able to successfully detect and prevent all such efforts in a timely manner or assure that no misuse of our content occurs. In addition, third parties operating "copycat" websites have attempted to imitate our brand or the functionality of our service. When we have become aware of such efforts by other companies, we have employed technological or legal measures in an attempt to halt their operations. However, we may not be able to detect all such efforts in a timely manner, or at all, and even if we could, the technological and legal measures available to us may be insufficient to stop their operations. In some cases, particularly in the case Table of Contents of companies operating outside of the United States, our available remedies may not be adequate to protect us against the damage to our business caused by such websites or mobile apps. Regardless of whether we can successfully enforce our rights against the operation of these third parties, any measures that we may take could require us to expend significant financial or other resources and have a significantly adverse effect on our brand. Some of our solutions contain open source software, which may pose particular risks to our proprietary software and solutions. We use open source software in our solutions and will use open source software in the future. From time to time, we may face claims from third parties claiming ownership of, or demanding release of, the open source software and/or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a costly license or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a negative effect on our business and operating results. We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors. We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In this prospectus, we have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing Table of Contents
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+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 thereto and the information set forth under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in each case included in this prospectus. Unless the context otherwise requires, we use the terms "Trevena," "company," "we," "us" and "our" in this prospectus to refer to Trevena, Inc. Company Overview We are a clinical stage biopharmaceutical company that discovers, develops and intends to commercialize therapeutics that use a novel approach to target G protein coupled receptors, or GPCRs. Using our proprietary product platform, we have identified and advanced three differentiated product candidates into the clinic as follows: TRV130: We recently announced top-line data from our Phase 2a/b clinical trial of TRV130 in postoperative pain. At doses of 2 mg and 3 mg of TRV130 administered every three hours, the trial achieved its primary endpoint of statistically greater pain reduction than placebo for 48 hours, which we believe demonstrates proof of concept for TRV130. The 3 mg dose of TRV130 also showed statistically superior analgesic efficacy over the 48-hour trial period compared to 4 mg of morphine administered every four hours. Additionally, in the first three hours of dosing, when pain was most severe, the 1 mg, 2 mg and 3 mg doses of TRV130 demonstrated superior analgesic efficacy in the trial compared to placebo, and the 2 mg and 3 mg doses of TRV130 demonstrated superior analgesic efficacy compared to 4 mg of morphine. There were no serious adverse events reported in the trial, which we believe suggests that these levels of pain relief can be achieved safely. Over the 48-hour trial period, the tolerability of TRV130 at doses of 2 mg and 3 mg administered every three hours was similar to that of 4 mg of morphine administered every four hours. Based on these data, we plan to move into Phase 3 preparations, which we expect to occur in parallel with a second Phase 2 trial for TRV130 that we plan to commence in December 2014. We also anticipate that we will initiate a Phase 3 clinical trial for TRV130 in the first quarter of 2016. These data complement the data generated in our Phase 1b trial, in which TRV130 showed superior efficacy with an improved tolerability profile following a single dose of TRV130 relative to a 10 mg dose of morphine in a human evoked-pain model. We hold a U.S. patent covering the composition of matter and methods of use for TRV130. We have retained all worldwide development and commercialization rights to TRV130, and plan to commercialize it in acute care markets such as hospitals and ambulatory surgery centers if it receives regulatory approval. TRV734: We have completed a first Phase 1 single ascending dose clinical trial for TRV734, an oral follow-on to TRV130 for the treatment of moderate to severe acute and chronic pain. We have completed enrollment in a second Phase 1 multiple ascending dose clinical trial and expect to report data from this trial early in the first quarter of 2015. We have retained all worldwide development and commercialization rights to TRV734. TRV027: We have completed a Phase 2a clinical trial and in early 2014 we initiated a Phase 2b clinical trial of TRV027 for acute heart failure, or AHF. Enrollment in this trial is ongoing, with over 250 patients recruited out of planned enrollment of approximately 500 patients. More than 65 sites in 12 countries are now open and recruiting, and we expect patient enrollment will conclude in the third quarter of 2015. We expect to report top-line data from this trial in the fourth quarter of 2015. Actavis plc, or Actavis, has the exclusive option to license TRV027 from AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents us. We plan for TRV027 to be commercialized in the acute care hospital market if it receives regulatory approval. We also have identified a new product candidate, TRV250, from our preclinical d-opioid receptor program focused on central nervous system, or CNS, indications and plan to advance TRV250 to preclinical studies in 2015 designed to support our submission of an investigational new drug application, or IND, to the U.S. Food and Drug Administration, or FDA. Our Pipeline Our Platform GPCRs are a large family of cell surface receptors that trigger two signaling pathways, G protein and b-arrestin, and are implicated in cellular function and disease processes. More than 30% of all currently marketed therapeutics target GPCRs. Currently available therapeutics that target GPCRs, or GPCR ligands, are typically not signal specific, and therefore either inhibit both the G protein and b-arrestin pathways (an antagonist ligand) or activate both pathways (an agonist ligand). This lack of signal specificity often results in a suboptimal therapeutic profile for these drugs because in many cases one of the pathways is associated with a beneficial therapeutic effect and the other is associated with limiting that benefit or with an undesirable side effect (see Figure 1). We use our proprietary Advanced Biased Ligand Explorer, or ABLE, product platform to identify "biased" ligands, which are compounds that activate one of the two signaling pathways of the GPCR while inhibiting the other (see Figure 2). This signaling specificity is the basis for our drug discovery and development approach, which is to identify selective GPCR biased ligands and develop them into differentiated clinical products. While some GPCRs trigger other signaling pathways in addition to G protein and b-arrestin, most GPCRs trigger those two pathways. Our ABLE product platform is a collection of proprietary biological information, in vitro assays, know-how and expertise that we use to identify unique GPCR-targeted biased ligands with attractive pharmaceutical properties. Our in vitro assays use cells that have the receptor of interest on the cell surface, where G protein and b-arrestin signaling from that receptor can be measured to determine if a particular ligand is biased, and if so whether it is a G protein or b-arrestin biased ligand. Our assays can also measure different cellular responses resulting from signaling through b-arrestin and can thereby help us to associate pharmacological responses with molecular signaling. Most components of TREVENA, INC. (Exact name of registrant as specified in its charter) Table of Contents our ABLE product platform are maintained as trade secrets, but the output of the product platform is reflected in the product candidates that we have advanced into clinical testing and the research we have published in numerous peer-reviewed journals. We believe that our ABLE product platform provides us with an important competitive advantage in identifying further opportunities for efficient and high-impact biased ligand drug discovery, development and commercialization. We were founded in late 2007 to discover and develop product candidates based on biased ligands, a concept discovered by our scientific founder, Dr. Robert Lefkowitz, who was awarded the 2012 Nobel Prize in Chemistry in part for his elucidation of the multiple pathways that a GPCR engages. We believe that we are the first company to progress a GPCR biased ligand into clinical trials. The members of our executive management team have held senior positions at leading pharmaceutical and biotechnology companies and possess substantial experience across the spectrum of drug discovery, development and commercialization. Figure 1: Mechanism of current GPCR-targeted drugs Figure 2: Mechanism of our biased ligands the next generation of GPCR-targeted drugs Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 26-1469215 (I.R.S. Employer Identification Number) 1018 West 8th Avenue, Suite A King of Prussia, PA 19406 (610) 354-8840 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents CNS Portfolio TRV130 TRV130 is a small molecule G protein biased ligand at the -opioid receptor that we are developing as a first-line treatment for patients experiencing moderate to severe acute pain where intravenous, or IV, administration is preferred. The -opioid receptor is a well-established target for analgesics such as fentanyl and morphine, which are unbiased -opioid agonists. TRV130 activates the -opioid G protein pathway, associated with analgesia, and inhibits the b-arrestin pathway, which, in preclinical studies, was associated with limiting opioid analgesia, and with promoting opioid-induced respiratory depression and constipation. We believe that the management of moderate to severe, acute postoperative pain represents the largest opportunity for an intravenously administered -opioid therapy like TRV130. Accordingly, we have focused our initial clinical trials on the treatment of surgical patients. We believe that delivering better pain relief or mitigating dose limiting side effects typically associated with the activation of the -opioid receptor will position TRV130, if approved, to more effectively treat postoperative pain than currently available -opioid therapies. According to data from IMS Health, a healthcare information firm, in 2013 there were approximately 47 million hospital inpatient stays and outpatient visits during which reimbursement claims for injectable opioids were made, 20 million of which involved a surgical procedure. Given its pharmacokinetic, tolerability and efficacy profile in our Phase 1 and Phase 2a/b clinical trials, we believe that both the inpatient and outpatient settings could be appropriate for TRV130 use. Despite the adoption of postoperative pain management guidelines, significant unmet need remains. In a 2012 survey of 300 surgical patients in the United States, over 80% of patients reported postoperative pain after the first analgesic medication had been administered, and 40% of those patients reported this pain to be moderate or severe. Currently available m-opioid agonists, such as morphine and fentanyl, are the most effective class of analgesics for moderate to severe acute postoperative pain, but their effectiveness is limited in part because their doses are limited by severe side effects such as respiratory depression, nausea and vomiting, constipation and postoperative ileus, which is a condition that most commonly occurs after surgery involving interruption of movement of the intestines in which the bowel enters spasm and stops passing food and waste. We have announced top-line data from our Phase 2a/b clinical trial of TRV130 in postoperative pain. At doses of 2 mg and 3 mg of TRV130 administered every three hours, the trial achieved its primary endpoint of statistically greater pain reduction than placebo for 48 hours, which we believe demonstrates proof of concept for TRV130. The 3 mg dose of TRV130 also showed statistically superior analgesic efficacy over the 48-hour trial period compared to 4 mg of morphine administered every four hours. Additionally, in the first three hours of dosing, when pain was most severe, the l mg, 2 mg and 3 mg doses of TRV130 demonstrated superior analgesic efficacy in the trial compared to placebo, and the 2 mg and 3 mg doses of TRV130 demonstrated superior analgesic efficacy compared to 4 mg of morphine. There were no serious adverse events reported in the trial, which we believe suggests that these levels of pain relief can be achieved safely. Over the 48-hour trial period, the tolerability of TRV130 at doses of 2 mg and 3 mg administered every three hours was similar to that of 4 mg of morphine administered every four hours. Based on these data, we plan to move into Phase 3 preparations, which we expect to occur in parallel with a second Phase 2 trial that we plan to commence in December 2014. In our Phase 1b clinical trial in healthy subjects using an evoked-pain model, TRV130 showed superior analgesia compared to a high dose of morphine following a single dose administration, while causing less respiratory depression, less severe nausea and less vomiting. Together with our top-line Phase 2a/b data, we believe these results suggest that TRV130 may have an improved clinical profile in terms of efficacy, safety and tolerability compared to unbiased -opioid agonists, which are the current standard of care. John M. Limongelli, Esq. Senior Vice President, General Counsel and Secretary Trevena, Inc. 1018 West 8th Avenue, Suite A King of Prussia, PA 19406 (610) 354-8840 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents We plan to initiate a second Phase 2 clinical trial in the fourth quarter of 2014 in soft tissue pain to inform Phase 3 development, since efficacy in both hard and soft tissue pain would be required by the FDA for a broad label in the treatment of acute moderate to severe pain. This trial will use flexible, as-needed dosing to allow patients to control the balance of efficacy and tolerability as their needs change over time. We expect to report top-line data from this second Phase 2 clinical trial in mid-2015. Prior to later-phase clinical development, we are also conducting or planning additional Phase 1 clinical testing in healthy subjects to add to our clinical understanding of TRV130. We intend to retain full commercialization rights in the United States for TRV130. After the availability of the final Phase 2a/b clinical data for TRV130, we may seek collaborators for commercializing TRV130 outside of the United States to offset risk and preserve capital. We may also seek to collaborate with a third party to evaluate novel formulations of TRV130 for chronic pain and breakthrough pain. We have an issued U.S. patent that covers TRV130, compositions comprising TRV130 and methods of using TRV130, and this patent is expected to expire no earlier than 2032. TRV734 TRV734 is a small molecule G protein biased ligand targeting the -opioid receptor, which we are developing as a first-line, orally administered compound for the treatment of moderate to severe acute and chronic pain. Like TRV130, TRV734 takes advantage of a well-established mechanism of pain relief by targeting the -opioid receptor, but does so with enhanced selectivity for the G protein signaling pathway, which in preclinical studies was linked to analgesia, as opposed to the b-arrestin signaling pathway, which in preclinical studies was associated with limiting analgesic efficacy and with promoting opioid-induced respiratory depression and constipation. Subject to successful non-clinical and clinical development and regulatory approval, we believe TRV734 may have an improved profile of efficacy relative to tolerability, or therapeutic profile, as compared to current commonly prescribed oral analgesics, such as oxycodone. We have filed patent applications covering TRV734 and methods of using TRV734. In a Phase 1 single ascending dose clinical trial in healthy subjects, using pupil constriction as a surrogate for the analgesic efficacy of opioid drugs, orally administered TRV734 showed pharmacokinetics and pharmacodynamics across a dose range that was generally safe and well tolerated. These data supported further development, and we have completed enrollment in a second Phase 1 clinical trial, which is a multiple ascending dose trial evaluating the safety, tolerability, pharmacodynamics and pharmacokinetics of TRV734 given as a single dose and as multiple ascending doses in healthy volunteers. The aim of this trial is to support Phase 2 development, and top line data are expected early in the first quarter of 2015. We intend to seek a collaborator with experience in developing and commercializing controlled-substance therapeutics in acute and chronic care pain markets, thereby leveraging their expertise while retaining rights to commercialize TRV734 in treatment settings for which we can leverage our commercial strategy for TRV130. TRV250 In November 2014, we identified a new product candidate, TRV250, a small molecule G protein biased ligand targeting the d-opioid receptor. Based on the initial profile of TRV250, we anticipate focusing our initial development efforts on the treatment of treatment-refractory migraine headaches. According to Decision Resources, a healthcare consulting company, the acute episodic migraine market encompassed approximately 12 million drug-treated patients in 2013 in the United States, representing approximately $2.2 billion of sales. We estimate that approximately 20% to 30% of these patients either do not respond to or cannot tolerate the market-leading triptan drug class, and an additional 30% would benefit from improved efficacy compared to these drugs. Copies to: Brent B. Siler, Esq. Derek O. Colla, Esq. Cooley LLP 11951 Freedom Drive Reston, Virginia 20190 Telephone: (703) 456-8000 Fax: (703) 456-8100 Peter N. Handrinos, Esq. Michael E. Sullivan, Esq. Latham & Watkins LLP John Hancock Tower 200 Clarendon Street Boston, MA 02116 Telephone: (617) 948-6000 Fax: (617) 948-6001 Table of Contents We believe TRV250 also may have utility in other CNS areas such as depression, Parkinson's disease or neuropathic pain. We intend to conduct preclinical work beginning in 2015 designed to support the filing of an IND for TRV250. We also intend to seek a collaborator for TRV250 with CNS development and worldwide commercialization expertise, while potentially retaining commercialization rights in the United States. Cardiovascular Program TRV027 We are developing TRV027 as a first-line IV treatment in combination with standard diuretic therapy for AHF patients. TRV027 is a peptide b-arrestin biased ligand that targets the angiotensin II type 1 receptor, or AT1R, which is a GPCR expressed on cells in the cardiovascular system. TRV027 inhibits G protein signaling and activates b-arrestin signaling. In our Phase 2a clinical trial, TRV027 rapidly reduced blood pressure and preserved renal, or kidney, function, while preserving cardiac performance. We are enrolling patients in a Phase 2b clinical trial to evaluate the safety and efficacy of TRV027 in AHF. Over 250 patients have been recruited out of planned enrollment of approximately 500 patients. More than 65 sites in 12 countries are open and recruiting, and we expect patient enrollment to conclude in the third quarter of 2015. We expect to report data from this trial by the end of the fourth quarter of 2015. If subsequent Phase 3 development is successful and TRV027 is approved by regulatory authorities, we believe TRV027 would be used as a first-line in-hospital AHF treatment. We also believe TRV027 could improve AHF symptoms, shorten length of hospital stay in the short term, and potentially lower readmission rates and mortality rates in the long term. There are over 20 million people living with heart failure in the United States and Europe, according to the American Heart Association and the European Society of Cardiology. AHF, also sometimes referred to as acute decompensated heart failure, is heart failure requiring hospitalization. AHF patients present with severe dyspnea, a serious shortness of breath sometimes described as "air hunger," and fluid overload, leading to an inability to perform simple functions such as standing and walking short distances. This can also lead to organ dysfunction, including dysfunction in the kidneys and heart. The National Hospital Discharge Survey reported over five million hospital discharges in the United States in 2010 where heart failure was listed as a component of the diagnosis, over one million of which listed heart failure as the primary diagnosis. TRV027 has shown beneficial effects on the three key organ systems affected in heart failure, the blood vessels, heart and kidneys in our preclinical studies and Phase 1b and 2a clinical trials. In combination with standard diuretics, we believe these effects may translate into improvements in symptoms and outcomes such as hospital readmission rates, length of hospital stay and mortality rates if TRV027 successfully completes Phase 3 development and is approved by regulatory authorities. Safety and tolerability issues limit the effectiveness of currently available AHF treatments. We believe that TRV027's tolerability profile differentiates it from current therapies. In healthy subjects in our Phase 1 clinical trial, there were no serious adverse events, even at doses 20 times higher than the expected therapeutic dose. In addition, there were no TRV027-related serious adverse events in a Phase 2a clinical trial in medically fragile, advanced chronic heart failure subjects and no clinically significant adverse events in subjects with heart failure and concomitant renal impairment. Finally, in preclinical toxicology studies, TRV027 had a favorable profile at doses up to 500 times the expected therapeutic dose. In May 2013, we entered into an option agreement and a license agreement with Forest Laboratories Holdings Limited, or Forest, under which we granted to Forest an exclusive option to license TRV027, which may be exercised at any time before we deliver our Phase 2b clinical trial results to Forest and during a specified period of time thereafter. In July 2014, Actavis plc, or Actavis, acquired Forest, including Forest's option to TRV027. If Actavis exercises its option, the license Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. Table of Contents agreement between us and Actavis will become effective, and Actavis will have an exclusive worldwide license to develop and commercialize TRV027 and specified related compounds. Actavis will be responsible for subsequent development, regulatory approval and commercialization of TRV027 at Actavis's expense. If Actavis exercises the option, we would receive a $65 million option exercise fee and could potentially receive up to $365 million depending upon the achievement of future development and commercial milestones. We could also receive tiered royalties between 10% and 20% on net sales of licensed products worldwide, with the royalty rates on net sales of licensed products in the United States being somewhat higher than the royalty rates on net sales of licensed products outside the United States. We have three issued U.S. patents covering the composition of matter and method of use of TRV027 that are expected to expire no earlier than 2031 and 2029, respectively. Our Strategy Our goal is to build a leading biopharmaceutical company leveraging our expertise in biased ligands to develop and commercialize innovative, best-in-class drugs targeting established GPCRs. Key elements of our business strategy to achieve this goal are to: rapidly advance development of our three clinical-stage product candidates, TRV130, TRV734 and TRV027, to commercialization; establish commercialization and marketing capabilities in the United States, initially in acute care markets, for any of our product candidates that are approved or that we anticipate may be approved; expand our CNS product portfolio by advancing TRV250, our preclinical d-opioid receptor product candidate; and leverage our ABLE product platform to continue to discover innovative biased ligand therapeutics and expand our product platform's impact through external collaborations. Financial Overview Our revenue to date has been generated primarily through research grants and a research collaboration. We have not generated any commercial product revenue. As of September 30, 2014, we had $72.2 million of cash and cash equivalents and an accumulated deficit of $118.7 million. In September 2014, we announced we had entered into a $35.0 million senior secured tranched term loan credit facility with Oxford Finance LLC and Square 1 Bank, of which we have drawn $2.0 million as of the date of this prospectus. The facility also provides for up to two additional term loan tranches of $16.5 million each. Based on the top-line results of the Phase 2a/b clinical trial of TRV130 announced in November 2014, we believe we have met the conditions to draw the second tranche of $16.5 million tranche from the credit facility. We may opt to draw the third term loan tranche if we receive positive data from the Phase 2 clinical trial of TRV027. We believe that existing cash and the available borrowings under the second tranche of our credit facility, excluding any potential future draw from our credit facility if we receive positive data from the Phase 2 study of TRV027, plus the net proceeds from the offering will be sufficient to fund our operations through the fourth quarter of 2016. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 under the Securities Exchange Act of 1934. (Check one): Large Accelerated Filer Accelerated Filer Non-accelerated Filer (Do not check if a smaller reporting company) Smaller Reporting Company Table of Contents Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus. These risks include the following: We will need substantial additional funding to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our drug development programs or potential commercialization efforts. We are early in our clinical development efforts and have only two product candidates, TRV027 and TRV130, in Phase 2, and one more, TRV734, in Phase 1. If we, or Actavis if it exercises its option to license TRV027, are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed. Advancing TRV250, our preclinical d-opioid receptor product candidate, may not lead to the filing of an IND or future clinical development. If Actavis exercises its option to license TRV027, that relationship will be significant to our business. If Actavis' development and commercialization of TRV027 is not successful, our business could be adversely affected. We have incurred significant losses since our inception. We expect to continue to incur losses over the next several years and may never achieve or maintain profitability. We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than we do. Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. Corporate Information We were incorporated under the laws of the State of Delaware in November 2007. Our principal executive office is located at 1018 West 8th Avenue, Suite A, King of Prussia, Pennsylvania 19406. Our telephone number is (610) 354-8840. Our website address is www.trevenainc.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. "Trevena", the Trevena logo and other trademarks or service marks of Trevena, Inc. appearing in this prospectus are the property of Trevena, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Implications of Being an Emerging Growth Company As a company with less than $1 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: Being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure; The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; Not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; Reduced disclosure obligations regarding executive compensation; and Exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these provisions through 2019 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenue, have more than $700 million in market value of our capital stock held by non-affiliates or issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Table of Contents Subject to Completion, dated December 4, 2014 The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS Table of Contents The Offering Common stock offered by Trevena $40,000,000 of shares of common stock. Total common stock to be outstanding after this offering 35,855,298 shares (37,277,099 shares if the underwriters elect to exercise their option to purchase additional shares from us in full). Option to purchase additional shares of common stock The underwriters have an option to purchase a maximum of $6,000,000 of additional shares from us. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Use of proceeds We expect the net proceeds to us from this offering, after expenses, to be approximately $37.0 million, or approximately $42.6 million if the underwriters exercise their option to purchase additional shares from us in full. We intend to use the net proceeds from this offering, together with our existing cash and cash equivalents and the $16.5 million we believe we are entitled to draw from the second tranche of our credit facility, as follows: to fund clinical development expenses, including the completion of our ongoing Phase 2b clinical trial for TRV027, the initiation and completion of the next Phase 2 clinical trial and up to two Phase 3 clinical trials for TRV130 and the completion of a multiple ascending dose trial and other activities to support Phase 2 development for TRV734; to fund preclinical research and development activities, including work to support the filing of an IND for TRV250; and for working capital and general corporate purposes. See "Use of Proceeds" on page 51 for additional information.
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001431227_advanced_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001431227_advanced_prospectus_summary.txt
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+Prospectus Summary 1
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001448056_new-relic_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001448056_new-relic_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the following summary together with the more detailed information appearing elsewhere in this prospectus, including Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms New Relic, the company, we, us, and our in this prospectus refer to New Relic, Inc. and its subsidiaries. NEW RELIC, INC. Our Mission Software is becoming the lifeblood of almost every organization, large and small, around the world. Our mission is to empower organizations to build the best modern software possible and to improve their business intelligence using the data flowing through and about that software. This software data contains massive amounts of information about customer behaviors, user experiences, and overall software performance. New Relic enables organizations to gain visibility into this data to make better, faster, data-driven decisions. Overview We are building a new category of enterprise software we call Software Analytics. Our cloud-based suite of products enables organizations to collect, store, and analyze massive amounts of software data in real time. We design all our products to be highly intuitive and frictionless; they are easy to deploy, and customers can rapidly, often within minutes, realize benefits and results. With our products, technology users can quickly find and fix performance problems as well as predict and prevent future issues. Business users such as product managers can get answers to how their new product launch is being received, or how a pricing change impacted customer retention, without waiting for help from IT. Software developers can build better applications faster, as they can see how their software will perform and is actually performing for end-users. As of September 30, 2014, we collected, stored, and analyzed over 690 billion data points daily across more than 4 million application instances and monitored user experiences on over a million website domains and from over one billion mobile application installs. As of September 30, 2014, we had over 250,000 users. We define a user as an email address associated with an account that has deployed our software code, called agents, and from which we receive data from at least one application. As of September 30, 2014, we had 10,590 paid business accounts. Software has become critical to businesses and consumers worldwide, from online retailing to social networking to customer relationship management. This software is found in applications and throughout the architectures on which those applications run: servers, websites, operating systems, mobile devices, and other IT assets. The use of this software generates huge volumes of data, but historically, organizations collected and analyzed only a small fraction of this data due to technology and business constraints. Legacy software products were typically customized, expensive, required training, and were thus limited to business-critical applications within large organizations. As a result, the vast majority of software data has been underutilized. We saw the opportunity for Software Analytics to empower technology and business users to make use of this underutilized software data. We provide developers with our agents to add to their applications and infrastructure quickly and easily. Our cloud-based, big data database collects and organizes our users data for analysis through a simple dashboard interface that users can easily configure to monitor their key metrics and quickly make queries using simple phrases. Our intuitive and frictionless product design results in users being able to quickly receive analysis of their data. With this visibility, developers can significantly improve the quality of their software, and business and technology users can get real-time insights into their data. Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. PROSPECTUS (Subject to Completion) Issued December 9, 2014 5,000,000 Shares COMMON STOCK New Relic, Inc. is offering 5,000,000 shares of common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $20.00 and $22.00 per share. Our common stock has been approved for listing on the New York Stock Exchange under the symbol NEWR. We are an emerging growth company as defined under the federal securities laws. Investing in our common stock involves risks. See Risk Factors beginning on page 11. PRICE $ A SHARE Price to Public Underwriting Discounts and Commissions(1) Proceeds to New Relic Per share $ $ $ Total $ $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters the right to purchase up to an additional 750,000 shares of common stock to cover over-allotments. The Securities and Exchange Commission and any state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares of common stock to purchasers on , 2014. MORGAN STANLEY J.P. MORGAN ALLEN & COMPANY LLC UBS INVESTMENT BANK JMP SECURITIES RAYMOND JAMES , 2014 Table of Contents Our Software Analytics solution is comprised of an integrated suite of products, a big data database, and an open platform. All of our products have a simple user interface, and require minimal training or integration. Our products for technology users focus on software performance management and monitoring and consist of New Relic APM, New Relic Mobile, New Relic Servers, New Relic Browser, and New Relic Synthetics. New Relic Insights provides big data analytics to both business and technology users that enable them to easily extract actionable information from the massive quantities of unstructured and structured data flowing through their software. New Relic Platform offers a plugin architecture including application programming interfaces, or APIs, and software development kits, or SDKs, for customers and partners to embed and extend our solution into their products. Today, there are over 475 New Relic Platform plugins to extend our functionality to other applications and infrastructures. Our go-to-market strategy combines grassroots user adoption with both low-touch and high-touch sales approaches. Our products are easy to download and use, which has allowed us to build a large base of users and smaller organizations without an enterprise sales organization. We are building a direct enterprise sales and support operation in order to better market to and support these larger organizations, which represent a growing portion of our revenue. We have achieved rapid customer adoption, high customer retention, and significant growth since our founding. For our fiscal years ended March 31, 2012, 2013, and 2014, our revenue was $11.7 million, $29.7 million, and $63.2 million, respectively, representing year-over-year growth of 154% from the fiscal year ended March 31, 2012 to the fiscal year ended March 31, 2013, and 113% from the fiscal year ended March 31, 2013 to the fiscal year ended March 31, 2014. For the six months ended September 30, 2013 and 2014, our revenue was $26.1 million and $48.0 million, respectively, representing year-over-year growth of 83%. We had net losses of $7.5 million, $22.5 million, and $40.2 million for our fiscal years ended March 31, 2012, 2013, and 2014, respectively, and $18.6 million and $19.4 million for the six months ended September 30, 2013 and 2014, respectively. Industry Background Importance of Software for Businesses and Consumers Software has become a central element of business and consumer life. Businesses rely upon their software applications to interact with their customers, employees, and partners to increase revenue and improve operational efficiency. Businesses and consumers use software on a variety of devices in more of their day-to-day activities. Users increasingly expect their software to be fast and reliable, and they can quickly replace the applications they use if they are unsatisfied with their experience. Advent of Cloud Architectures and SaaS Historically, legacy on-premise architectures required companies to purchase and maintain the complete IT stack including storage, servers, networking, and applications. In contrast, cloud architectures enable companies to subscribe for and access computing resources as needed. This has provided a wide range of economic and technology benefits including applications that are easier to deploy, maintain, use, and integrate. Explosion of Mobility The greatly increased functionality of smartphones and tablets, and the ubiquity of high-bandwidth Internet access, have led to an explosion in mobile devices and mobile applications. These devices and the applications they run need to be supported by completely new software architectures that are fundamentally different and separate from legacy, on-premise IT architectures. Mobility has increased pressures on software performance and greatly expanded the variety, velocity, and volume of data available for analysis. Table of Contents Table of Contents Growing Importance of Developers The increasing ubiquity of software has led to greater importance and roles for the developers who build and maintain that software. These developers are increasingly able to create and influence major technology trends such as adoption of cloud architectures, open source, and new programming languages and frameworks to improve the time-to-market and performance of their applications. Emergence of Big Data Technologies for Unstructured and Structured Data Historically, companies have relied on on-premise databases from vendors such as Oracle, IBM, and Microsoft. Over the past few years, a wide variety of technologies have been introduced to greatly increase the ability to collect and analyze the rapidly growing variety, velocity, and volume of data, commonly referred to as big data. Today, an increasing number of companies are investing in technology and personnel to gain a competitive advantage using big data to enable real-time, data-driven decisions. New Complexities for Technology Users, Business Users, and Software Developers Business and consumer applications are running on both cloud and legacy architectures and are built with a multitude of programming languages. This has created significant challenges and complexities for technology users, business users, and software developers. The success or failure of businesses is increasingly determined by the availability, accessibility, response time, and quality of their users experience. Our Solution We have developed our Software Analytics suite of products, big data database, and open platform to help technology and business users make real-time, data-driven decisions to improve business and IT performance. In addition, developers can build better software, build it faster, and keep it running optimally for end-user experiences. Our solution collects, stores, and analyzes vast quantities of unstructured and structured data flowing through and about our users software. We currently offer an integrated suite of seven products that we continue to enhance and expand: New Relic APM: Application performance management New Relic Mobile: Mobile application performance management New Relic Servers: Server monitoring for cloud and data centers New Relic Browser: End-user experience monitoring and performance monitoring New Relic Synthetics: Software testing through simulated usage New Relic Platform: Platform that extends our functionality into other applications New Relic Insights: Real-time big data analytics for business managers This suite of products uses a common infrastructure to enable customers to: Collect. Our intelligent agents are software code that developers can easily deploy. These agents configure automatically to their particular IT environment and collect and send event and performance data securely to our proprietary cloud database. Store. Data collected from our agents is stored in our highly secure and scalable cloud-based, big data database. Our database has been optimized to store unstructured and structured data as well as handle the analytics and queries that we believe are important to drive decision making. Analyze. Our simple and intuitive user interface consists of a dashboard of graphical charts for key performance indicators, which are easily configurable and enable deep drill-down and root cause Table of Contents Table of Contents analysis. Our New Relic Insights product also includes a field for real-time ad-hoc queries with corresponding answers in a range of visual and graphical formats. We also intend to release platform features that enable users to create and publish customized data apps and make them available to non-technical business users. Key Elements of Our Solution Built on Cloud Architecture. We designed our products based on a cloud architecture and a SaaS delivery model. We are able to provide frequent updates to our software enabling us to continuously improve it to reflect technology developments. Flexibility to Manage Cloud, Hybrid, and On-Premise Architectures. In addition to modern cloud architectures, our SaaS solution can also manage hybrid cloud and heterogeneous architectures, including on-premise software. Users are able to rapidly deploy our agents globally across their IT environment. Built for Modern Software. We support a broad range of software development languages and frameworks as well as mobile operating systems. Our agents are easily embedded into applications built using all of these languages, without the need for customized coding. Mobile Enabled. We provide a native mobile version of our Software Analytics products with nearly all functionality accessible and usable through mobile devices. Our products are designed to anticipate and handle the complexity of mobile architectures, such as mobile carrier performance and user location. Big Data Database and Analytics. Our proprietary, cloud-based database leverages modern big data technologies that enable collection and storage of billions of events and metrics each day. Our database structure allows customers to easily build dashboards or make queries to deliver real-time insights. Easy and Intuitive. We design our products to be simple, intuitive, and user-friendly. Users are able to learn, deploy, and begin using our products with minimal or no training, often within a few minutes. Low Total Cost of Ownership. We price our products on a monthly subscription basis, with flexible pricing plans so each customer is only paying for the products and usage they are consuming. Our customers do not need to invest in additional hardware, infrastructure, or services to utilize our products. Integrated Suite. Our suite currently consists of seven products that are integrated, share a common design and user interface, and access the same cloud-based database structure. Users can move seamlessly among different analytic categories and use cases for their software data. Extensible Platform. We provide APIs and SDKs for customers, partners, and developers to easily build applications which integrate with and embed our product functionality into other applications. Enterprise Scalability and Security. Our products are designed to be scalable and secure. As of September 30, 2014, we collected, stored, and analyzed over 690 billion data points per day. By default, our software data transmissions are encrypted in transit and stored in our secure tier 3 SSAE-16 certified data center. We also perform an annual SOC-2 type 2 audit. Benefits of Our Solution Technology Users. Technology users can more rapidly identify problems, isolate root causes, and address problems. Our analytics tools also enable them to predict and prevent future issues. Business Users. Business users can use our products to obtain real-time analytics about their business. Software Developers. Software developers can use our products to better monitor software performance to continuously improve it as well as fix and prevent problems. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001448806_eflo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001448806_eflo_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it is not complete and does not contain all of the information that you should consider before deciding whether or not to invest in our common stock. You should carefully read the entire prospectus. In particular, you should read the sections entitled 'Risk Factors ', 'Forward-looking Statements , 'Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the notes thereto included elsewhere in this prospectus. Unless the context otherwise requires, information presented in this prospectus assumes that the agent's over-allotment option to purchase additional shares of our common stock is not exercised. Unless the context otherwise requires, references in this prospectus to ''we,'' ''us,'' ''our,'' ''our company,'' when used in the present tense or prospectively, those terms refer to EFLO Energy, Inc. and its consolidated subsidiaries. Unless otherwise indicated or the context otherwise requires, all operating data in this prospectus presented on a per unit basis is calculated based on working interest production volumes. Certain oil and gas industry terms used in this prospectus are defined in the ''Glossary of Oil and Gas Terms'' section of this prospectus.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001453420_echo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001453420_echo_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001465509_xcelmobili_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001465509_xcelmobili_prospectus_summary.txt
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+PROSPECTUS SUMMARY You should read the following summary together with the more detailed information and the financial statements appearing elsewhere in this Prospectus. This Prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this Prospectus. Unless the context indicates or suggests otherwise, references to "we," "our," "us," the "Company," "Xcel," "XCLL" or the "Registrant" refer to XcelMobility, Inc., a Nevada corporation and its wholly owned subsidiaries, CC Mobility Limited ("CC Mobility"), a company organized under the laws of Hong Kong, Shenzhen CC Power Investment Consulting Co. Ltd. ("CC Investment"), a company organized under the laws of the People s Republic of China ("PRC"), and a wholly-owned subsidiary of CC Mobility, Shenzhen CC Power Corporation ("CC Power"), a company organized under the laws of the People s Republic of China, and Shenzhen Jifu Communication Technology Co., Ltd., a company organized under the laws of the People s Republic of China ("Jifu"). Overview We were incorporated in the state of Nevada on December 27, 2007 under the name "Advanced Messaging Solutions, Inc." On March 29, 2011, we amended our Articles of Incorporation to change our name from "Advanced Messaging Solutions, Inc." to "XcelMobility, Inc." and we effected a 35-for-1 forward stock split of all of our issued and outstanding shares of common stock. On July 5, 2011, we entered into a voluntary share exchange agreement (the "Exchange Agreement") with CC Power, CC Mobility and the shareholders of CC Mobility. Pursuant to the closing of the transactions contemplated under the Exchange Agreement, on August 30, 2011, we issued 30,300,000 shares of our common stock to the shareholders of CC Mobility representing 50.5% of our issued and outstanding common stock in exchange for 100% of the issued and outstanding capital stock of CC Mobility (the "Exchange Transaction"). As a result of the Exchange Transaction, CC Mobility became our wholly-owned subsidiary and we control the business and operations of CC Power. On May 7, 2013, we entered into and consummated a stock purchase agreement (the "Purchase Agreement") with CC Investment, Jifu and certain of its shareholders (the "Jifu Shareholders"). Pursuant to the terms of the Purchase Agreement, we issued an aggregate of 27,000,000 shares of our common stock to the Jifu Shareholders as consideration for Jifu entering into certain controlling agreements with CC Investment (the "Jifu Acquisition"). Through these controlling agreements, CC Investment effectively owns Jifu through a variable interest entity or VIE structure. Our Business We recently made a strategic decision to change our primary business focus to becoming a wearable computing company, with two main business divisions: (i) the wearable computing group; and (ii) the video and security group. We were previously focused on developing mobile applications for mobile devices that utilize cellular networks to connect to the Internet and hardware/software products to increase the speed of virtual private networks. As electronic miniaturization has moved us from mainframes to cellular phones, we believe that in the coming years wearable computing will replace or augment cellular phones on a growing basis. We believe this will include cellular phones and their related technology being embedded in wearable items, such as watches, belts, shoes, shirts, or glasses. We are in the development stage for certain applications for wearable computing, including: Location-based services: core applications include finding friends/family/assets, location-based marketing, and security-related applications. Medical monitoring: for patients with heart disease, epilepsy, Alzheimer's, and other aged-related maladies. Security force monitoring and deployment: wearable computing with video, sound, and location which allows for remote monitoring and deployment of security forces over the internet and in the cloud. Secure and touch-less payment systems: near field communication-enabled wearable devices have the potential to become the wallets of the future. We are currently beta testing our CCWatch, an Android-based smartwatch which offers a Mandarin language voice command system and we now offer the Companion Solution, which is a cloud-connected smartwatch system with software applications focused on monitoring loved ones and private/public security forces. We have developed and now offer several location based applications and services, including the CCWatch Locator, Real-time Traffic Report Application, and Applications Interface. We are developing location based technology which allows for high accuracy location of global positioning system ("GPS") enabled mobile devices in China. We believe that this technology will allow us to locate GPS devices to within 10 feet. We believe this technology will also be an enabling technology for medical monitoring mobile devices in the future. This technology is scheduled to be completed by the middle of 2015. We are currently deriving revenue from the sale of cloud connected security systems for the public and private markets and initial location based services. For the three months ended March 31, 2014, we had a net income of $98,976 as compared to a net loss of $371,108 for the three months ended March 31, 2013. For the year ended December 31, 2013, we had a net loss of $504,848 as compared to a net loss of $434,769 for the prior year. Our current burn rate is approximately $75,000 per month and we believe that our current capital will last until approximately November 2014. We believe we will need at least $2,000,000 in additional financing for us to break-even and achieve self-sufficiency on a cash flow basis. Failure to complete a financing may have an adverse effect on our ability to operate and execute our business plan. Based on the current burn rate, we do not currently have sufficient capital to operate and we are doing so on a very limited budget. Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund marketing, development and distribution of our products. Our auditors have issued a going concern opinion in their audit report for the year ended December 31, 2013 dated March 31, 2014. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital. Corporate Information Our principal executive office is located at: 303 Twin Dolphins Drive, Suite 600, Redwood City, CA 94065. Our main telephone number is: 650-632-4210 and our fax number is 650-551-9901. Our website is located at: www.xcelmobility.com CC Power s offices are located at: 3F, West Block, M-8, Maqueling Industrial Park, Nanshan District, Shenzhen, PRC. Jifu s offices are located at: 3F, West Block, M-8, Maqueling Industrial Park, Nanshan District, Shenzhen, PRC. Stock Transfer Agent Our transfer agent is Securities Transfer Corp. and is located at 2591 Dallas Parkway, Suite 102, Frisco, Texas, 75034. Their telephone number is (469) 633-0101. The Offering Issuer XcelMobility Inc. Securities Offered for Resale 12,600,000 shares of common stock, consisting of: 10,769,230 shares of common stock that we may issue to Hanover upon conversion of the principal amount of the Convertible Note; 71,508 shares of common stock that we may issue to Hanover upon conversion of the interest accrued under the Convertible Note; and 1,759,262 shares of common stock that we may issue to Hanover upon exercise of the Warrant. Common Stock Outstanding Before the Offering 74,773,902 shares Common Stock to be Outstanding After the Offering assuming all of the Securities are Resold 87,373,902 shares Use of Proceeds We will not receive any proceeds from the sale of the shares of common stock offered by Selling Stockholder. We may receive gross proceeds of up to $150,000 if the Warrant is exercised for cash. Any proceeds received from the exercise of the Warrant will be used for working capital or general corporate purposes. See "Use of Proceeds." Trading Our common stock is quoted on the OTCQB under the symbol "XCLL." Risk Factors You should carefully consider the information set forth in the section entitled "Risk Factors" of this prospectus in deciding whether or not to invest in our common stock. Convertible Note Shares and Warrant Shares - Hanover On May 30, 2014, or the Closing Date, we entered into a securities purchase agreement dated as of the Closing Date (the "Purchase Agreement") with Hanover Holdings I, LLC, a New York limited liability company ("Hanover"). Pursuant to the terms of the Purchase Agreement, Hanover purchased from us on the Closing Date (i) a senior convertible note with an initial principal amount of $350,000 (the "Convertible Note") and (ii) a warrant to acquire up 3,716,091 shares of our common stock (the "Warrant"), for a total purchase price of $250,000. The Convertible Note was issued with an original issue discount of approximately 28.57%. $40,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by us) if (i) we have properly filed a registration statement with the Securities and Exchange Commission, or SEC, on or prior to July 14, 2014, or the Filing Deadline, covering the resale by Hanover of the shares of common Stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. Moreover, $60,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by us) if (i) the registration statement has been declared effective by the SEC on or prior to the earlier of (i) the 120th calendar day after the Closing Date and (ii) the fifth business day after the date we are notified by the SEC that such registration statement will not be reviewed or will not be subject to further review (the "Effectiveness Deadline"), and the prospectus contained therein is available for use by Hanover for the resale by Hanover of the shares of common stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. The Convertible Note matures on May 30, 2016 (subject to extension as provided in the Convertible Note) and, in addition to the approximately 28.57% original issue discount, accrues interest at the rate of 8.0% per annum. The Convertible Note is convertible at any time, in whole or in part, at Hanover s option into shares of our common stock, par value $0.001 per share at a conversion price equal to the lesser of (i) the product of (x) the arithmetic average of the lowest three (3) trade prices of our common stock during the 10 consecutive trading days ending and including the trading day immediately preceding the applicable conversion date and (y) 65%, and (ii) $0.12 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions). The Warrant entitles Hanover to purchase up to 3,716,091 shares of our common stock (the "Share Amount") at any time for a period of one year from the Closing Date at an exercise price equal to the lesser of (i) the product of (x) the arithmetic average of the lowest three (3) VWAPs of the common stock during preceding ten (10) consecutive trading days and (y) sixty-five percent (65%), and (B) $0.12 (as adjusted for any stock split, stock dividend, stock combination or other similar transaction) (the "Exercise Price"). The Warrant may only be exercised for cash and we have the right to accept or decline any exercise of the Warrant by Hanover. If at any time the Share Amount is less than the quotient of $150,000 and the Exercise Price (the "Required Share Amount"), then the number of shares issuable upon exercise of the warrant shall automatically be increased by such number of shares equal to the difference of the Required Share Amount less the Share Amount. At no time will Hanover be entitled to convert any portion of the Convertible Note or exercise any portion of the Warrant to the extent that after such conversion or exercise, Hanover (together with its affiliates) would beneficially own more than 4.99% of the outstanding shares of our common stock as of such date (the "Maximum Percentage"). The Maximum Percentage may be raised to any other percentage not in excess of 9.99% at the option of Hanover upon at least 61 days prior notice to us, or lowered to any other percentage, at the option of Hanover, at any time. The Convertible Note includes customary event of default provisions. Upon the occurrence of an event of default, Hanover may require us to pay in cash the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 135% (or 100% if an insolvency related event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1) 135% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of our common stock on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date we make the entire payment required to be made under this provision. We have the right at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash at a price equal to 135% of the total amount of such Convertible Note then outstanding. If at any time after the Closing Date, (i) the closing bid price of our common stock is equal to or greater than 140% of the Exercise Price for a period of 30 consecutive trading days (the "Measuring Period"), (ii) no Equity Conditions Failure (as defined in the Warrant) shall have occurred, and (iii) the aggregate dollar trading volume of the Common Stock for each trading day during the Measuring Period exceeds $3,000 per day, then we shall have the right to require Hanover to exercise all, or any part, of the Warrant (up to the Maximum Forced Exercise Amount (defined below)) (the "Forced Exercise") at the then applicable Exercise Price. We will not be permitted to effect a Forced Exercise if, after giving effect to such Forced Exercise, we have received more than $150,000 in cash, in the aggregate, from one or more exercises of the Warrant. "Maximum Forced Exercise Amount" means, as of any given date, the lesser of (x) the number of shares of our common stock issuable upon exercise of the Warrant as of such given date and (y) 500% of the average trading volume (as reported on Bloomberg) of our common stock on our principal market on each of the 10 consecutive trading days ending and including the trading day immediately prior to such given date. SUMMARY OF FINANCIAL INFORMATION The following selected financial information is derived from the Company s Financial Statements appearing elsewhere in this Prospectus and should be read in conjunction with the Company s Financial Statements, including the notes thereto, appearing elsewhere in this Prospectus. Summary of Statements of Operations Year Ended December 31, 2013 Three Months Ended March 31, 2014 Total Revenue $2,781,745 $884,528 Net income (loss) $(504,848) $98,976 Earnings (loss) per common share (basic and diluted) $(0.01) $0.0014 Weighted average common shares 68,606,084 73,127,686 Statement of Financial Position Year Ended December 31, 2013 Three Months Ended March 31, 2014 Cash and cash equivalents $431,707 $87,847 Prepaid expenses $- $- Total current assets $4,817,375 $5,769,582 Total assets $6,650,204 $7,594,303 Total current liabilities $4,856,024 $5,640,619 Total Stockholders (deficit) equity $1,024,654 $1,130,687 Total liabilities and stockholders deficit $6,650,204 $7,594,303 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS Except for statements of historical facts, this Prospectus contains forward-looking statements involving risks and uncertainties. The words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan" or the negative of these terms and similar expressions or variations thereof are intended to be forward looking statements. Such statements reflect the current view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this registration statement on Form S-1 entitled "Risk Factors") relating to the Registrant s industry, the Registrant s operations and results of operations and any businesses that may be acquired by the Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned. Although the Registrant believes that the expectations reflected in the forward looking statements are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the Registrant s financial statements and the related notes included in this registration statement on Form S-1. RISK FACTORS You should carefully consider the risks described below together with all of the other information included in our public filings before making an investment decision with regard to our securities. If any of the following events described in these risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Risks Related to Our Business and Industry Our operating results are difficult to predict, and we may experience significant fluctuations in our operating results. Our operating results may fluctuate significantly. As a result, you may not be able to rely on period to period comparisons of our operating results as an indication of our future performance. Factors causing these fluctuations include, among others: our ability to maintain and increase sales to existing customers, attract new customers and satisfy our customers demands; our ability to monetize our products; the cooperation and access to our partners customer bases; the price we charge for our products or changes in our pricing strategies or the pricing strategies of our competitors; timing and costs of marketing and promotional programs organized by us and/or our partners, including the extent to which we or our partners offer promotional discounts to their customers; technical difficulties, system downtime or interruptions of our computer system, which we use to support our products; the introduction by our competitors of new products and services; the effects of strategic alliances, potential acquisitions and other business combinations, and our ability to successfully and timely integrate them into our business; changes in government regulations with respect to the wearable computing and mobile internet industry; and economic and geopolitical conditions in China, Japan and elsewhere. In addition, a significant percentage of our operating expenses are fixed in the short term. As a result, a delay in generating or recognizing revenue for any reason could result in substantial operating losses. If wearable computing devices do not gain some reasonable level of acceptance in the consumer market, our business strategy may fail. It is difficult to assess or predict with any certainty the potential size, timing and viability of market opportunities for our wearable computing products or their market acceptance. Market acceptance of our wearable computing products will depend, in part, upon consumer acceptance of wearable computing technology providing benefits comparable to or greater than those provided by other non-wearable computing products, such as cellular phones or tablet computers. Such acceptance may depend on the relative complexity, reliability, usefulness and cost-effectiveness of our wearable computing products compared to other non-wearable computing products available in the market or that may be developed by our competitors. Potential customers may be reluctant to adopt our wearable computing products because of concerns surrounding perceived risks relating to use and the fact that it is a new technology. If consumers fail to purchase our wearable computing products in the numbers we anticipate or as soon as we anticipate, the sales of our products and our results of operations would be adversely affected and our business strategy may fail. Our success is dependent upon our ability to maintain our relationships with cellular carriers, phone manufacturers and phone retailers and to expand such relationships and develop new relationships. Our mobile internet business depends significantly on our relationships with cellular carriers, phone manufacturers and phone retailers. No assurance can be given that any such distribution channels will continue their relationships with us, and the loss of one or more of these distribution channel partners could have a material adverse effect on our mobile internet business, results of operations and financial condition. Our ability to grow our mobile internet business will therefore depend to a significant degree upon our ability to expand existing relationships and develop new relationships with such distribution channel partners and to expand existing relationships. No assurance can be given that new partners will be found, that any such new relationships will be successful when they are in place, or that business with current distribution channel partners will increase. Failure to develop and expand such relationships could have a material adverse effect on our business, results of operations and financial condition. Concerns about health risks associated with wireless equipment may reduce the demand for our services. Portable communications devices have been alleged to pose health risks, including cancer, due to radio frequency emissions from these devices. The actual or perceived risk of mobile communications devices could adversely affect us through a reduction in mobile communication devise users, thereby reducing potential users of our services. Our failure to retain and attract qualified personnel could harm our business. We believe that our success depends in part on our ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense and we may not be able to hire sufficient personnel to achieve our goals or support the anticipated growth in our business. If we fail to attract and retain qualified personnel, our business will suffer. There are a number of competing providers of wearable computing products and we may fail to capture a substantial portion of the wearable computing market. In addition to competing with wearable computing products, we also compete with wearable computing products that have been developed by other companies. Our primary competitors include HTC Corp., Huawei, ZTE, Lenovo, and Xiaomi in the China market. In addition, Sony and Samsung have both released their own smartwatch products and other companies such as Google, Apple and Microsoft have been rumored to be developing wearable computing products. Most of our competitors have greater financial, marketing, distribution and technical resources than we do. Moreover, our competitors may succeed in developing new wearable computing products and technology that are more affordable or have more or more desirable features than our technology. If our products are unable to capture a reasonable portion of the wearable computing market, our business strategy may fail. If we fail to accurately forecast seasonal demand for our wearable computing products, our results of operations for the entire fiscal year may be materially adversely affected. Historically, a high percentage of consumer sales in electronics and computing products is attributable to the winter holiday selling season. Like many manufacturers of consumer electronics products, we must make merchandising and inventory decisions for the winter holiday selling season well in advance of actual sales. Inaccurate projections of demand or deviations in the demand for our products may cause large fluctuations in our fourth quarter results and could have a material adverse effect on our results of operations for the entire fiscal year. If we are not able to adequately protect our intellectual property, we may not be able to compete effectively. Our ability to compete depends in part upon the strength of our proprietary rights in our technologies, brands and content. We expect to rely on a combination of Chinese, U.S. and other foreign patents, copyrights, trademark, trade secret laws and license agreements to establish and protect our intellectual property and proprietary rights. The efforts we have taken and expect to take to protect our intellectual property and proprietary rights may not be sufficient or effective at stopping unauthorized use of our intellectual property and proprietary rights. In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which our products are made available. There may be instances where we are not able to fully protect or utilize our intellectual property in a manner that maximizes competitive advantage. Our inability to obtain appropriate protections for our intellectual property may also allow competitors to enter our markets and produce or sell the same or similar products. In addition, protecting our intellectual property and other proprietary rights is expensive and diverts critical managerial resources. If we are otherwise unable to protect our intellectual property and proprietary rights from unauthorized use, the value of our products may be reduced, and our business and financial results could be adversely affected. If we are forced to resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome and expensive. In addition, our proprietary rights could be at risk if we are unsuccessful in, or cannot afford to pursue, those proceedings. In addition, the possibility of extensive delays in the patent issuance process could effectively reduce the term during which a marketed product is protected by patents. We may also need to obtain licenses to patents or other proprietary rights from third parties. We may not be able to obtain the licenses required under any patents or proprietary rights or they may not be available on acceptable terms. If we do not obtain required licenses, we may encounter delays in product development or find that the development, manufacture or sale of products requiring licenses could be foreclosed. We may, from time to time, support and collaborate in research conducted by universities and governmental research organizations. We may not be able to acquire exclusive rights to the inventions or technical information derived from these collaborations, and disputes may arise over rights in derivative or related research programs conducted by us or our collaborators. We may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations. There is significant litigation in the wearable computing and telecommunications technology field regarding patents and other intellectual property rights. Other companies with greater financial and other resources than us have gone out of business from costs related to patent litigation and from losing a patent litigation. Our success depends, in large part, on our ability to use our proprietary information and know-how without infringing third party intellectual property rights. As we increase sales of our products, and as litigation becomes more common in China and throughout Asia, we face a higher risk of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties proprietary rights. Our current or potential competitors, many of which have substantial resources, may have or may obtain intellectual property protection that may prevent, limit or interfere with our ability to make, use or sell our products in China and elsewhere. Moreover, the defense of intellectual property suits, including patent infringement suits, and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our management personnel. Resolving intellectual property infringement claims may also require us to enter into license agreements. No assurances can be given that we would be able to obtain license agreements on commercially reasonable terms. A successful claim of intellectual property infringement could subject us to significant damages and may prevent us from developing or licensing the affected product. Any of these events could have a material adverse effect on our profitability and financial condition. XCELMOBILITY INC. AND SUBSIDIARIES FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013 INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013 5 Condensed Consolidated Statements of Income and Comprehensive Income (loss) for the three months ended March 31, 2014 and 2013 (unaudited) 6 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited) Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information. Our success depends upon the skills, knowledge and experience of our technical personnel, our consultants and advisors as well as our licensors and contractors. Because we operate in a highly competitive field, we rely almost wholly on trade secrets to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties confidential information developed by us during the course of the receiving party s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position. We depend substantially on the continuing efforts of our executive officers, and our business and prospects may be severely disrupted if we lose their services. Our future success is dependent on the continued services of the key members of our management team, including Ronald Edward Strauss, Renyan Ge, Gregory Tse and Xili Wang. We do not maintain key man life insurance on any of our executive officers and directors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new management. The process of hiring suitably qualified personnel is also often lengthy. If our recruitment and retention efforts are unsuccessful in the future, it may be more difficult for us to execute our business strategy. Increasing government regulation of the internet could affect our business. We are subject not only to regulations applicable to businesses generally but also to laws and regulations directly applicable to wearable computing products and electronic commerce. The PRC government may adopt new laws and regulations applicable to our business. Currently, there are no specific regulations adopted by the PRC government pertaining to our industry. However, in the future the PRC government may decide to regulate wearable computing and electronic commerce as they pertain to our industry. Any such legislation or regulation could dampen the growth of our business. Any new laws or regulations in the following areas could affect our business: wearable computing product certifications; user privacy; the pricing and taxation of products offered over the internet; the content of websites; copyrights; the online distribution of specific material or content over the internet; and the characteristics and quality of services offered over the internet. We may not be able to manage our expansion of operations effectively and failure to do so could strain our management, operational and other resources, which could materially and adversely affect our business and growth potential. We have grown since our inception and we anticipate continued expansion of our business to address growth in demand for our products, as well as to capture new market opportunities. The continued growth of our business has resulted in, and will continue to result in, substantial demands on our management, operational and other resources. In particular, we believe that the management of our growth will require, among other things: our ability to expand our market reach in China, Japan and elsewhere; our ability to continue to identify new customers and distribution channels; our ability to control operating expenses; strengthening of financial and management controls; increased marketing, sales and sales support activities; and hiring, training and managing of new personnel, including sales personnel. If we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected. We may need additional capital and may not be able to obtain it on acceptable terms or at all, which could adversely affect our liquidity and financial position; the issuance of additional equity would result in dilution to our shareholders. We may need to raise additional capital if our expenditures exceed our current expectations due to changed business conditions or other future developments. Our future liquidity needs and other business reasons may require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities or securities convertible or exchangeable to our equity securities would result in additional dilution to our shareholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that restrict our operational flexibility. Our ability to raise additional funds in the future is subject to a variety of uncertainties, including: our future financial condition, results of operations and cash flows; general market conditions for capital-raising activities by technology companies; and economic, political and other conditions in China, Japan and elsewhere. No assurances can be given that we will be able to obtain additional capital in a timely manner or on commercially acceptable terms or at all. Future acquisitions are expected to be a part of our growth strategy and could expose us to significant business risks. One of our strategies is to grow our business through acquisition of other companies. However, no assurances can be given that we will be able to identify and secure suitable acquisition opportunities. Our ability to consummate and integrate effectively any future acquisitions on terms that are favorable to us may be limited by the number of attractive acquisition targets, internal demands on our resources and, to the extent necessary, our ability to obtain financing on satisfactory terms for larger acquisitions, if at all. Moreover, if an acquisition candidate is identified, the third parties with whom we seek to cooperate may not select us as a potential partner or we may not be able to enter into arrangements on commercially reasonable terms or at all. The negotiation and completion of potential acquisitions, whether or not ultimately consummated, could also require significant diversion of management s time and resources and potential disruption of our existing business. Furthermore, no assurances can be given that the expected synergies from future acquisitions will actually materialize. In addition, future acquisitions could result in the incurrence of additional indebtedness, costs, and contingent liabilities. Future acquisitions may also expose us to potential risks, including risks associated with: the integration of new operations, products, services and personnel; unforeseen or hidden liabilities; the diversion of financial or other resources from our existing businesses; our inability to generate sufficient revenue to recover costs and expenses of the acquisitions; and the potential loss of, or harm to, relationships with employees or customers. Any of the above could significantly disrupt our ability to manage our business and materially and adversely affect our business, financial condition and results of operations. The technology used in the wearable computing industry continues to change rapidly and if we are unable to modify our products to adapt to future changes in the mobile communication industry, we will be unable to attract or retain customers. The wearable computing industry has been characterized by a rapid rate of development of new technologies and manufacturing processes, rapid changes in customer requirements, frequent product introductions and ongoing demands for greater functionality. Our future success will likely depend on our ability to develop new products and to adjust our product specifications in response to these developments in a timely manner. If our development efforts are not successful or are delayed, or if our newly developed products do not achieve market acceptance, we may be unable to attract or retain customers and our operating results could be harmed. Our efforts to develop new products involve several risks, including: our ability to anticipate and respond in a timely manner to changes in customer requirements; the significant research and development investment that we may be required to make before market acceptance of a particular new or enhanced product; the possibility that the wearable computing industry may not accept our products after we have invested a significant amount of resources in development; and competition from new technologies, processes and products introduced by our current or future competitors. We intend to make significant investments in research and development and new products that may not be profitable. Companies in our industry are under pressure to develop new software and new product innovations to support changing consumer tastes and regulatory requirements. We have engaged in research and development activities and we believe that substantial additional research and development activities are necessary to allow us to offer technologically-advanced products. We expect that our research and development budget will increase significantly as we attempt to create new products and as we have access to additional working capital to fund these activities. Research and development and investments in new technology are inherently speculative and commercial success depends on many factors including technological innovation, novelty, service and support, and effective sales and marketing. We may not achieve significant revenue from new product and service investments for a number of years, if at all. Moreover, new products and services may not be profitable, and even if they are profitable, operating margins for new products and businesses may be minimal. We depend on third parties to provide technology and critical components for use in our products. We do not manufacture the electronic components which are used in our products. Instead, we have arrangements with or purchase them from third party suppliers or rely on third party independent contractors for these critical components, some of which are customized or specially made for us. We also may use third parties to assemble all or portions of our products. Some of these third party contractors and suppliers are small companies with limited financial resources. If any of these third party contractors or suppliers were unable or unwilling to supply these critical components to us, we would be unable to manufacture and sell our products until a replacement supplier could be found. We cannot assure investors that a replacement third party contractor or supplier could be found on reasonable terms or in a timely manner. Any interruption in our ability to manufacture and distribute our products could cause our business to be unsuccessful and the value of investors investment in us may decline. Risks Related to Our Corporate Structure Transactions among our affiliates are subject to scrutiny by the PRC tax authorities and a finding that we or any of our consolidated entities owe additional taxes could have a material adverse impact on our net income and the value of an investment in our common stock. Under PRC law, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. If any of the transactions we have entered into among our consolidated entities are challenged by the PRC tax authorities to be not on an arm s-length basis, or to result in an unreasonable reduction in our PRC tax obligations, the PRC tax authorities have the authority to disallow our tax deduction claims, adjust the profits and losses of our respective PRC consolidated entities and assess late payment fees and other penalties. Our net income may be materially reduced if our tax liabilities increase or if we are otherwise assessed late payment fees or other penalties. PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate. Our failure to obtain the prior approval of the listing and trading of our common stock could have a material adverse effect on our business, operating results, reputation and trading price of our common stock. On August 8, 2006, the PRC Ministry of Commerce ("MOFCOM"), joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission ("CSRC") and the State Administration of Foreign Exchange ("SAFE"), released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the "Revised M&A Regulations"), which took effect September 8, 2006. Among other things, the Revised M&A Regulations include provisions that purport to require that an offshore special purpose vehicle, or "SPV," formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. We believe that (i) CC Investment was incorporated as a foreign owned enterprise and that there was no acquisition of the equity or assets of a "PRC domestic company" as such term is defined under the Revised M&A Regulations and (ii) that no provision in the Revised M&A Regulations clearly classifies the contractual arrangements between CC Investment and CC Power or Jifu as a type of transaction falling within such rules. Therefore, we were and are not required to obtain the approval of CSRC under the Revised M&A Regulations in connection with the Exchange Transaction or the Jifu Acquisition. If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval was required for the Exchange Transaction or Jifu Acquisition, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. Also, if the CSRC later requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock. It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of the Revised M&A Regulations. It is anticipated that application of the rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure that our domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the rules, we may need to expend significant time and resources to maintain compliance. We currently conduct of our business primarily through contractually controlled PRC operating entities, and our control of the day-to-day operations of such PRC entities pursuant to contracts, to comply with Chinese law, may not be as effective as conducting business through direct equity ownership of such PRC entities due to uncertainties with respect to the PRC legal system which could materially and adversely affect our results of operations. We currently conduct a substantial portion of our business primarily through our contractually controlled PRC operating entities. PRC laws and regulations govern our operations in the PRC. Our contractually controlled PRC operating entities are generally subject to laws and regulations applicable to foreign investments in the PRC and, in particular, laws applicable to wholly foreign-owned enterprises ("WFOEs"). Although members of our executive management team and our shareholders include the executive officers and owners of our contractually controlled PRC operating entities, because we do not directly own our contractually controlled PRC operating entities, we may encounter problems enforcing our rights to control the business affairs and day-to-day operations of such entities. If we find it necessary to take legal action in the PRC to enforce our rights under our contracts with the PRC operating entities, we will be subject to the uncertainties of the PRC legal system, where prior court decisions have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in PRC. However, the PRC has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation, if any, of these policies and rules until sometime after the violation. In addition, any litigation in the PRC, regardless of outcome, may be protracted and result in substantial costs and diversion of resources and management attention. Accordingly, notwithstanding our contractual control over our PRC operating entities, such control may not be as effective as if we conducted our business through direct equity owned PRC entities which could materially and adversely affect our results of operations. Our contractual arrangements with CC Power, Jifu and their respective shareholders may not be as effective in providing control over these entities as direct ownership. We have no equity ownership interest in CC Power or Jifu as we rely on the contractual arrangements of the VIE agreements to control and operate CC Power and Jif. These contractual arrangements may not be as effective in providing control over CC Power or Jifu as direct ownership. For example, CC Power or Jifu could fail to take actions required for our business or fail to pay dividends to CC Investment despite their contractual obligations to do so. If CC Power or Jifu fail to perform their obligation under their respective VIE agreements, we may have to rely on legal remedies under PRC law, which may not be effective. Risks Related to Doing Business Internationally and in China We are subject to market risk through our sales to international markets. A portion of our sales are or will be derived from international markets. These operations are subject to risks that are inherent in operating in foreign countries, including the following: foreign countries could change regulations or impose currency restrictions and other restraints; changes in foreign currency exchange rates and hyperinflation or deflation in the foreign countries in which we operate; exchange controls; some countries impose burdensome tariffs and quotas; political changes and economic crises may lead to changes in the business environment in which we operate; international conflict, including terrorist acts, could significantly impact our financial condition and results of operations; and economic downturns, political instability and war or civil disturbances may disrupt distribution logistics or limit sales in individual markets. No assurance can be given that we will be able to continue selling our products in any of the foreign countries in which we currently or plan to do business. Any of the above-mentioned factors could detrimentally affect our sales, and impact our financial condition and results of operations. Current global economic conditions may adversely affect our industry, business and results of operations. The recent disruptions in the current global credit and financial markets has included diminished liquidity and credit availability, a decline in consumer confidence, a decline in economic growth, an increased unemployment rate, and uncertainty about economic stability. There can be no assurance that there will not be further deterioration in credit and financial markets and confidence in economic conditions. These economic uncertainties affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. The current adverse global economic conditions and tightening of credit in financial markets may lead consumers to postpone spending. We are unable to predict the likely duration and severity of the current disruptions in the credit and financial markets and adverse global economic conditions. If the current uncertain economic conditions continue or further deteriorate, our business and results of operations could be materially and adversely affected. Our international operations subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to the countries or regions in which we operate, which could adversely affect our financial performance. We currently conduct operations in the PRC and in Japan, and plan on expanding our operations to additional international markets. Our future operating results in international markets could be negatively affected by a variety of factors, most of which are beyond our control. These factors include political conditions, including political instability, economic conditions, legal and regulatory constraints, trade policies, currency regulations, and other matters in any of the countries or regions in which we operate, now or in the future. Moreover, the economies of some of the countries in which we currently have, or plan to have operations, have in the past suffered from high rates of inflation and currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which may impact our operations include foreign trade, monetary and fiscal policies both of the United States and of other countries, laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with having numerous officers located in countries which have historically been less stable than the United States. Additional risks inherent in our international operations generally include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the United States. Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and materially and adversely affect our competitive position. A significant portion of our current business operations are conducted in China and we anticipate that a majority of our sales will be made in China. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including: the degree of government involvement; the level of development; the growth rate; the control of foreign exchange; access to financing; and the allocation of resources. While the Chinese economy has grown significantly in the past 25 years, the growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. The Chinese government may not continue to pursue these policies or may significantly alter them to our detriment from time to time with little, if any, prior notice. Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to shareholders, governmental control over capital investments or changes in tax regulations applicable to us, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business. The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has in recent years implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC government could materially and adversely affect our business. The PRC government also exercises significant control over China s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Since late 2003, the PRC government implemented a number of measures, such as raising bank reserves against deposit rates to place additional limitations on the ability of commercial banks to make loans and raise interest rates, in order to decrease the growth rate of specific segments of China s economy which it believed to be overheating. These actions, as well as future actions and policies of the PRC government, could materially affect our liquidity and access to capital and our ability to operate our business. Nationalization or expropriation could even result in the total loss of our investment in China and in the total loss of our shareholders investment. New labor laws in the PRC may adversely affect our results of operations. On January 1, 2008, the PRC government promulgated the Labor Contract Law of the PRC, or the New Labor Contract Law. The New Labor Contract Law imposes greater liabilities on employers and significantly impacts the cost of an employer s decision to reduce its workforce. Further, it requires certain terminations to be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce, the New Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our business or in a timely and cost effective manner, thus materially and adversely affecting our financial condition and results of operations. If political relations between the United States and China worsen, our stock price may decrease and we may have difficulty accessing U.S. capital markets. At various times during recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China, whether or not directly related to our business, could adversely affect the market price of our common stock and our ability to access U.S. capital markets. Uncertainties with respect to the PRC legal system could limit the protections available to you and us. The PRC legal system is a civil law system based on written statutes. Unlike the common law system in the United States, prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. We conduct a significant portion of our current business through our subsidiary established in China. Thus we are generally subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to wholly foreign-owned enterprises. However, since many laws, rules and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to us. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of Chinese administrative and court proceedings and the level of legal protection we enjoy in China than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our business partners, customers and suppliers. In addition, such uncertainties, including the inability to enforce our contracts, could materially and adversely affect our business and operations. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to the Chinese telecommunications industry and software technology industry, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and our investors. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention. The fluctuation of foreign currency exchange rates could materially impact our financial results. Since we currently conduct a significant portion our operations in China, our business is subject to foreign currency risks, including currency exchange rates fluctuations and difficulties in converting Renminbis into U.S. dollars. The exchange rates between the Renminbi and the U.S. dollar, Euro and other foreign currencies is affected by, among other things, changes in China s political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Currently the Renminbi exchange rate versus the U.S. dollar is restricted to a rise or fall of no more than 1% per day and the People s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business, financial condition and results of operations. Because our assets are located outside of the United States and all of our directors and officers reside outside of the United States, it may be difficult for investors to enforce their rights based on United States federal securities laws or any United States court judgments against us and our officers and directors. Our operating company and all of our assets are currently located in the PRC and Hong Kong. In addition, all of our current directors and officers reside outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the United States federal securities laws against us in the courts of either the United States, PRC or Hong Kong and, even if civil judgments are obtained in United States courts, to enforce such judgments in PRC or Hong Kong courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC and Hong Kong would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States federal securities laws or other United States laws. Restrictions under PRC law on our PRC operating subsidiary s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or complete acquisitions that could benefit our business, pay dividends to, and otherwise fund and conduct our businesses. Substantially all of our revenues are currently earned by our PRC operating subsidiary. However, PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its offshore parent company. PRC legal restrictions permit payments of dividend by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary is also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business. Restrictions on currency exchange may limit our ability to receive and use our sales revenue effectively. All of CC Power s and Jifu s sales revenue and expenses are denominated in RMB. Under PRC law, the RMB is currently convertible under the "current account," which includes dividends and trade and service-related foreign exchange transactions, but not under the "capital account," which includes foreign direct investment and loans. Currently, CC Power and Jifu may purchase foreign currencies for settlement of current account transactions, including payments of dividends to the Company, without the approval of SAFE, by complying with certain procedural requirements. However, the relevant PRC government authorities may limit or eliminate our ability to purchase foreign currencies in the future. Since a significant amount of our future revenue will be denominated in RMB, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in RMB to fund our business activities outside China that are denominated in foreign currencies. Foreign exchange transactions by our PRC operating subsidiary under the capital account continue to be subject to significant foreign exchange controls and require the approval of or need to register with PRC government authorities, including SAFE. In particular, if our PRC operating subsidiary borrows foreign currency through loans from us or other foreign lenders, these loans must be registered with SAFE, and if we finance the subsidiary by means of additional capital contributions, these capital contributions must be approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their respective local counterparts. These limitations could affect their ability to obtain foreign exchange through debt or equity financing. There are significant uncertainties under the EIT relating to the withholding tax liabilities of CC Investment and dividends payable by CC Investment to CC Mobility may not qualify to enjoy the treaty benefits. Under the EIT and its implementing rules, the profits of a foreign invested enterprise which are distributed to its immediate holding company outside the PRC will be subject to a withholding tax rate of 10%. Pursuant to a tax arrangement between Hong Kong and the PRC, such rate may be lowered to 5% if a Hong Kong resident enterprise owns over 25% of a PRC company. CC Investment is currently wholly-owned by CC Mobility. However, the 5% withholding tax rate does not automatically apply and approvals from competent local tax authorities are required before an enterprise can enjoy any benefits under the relevant taxation treaties. Moreover, according to the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009, for a tax treaty to be applicable, certain requirements must be satisfied, including: (1) the taxpayer must be the beneficial owner of the relevant dividends; (2) for corporate recipients to enjoy the favorable tax treatment under the tax treaty as direct owners of a PRC enterprise, such corporate recipients must satisfy the direct ownership thresholds at all times during the 12 consecutive months preceding the receipt of the dividends. On August 24, 2009, the State Administration of Taxation issued the Administrative Measures for Non-resident Enterprises to Enjoy Treatments under Tax Treaties (For Trial Implementation), which became effective on October 1, 2009, requiring non-resident enterprises to obtain an approval from the competent tax authority in order to enjoy the treatments under tax treaties. Further, the State Administration of Taxation promulgated the Notice on How to Understand and Recognize the "Beneficial Owner" in Tax Treaties on October 27, 2009, which limits the "beneficial owner" to individuals, enterprises or other organizations normally engaged in substantive operations, and set forth certain adverse factors on the recognition of such "Beneficial Owner." CC Investment has not yet applied for such approvals because it has not declared or paid dividends, and does not intend to declare or pay dividends. CC Investment will apply for such approvals when it intends to declare and pay dividends. There is no assurance that the PRC tax authorities will approve the 5% withholding tax rate on dividends received by CC Mobility from CC Investment. Changes in economic conditions and consumer confidence in China may influence the industry in which we operate, consumer preferences and spending patterns. A significant portion of our business and revenue growth depends on the size of the retail market for wearable computing products in China. As a result, our revenue and profitability may be negatively affected by changes in national, regional or local economic conditions and consumer confidence in China. We are susceptible to changes in economic conditions, consumer confidence and customer preferences of the Chinese population. External factors beyond our control that affect consumer confidence include unemployment rates, levels of personal disposable income, national, regional or local economic conditions, natural disasters, extreme weather conditions, disease outbreaks and acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer preferences, purchasing power and spending patterns. In addition, natural disasters, extreme weather conditions, disease outbreaks and acts of war or terrorism may cause damage to our facilities, disrupt the supply of the products we offer or adversely impact consumer demand. Any of these factors could have a material adverse effect on our business, financial condition and results of operations. Any significant failure or disruption of China s banking system could materially and adversely affect our ability to obtain credit. Most major banks in China are owned by the Chinese government. Most of these banks have historically extended significant amounts of loans according to governmental policy rather than for commercial reasons. As a result, these banks currently have significant loans outstanding to state-owned enterprises, many of which have incurred recurring and material losses. Consequently, many banks in China have substantial levels of loans that are not current with respect to payments of either interest or principal and may not have made adequate provisions to cover potential losses on these loans. Any significant failure or disruption of China s banking system could materially and adversely affect our ability to obtain credit and the economic environment in which we conduct our business and may also affect our customers and distributors Risks Relating to our Common Stock and our Status as a Public Company The relative lack of public company experience of our management team may put us at a competitive disadvantage. Our management team lacks public company experience and is generally unfamiliar with the requirements of the United States securities laws, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. The individuals who now constitute our senior management team have never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately responds to such increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business. We will be required to incur significant costs and require significant management resources to evaluate our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse effect on our stock price. As a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404"). Section 404 requires us to include an internal control report with the Annual Report on Form 10-K. This report must include management s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material weaknesses in internal control over financial reporting that we have identified. Failure to comply or any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our equity securities. Management believes that its internal controls and procedures are currently not effective to detect the inappropriate application of U.S. GAAP rules. Management realize there are deficiencies in the design or operation of our internal control that adversely affect our internal controls which management considers to be material weaknesses including those described below: i) We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis. ii) We do not have an audit committee. While not being legally obligated to have an audit committee, it is the management s view that to have an audit committee, comprised of independent board members, is an important entity-level control over our financial statements. iii) We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud-related risks and the risks related to non- routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness. Achieving continued compliance with Section 404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you that we will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to conclude that our internal control over financial reporting is effective at fiscal year-end. As a result, investors could lose confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting firm may not agree with our management s assessment or conclude that our internal control over financial reporting is operating effectively. A limited public trading market exists for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets. Our common stock is currently traded under the symbol "XCLL" but currently with low volume, based on quotations on the "Over-the-Counter Bulletin Board," meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our stock until such time as we became more viable. Additionally, many brokerage firms may not be willing to effect transactions in the securities. As a consequence, there may be periods of several days or more when trading activity in our stock is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained. In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities. Due to the volatility of our common stock price, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management s attention and resources. Shareholders should also be aware that, according to SEC Release No. 34-29093, the market for "penny stock," such as our common stock, has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the future volatility of our share price. We do not anticipate paying any dividends in the foreseeable future. If and when we decide to pay dividends, any dividends or proceeds from liquidation will be subject to the approval of the relevant Chinese government agencies. We currently intend to retain any future earnings for funding growth. We do not anticipate paying any dividends in the foreseeable future. As a result, shareholders should not rely on an investment in our securities if they require dividend income. A significant portion of our assets are located inside China. Under the laws governing foreign-invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. If and when made, any dividend payment will be subject to the decision of the board of directors of our Chinese operating company, CC Investment, and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency s approval and supervision as well the foreign exchange control. This may generate additional risk for our investors in case of dividend payment and liquidation. Our stock is categorized as a penny stock. Trading of our stock may be restricted by the SEC s penny stock regulations which may limit a shareholder s ability to buy and sell our stock. Our stock is categorized as a "penny stock." The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $4.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. FINRA sales practice requirements may also limit a shareholder s ability to buy and sell our stock. In addition to the "penny stock" rules described above, the Financial Industry Regulatory Authority ("FINRA") has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees. Our Articles of Incorporation and Bylaws contain a provision permitting us to eliminate the personal liability of our directors to our company and shareholders for damages for breach of fiduciary duty as a director or officer to the extent provided by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders. The audit report included in this Registration Statement on Form S-1 was prepared by auditors who are not inspected by the Public Company Accounting Oversight Board and, as a result, you are deprived of the benefits of such inspection. The independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the "PCAOB", is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in the PRC, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditors are not currently inspected by the PCAOB. Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating our auditor s audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements. USE OF PROCEEDS The Selling Stockholder may sell all of the common stock offered by this Prospectus from time to time. We will not receive any proceeds from the sale of those shares of common stock. We may receive gross proceeds of up to $150,000 if the Warrant is exercised for cash. Any such proceeds we receive will be used for working capital and general corporate matters. DETERMINATION OF OFFERING PRICE There currently is a limited public market for our common stock. The Selling Stockholder will determine at what price it may sell the offered shares and such sales may be made at prevailing market prices or at privately negotiated prices. See "Plan of Distribution" below for more information. SELLING STOCKHOLDER Hanover On May 30, 2014, or the Closing Date, we entered into a securities purchase agreement dated as of the Closing Date (the "Purchase Agreement") with Hanover Holdings I, LLC, a New York limited liability company, or Hanover. Pursuant to the terms of the Purchase Agreement, Hanover purchased from us on the Closing Date (i) a senior convertible note with an initial principal amount of $350,000 (the "Convertible Note") and (ii) a warrant to acquire up 3,716,091 shares of our common stock (the "Warrant"), for a total purchase price of $250,000. The Convertible Note was issued with an original issue discount of approximately 28.57%. $40,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by us) if (i) we have properly filed a registration statement with the Securities and Exchange Commission, or SEC, on or prior to July 14, 2014, or the Filing Deadline, covering the resale by Hanover of the shares of common Stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. Moreover, $60,000 of the outstanding principal amount of the Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) shall be automatically extinguished (without any cash payment by us) if (i) the registration statement has been declared effective by the SEC on or prior to the earlier of (i) the 120th calendar day after the Closing Date and (ii) the fifth business day after the date we are notified by the SEC that such registration statement will not be reviewed or will not be subject to further review (the "Effectiveness Deadline"), and the prospectus contained therein is available for use by Hanover for the resale by Hanover of the shares of common stock issued or issuable upon conversion of the Convertible Note and (ii) no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. The Convertible Note matures on May 30, 2016 (subject to extension as provided in the Convertible Note) and, in addition to the approximately 28.57% original issue discount, accrues interest at the rate of 8.0% per annum. The Convertible Note is convertible at any time, in whole or in part, at Hanover s option into shares of our common stock, par value $0.001 per share at a conversion price equal to the lesser of (i) the product of (x) the arithmetic average of the lowest three (3) trade prices of our common stock during the 10 consecutive trading days ending and including the trading day immediately preceding the applicable conversion date and (y) 65%, and (ii) $0.12 (as adjusted for stock splits, stock dividends, stock combinations or other similar transactions). The Warrant entitles Hanover to purchase up to 3,716,091 shares of our common stock (the "Share Amount") at any time for a period of one year from the Closing Date at an exercise price equal to the lesser of (i) the product of (x) the arithmetic average of the lowest three (3) VWAPs of the common stock during preceding ten (10) consecutive trading days and (y) sixty-five percent (65%), and (B) $0.12 (as adjusted for any stock split, stock dividend, stock combination or other similar transaction) (the "Exercise Price"). The Warrant may only be exercised for cash and we have the right to accept or decline any exercise of the Warrant by Hanover. If at any time the Share Amount is less than the quotient of $150,000 and the Exercise Price (the "Required Share Amount"), then the number of shares issuable upon exercise of the warrant shall automatically be increased by such number of shares equal to the difference of the Required Share Amount less the Share Amount. At no time will Hanover be entitled to convert any portion of the Convertible Note or exercise any portion of the Warrant to the extent that after such conversion or exercise, Hanover (together with its affiliates) would beneficially own more than 4.99% of the outstanding shares of our common stock as of such date (the "Maximum Percentage"). The Maximum Percentage may be raised to any other percentage not in excess of 9.99% at the option of Hanover upon at least 61 days prior notice to us, or lowered to any other percentage, at the option of Hanover, at any time. The Convertible Note includes customary event of default provisions. Upon the occurrence of an event of default, Hanover may require us to pay in cash the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 135% (or 100% if an insolvency related event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by (Y) the product of (1) 135% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price of our common stock on any trading day during the period commencing on the date immediately preceding such event of default and ending on the date we make the entire payment required to be made under this provision. We have the right at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash at a price equal to 135% of the total amount of such Convertible Note then outstanding. If at any time after the Closing Date, (i) the closing bid price of our common stock is equal to or greater than 140% of the Exercise Price for a period of 30 consecutive trading days (the "Measuring Period"), (ii) no Equity Conditions Failure (as defined in the Warrant) shall have occurred, and (iii) the aggregate dollar trading volume of the Common Stock for each trading day during the Measuring Period exceeds $3,000 per day, then we shall have the right to require Hanover to exercise all, or any part, of the Warrant (up to the Maximum Forced Exercise Amount (defined below)) (the "Forced Exercise") at the then applicable Exercise Price. We will not be permitted to effect a Forced Exercise if, after giving effect to such Forced Exercise, we have received more than $150,000 in cash, in the aggregate, from one or more exercises of the Warrant. "Maximum Forced Exercise Amount" means, as of any given date, the lesser of (x) the number of shares of our common stock issuable upon exercise of the Warrant as of such given date and (y) 500% of the average trading volume (as reported on Bloomberg) of our common stock on our principal market on each of the 10 consecutive trading days ending and including the trading day immediately prior to such given date. Registration Rights Agreement In connection with the execution of the Purchase Agreement, on the Closing Date, the Company and Hanover also entered into a registration rights agreement dated as of the Closing Date (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, we agreed to file an initial registration statement ("Registration Statement") with the SEC to register the resale of the Common Stock into which the Convertible Note may be converted and for which the Warrant may be exercised, on or prior to the Filing Deadline and have it declared effective as of the Effectiveness Deadline. If at any time all of the shares of common stock underlying the Convertible Note and Warrant are not covered by the initial Registration Statement, we have agreed to file with the SEC one or more additional Registration Statements so as to cover all of the shares of our common stock underlying the Convertible Note and Warrant not covered by such initial Registration Statement, in each case, as soon as practicable, but in no event later than the applicable filing deadline for such additional Registration Statements as provided in the Registration Rights Agreement. We also agreed, among other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to our obligations under the Registration Rights Agreement, including certain liabilities under the Securities Act. Hanover has agreed to indemnify and hold us and each of our directors, officers and persons who control us harmless against certain liabilities that may be based upon written information furnished by Hanover to us for inclusion in a registration statement pursuant to the Registration Rights Agreement, including certain liabilities under the Securities Act. The Selling Stockholder Table The following table sets forth the Selling Stockholder, the number of shares of common stock beneficially owned by the Selling Stockholder as of the date hereof and the number of shares of common stock being offered by the Selling Stockholder. The shares being offered hereby are being registered to permit public secondary trading and the Selling Stockholder may offer all or part of the shares for resale from time to time. However, the Selling Stockholder is under no obligation to sell all or any portion of such shares nor is the Selling Stockholder obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the Selling Stockholder. The "Amount Beneficially Owned After Offering" column assumes the sale of all shares offered. Shares Beneficially Percent Beneficially Amount Beneficially Percent Beneficially Owned Prior To Owned Prior Shares to Owned After Owned Name Offering To Offering be Offered Offering After Offering Hanover Holdings I, LLC (1) 12,600,000 14.42% 12,600,000 0 0% (1) Hanover is a limited liability company organized and existing under the laws of the state of New York. Mr. Joshua Sason is the Chief Executive Officer of Hanover and owns all of the membership interests in Hanover. Accordingly, Mr. Sason has sole power to vote or to direct the vote and sole power to dispose or to direct the disposition of all of our securities owned directly by Hanover. Mr. Sason does not directly own any shares of our common stock. Under Rule 13d-3 under the Exchange Act, Mr. Sason may be deemed to beneficially own the securities owned directly by Hanover. We have been advised that Hanover is not a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, and that neither Hanover nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. All expenses incurred with respect to the registration of the common stock will be borne by us, but we will not be obligated to pay any underwriting fees, discounts, commission or other expenses incurred by the Selling Stockholder in connection with the sale of the securities covered by this prospectus. Neither the Selling Stockholder nor any of its associates or affiliates has held any position, office, or other material relationship with us in the past three years. PLAN OF DISTRIBUTION This prospectus relates to the resale of 12,600,000 shares of our common stock, par value $0.001 per share, by the Selling Stockholder, including (i) 10,769,230 shares of our common stock issuable upon conversion of the principal of the Convertible Note; (ii) 71,508 shares of our common stock issuable upon conversion of the accrued interest under the Convertible Note; and (iii) 1,759,262 shares of our common stock issuable upon exercise of the Warrant. The Selling Stockholder and any of its respective pledges, donees, assignees and other successors-in-interest may, from time to time, sell any or all of its shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The Selling Stockholder may use any one or more of the following methods when selling shares: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated transactions; broker-dealers may agree with a Selling Stockholder to sell a specified number of such shares at a stipulated price per share; through the writing of options on the shares; a combination of any such methods of sale; and any other method permitted pursuant to applicable law. The Selling Stockholder or its respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Stockholder and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that the Selling Stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The Selling Stockholder cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the Selling Stockholder. In addition, the Selling Stockholder and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus are "underwriters" as that term is defined under the Securities Act or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the Selling Stockholder. The Selling Stockholder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act. The Selling Stockholder may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by it, and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or any other applicable provision of the Securities Act amending the list of Selling Stockholder to include the pledgee, transferee or other successors in interest as Selling Stockholder under this prospectus. The Selling Stockholder also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholder under this prospectus. We are required to pay all fees and expenses incident to the registration of the shares of common stock. Otherwise, all discounts, commissions or fees incurred in connection with the sale of our common stock offered hereby will be paid by the Selling Stockholder. The Selling Stockholder acquired or will acquire the securities offered hereby in the ordinary course of business and has advised us that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of its shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by the Selling Stockholder. We will file a supplement to this prospectus if the Selling Stockholder enters into a material arrangement with a broker-dealer for sale of common stock being registered. If the Selling Stockholder uses this prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act. Pursuant to a requirement by the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount to be received by any FINRA member or independent broker/dealer may not be greater than eight percent (8%) of the gross proceeds received by us for the sale of any securities being registered pursuant to SEC Rule 415 under the Securities Act. The anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of our common stock and activities of the Selling Stockholder. The Selling Stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. We have agreed to indemnify Hanover and its controlling persons against certain liabilities, including liabilities under the Securities Act. We estimate that the expenses of the offering to be borne by us will be approximately $20,481.14. We will not receive any proceeds from the resale of any of the shares of our common stock by Hanover. We may receive proceeds of up to $150,000 if the Warrant is exercised for cash. DESCRIPTION OF SECURITIES TO BE REGISTERED General Our authorized capital stock consists of 400,000,000 shares of common stock at a par value of $0.001 per share, of which 74,773,902 shares were issued and outstanding as of July 7, 2014, and 20,000,000 shares of preferred stock at a par value of $0.001. No shares of preferred stock are outstanding. Common Stock The holders of our common stock are entitled to one vote per share. They are not entitled to cumulative voting rights or preemptive rights. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. However, the current policy of the Board of Directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in all assets that are legally available for distribution after payment in full of any preferential amounts. The holders of common stock have no subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of the Board of Directors and issued in the future. All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable. Preferred Stock In accordance with our Articles of Incorporation, the Board of Directors may fix and determine the designations, rights, preferences or other variations of each class or series within each class of preferred stock. To date, we have not issued any shares of preferred stock or designated any class of preferred stock. No shares of preferred stock are outstanding. Dividends We have not declared any cash dividends in the two most recent fiscal years. The declaration of future cash dividends, if any, will be at the discretion of the Board of Directors and will depend on our earnings, if any, capital requirements and financial position, general economic conditions and other pertinent conditions. It is our present intention not to pay any cash dividends in the near future. Registration Rights Hanover Registration Rights In connection with the execution of the Purchase Agreement, on the Closing Date, the Company and Hanover entered the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we agreed to file an initial Registration Statement with the SEC to register the resale of the common stock into which the Convertible Note may be converted and for which the Warrant may be exercised, on or prior the Filing Deadline and have it declared effective as of the Effectiveness Deadline. If at any time all of the shares of common stock underlying the Convertible Note and Warrant are not covered by the initial Registration Statement, we have agreed to file with the SEC one or more additional Registration Statements so as to cover all of the shares of our common stock underlying the Convertible Note and Warrant not covered by such initial Registration Statement, in each case, as soon as practicable, but in no event later than the applicable filing deadline for such additional Registration Statements as provided in the Registration Rights Agreement. We also agreed, among other things, to indemnify Hanover from certain liabilities and fees and expenses of Hanover incident to our obligations under the Registration Rights Agreement, including certain liabilities under the Securities Act. Hanover has agreed to indemnify and hold us and each of our directors, officers and persons who control us harmless against certain liabilities that may be based upon written information furnished by Hanover to us for inclusion in a registration statement pursuant to the Registration Rights Agreement, including certain liabilities under the Securities Act. INTERESTS OF NAMED EXPERTS AND COUNSEL No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. The financial statements included in this prospectus and in the registration statement have been audited by Albert Wong & Co., for the years ended December 31, 2013 and December 31, 2012 and are included in reliance upon such reports given upon the authority of said firm as experts in auditing and accounting. The validity of the issuance of the common stock hereby will be passed upon for us by Greenberg Traurig, LLP. INFORMATION WITH RESPECT TO THE REGISTRANT Background and Overview We were incorporated in the state of Nevada on December 27, 2007 under the name "Advanced Messaging Solutions, Inc." On March 29, 2011, we amended our Articles of Incorporation to change our name from "Advanced Messaging Solutions, Inc." to "XcelMobility Inc." and we effected a 35-for-1 forward stock split of all of our issued and outstanding shares of common stock. On July 5, 2011, we entered into a voluntary share exchange agreement (the "Exchange Agreement") with CC Power, CC Mobility and the shareholders of CC Mobility. Pursuant to the closing of the transactions contemplated under the Exchange Agreement, on August 30, 2011, we issued 30,300,000 shares of our common stock to the shareholders of CC Mobility representing 50.5% of our issued and outstanding common stock in exchange for 100% of the issued and outstanding capital stock of CC Mobility (the "Exchange Transaction"). As a result of the Exchange Transaction, CC Mobility became our wholly-owned subsidiary and we control the business and operations of CC Power. On May 7, 2013, we entered into and consummated a stock purchase agreement (the "Purchase Agreement") with CC Investment, Jifu and certain of its shareholders (the "Jifu Shareholders"). Pursuant to the terms of the Purchase Agreement, we issued an aggregate of 27,000,000 shares of our common stock to the Jifu Shareholders as consideration for Jifu entering into certain controlling agreements with CC Investment (the "Jifu Acquisition"). Through these controlling agreements, CC Investment effectively owns Jifu through a variable interest entity or VIE structure. We recently made a strategic decision to change our primary business focus to becoming a wearable computing company, with two main business divisions: (i) the wearable computing group; and (ii) the video and security group. We were previously focused on developing mobile applications for mobile devices that utilize cellular networks to connect to the Internet and hardware/software products to increase the speed of virtual private networks. As electronic miniaturization has moved us from mainframes to cellular phones, we believe that in the coming years, wearable computing will replace or augment cellular phones on a growing basis. We believe this will include cellular phones and their related technology being embedded in wearable items, such as watches, belts, shoes, shirts, or glasses. We are in the development stage for certain applications for wearable computing, including: 1. Location-based services: core applications include finding friends/family/assets, location-based marketing, and security-related applications. 2. Medical monitoring: for patients with heart disease, epilepsy, Alzheimer's, and other aged-related maladies. 3. Security force monitoring and deployment: wearable computing with video, sound, and location which allows for remote monitoring and deployment of security forces over the internet and in the cloud. 4. Secure and touch-less payment systems: near field communication-enabled wearable devices have the potential to become the wallets of the future. We are currently beta testing our CCWatch, an Android-based smartwatch which offers a Mandarin language voice command system and we also now offer the Companion Solution, which is an "always on" cloud-connected smartwatch system with software applications focused on monitoring loved ones and private/public security forces. We have developed and now offer several location based applications and services, including the CCWatch Locator, Real-time Traffic Report Application, and Applications Interface. We are also developing location based technology which allows for high accuracy location of GPS enabled mobile devices in China. We believe that this technology will allow us to locate GPS devices to within 10 feet. We believe this technology will be also an enabling technology for medical monitoring mobile devices in the future. This technology is scheduled to be completed by the middle of 2015. We are currently deriving revenue from the sale of cloud connected security systems for the public and private markets and initial location based services. Corporate Structure Our organizational structure is as follows: CC Mobility Limited ("CC Mobility") was incorporated on May 3, 2011 under the laws of Hong Kong as a limited liability company. Shenzhen CC Power Investment Consulting Co. Ltd., ("CC Investment") a wholly-owned subsidiary of CC Mobility, was incorporated on July 27, 2011 under the laws of the People s Republic of China as a wholly foreign owned limited liability company. Shenzhen CC Power Corporation ("CC Power") is a Chinese enterprise incorporated on March 13, 2003 under the laws of the PRC. CC Power is owned entirely by Xili Wang (the "CC Power Shareholder"), who is also our Chief Financial Officer and Secretary. CC Power maintains all the licenses and approvals necessary to operate its business in the PRC. Shenzhen Jifu Communication Technology Co. Ltd., is a Chinese enterprise incorporated on March 3, 2003 under the laws of the PRC. PRC law places certain restrictions on roundtrip investments through the acquisition of a PRC entity by PRC residents. To comply with these restrictions, in conjunction with the Exchange Transaction and the Purchase Agreement, we (via our wholly-owned subsidiary, CC Investment), entered into and consummated certain contractual arrangements with (i) CC Power and/or the CC Power Shareholder, and (ii) Jifu and/or the Jifu Shareholders pursuant to which we provide CC Power and Jifu (together, the "VIE Entities") with exclusive technology consulting and management services. Through these contractual arrangements, we have the ability to substantially influence the VIE Entities daily operations and financial affairs, appoint its directors and senior executives, and approve all matters requiring board and/or shareholder approval. These contractual arrangements enable us to control the VIE Entities and operate our business in the PRC through the VIE Entities, and we are considered the primary beneficiary of the VIE Entities. Accordingly, our consolidated financial statements reflect the results of operations, assets and liabilities of both the VIE Entities Our subsidiary, CC Investment, entered into separate contractual arrangements with (i) CC Power and/or the CC Power Shareholder, and (ii) Jifu and/or the Jifu Shareholders, each of which are enforceable and valid in accordance with the laws of the PRC: Entrusted Management Agreement. Pursuant to the Entrusted Management Agreements entered into by CC Investment and each of the VIE Entities, CC Investment agrees to provide, and the VIE Entities agree to accept, exclusive management services provided by CC Investment. Such management services include but are not limited to financial management, business management, marketing management, human resource management and internal control of the VIE Entities. The Entrusted Management Agreements will remain in effect until the acquisition of all assets or equity of the VIE Entities by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement description below). Technical Services Agreement. Pursuant to the Technical Services Agreements entered into by CC Investment and each of the VIE Entities, CC Investment agrees to provide, and the VIE Entities agree to accept, exclusive technical services provided by CC Investment. Such technical services include but are not limited to software, computer system, data analysis, training and other technical services. CC Investment shall be entitled to charge the VIE Entities service fees equivalent to each of the VIE Entities respective total net income. The Technical Service Agreements will remain in effect until the acquisition of all assets or equity of the respective VIE Entities by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement description below). Exclusive Purchase Option Agreement. Pursuant to the Exclusive Purchase Option Agreements entered into by CC Investment and each of the VIE Entities, each of the CC Power Shareholder and the Jifu Shareholders granted CC Investment an irrevocable and exclusive purchase option to acquire CC Power s or Jifu s equity and/or assets, respectively, at a nominal consideration. CC Investment may exercise either of its purchase options at any time. Loan Agreement. CC Investment entered into a Loan Agreement with the CC Power Shareholder pursuant to which CC Investment agreed to lend RMB 10,000,000 to the CC Power Shareholder, to be used solely for the operations of CC Power. CC Investment also entered into a Loan Agreement with the Jifu Shareholders pursuant to which CC Investment agreed to lend RMB 2,000,000 to the Jifu Shareholders to be used solely for the operations of Jifu. Equity Pledge Agreement. Under the Equity Pledge Agreements entered into by CC Investment and each of the CC Power Shareholder and the Jifu Shareholders (together, the "VIE Shareholders"), the VIE Shareholders pledged all of their equity interests in the VIE Entities, including the proceeds thereof, to guarantee all of CC Investment s rights and benefits under the respective Entrusted Management Agreements, the Technical Service Agreements, the Exclusive Purchase Option Agreements and the Loan Agreements. Prior to termination of the Equity Pledge Agreements, the pledged equity interests cannot be transferred without CC Investment s prior consent. The VIE Shareholders covenant to CC Investment that among other things, it will only appoint/elect the candidates for the directors of the VIE Entities nominated by CC Investment. Subsidiaries As a result of the Exchange Transaction, CC Investment and (via a contractual relationship) CC Power are wholly-owned subsidiaries of our subsidiary CC Mobility. As a result of the Purchase Agreement, Jifu (via a contractual relationship) is a wholly-owned subsidiary of CC Investment. Strategy We recently made the strategic decision to focus on building a leading wearable computing business. We believe that we are well positioned in the growing wearable computing market given our experience in location-based technology and established relationships and location in China, arguably the world's largest market for mobile devices. As electronic miniaturization has moved us from mainframes to cell phones, we believe that in the coming years, wearable computing will replace or augment cell phones on a growing basis. In the future, it is expected that the cell phone will be embedded in a person's everyday wearable items, including the watch, belt, shoes, shirt and glasses. Wearable computing will also do much more than a cell phone as these devices will come loaded with biometric sensors ready to monitor a person's position, temperature, heart rate, and other data. One of the markets we plan on pursuing is the medical and fitness market. We have partnered with CIM120 (Beijing, China) Limited ("CIM120") to build comprehensive wearable computing solutions for the medical markets. CIM120 is a leading developer and marketer of advanced medical sensors and solutions. Together with CIM120, we will target opportunities for wearable computing in the medical markets. The jointly developed solutions will combine our cloud connected wearable computing devices with CIM120's most advanced medical biometric sensors. Using CIM120's existing customer base, these solutions will be marketed across the medical field in China. Customers Through Jifu, we are currently selling cloud-connected security systems to Huandi Industries, a private company. The wearable computing market has numerous consumer and non-consumer segments including: Consumer Markets: wearable cameras, sports and activity trackers, smart clothing and textiles, smart glasses, smart watches, entertainment, gaming; and Non-Consumer Markets: healthcare, defense and aerospace, enterprise and industrial, and warehouse and logistics. We plan to sell the CCWatch as part of a complete solution and distributed through distribution partners in specific markets and industries. We currently market the Companion Solution to the private and public security forces market in China. We also plan to offer wearable computing solutions to the medical and healthcare markets. Technology We are developing wearable computing solutions that utilize our proprietary location based software and cloud computing network for the following applications: Location Based Software: Knowing where the user is and what is around the user is important in the majority of applications for wearable computing. We have forged a relationship with Mapworld China to provide comprehensive and up to date location and mapping data for wearable computing applications in China. We have combined Mapworld China's location and mapping data with our location-based software to give the user access to advanced location based services. Cloud Computing Network: Users can access numerous and powerful functions with wearable computers that have internet connectivity. Our national cloud-based network allows wearable computer users to stay connected to the internet and maintain access throughout the day. We offer several wearable computing applications through our cloud-based network, such as English/Chinese translation services. Biometric Sensors: Wearable computing for medical and health applications use today s most advanced and miniature biometric sensors. These sensors can provide temperature, heart rate, and other important measurements. Application Specific Software: Wearable computing has numerous applications across diverse markets and each of these may require different software programs. We continue to develop and provide application software-related solutions for our key markets. Intellectual Property We have developed intellectual property for our wearable computing solutions and security systems. Our intellectual property consists of application related software and solutions for wearable computing, including location based software, GPS related algorithms, cloud computing software and other application specific software. We have not registered any patents, trademarks or copyrights. We will continue to evaluate the business benefits in pursuing patents and copyrights in the future. We currently protect all of our development work with confidentiality and trade secret agreements with our engineers, employees and any outside contractors. However, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property or technology or otherwise develop a product with the same functionality as our service. Policing unauthorized use of intellectual property rights is difficult, and nearly impossible on a worldwide basis. Therefore, we cannot be certain that the steps we have taken or will take in the future will prevent misappropriation of our technology or intellectual property, particularly in foreign countries where we do business or where our service is sold or used, where the laws may not protect proprietary rights as fully as do the laws of the United States or where the enforcement of such laws is not common or effective. Products CCWatch We have developed and are currently beta testing a full featured wearable computing device, CCWatch, which is an Android-based smartwatch. We believe that the smartwatch will be the preferred method of connecting to the internet in the coming years. The smartwatch is unobtrusive, convenient and a user can check up on notifications at the flick of the wrist. We plan on offering the following capabilities for our smartwatch: voice call, text messaging, social media messaging, sports apps, tracking, SOS device, GPS navigation, gesture control, voice control, voice-to-text, weather, music player, world clock functions, calendar alarms, and voice notes. The CCWatch has been designed to take advantage of the growing market for location-based services. The built in low power GPS allows the CCWatch to be located anywhere in the world. Combined with MapWorld's mapping service, we believe that the CCWatch is well positioned to be a premier location-based wearable mobile device for the China market. Advantages of CCWatch The CCWatch has been designed with the China market in mind. China is arguably the world's largest market for wearable computing devices. The CCWatch includes the following features: 1. The world s first Mandarin language voice command interface on a mobile device. 2. The watch will be priced for high volume sales in China. 3. Texting, the preferred method of communication in China, will be easy and user-friendly. 4. Key software applications, including popular location-based mapping applications. 5. Distribution through large mobile carriers in China, including China Unicom. Initial Applications and Services We have developed location based applications and services that are available on the CCWatch. These applications consist of the following: CCWatch Locator: The smartwatch locator acts as a security device with assisted GPS technology for both outdoor and indoor location. The CCWatch locator may be used in the following applications: child protection, law enforcement, lone worker protection, elderly care and Alzheimer care. Real-time Traffic Report Application: The RTR application will provide real-time traffic information to CCWatch users. The traffic data will be updated in real-time. The RTR service will intelligently provide directional data to the user to provide the quickest and safest route to the user's destination. Applications Interface: The CCWatch runs on the Android operating system like many of today's most popular smartphones and tablets. We have developed an easy to use API whereby third parties can develop custom applications and services for the smartwatch. Third party developers can market their applications through our Mach5.cn mobile internet portal. Companion Solution: The Companion Solution is a full featured application for the location and tracking of GPS enabled mobile devices. It encompasses the CCwatch, cloud computing network, and application specific software to provide real world solution for the tracking and location of GPS enabled mobile devices. This technology allows for the tracking of assets, people, pets, and other tracking applications. Security and Surveillance Products Through Jifu, we are developing advanced security systems combining video, location enabled wearable computing, and cloud computing. Our Companion Solution uses Internet Protocol networks and location enabled wearable devices to deliver advanced security solution for private and government facilities. The Video Surveillance Solution allows for a cloud-based offering and enables end-users in small to medium commercial facilities to simplify the integration of video surveillance by moving it from on-site locations to a cloud-based service model, scales over time to fit their business needs, and ensures system reliability to eliminate downtime. The service, which can be added seamlessly and securely to any new or existing facility's security infrastructure via an Internet connection, also provides users with real-time event notification, video alarm verification, remote employee monitoring and offsite video storage, allowing users' staff to more effectively respond to events and creating opportunities for operational efficiencies that go beyond security. The new cloud based security system is being targeted to the many gated communities throughout China. These gated communities are home to China's rapidly growing 600 million affluent middle and upper class. Products in Development We continue to develop our Companion Solution and all associated technologies. We plan to release a solution for the tracking of children by the middle of 2015. Distribution Our wearable computing devices will be distributed through different distribution partners including Tianditu (Mapworld). Tianditu is the premier map related data supplier in China. Industry Wearable Computing Market According to the recent Credit Suisse wearable computing report – a rapidly growing installed base of mobile computing devices and a confluence of hardware/component innovation, software ecosystem maturation and emerging business models should drive significant growth in "Wearables" (smart watches, glasses, monitors etc.) over the next several years from an estimated $3-5 billion in 2013 to what could be well over $42 billion in the next 3-5 years. China Mobile Device Market In June 2013, Flurry Analytics measured 261,333,271 active smartphones and tablets in China. That represented 24% of the entire worldwide connected device installed base measured by Flurry. The chart below documents the growth in the installed base. The left axis and blue line show China s growth over the years. The right axis and red line show growth in the world as a whole (including China) a basis of comparison. As can be seen from the gap between the two lines growing through 2010 and much of 2011, growth in smartphones and tablets in China lagged behind the world as a whole through that period. But starting toward the end of 2011, the installed base in China began a period of exponential growth. During this period, it surpassed the growth rate for the world as a whole, as shown by the blue line catching the red line in the graph. It is expected that China will maintain its leadership (in terms of active installed base) for the foreseeable future because the device penetration rate is still relatively low and much opportunity remains. Mobility in China 464 million, or 78.5% of China's 591 million Internet users, go online with a mobile device. Through apps and websites, mobiles now touch numerous aspects of life in China. China's mobile landscape is changing even faster than China itself. With locally-branded smartphones going for as cheap as $100, they are not just the realm of the wealthy, but are in the pockets and handbags of virtually every Chinese consumer who buys Western products. Smartphones are replaced every six months on average in China, compared to every couple of years in developed markets. With each replacement mobile comes new specifications and technology to consider. Wearable Computing in China The wearable computing market in China will closely follow the emergence and growth of the high end mobile device (smartphone/tablet) market. As seen on the graph (China's Path to the World's largest Connected Device Installed Base) China has the largest and fastest growing opportunity for wearable computing. Not only are existing connected device users measuring over 261,000,000, but there is a large green field opportunity as more and more Chinese citizens move into the middle class. Growth in China will continue at an exponential rate for the foreseeable future because the device penetration rate is still relatively low and much opportunity remains. Applications and Services The most popular mobile applications in the world can be grouped into the following categories: 1. Location-based services: Using mapping services and software to discover where you are, what is around you, where your friends and loved ones are, and so on. 2. Texting/chatting/connecting: Mobile device users want to stay connected to their associates, friends and family. 3. Social networking: Mobile users want real-time and continuous social updates. Government Regulation Overview The PRC government has imposed extensive and stringent measures to regulate the telecommunications and software development industries. The State Council of the PRC, or the State Council, the Ministry of Industry and Information Technology, or the MIIT (formerly the Ministry of Information Industry, or the MII), and other relevant authorities in the PRC have issued various regulations with respect to the telecommunications and software development industries. This section summarizes the principal PRC laws and regulations relevant to our business and operations. Business license Any company that conducts business in the PRC must have a business license that covers a particular type of work. Our business license covers our present business to design, develop, and produce mobile Internet software. Prior to expanding our business beyond that of our business license, we are required to apply and receive approval from the PRC government. Employment laws We are subject to laws and regulations governing our relationship with our employees, including: wage and hour requirements, working and safety conditions, citizenship requirements, work permits and travel restrictions. These include local labor laws and regulations, which may require substantial resources for compliance. China s National Labor Law, which became effective on January 1, 1995, and China s National Labor Contract Law, which became effective on January 1, 2008, permit workers in both state and private enterprises in China to bargain collectively. The National Labor Law and the National Labor Contract Law provide for collective contracts to be developed through collaboration between the labor union (or worker representatives in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work. The laws also permit workers and employers in all types of enterprises to sign individual contracts, which are to be drawn up in accordance with the collective contract. Regulation on the Telecommunications Industry Types of Telecommunications Services On September 25, 2000, the State Council issued the Regulations on Telecommunications of the PRC, or the Regulations on Telecommunications, which became effective on September 25, 2000 and which regulates the telecommunications industry and other related activities and services within the PRC. The MIIT regulates the telecommunications industry on a national level while the provincial-level communications administrative bureaus, or the CABs, supervise and regulate the telecommunications industry in their respective administrative regions. The Regulations on Telecommunications classifies telecommunications services into two main categories: (1) core telecommunications services and (2) value-added telecommunications services, and further divides each main category into several sub-categories. According to the Catalog for Classification of Telecommunications Businesses, which became effective on April 1, 2003, our business operates under the provision of information services through mobile networks and the Internet, thus fitting into the category of value-added telecommunications services. Value-added Telecommunications Services Providers of value-added telecommunications services in the PRC are subject to examination and approval from, and require licenses issued by, the MIIT or the relevant CABs. Pursuant to the Regulation on Telecommunications, to provide value-added telecommunications services in more than two provinces, autonomous regions or centrally administered municipalities, the value-added telecommunication service provider shall obtain the Transregional Value-added Telecommunication Business Operation License from the MIIT; to provide value-added telecommunications services within one province, autonomous region or centrally administered municipality, the value-added telecommunication service provider shall obtain the Value-Added Telecommunication Business Operation License from relevant CABs. On March 1, 2009, the MIIT issued the Administrative Measures for Licensing of Telecommunications Business Operations which set forth the basic requirements for a license to provide value-added telecommunications services in the PRC. Such requirements mainly include the following: the applicant is a duly incorporated company; the applicant has necessary funds and professional staff suitable for its business activities; the applicant has the reputation or capability of providing customers with long-term services; to operate value-added telecommunications services business across multiple provinces, autonomous regions or centrally administered municipalities, the applicant shall have a minimum registered capital of RMB10,000,000; to operate value-added telecommunications services business within a single province, autonomous region or centrally administered municipality, the applicant shall have a minimum registered capital of RMB1,000,000; the applicant has necessary premises, facilities and technical scheme; and the applicant and its major capital contributors and business managers have no record of violating rules on telecommunication supervision and administration during the past three years. We have obtained the China Value-Added Telecommunications Business License permitted by the MII (B2-20080062) and the China Value-Added Telecommunications Business License permitted by the Guangdong Provincial Communications Authority (B2-20050598). These are the only value-added telecommunications business licenses that we currently require to operate our business in the PRC. Short Message Services On April 15, 2004, the MII issued the Notice on Certain Issues Regarding Regulating Short Message Services which specifies that only those telecommunications services providers that hold specific short message service licenses may provide such services in the PRC. The notice also requires short message services providers to censor the contents of short messages, to automatically collect information such as the time that short messages are sent and received and the telephone numbers or codes of the sending and receiving terminals and to keep such records for five months within the time each short message is delivered. Telecommunications Networks Code Number Resources On January 29, 2003, the MII issued the Administrative Measures on Telecommunications Networks Code Number Resources to administer the code number resources including mobile communications network code number. According to the administrative measures, the entity shall apply to the MII for a code number to be used in the interprovincial operations and shall apply to the relevant CAB for a separate code number for intra-provincial operations. The administrative measures specify the qualifications for a code number, required application materials and application procedures. Specifications for Telecommunications Services On March 13, 2005, the MII issued the Specifications for Telecommunications Services specifying the telecommunications service qualities to which all telecommunications service providers in the PRC should conform. It also requires all telecommunications services providers to establish a sound service quality management system and make periodical reports to the relevant telecommunications authorities. Foreign Investments in Value-added Telecommunications Services Industry Foreign direct investment in telecommunications services industry in China is regulated under Regulations on the Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations. The FITE Regulations were issued by the State Council on December 11, 2001 and amended by the State Council on September 10, 2008. According to the FITE Regulations, foreign investors ultimate equity interests in any entity providing value-added telecommunications services in the PRC may not exceed 50%. A foreign investor must demonstrate a good track record and prior experience in providing value-added telecommunications services outside the PRC prior to acquiring any equity interest in any value-added telecommunications services business in the PRC. On July 13 2006, the MII issued the Notice Regarding Strengthening the Administration of Foreign Investment in Operating Value-Added Telecommunications Businesses, or the MII Notice, which prohibits value-added telecommunications services operation license holders, including Trans-regional Value-added Telecommunications Services Operation License and Telecommunications Value-added Services Operation License holders, from leasing, transferring or selling their licenses to any foreign investors in any manner, or providing any resources, premises or facilities to any foreign investors for illegal operation of telecommunications services business in the PRC. The MII Notice also requires that, (1) value-added telecommunications services operation license holders or their shareholders must directly own the domain names and trademarks used by such license holders in their daily operations; (2) each license holder must have necessary facilities for its approved business operations and maintain such facilities in the regions specified by its license; and (3) all value-added telecommunications service providers are required to maintain network and Internet security in accordance with the standards set forth in relevant PRC regulations. If a license holder fails to comply with the requirements in the MII Notice and fails to remedy such non-compliance within a designated period, the MIIT or relevant CABs may take administrative actions against such license holder, including revocation of their valued-added telecommunications services operation licenses. We provide our services through our controlled affiliated entity that owns Value-added Telecommunications Services Operation Licenses. We believe our controlled affiliated entity is in compliance with the MII Notice. Regulations Concerning the Software Development Industry Software Products On March 1, 2009, the MIIT issued the Administrative Measures for Software Products, or the Measures for Software Products, to regulate the development, production, sale, and import and export of software products, including computer software, software embedded in information systems and equipments, and computer software provided in conjunction with other information or technology services. Any entity or individual shall not develop, produce, sell and import or export any software product which infringes upon the intellectual property rights of third parties, contains computer viruses, endangers computer system security, is not in compliance with the software standard specification of the PRC, or contains contents prohibited under PRC laws and regulations. To that end, for any software products, the Measures for Software Products require registration and filing with the provincial level software registration institutions authorized to accept and review software products registration applications. Once accepted for review, the software product registration application shall be filed with and publicly announced by the MIIT, and if no objection is received within a seven-working-day publication period, a software registration number and a software product registration certificate will be granted. A software registration certificate is valid for five years and may be renewed upon expiration. We have obtained a Software Company Certification, as issued by the Technology and Information Bureau of Shenzhen City (R2007-0033). Software Enterprises A PRC enterprise that develops one or more software products and meets the Certifying Standards and Administrative Measures for Software Enterprises (Proposed), promulgated by the MII, Ministry of Education, Ministry of Science and Technology and the State Administration of Taxation, or the SAT on October 16, 2000, can be certified as a "software enterprise." The certification standards for software enterprises include the following: the applicant shall be an enterprise established in PRC which engages in the business of computer software development and production, system integration, application service, etc., and whose operating revenue is primarily derived from the above referenced business activities; the enterprise develops one or more software products or possesses one or more intellectual property rights of software products, or provides technical services such as computer information system integration that has passed qualification and grade certification; the proportion of technical staff in the work of software development and technical service shall be no less than 50% of the total staff in the enterprise; the applicant shall possess relevant technical equipments and premises necessary for developing software and providing relevant services; the applicant shall possess methods and ability to safeguard the qualify of the software products and the technical services; the development fund for software technique and products shall be above 8% of the enterprise s annual software income; and the annual sale income of software shall be more than 35% of the total annual income of the enterprise, with the income of self-developed software more than 50% of the software sales income; the enterprise has clearly-established ownership, standardized management and complies with disciplines and laws. Enterprises that qualified as "software enterprises" are entitled to certain preferential treatments in the PRC. According to the Circular on Relevant Taxation Policies for Encouraging the Development of the Software and Integrate Circuit Industries (Circular No. 25) (2000) by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation, or the SAT, newly-established software manufacturing enterprises (i.e. those established after July 1, 2000) may be exempt from income tax in the first two years of profitability and enjoy 50% income taxes reduction for the next three years, such policy is known as the "Two Free, Three Half" preferential policy. On February 22, 2008, the Ministry of Finance and SAT promulgated the Notice on Several Preferential Policies in Respect of Enterprise Income Tax, or the Notice 2008 No. 1, which reiterated that a software production enterprise newly established within China may, upon certification, enjoy the Two Free, Three Half preferential treatment. On April 24, 2009, the Ministry of Finance and SAT promulgated the Notice on Several Issues Relevant to the Implementation of the Preferential Policies on Enterprise Income Tax, which states that, the software production enterprises and the integrated circuit production enterprises established prior to the end of 2007 may, upon certification, enjoy the preferential policies on the enterprise income tax reductions and exemptions within specified periods as provided in the Notice 2008 No. 1. An enterprise which became profitable in or before 2007 and started enjoying the enterprise income tax reductions and exemptions within specified periods may continue to enjoy the relevant preferential treatment from 2008 until the expiration of the specified periods. According to the Circular on Relevant Policies for Further Encouraging the Development of the Software and Integrate Circuit Industries (Circular No. 4) (2011) issued by the State Council on January 28, 2011, the software production enterprises and the integrated circuit production enterprises may, upon certification, enjoy the "Two Free, Three Half" preferential policy from the year of profitability prior to December 31, 2017, until the expiration of the specified periods. Foreign Investments in Software Development Industry According to the Catalogue of Industries for Guiding Foreign Investment amended in December 2011, foreign investment is encouraged in the software development and production sector. As such, there are no restrictions on foreign investment in the software development industry in the PRC aside from business licenses and other permits that every software development entity in the PRC must obtain. Regulations on Internet Domain Name and Content Internet Domain Name Internet domain names in the PRC are regulated by the Administrative Measures on the PRC Internet Domain Name, which were promulgated by the MII and which came into effect on December 20, 2004, and the Implementation Rules of Registration of Domain Name, which were promulgated by PRC s domain name registrar, China Internet Network Information Center, or CNNIC and which came into effect on December 1, 2002, and were amended by CNNIC on June 5, 2009. Domain name service organizations accept applications for network domain names; successful applicants become holders of the registered domain names after registration. A holder needs to pay operation fees on time to keep the registered domain names, otherwise the domain name registrar may revoke the domain names. In case there is any changes to the registration information of a domain name, the holder shall file the changes with the domain name registrar within 30 days after such changes. The CNNIC is responsible for the administration of .cn domain names and domain names in Chinese language. Disputes in respect of domain names are regulated by the Measures on Resolution of Disputes regarding Domain Names which were issued by CNNIC and revised on February 14, 2006, and shall be settled by organizations approved by the CNNIC. We have obtained an Internet Registration Certification from the Shenzhen Municipal Public Security Bureau, No. 3303101901203. Content of Internet Information Provision of Internet information services in the PRC is regulated by the Administrative Measures on Internet Information Services adopted by the State Council on September 20, 2000. According to these measures, provision of Internet information services regarding news, publication, education, medical and health care, pharmacy and medical appliances are subject to examination, approval and regulation by relevant authorities responsible for regulating these sectors. Internet content providers are not allowed to provide services beyond the scope of an applicable license or registration. The measures also provide a list of prohibited content on the Internet. Internet information service providers are required to monitor and censor the information on their websites, and when prohibited content is found, they shall terminate the transmission immediately, keep the relevant record and report immediately to relevant authorities. According to these measures, commercial Internet information service providers must obtain a License for Internet Content Providers, or ICP license, in order to engage in such business. Moreover, provision of ICP services in multiple provinces, autonomous regions and centrally administered municipalities may require a trans-regional ICP license. We have obtained an ICP license (ICP No. 07047476). On November 6, 2000, the MII issued the Regulations for the Administration of Internet Electronic Notice Services to regulate the provision of information via Internet in the form of, among others, electronic bulletin boards, electronic whiteboards, electronic forums, Internet chat-rooms and message boards. The Internet electronic bulletin service providers are required to record the content and time of information released, the website or domain name in the electronic bulletin system, keep such records for at least 60 days, and to provide such information to the relevant authorities upon request. Regulations on Technology Export The Technology Import and Export Administrative Regulations of the PRC promulgated by the State Council on December 10, 2001 and the Regulations of Protection of Computer Software which came into effect on January 1, 2002, requires approval of imports and exports of restricted technology, and registration of contracts to import or export unrestricted technology. Software is part of the technology governed by this regime. To implement this requirement, the Administrative Measures for Registration of Technology Import and Export Contracts, or the Registration Measures, was promulgated by the Ministry of Commerce, or the MOFCOM and become effective on March 1, 2009; the Administrative Measures on Prohibited and Restricted Technology Exports, or the Technology Export Measures was jointly promulgated by the MOFCOM and the Ministry for Science and Technology and become effective on May 20, 2009, and the Administrative Measures on Prohibited and Restricted Technology Imports, or the Technology Import Measures was promulgated by the MOFCOM and become effective on March 1, 2009. Pursuant to these regulations, the technology within the prohibited list for import and/or export shall not be imported and/or exported, and a permit for import and/or export shall be obtained by the importer and/or exporter if the technology to be imported and/or exported are listed within the restricted list for import and/or export. For any import or export technology, the relevant department of commerce is responsible for the registration of contracts for such technology import or export. Regulations on Intellectual Property Rights The PRC s intellectual property protection regime is consistent with those of other modern industrialized countries. The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets. The PRC is also signatory to most of the world s major intellectual property conventions, including: Convention establishing the World Intellectual Property Organization (WIPO Convention) (June 3, 1980); Paris Convention for the Protection of Industrial Property (March 19, 1985); Patent Cooperation Treaty (January 1, 1994); and The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) (December 11, 2001). Trademarks Registered trademarks in the PRC are protected by the Trademark Law of the PRC which came into effect in 1982 and was revised in 1993 and 2001 and the Regulations for the Implementation of Trademark Law of PRC which came into effect in 2002. A trademark can be registered in the PRC with the Trademark Office under the State Administration for Industry and Commerce, or the SAIC. The protection period for a registered trademark in the PRC is ten years starting from the date of registration and may be renewed if an application for renewal is filed within six months prior to expiration. Copyright Copyright in the PRC is protected by the Copyright Law of the PRC which was promulgated in 1990 and revised in 2001 and February 2010 and the Regulation for the Implementation of the Copyright Law of the PRC which came into effect in September 2002 and revised in January 2011. Under the revised Copyright Law, copyright protections have been extended to information network and products transmitted on information network. Copyrights are reserved by the author, unless specified otherwise by the laws. According to Article 16 of the Copyright Law, if a work constitutes "work for hire", the employer, instead of the employee, is considered the legal author of the work and will enjoy the copyrights of such "work for hire" other than rights of authorship. "Works for hire" include, (1) drawings of engineering designs and product designs, maps, computer software and other works for hire, which are created mainly with the materials and technical resources of the legal entity or organization with responsibilities being assumed by such legal entity or organization; (2) those works the copyrights of which are, in accordance with the laws or administrative regulations or under contractual arrangements, enjoyed by a legal entity or organization. The actual creator may enjoy the rights of authorship of such "work for hire." A copyright owner may transfer its copyrights to others or permit others to use its copyrighted works. Use of copyrighted works of others generally requires a licensing contract with the copyright owner. The protection period for copyrights in the PRC varies, with 50 years as the minimum. The protection period for a "work for hire" where a legal entity or organization owns the copyright (except for the right of authorship) is 50 years, expiring on December 31 of the fiftieth year after the first publication of such work. Patent protection in China Patents in the PRC are governed by the China Patent Law and its Implementing Regulations, each of which went into effect in 1985. Amended versions of the China Patent Law and its Implementing Regulations came into effect in 2009 and 2010, respectively. The PRC is signatory to the Paris Convention for the Protection of Industrial Property, in accordance with which any person who has duly filed an application for a patent in one signatory country shall enjoy, for the purposes of filing in the other countries, a right of priority during the period fixed in the convention (12 months for inventions and utility models, and 6 months for industrial designs). The Patent Law covers three kinds of patents—patents for inventions, utility models and designs. The Chinese patent system adopts the principle of first to file; therefore, where more than one person files a patent application for the same invention, a patent can only be granted to the person who first filed the application. Consistent with international practice, the PRC only allows the patenting of inventions or utility models that possess the characteristics of novelty, inventiveness and practical applicability. For a design to be patentable, it cannot be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, and should not be in conflict with any prior right of another. PRC law provides that anyone wishing to exploit the patent of another must conclude a written licensing contract with the patent holder and pay the patent holder a fee. One broad exception to this rule, however, is that, where the patent holder has not exploited the patent or has not exploited the patent adequately without any reasonable reason in the statutory period of time, or the patent holder s act of exploiting the patent is held to be monopolistic, the PRC State Intellectual Property Office, or SIPO, is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. SIPO, however, has not granted any compulsory license to date. The patent holder may appeal such decision within three months from receiving notification by filing a suit in a people s court. PRC law defines patent infringement as the exploitation of a patent without the authorization of the patent holder. Patent holders who believe their patent is being infringed may file a civil suit or file a complaint with a PRC local Intellectual Property Administrative Authority, which may order the infringer to stop the infringing acts. A preliminary injunction may be issued by the People s Court upon the patentee s or the interested parties request before instituting any legal proceedings or during the proceedings. Damages in the case of patent infringement is calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be reasonably determined in an amount ranging from one or more times the license fee under a contractual license. The infringing party may be also fined by the Administration of Patent Management in an amount of up to four times the unlawful income earned by such infringing party. If there is no unlawful income so earned, the infringing party may be fined in an amount of up to RMB200,000, or approximately USD $31,250. Measures for the Registration of Computer Software Copyright In China, holders of computer software copyrights enjoy protections under the Copyright Law. China s State Council and the State Copyright Administration have promulgated various regulations relating to the protection of software copyrights in China. Under these regulations, computer software that is independently developed and exists in a physical form is protected, and software copyright owners may license or transfer their software copyrights to others. Registration of software copyrights, exclusive licensing and transfer contracts with the Copyright Protection Center of China (previously, the State Copyright Administration) or its local branches is encouraged. Such registration is not mandatory under Chinese law, but can enhance the protections available to the registered copyrights holders. For example, the registration certificate is proof of protection. Foreign Exchange Regulation Pursuant to the Foreign Currency Administration Rules promulgated in 1996 and amended in 2008 and various regulations issued by the State Administration of Foreign Exchange ("SAFE"), and other relevant PRC government authorities, the Renminbi is freely convertible only to the extent of current account items, such as trade-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriation of investments, require the prior approval from the SAFE or its local counterpart for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC. Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC companies must repatriate foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by the SAFE or its local counterpart. Unless otherwise approved, domestic enterprises must convert all of their foreign currency receipts into Renminbi. Under the Implementing Rules of Measures for the Administration of Individual Foreign Exchange, or the Implementation Rules, issued by the SAFE on January 5, 2007, PRC citizens who are granted shares or share options by an overseas listed company according to its share incentive plan are required, through a qualified PRC agent or the PRC subsidiary of such overseas listed company, to register with the SAFE and complete certain other procedures related to the share incentive plan. Foreign exchange income received from the sale of shares or dividends distributed by the overseas listed company must be remitted into a foreign currency account of such PRC citizen or be exchanged into Renminbi. In addition, domestic wages and salaries of foreign employees outside of the PRC, as well as other rightful earnings, such as dividends, bonuses and profits, of shareholders outside of the PRC may be remitted freely out of the PRC after taxes have been paid in accordance with the provisions of the Chinese tax law with a tax certificate. Since we do not have any debt that is generated outside the PRC and do not have any employees located outside PRC, management is not aware of any material risk of paying in foreign currency in respect of those employee-related and debt-settlement amounts due to any other party located outside PRC. Liquidation According to the bankruptcy law of the PRC, CC Investment, as a WFOE, needs to have its debt to creditors settled in the priority as set forth in the relevant Bankruptcy law in China and its immediate equity holder, CC Mobility, located in Hong Kong, would be the last party to be entitled to any residual interest of the entity. Such priority of payment and distribution in the case of the liquidation of CC Investment does not have any different priority in respect of PRC nationals or foreigners. The priority is based on the status of being a creditor and other requirements as set forth in the bankruptcy law in China, which does not have any discrimination or preference in respect of whether the party is a PRC national or foreigner. Taxation Under the Enterprise Income Tax Law ("EIT"), effective January 1, 2008, China adopted a uniform tax rate of 25.0% for all enterprises (including foreign-invested enterprises) and revoke the current tax exemption, reduction and preferential treatments applicable to foreign-invested enterprises. However, there will be a transition period for enterprises, whether foreign-invested or domestic, that are currently receiving preferential tax treatment granted by relevant tax authorities. Enterprises that are subject to an enterprise income tax rate lower than 25.0% may continue to enjoy the lower rate and gradually transition to the new tax rate within five years after the effective date of the EIT Law. Enterprises that are currently entitled to exemptions or reductions from the standard income tax rate for a fixed term may continue to enjoy such treatment until the fixed term expires. However, the two-year exemption from enterprise income tax for foreign-invested enterprise will begin from January 1, 2008 instead of from when such enterprise first becomes profitable. Preferential tax treatments will continue to be granted to industries and projects that are strongly supported and encouraged by the state, and enterprises otherwise classified as "new and high technology enterprises strongly supported by the state" will be entitled to a 15.0% enterprise income tax rate even though the EIT Law does not currently define this term. Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors On August 8, 2006, six PRC regulatory agencies, including the Chinese Securities Regulatory Commission ("CSRC"), promulgated a rule entitled Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the "new M&A rule") to regulate foreign investment in PRC domestic enterprises. The new M&A rule provides that the Ministry of Commerce must be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise and any of the following situations exists: (i) the transaction involves an important industry in China; (ii) the transaction may affect national "economic security;" or (iii) the PRC domestic enterprise has a well-known trademark or historical Chinese trade name in China. On September 21, 2006, the CSRC issued a clarification that sets forth the criteria and process for obtaining any required approval from the CSRC. To date, the application of this new M&A rule is unclear. Employees Xcel currently employs 98 individuals amongst its various offices. All employees enter into confidentiality agreements. PROPERTIES Our principal executive offices are located at: 303 Twin Dolphins Drive, Suite 600, Redwood City, CA 94065. The monthly rent for this property and related expenses is US $350 per month. Our main telephone number is: 650-632-4210 and our fax number is 650-551-9901. Our website is located at: www.xcelmobility.com CC Power s offices are located at: 3F, West Block, M-8, Maqueling Industrial Park, Nanshan District, Shenzhen, PRC. The lease for CC Power s offices is for a term from September 1, 2013 to August 30, 2015, with a payment of RMB 19,933.60 (approximately US $3,263) per month. Jifu s offices are located at: 3F, West Block, M-8, Maqueling Industrial Park, Nanshan District, Shenzhen, PRC. The lease for Jifu s offices is for a term from September 1, 2013 to August 30, 2015, with a payment of RMB 60,559.84 (approximately US $9,911) per month. LEGAL PROCEEDINGS There are no material pending legal proceedings to which we are a party or to which any of our property is subject, nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Market for Registrant s Common Equity Our common stock is currently listed for trading on the OTCQB under the Symbol: "XCLL." The table below lists the high and low closing prices per share of our common stock for each quarterly period during the past two fiscal years as quoted on the Over-the-Counter Bulletin Board. Fiscal Year Ending December 31, 2014 High Low First Quarter - March 31, 2014 $0.15 $0.11 Second Quarter - June 30, 2014 $0.12 $0.05 Fiscal Year Ending December 31, 2013 High Low First Quarter - March 31, 2013 $0.20 $0.07 Second Quarter - June 30, 2013 $0.17 $0.10 Third Quarter - September 30, 2013 $0.09 $0.04 Fourth Quarter - December 31, 2013 $0.17 $0.07 Fiscal Year Ending December 31, 2012 High Low First Quarter - March 31, 2012 $1.08 $0.58 Second Quarter - June 30, 2012 $0.65 $0.10 Third Quarter - September 30, 2012 $0.44 $0.12 Fourth Quarter - December 31, 2012 $0.17 $0.05 On July 8, 2014, the closing bid price of our common stock was $0.05 per share. Trading in our common stock has been sporadic and the quotations set forth above are not necessarily indicative of actual market conditions. All prices reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily reflect actual transactions. Approximate Number of Holders of Common Stock As of July 7, 2014, there were 7 shareholders of record of our common stock. Such number does not include any shareholders holding shares in nominee or "street name." Securities Authorized for Issuance Under Equity Compensation Plans There are no options, warrants or convertible securities outstanding pursuant to an equity compensation plan. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Registration Statement on Form S-1. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements. OVERVIEW We were incorporated in the state of Nevada on December 27, 2007 under the name "Advanced Messaging Solutions, Inc." On March 29, 2011, we amended our Articles of Incorporation to change our name from "Advanced Messaging Solutions, Inc." to "XcelMobility Inc." and we effected a 35-for-1 forward stock split of all of our issued and outstanding shares of common stock. On July 5, 2011, we entered into the Exchange Agreement with CC Power, CC Mobility and the shareholders of CC Mobility. As a result of the Exchange Transaction, CC Mobility became our wholly-owned subsidiary and we control the business and operations of CC Power. On May 7, 2013, we entered into and consummated the Purchase Agreement with CC Investment, Jifu and the Jifu Shareholders. Pursuant to the terms of the Purchase Agreement, we issued an aggregate of 27,000,000 shares of our common stock to the Jifu Shareholders as consideration for Jifu entering into certain controlling agreements with CC Investment. Through these controlling agreements, CC Investment effectively owns Jifu through a VIE structure. We recently made a strategic decision to change our primary business focus to becoming a wearable computing company, with two main business divisions: the wearable computing group and the video and security group. We were previously focused on the development of mobile applications for mobile devices that utilize cellular networks to connect to the Internet and hardware/software products to increase the speed of virtual private networks. As electronic miniaturization has moved us from mainframes to cellular phones, we believe that in the coming years wearable computing will replace or augment cellular phones on a growing basis. We believe this will include cellular phones and their related technology being embedded in wearable items, such as watches, belts, shoes, shirts, or glasses. We plan to focus on the development of applications for wearable computing, including: Location-based services: core applications include finding friends/family/assets, location-based marketing, and security-related applications. Medical monitoring: for patients with heart disease, epilepsy, Alzheimer's, and other aged-related maladies. Security force monitoring and deployment: wearable computing with video, sound, and location which allows for remote monitoring and deployment of security forces over the internet and in the cloud. Secure and touch-less payment systems: near field communication-enabled wearable devices have the potential to become the wallets of the future. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates. Certain of our accounting policies require higher degrees of professional judgment than others in their application. These include allowance for doubtful accounts, depreciation and impairment of fixed assets, and income tax. Management evaluates all of its estimates and judgments on an ongoing basis. Select significant accounting policies concerning revenue recognition and cost of revenue are listed as below: Revenue recognition Our source of revenues is from security surveillance systems. We evaluate revenue recognition based on the criteria set forth in FASB ASC 985-605, Software: Revenue Recognition and Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104, Revenue Recognition. Revenue Recognition for Software Products (Software Elements) New software license revenues represent fees earned from granting customers licenses to download our software products that aim at improving the internet connection speed of the mobile phone, computers or servers. The basis for software license revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. For software license that do not require significant modification or customization of the underlying software, we recognize new software license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met. Our software license arrangements do not include acceptance provisions, software license updates or product support contracts. Revenue Recognition for Multiple-Element Arrangements – Software Products and Software Related Services(Software Arrangements) We enter into arrangements with customers that purchase software related products that include one to three year product support service and a short training session (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, and product support contracts whereby software license delivery is followed by the subsequent delivery of the other elements. Our software license arrangements include acceptance provisions. We recognize revenue upon the receipt of written customer acceptance. The vast majority of our software license arrangements include software license updates and product support contracts. Software license updates provide customers with rights to unspecified software product upgrades during the term of the support period. Product support includes telephone access to technical support personnel or on-site support. For those software related multiple-element arrangements, we recognized revenue pursuant to ASC 985-605. Since we are unable to determine the fair value of the selling price for the undelivered elements in a multiple-element arrangement, which is the product support service and training, the entire arrangement consideration is deferred and is recognized ratably over the term of the arrangement, typically one year to three years. Revenue Recognition for Multiple-Element Arrangements – Arrangements with Software and Hardware Elements We also enter into multiple-element arrangements that may include a combination of our software installed in the hardware products we purchased from third parties and service offerings including purchased hardware , new software licenses, installation of the software in the hardware and one to three years product support. We adopted Accounting Standards Update ("ASU") 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements . This guidance modifies the fair value requirements of FASB ASC subtopic 605-25, Revenue Recognition-Multiple Element Arrangements , by allowing the use of the "best estimate of selling price" in addition to vendor-specific objective evidence and third-party evidence for determining the selling price of a deliverable for non-software arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimated selling price. In addition, the residual method of allocating arrangement consideration is no longer permitted. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the hardware elements. We recognize the hardware element considerations upon delivery of the hardware. The consideration allocated to the software group which includes the software element and the product support is recognized in according to the software arrangements policy as described above. Cost of Revenue Cost of revenue primarily consists of business tax and surcharges on revenue. Research and development and Software Development Costs All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed, were not material to our consolidated financial statements for the years ended December 31, 2013 and 2012. Other research and development expenses were included in general and administrative expense. Recently Issued Accounting Pronouncements In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-04, Technical Corrections and Improvements. This ASU make technical corrections, clarifications, and limited-scope improvements to various Topics throughout the Codification. The amendments in this ASU that will not have transition guidance will be effective upon issuance for both public entities and nonpublic entities. For public entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. For nonpublic entities, the amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2013. In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-05, Statement of Cash Flows (Topic 230). This ASU addresses how cash receipts arising from the sale of certain donated financial assets, such as securities, should be classified in the statement of cash flows of not-for-profit entities (NFPs). Some NFPs classify those cash receipts as investing cash inflows, while other entities classify them as either operating cash inflows or financing cash inflows, consistent with their treatment of inflows arising from cash contributions. The objective of this Update is for an NFP to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without the NFP imposing any limitations for sale and were converted nearly immediately into cash. The amendments in the ASU are effective prospectively for fiscal years, and interim fiscal periods within those years, beginning after June 15, 2013. Retrospective application to all periods presented upon the date of adoption is permitted. Early adoption from the beginning of the fiscal year of adoption is permitted. In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-06, Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. This ASU addresses the diversity in practice about how to interpret the terms on the same basis and contractual limitations when subsequently measuring an indemnification asset recognized in a government-assisted (Federal Deposit Insurance Corporation or National Credit Union Administration) acquisition of a financial institution that includes a loss-sharing agreement (indemnification agreement). For public and nonpublic entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. In October 2012, FASB has issued Accounting Standards Update (ASU) No. 2012-07, Entertainment—Films (Topic 926): Accounting for Fair Value Information That Arises after the Measurement Date and Its Inclusion in the Impairment Analysis of Unamortized Film Costs. This ASU eliminates the rebuttable presumption that the conditions leading to the write-off of unamortized film costs after the balance sheet date existed as of the balance sheet date. The amendments also eliminate the requirement that an entity incorporate into fair value measurements used in the impairment tests the effects of any changes in estimates resulting from the consideration of subsequent evidence if the information would not have been considered by market participants at the measurement date. or SEC filers, the amendments are effective for impairment assessments performed on or after December 15, 2012. For all other entities, the amendments are effective for impairment assessments performed on or after December 15, 2013. The amendments resulting from this ASU should be applied prospectively. Earlier application is permitted, including for impairment assessments performed as of a date before October 24, 2012, if, for SEC filers, the entity s financial statements for the most recent annual or interim period have not yet been issued or, for all other entities, have not yet been made available for issuance. In January 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU clarifies that ordinary trade receivables and receivables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification (Codification) or subject to a master netting arrangement or similar agreement. The FASB undertook this clarification project in response to concerns expressed by U.S. stakeholders about the standard s broad definition of financial instruments. After the standard was finalized, companies realized that many contracts have standard commercial provisions that would equate to a master netting arrangement, significantly increasing the cost of compliance at minimal value to financial statement users. An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of ASU 2011-11. In February 2013, FASB has issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU improves the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to: Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). A private company is required to meet the reporting requirements of the amended paragraphs about the roll forward of accumulated other comprehensive income for both interim and annual reporting periods. However, private companies are only required to provide the information about the effect of reclassifications on line items of net income for annual reporting periods, not for interim reporting periods. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies and are effective for reporting periods beginning after December 15, 2013, for private companies. Early adoption is permitted. In February 2013, FASB issued Accounting Standards Update (ASU) No. 2013-03, Financial Instruments (Topic 825). This ASU clarifies the scope and applicability of a disclosure exemption that resulted from the issuance of Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendment clarifies that the requirement to disclose "the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3)" does not apply to nonpublic entities for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed. This ASU is the final version of Proposed Accounting Standards Update 2013-200—Financial Instruments (Topic 825) which has been deleted. The amendments are effective upon issuance. Results of Operations Comparison of the Three Months Ended March 31, 2014 and 2013 Revenue Our revenue for the three months ended March 31, 2014 totaled $844,528, an increase of $818,154 or 3,102.1% from $26,374 for the three months ended March 31, 2013. This increase in revenue was primarily due to the acquisition of Jifu in the middle of 2013, which generated revenue of $844,399. Cost of revenue Cost of revenue for the three months ended March 31, 2014 totaled $134,852, an increase of $134,852, from nil for the three months ended March 31, 2013. This increase in cost of revenue was primarily due to the acquisition of Jifu in the middle of 2013, which incurred cost of revenue of $134,809. Gross profit Gross profit for the three months ended March 31, 2014 was $709,676, an increase of $683,302 or 2,590.8% from $26,374 for the three months ended March 31, 2013. This increase in gross profit was primarily due to the acquisition of Jifu, which generated a gross profit of $709,590. Operating Expenses Our operating expenses for the three months ended March 31, 2014 increased by $267,719 or 93.47% to $554,138 from $286,419 for the three months ended March 31, 2013. These expenses comprise of selling expenses of $35,017 and general & administrative expenses of $519,121 for the three months ended March 31, 2014, while the selling expenses and general & administrative expenses for the three months ended March 31, 2013 were $4,487 and $281,932 respectively. This increase in operating expenses was primarily due to the acquisition of Jifu, which incurred selling expenses and general & administrative expenses for the three months ended March 31, 2014 of $30,112 and $378,191 respectively. Other Income (expense) Other income (expense) for the three months ended March 31, 2014 was ($56,562), a decrease of $54,501 or (49.07%) from ($111,063) for the three months ended March 31, 2013. This decrease in other expense was primarily due to decrease in amortization of debt discounts by $37,085 to $75,437 for the three months ended March 31, 2014 from $112,522 for the three months ended March 31, 2013. Net income (loss) Our net income was $98,976 for the three months ended March 31, 2014, compared to net (loss) of ($371,108) for the three months ended March 31, 2013. This increase in net income was primarily due to the acquisition of Jifu, which generated a net income of $292,248 for the three months ended March 31, 2014. Comprehensive income (loss) Our comprehensive income (loss) increased from ($375,286) for the three months ended March 31, 2013 to $106,033 for the three months ended March 31, 2014. The increase is primarily due to an increase in net income. Comparison of the Years Ended December 31, 2013 and 2012 Revenue Our revenue for the year ended December 31, 2013 totaled $2,781,745, an increase of $2,504,339 or 902.8% from $277,406 for the year ended December 31, 2012. This increase in revenue was primarily due to the acquisition of Jifu in 2013, which generated revenue of $2,705,296, while the revenue of CC Power was dropped to $76,449 for the year ended December 31, 2013 from $277,406 for the year ended December 31, 2012, by ($200,957) or (72.4%). For the year ended December 31, 2013, the revenues from software products and those related services were $2,289,808, an increase of $2,012,402 or 725.4% from $277,406 for the year ended December 31, 2012. For the year ended December 31, 2013, the revenues from hardware products were $491,937, when comparing with nil of these revenues for the year ended December 31, 2012. Cost of revenue Cost of revenue for the year ended December 31, 2013 totaled $494,485, an increase of $476,532, or 2,654.3%, from $17,953 for the year ended December 31, 2012. This increase in cost of revenue was primarily due to the acquisition of Jifu in 2013, which incurred cost of revenue of $494,446, while the costs of revenue of CC Power dropped by $17,914 in 2013. For the year ended December 31, 2013, the costs of revenues from software products and those related services were $229,329, an increase of $211,376 or 1,177.4% from $17,953 for the year ended December 31, 2012. For the year ended December 31, 2013, the costs of revenues from hardware products were $265,156, when comparing with nil of these costs for the year ended December 31, 2012. Gross profit Gross profit for the year ended December 31, 2013 was $2,287,260, an increase of $2,027,807 or 781.6% from $259,453 for the year ended December 31, 2012. This increase in gross profit was primarily due to the acquisition of Jifu, which generated a gross profit of $2,210,850, while CC Power generated gross profit of $76,410, decreased by $(183,043) or (70.5%), when comparing with 2012. Operating Expenses Our operating expenses for the year ended December 31, 2013 increased by $1,643,316 or 159.8% to $2,671,360 from $1,028,044 for the year ended December 31, 2012. These expenses comprise of selling expenses of $298,496 and general & administrative expenses of $2,372,864 for the year ended December 31, 2013, while the selling expenses and general & administrative expenses for the year ended December 31, 2012 were $41,136 and $986,908 respectively. This increase in operating expenses was primarily due to the acquisition of Jifu, which incurred selling expenses and general & administrative expenses for the year ended December 31, 2013 of $272,211 and $1,136,003 respectively. Other Income (Expense) Other income (expense) for the year ended December 31, 2013 was ($120,748) a decrease of $(454,570) or (136.2%) from $333,822 for the year ended December 31, 2012. This increase in other expense was primarily due to increase in amortisation of debt discounts and decrease in gain on derivative. Net loss A net loss of ($504,848) resulted for the year ended December 31, 2013 compared to net loss of ($434,769) for the year ended December 31, 2012, the loss increase $(70,079) was primarily due to increase in other expenses by $454,570, though the operation expenses decreased to $384,100, by ($384,491) or (50.0%), for the year ended December 31, 2013. Comprehensive loss Our comprehensive loss increased by ($255,100) from ($432,388) for the year ended December 31, 2012 to ($687,488) for the year ended December 31, 2013. The decrease is primarily due to increase in loss derived from foreign currency translation adjustment. Liquidity and Capital Resources Overview As of March 31, 2014, we had cash and equivalents on hand of $87,847 and net current assets of $128,963. We believe that our cash on hand and working capital will be sufficient to meet our anticipated cash requirements through December 31, 2014. To meet our future development plan, we will need to meet our revenue objectives and/or sell additional equity and debt securities, which could result in dilution to current shareholders. The incurrence of indebtedness might result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations activities. Moreover, financing may not be available in amounts or on terms acceptable to us, if at all. Our capability to raise adequate additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects. On March 9, 2013, we issued 6,000,000 shares of our common stock to an accredited investor in a private placement for an aggregate purchase price of $300,000. On July 16, 2013, we issued 2,400,000 shares of our common stock to an accredited investor in a private placement for an aggregate purchase price of $120,000. On May 30, 2014, we issued the Convertible Note and the Warrant to Hanover in a private placement for an aggregate purchase price of $250,000. Substantially all of our current revenues are earned by CC Power and Jifu, our PRC subsidiaries. However, PRC regulations restrict the ability of our PRC subsidiary to declare dividends and other payments to their offshore parent company. Pursuant to the law of PRC on foreign-capital enterprises, when CC Power or Jifu decides to distribute profits, reserve funds and bonus and welfare funds for workers and staff members shall be withdrawn from the profits after a foreign-capital enterprise has paid income tax in accordance with the provisions of the Chinese tax law. The proportion of reserve funds to be withdrawn shall not be lower than 10% of the total amount of profits after payment of tax; the withdrawal of reserve funds may be stopped when the total cumulative reserve has reached 50% of the registered capital. The proportion of bonus and welfare funds for workers and staff members to be withdrawn shall be determined by the foreign-capital enterprise of its own accord. Companies may be subject to a fine up to 5,000 RMB as a result of non-compliance of such rules. The registered capital of CC Power is $345,864 (RMB 2,526,000) and the registered capital of Jifu is $362,472 (RMB 3,000,000). We anticipate generating losses in the near term, and therefore, may be unable to continue operations in the future. We require additional capital, and we may have to issue debt or equity or enter into a strategic arrangement with a third party to obtain such capital. In order to meet our planned strategic two to four acquisitions, we estimate requiring up to US$3,000,000 in capital. We will consider debt or equity offerings or institutional borrowing as potential means of financing, however, there are no assurances that we will be successful or that we will obtain terms that are favorable to us. Net cash provided by (used in) operating activities Net cash provided by (used in) operating activities for the three months ended March 31, 2014 was ($2,625,307) compared to net cash provided by operating activities of $214,776 for the three months ended March 31, 2013. This decrease in cash from operating activities was primarily due to an increase in other receivables and prepayment, and a decrease in accounts payable. Net cash provided by (used in) investing activities Net cash provided by investing activities for the three months ended March 31, 2014 was $2,365 compared to net cash used in investing activities for the three months ended March 31, 2013 of ($1,158). This increase in cash provided by investing activities was primarily due to a decrease in purchases of property, plant and equipment. Net cash provided by financing activities Net cash provided by financing activities for the three months ended March 31, 2014 was $2,272,026 compared to nil in cash provided by financing activities for the three months ended March 31, 2013. The increase in cash provided by financing activities was as a result of the increase in the proceeds from a bank loan obtained in the three months ended March 31, 2014. Off-Balance Sheet Arrangements We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to its shares and classified as shareholder s equity or that are not reflected in its consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development services with it. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE As previously disclosed on a Current Report on Form 8-K filed with the SEC on January 9, 2013, EFP Rotenberg, LLP ("EFP") was dismissed as our independent accountant on January 3, 2013. On January 3, 2013, we engaged Albert Wong & Co. ("AWC") as our new independent registered public accounting firm. In connection with the foregoing change in accountants, there were no disagreements (as that term is used in Item 304(a)(1)(iv) of Regulation S-K) or reportable events (as described in Item 304(a)(1)(v) of Regulation S-K). As previously disclosed on a Current Report on Form 8-K filed with the SEC on June 2, 2013, EFP sent a letter to the SEC indicating that the Company had not taken timely and appropriate remedial actions with respect to the following issues: (i) EFP s audit report was included in the Company s Annual Report on Form 10-K for the 2012 fiscal year without EFP s consent, and (ii) the audit report included with the audited financial statements for the 2011 fiscal year was dated March 30, 2013 instead of March 30, 2012. The foregoing issues were resolved in an Amendment to the Company s Annual Report on Form 10-K/A for the 2012 fiscal year, filed on August 15, 2013 (the "2012 Amended Annual Report"). As previously disclosed on Amendment No. 1 to the Current Report on Form 8-K/A filed on July 11, 2013, the Company was informed by AWC that action should be taken to prevent future reliance on certain financial statements included in the Company s annual and quarterly reports as specified therein. Specifically, AWC recommended a recalculation of the intrinsic and fair value of certain convertible debt (the "Convertible Debt") issued in 2011 and 2012 in accordance with ASC 470 and ASC 815. The Company filed the 2012 Amended Annual Report and an Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2013, filed on August 21, 2013 to correct the improper accounting treatment for the Convertible Debt. DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person: Name Age Position Since Ronald Edward Strauss 55 Executive Chairman of the Board of Directors 2011 Renyan Ge 51 Director, Chief Executive Officer 2011 Xili Wang 45 Chief Financial Officer, Secretary 2011 Gregory D. Tse 54 Director 2011 The Board of Directors is comprised of only one class. All of the directors serve for a term of one year and until their successors are elected at the Company s Annual Shareholders Meeting and are qualified, subject to removal by the Company s shareholders. Each executive officer serves, at the pleasure of the Board of Directors, for a term of one year and until his successor is elected at a meeting of the Board of Directors and is qualified. Our Board of Directors believes that all members of the Board and all executive officers encompass a range of talent, skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests. The information below with respect to our directors and executive officers includes each individual s experience, qualifications, attributes, and skills that led our Board of Directors to the conclusion that he or she should serve as a director and/or executive officer. Biographies Set forth below are brief accounts of the business experience during the past five years of each director, executive officer and significant employees of the Company. Ronald Edward Strauss, Executive Chairman of the Board of Directors, Director Mr. Strauss is a serial entrepreneur with 20 years of experience in founding and leading computer hardware and software related technology start-ups. Mr. Strauss has been an active advisor and director for CC Power since 2008. In 1987, Mr. Strauss founded his first company Focus Automation Systems Inc. Focus spun out Mitra Imaging Inc., acquired by Agfa Gervaert, and Focus Systems, acquired by V Technology Corporation. In 2001, Mr. Strauss founded Avvida Systems a leading supplier of embedded computing technology to military, telecom, and transportation industries. Avvida was ultimately acquired by a division of GE Fanuc USA. Following the acquisition, Mr. Strauss worked for 3 years ending his career at GE Fanuc as VP/GM Canada and Asia Integration Leader. Mr. Strauss is a Computer Systems Technologist and has completed software development, human resource, and financial accounting management training at University of Waterloo, GE Jack Welsh Management Training Center and Harvard University. Most recently, Mr. Strauss completed Chinese Mandarin language and culture training at Sinoland College in Beijing China. Today he speaks and understands Intermediate level Mandarin Chinese. He has sat on the board of directors for all three of the high tech companies he founded, the board of directors of the Automated Imaging Association in the USA (1992-1996), a Canadian division of GE Fanuc (2001- 2006), and was a past member of the Board of Governors of Conestoga College of Applied Arts and Technology (1995-1999). The Company believes that Mr. Strauss prior business experience and familiarity with our industry represent an invaluable resource to achieving the business goals of the Company. Renyan Ge, Chief Executive Officer, Director Mr. Ge has over 25 years of experience in engineering, R&D, customer support and management. He is also a founding member of CC Power since its inception in 2003. Since 2007, Mr. Ge has served as a director and chief executive officer of CC Power, positions he still holds. Prior to founding CC Power, from 2001 until 2006, Mr. Ge worked as the business development director for General Electric (Fanuc) embedded systems in the Asia-Pacific region. In addition, he also worked in Canada and Japan for a leading supplier to the semiconductor and FPD markets. Mr. Ge holds a masters degree in system design from the University of Waterloo, and a BSc in photogrammetry and remote sensing from Wuhan University in the People s Republic of China. Mr. Ge has recently completed financial accounting management training at Harvard University. Mr. Ge speaks Chinese, Japanese, and English. The Company believes that Mr. Ge s knowledge and experience will help the Company achieve its goals of expanding its business in China and throughout the Asia-Pacific region. Xili Wang, Chief Financial Officer, Secretary Ms. Wang has 18 years of experience in financial and general management in both public and private corporations in China. Ms. Wang is a founding member of CC Power and served as the chief financial officer of CC Power from 2003 to 2011. Ms. Wang began her career with publicly listed Sunrise Group Holdings as a senior financial manager. As a founding member of CC Power, Ms. Wang has performed many important duties including managing the financial activities of CC Power as well as working closely with CC Power s chief executive officer in human and operational management. Ms. Wang graduated from Huazhong Technical and Science University in 1990 with a BSc in accounting and finance management. Gregory D. Tse, Director Mr. Tse has over 25 years of international finance, marketing, media, PR and advertising experience with a brand management track record in North America, Hong Kong and China. Mr. Tse is currently a member of the Board of Directors of First China Pharmaceutical Group, Inc. (OTCBB: FCPG), a position he has held since 2010. He has also served as Head of China Advisory for Calneva Financial Group from July 2004 to the present date, providing investment banking services for merger and acquisitions in the information technology, media, energy, infrastructure and natural resources areas. Previously, Mr. Tse s media and marketing communications career included heading up several multinational advertising and PR agencies, including from May 1997 to June 2004, when Mr. Tse served as Managing Director at Publicis China, a communications group, where he managed the China national offices. Mr. Tse has also served as a member of the Board of Directors of i-Level Media Group Incorporated (PK: ILVL) from July 2008 to January 2009. Mr. Tse has also traveled extensively in China as the Chief Communications Officer for CORA (China s Old Revolution Area), a NGO with a mandate to develop China s rural areas, and started many humanitarian projects to fund education there. Mr. Tse graduated from the School of Architecture at University of Waterloo, Canada. Mr. Tse was appointed to the Company s Board of Directors due to his over 25 years of experience, primarily in China, as well as his public company board and management experience. The Company believes that Mr. Tse s knowledge of sales and marketing will be an invaluable resource as the Company seeks to expand its business within Asia and develop a unique brand image. Family Relationships There are no family relationships between or among any of our directors, executive officers and incoming directors or executive officers. Involvement in Certain Legal Proceedings No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years. Committees of the Board Our Board of Directors held no formal meetings in the prior fiscal year. All proceedings of the Board of Directors were conducted by resolutions consented to in writing by the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised Statutes and the bylaws of our Company, as valid and effective as if they had been passed at a meeting of the directors duly called and held. We do not presently have a policy regarding director attendance at meetings. We do not currently have a standing audit, nominating or compensation committee of the Board of Directors, or any committee performing similar functions. Our Board of Directors performs the functions of audit, nominating and compensation committees. Audit Committee Our Board of Directors has not established a separate audit committee within the meaning of Section 3(a)(58)(A) of the Exchange Act. Instead, the entire Board of Directors acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act and will continue to do so until such time as a separate audit committee has been established. Audit Committee Financial Expert We currently have not designated anyone as an "audit committee financial expert," as defined in Item 407(d)(5) of Regulation S-K as we have not yet created an audit committee of the Board of Directors. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2013, our officers, directors and greater than 10% percent beneficial owners complied with all applicable filing requirements. Nominations to the Board of Directors Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the stockholders, diversity, and personal integrity and judgment. In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the Company. In carrying out its responsibilities, the Board will consider candidates suggested by stockholders. If a stockholder wishes to formally place a candidate s name in nomination, however, he or she must do so in accordance with the provisions of the Company s Bylaws. Suggestions for candidates to be evaluated by the proposed directors must be sent to the Board of Directors, c/o XcelMobility Inc., 303 Twin Dolphins Drive, Suite 600, Redwood City, CA, 94065. Director Nominations As of December 31, 2013, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. Board Leadership Structure and Role on Risk Oversight Renyan Ge currently serves as the Company s principal executive officer and a director. The Company determined this leadership structure was appropriate for the Company due to our small size and limited operations and resources. The Board of Directors will continue to evaluate the Company s leadership structure and modify as appropriate based on the size, resources and operations of the Company. It is anticipated that the Board of Directors will establish procedures to determine an appropriate role for the Board of Directors in the Company s risk oversight function. Compensation Committee Interlocks and Insider Participation No interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past. Code of Ethics The Company has adopted a Code of Ethics applicable to all Company directors, officers and employees which is available on our website at: http://www.xcelmobility.com/about/governance/code-of-ethics. EXECUTIVE COMPENSATION General Philosophy Our Board of Directors is responsible for establishing and administering the Company s executive and director compensation. Executive Compensation The following summary compensation table indicates the cash and non-cash compensation earned from the Company during the fiscal years ended December 31, 2013 and 2012 by the current and former executive officers of the Company and each of the other two highest paid executives or directors, if any, whose total compensation exceeded $100,000 during those periods. Summary Compensation Table Name and Principal Position Year Salary Bonus Stock Awards Option Awards Non-Equity Incentive Plan Compensation All Other Compensation Total Ronald Edward Strauss, 2013 - - - - - - - Executive Chairman of the Board 2012 - - - - - - - Renyan Ge, Director, Chief 2013 $7,835 - - - - - $7,835 Executive Officer 2012 $60,000 - - - - - $60,000 Xili Wang, Chief Financial 2013 $17,427 - - - - - $17,427 Officer & Secretary 2012 $36,000 - - - - - $36,000 Potential Payments Upon Termination or Change-in-Control SEC regulations state that we must disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our executive officers in connection with any termination of employment or change in control of the Company. Please see the section entitled "Employment Agreements" below for a discussion of management compensation in the event of a termination of employment or change in control of the Company. Employment Agreements We have entered into employment agreements with Ronald Strauss, Renyan Ge and Xili Wang, per the following: Ronald Edward Strauss - The Company is party to a Management Service Agreement with Ronald Edward Strauss in connection with his service as Executive Chairman of the Board of Directors, commencing August 30, 2011 and continuing for an indefinite term. Mr. Strauss is entitled to a payment of $5,000 per month as a base management fee during the Company s development period. After an aggregate of $2,000,000 is raised by the Company in a financing, Mr. Strauss compensation shall be reviewed and a new base management fee shall be agreed upon by the Company s Board of Directors, such revised management fee to be no less than $180,000 per year. The Board of Directors will recommend a bonus program for Mr. Strauss subject to specific performance criteria. In the event the Company terminates Mr. Strauss service agreement without cause (as defined in his management service agreement), Mr. Strauss shall be entitled to certain payments in lieu of notice depending on Mr. Strauss length of service. Specifically, if Mr. Strauss service period is less than 36 months, he shall be entitled to receive 18 monthly payments equal to his monthly management fee at the time of termination in lieu of an 18 month notice period; and where Mr. Strauss service is more than 36 months, he shall be entitled to receive 30 monthly payments equal to his monthly management fee at the time of termination in lieu of a 30 month notice. If the Company elects to give Mr. Strauss notice of termination, in the absence of just cause, Mr. Strauss may choose to receive payments due in either a lump sum, or on a continuance basis or a combination of both. During the notice period, Mr. Strauss will not be required to perform the responsibilities of his position. Where there is just cause for termination or if Mr. Strauss is in material breach of his management service agreement, Mr. Strauss will not be entitled to notice, bonus payment or payment in lieu of notice. In the event there is a change in control of the Company, Mr. Strauss may elect to either terminate his existing service agreement and sign a new agreement with the controlling entity, or in the event Mr. Strauss does not sign a new agreement with the controlling entity, the controlling entity will provide Mr. Strauss a cash payment equal to 1.5 times his annual salary at the time of the change in control event. Mr. Strauss may terminate his management service agreement upon two months notice. Renyan Ge - The Company is a party to a Management Service Agreement with Renyan Ge in connection with his service as Chief Executive Officer of the Company, commencing August 30, 2011 and continuing for an indefinite term. Mr. Ge is entitled to a payment of $5,000 per month as a base management fee during the Company s development period. After an aggregate of $2,000,000 is raised by the Company in a financing, Mr. Ge s compensation shall be reviewed and a new base management fee shall be agreed upon by the Company s Board of Directors, such revised management fee to be no less than $180,000 per year. The Board of Directors will recommend a bonus program for Mr. Ge subject to specific performance criteria. In the event the Company terminates Mr. Ge s service agreement without cause (as defined in his management service agreement), Mr. Ge shall be entitled to certain payments in lieu of notice depending on Mr. Ge s length of service. Specifically, if Mr. Ge s service period is less than 36 months, he shall be entitled to receive 18 monthly payments equal to his monthly management fee at the time of termination in lieu of an 18 month notice period; and where Mr. Ge s service is more than 36 months, he shall be entitled to receive 30 monthly payments equal to his monthly management fee at the time of termination in lieu of a 30 month notice. If the Company elects to give Mr. Ge notice of termination, in the absence of just cause, Mr. Ge may choose to receive payments due in either a lump sum, or on a continuance basis or a combination of both. During the notice period, Mr. Ge will not be required to perform the responsibilities of his position. Where there is just cause for termination or if Mr. Ge is in material breach of his management service agreement, Mr. Ge will not be entitled to notice, bonus payment or payment in lieu of notice. In the event there is a change in control of the Company, Mr. Ge may elect to either terminate his existing service agreement and sign a new agreement with the controlling entity, or in the event Mr. Ge does not sign a new agreement with the controlling entity, the controlling entity will provide Mr. Ge a cash payment equal to 1.5 times his annual salary at the time of the change in control event. Mr. Ge may terminate his management service agreement upon two months notice. Xili Wang - The Company is a party to a Management Service Agreement with Xili Wang in connection with her service as Chief Financial Officer of the Company, commencing August 30, 2011 and continuing for an indefinite term. Ms. Wang is entitled to a payment of $3,000 per month as a base management fee during the Company s development period. After an aggregate of $2,000,000 is raised by the Company in a financing, Ms. Wang s compensation shall be reviewed and a new base management fee shall be agreed upon by the Company s Board of Directors, such revised management fee to be no less than $150,000 per year. The Board of Directors will recommend a bonus program for Ms. Wang subject to specific performance criteria. In the event the Company terminates Ms. Wang s service agreement without cause, Ms. Wang shall be entitled to certain payments in lieu of notice depending on Ms. Wang s length of service. Specifically, if Ms. Wang s service period is less than 36 months, she shall be entitled to receive 18 monthly payments equal to her monthly management fee at the time of termination in lieu of an 18 month notice period; and where Ms. Wang s service is more than 36 months, she shall be entitled to receive 30 monthly payments equal to her monthly management fee at the time of termination in lieu of a 30 month notice. If the Company elects to give Ms. Wang notice of termination, in the absence of just cause, Ms. Wang may choose to receive payments due in either a lump sum, or on a continuance basis or a combination of both. During the notice period, Ms. Wang will not be required to perform the responsibilities of her position. Where there is just cause for termination or if Ms. Wang is in material breach of her management service agreement, Ms. Wang will not be entitled to notice, bonus payment or payment in lieu of notice. In the event there is a change in control of the Company, Ms. Wang may elect to either terminate her existing service agreement and sign a new agreement with the controlling entity, or in the event Ms. Wang does not sign a new agreement with the controlling entity, the controlling entity will provide Ms. Wang a cash payment equal to 1.5 times her annual salary at the time of the change in control event. Ms. Wang may terminate her management service agreement upon two months notice. Other than as noted above, none of our executive officers or directors received, nor do we have any arrangements to pay out, any bonus, stock awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation. Compensation of Directors Other than as noted below, we have no standard arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred. The following table sets forth compensation paid to our non-executive directors for the fiscal year ended December 31, 2013. Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Gregory D. Tse $30,000 $ $- $- $- $- $30,000 Stock Option Plans - Outstanding Equity Awards at Fiscal Year End None. Pension Table The Company contributes to a state pension plan organized by municipal and provincial governments in respect of its employees in PRC. The compensation expense related to this plan was $20,073 and $6,600 for the years ended December 31, 2013 and 2012, respectively. Retirement Plans We do not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement, or any other termination of employment with our company, or from a change in the control of our Company. Compensation Committee The Company does not have a separate Compensation Committee. Instead, the Company s Board of Directors reviews and approves executive compensation policies and practices, reviews salaries and bonuses for other officers, administers the Company s stock option plans and other benefit plans, if any, and considers other matters. Risk Management Considerations We believe that our compensation policies and practices for our employees, including our executive officers, do not create risks that are reasonably likely to have a material adverse effect on our Company. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of July 7, 2014, with respect to the beneficial ownership of our common stock for (i) each director and officer, (ii) all of our directors and officers as a group, and (iii) each person known to us to own beneficially five percent (5%) or more of the outstanding shares of our common stock. As of July 7, 2014, there were 74,773,902 shares of common stock outstanding. To our knowledge, except as indicated in the footnotes to this table or pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to the shares of common stock indicated. Name and Address of Beneficial Owner (1) Shares Beneficially Owned Percentage Beneficially Owned Directors and Executive Officers Ronald Edward Strauss (2) 303 Twin Dolphins Drive, Suite 600 Redwood City, CA 94065 13,332,000 17.83% Renyan Ge (3) 303 Twin Dolphins Drive, Suite 600 Redwood City, CA 94065 16,968,000 22.69% Xili Wang 303 Twin Dolphins Drive, Suite 600 Redwood City, CA 94065 - - Gregory D. Tse 1155 Yu Yuan Road Building 4, Suite 103 Shanghai, China 200050 - - All Officers and Directors as a Group 30,300,000 40.52% 5% Shareholders Sheen Ventures Limited (2) 8th Floor, Henley Building, 5 Queen s Road, Central, Hong Kong 13,332,000 17.83% CC Wireless Limited (3) Room 15A, 17/F, Mai On Industrial Building, 17-21 Kung Yip Street, Kwai Chung, Hong Kong 16,968,000 22.69% Yixuan Li Unit 904, Building B, Jinmingxuan, Yangguang Mingju, Luohu District, Shenzhen Guangdong, P.R. China 6,000,000 8.02% _______________ (1)Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table. (2)Ms. Guo Jie has direct ownership over the 13,332,000 shares held by Sheen Ventures Limited, a company organized under the laws of Hong Kong. Ms. Guo Jie is the wife of Mr. Strauss. As such, Mr. Strauss may be deemed to be the indirect beneficial owner of the securities by reason of his influence or control over Ms. Guo Jie s voting and disposition decisions. (3)Mr. Renyan Ge holds voting and dispositive control over the 16,968,000 shares held by CC Wireless Limited, a company organized under the laws of Hong Kong. Securities Authorized for Issuance Under Equity Compensation Plans On May 9, 2014, our Board of Directors approved and adopted our 2014 Equity Incentive Plan (the "Plan") and authorized management to submit the Plan to our stockholders for approval. A majority of our stockholders approved the Plan on May 9, 2014. The proposed Plan permits us to grant a variety of forms of awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and dividend equivalent rights, to allow us to adapt our incentive compensation program to meet our needs. The number of shares of our common stock that may be issued under the Plan to employees, directors and/or consultants in such awards is 40,000,000 shares. Our Board of Directors currently serves as the administrator of the Plan. As of July 1, 2014, no stock options to purchase shares of our common stock have been granted under the Plan. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE Certain Relationships and Transactions There are no family relationships between any of our former directors or executive officers and new directors or new executive officers. Other than Mr. Strauss, who was appointed to our Board of Directors on August 12, 2011, none of the new directors and executive officers were directors or executive officers of the Company prior to the Closing of the Exchange Transaction, nor did any hold any position with the Company prior to the Closing of the Exchange Transaction, nor have been involved in any material proceeding adverse to the Company or any transactions with the Company or any of its directors, executive officers, affiliates or associates that are required to be disclosed pursuant to the rules and regulations of the SEC. Related Party Transactions None of our current officers or directors have been involved in any material proceeding adverse to the Company or any transactions with the Company or any of its directors, executive officers, affiliates or associates that are required to be disclosed pursuant to the rules and regulations of the SEC. Review, Approval or Ratification of Transactions with Related Persons Although we have adopted a Code of Ethics, we still rely on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person s immediate family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company. Director Independence During the year ended December 31, 2013, we had one independent director on our board - Mr. Gregory D. Tse. We evaluate independence by the standards for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards for independent directors established by The New York Stock Exchange, Inc., the NASDAQ National Market, and the Securities and Exchange Commission. Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company s consolidated gross revenues. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Sections 78.7502 and 78.751 of the Nevada Revised Statutes authorizes a court to award, or a corporation s board of directors to grant indemnity to directors and officers in terms sufficiently broad to permit indemnification, including reimbursement of expenses incurred, under certain circumstances for liabilities arising under the Securities Act. In addition, the registrant s Bylaws provide that the registrant has the authority to indemnify the registrant s directors and officers and may indemnify the registrant s employees and agents (other than officers and directors) against liabilities to the fullest extent permitted by Nevada law. The registrant is also empowered under the registrant s Bylaws to purchase insurance on behalf of any person whom the registrant is required or permitted to indemnify. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. WHERE YOU CAN FIND MORE INFORMATION We have filed a registration statement on Form S-1, together with all amendments and exhibits, with the SEC. This prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits. With respect to references made in this Prospectus to any of our contracts or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contracts or documents. You may read and copy any document that we file at the Commission s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the SEC s website at http://www.sec.gov. We maintain a website at www.xcelmobility.com. PART II - INFORMATION NOT REQUIRED IN PROSPECTUS Item 13.Other Expenses of Issuance and Distribution The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses will be borne by the Selling Stockholder. All of the amounts shown are estimates, except for the SEC registration fee. SEC registration fee $81.14 Accounting fees and expenses $2,400.00 Legal fees and expenses $20,000.00 Total $22,481.14 Item 14.Indemnification of Directors and Officers Nevada Law Section 78.7502 of the Nevada Revised Statutes ("NRS") permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (a) is not liable pursuant to Nevada Revised Statute 78.138, or (b) acted in good faith and in a manner which 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. In addition, Section 78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (a) is not liable pursuant to Nevada Revised Statute 78.138; or (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses, including attorneys fees, actually and reasonably incurred by him in connection with the defense. Section 78.752 of the Nevada Revised Statutes allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses. Other financial arrangements made by the corporation pursuant to Section 78.752 may include the following: (a) the creation of a trust fund; (b) the establishment of a program of self-insurance; (c) the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and (d) the establishment of a letter of credit, guaranty or surety No financial arrangement made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses or indemnification ordered by a court. Any discretionary indemnification pursuant to Section 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made: (a) by the shareholders; (b) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or (d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. Charter Provisions and Other Arrangements of the Registrant Pursuant to the provisions of Nevada Revised Statutes, the Registrant has adopted the following indemnification provisions in its Bylaws for its directors and officers: The Registrant shall indemnify, to the maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Registrant, by reason of the fact that such person is or was a director, officer, employee, or agent of the Registrant, or is or was serving at the request of the Registrant as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no lo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Registrant, and that, with respect to any criminal action or proceeding, such person had reasonable cause to believe that his conduct was unlawful. The Registrant shall indemnify, to the maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Registrant to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee, or agent of the Registrant, or is or was serving at the request of the Registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses, including attorneys fees, actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Registrant, but no indemnification shall be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable for negligence or misconduct in the performance of such person s duty to the Registrant unless and only to the extent that the court in which such action or suit was brought determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. To the extent that a director, officer, employee or agent of the Registrant has been successful on the merits or otherwise in defense of any action, suit or proceeding in accordance with the Bylaws, or in defense of any claim, issue or matter therein, such person shall be indemnified by the Registrant against expenses, including attorneys fees, actually and reasonably incurred by such person in connection with such defense. Any indemnification in accordance with the Bylaws, unless ordered by a court, shall be made by the Registrant only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in the Bylaws. Such determination shall be made: (i) by the shareholders; (ii) by the Board of Directors by majority vote of a quorum consisting of Directors who were not parties to such act, suit or proceeding; (iii) if such a quorum of disinterested Directors so orders, by independent legal counsel in a written opinion; or (iv) if such a quorum of disinterested Directors cannot be obtained, by independent legal counsel in a written opinion. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Registrant in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors unless it is ultimately determined that such director, officer, employee or agent is not entitled to be indemnified by the Registrant as authorized in this section or as provided by law. The indemnification provided by the Bylaws: (i) does not exclude any other rights to which a person seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders, or disinterested Directors or otherwise, both as to action in such person s official capacity and as to action in another capacity while holding such office; and (ii) shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. The Registrant may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Registrant, or is or was serving at the request of the Registrant as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person s status as such, whether or not the Registrant would have the power to indemnify such person against such liability under the provisions of this section. In addition to the above, each of our directors has entered into an indemnification agreement with us. The indemnification agreement provides that we shall indemnify the director against expenses and liabilities in connection with any proceeding associated with the director being our director to the fullest extent permitted by applicable law, our Articles of Incorporation and Bylaws. Item 15.Recent Sales of Unregistered Securities In connection with the Exchange Agreement, on August 30, 2011, we issued a total of 30,300,000 shares of our common stock to the shareholders of CC Mobility in exchange for 100% of the capital stock of CC Mobility. The issuance of the common stock to the shareholders of CC Mobility pursuant to the Exchange Agreement was exempt from registration in reliance upon Regulation S of the Securities Act as the investors are "accredited investors," as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act) such determination based upon representations made by such investors. On September 9, 2011, we issued two separate standard convertible promissory notes to Vantage Associates SA and First Capital A.G. (each, a "Holder"), in the principal amount of $200,000, respectively (each, a "Note" and collectively, the "Notes"). Both Notes carry an interest rate of 5% per annum with a maturity dates five years from the date of the Notes. At the mutual agreement of both the Company and each Holder, the outstanding debt under the Notes can be converted in whole or in part into shares of our common stock on the following terms: one share of common stock at a price of $0.50 per share, one warrant convertible into one share of common stock at a price of $1.00 per share (with a two year expiration date), and one warrant convertible into one share of common stock at a price of $1.50 per share (with a three year expiration date). In addition, unless earlier converted in accordance with the foregoing sentence, if within twelve months of the date of the Notes, we complete a financing yielding aggregate gross proceeds or borrowings of at least one million five hundred thousand dollars (the "Qualified Financing"), the Holders shall each agree to exchange the debt then outstanding simultaneously with the initial closing of such Qualified Financing as follows: (a) in the event of a debt Qualified Financing ("Qualified Debt Financing"), the Holder may at its option exchange in whole or in part the Note for a promissory note (or other evidence of indebtedness) in the same form and with the same terms and conditions as those issued in such Qualified Debt Financing and in a principal amount equal to the then outstanding debt; (b) in the event of an equity Qualified Financing ("Qualified Equity Financing"), the Holder may at its option convert the debt into shares of capital stock of the same class and series and with the same rights, preferences and privileges as those issued in such Qualified Equity Financing, at a price per share equal to the purchase price paid by investors in such Qualified Equity Financing. The Notes were issued in reliance on Section 506 of Regulation D and/or Regulation S of the Securities Act and comparable exemptions for issuances to "accredited" investors under state securities laws. On April 18, 2012, we issued 360,000 shares of Company common stock to Mr. Jack Zwick in connection with Mr. Zwick s service on our Board of Directors and in accordance with Mr. Zwick s Board Advisory Agreement. The issuance of the shares to Mr. Zwick was effected without registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act and the rules promulgated thereunder. On August 14, 2012, we issued 360,000 shares of Company common stock to Mr. Greg Tse in connection with Mr. Tse s service on our Board of Directors and in accordance with Mr. Tse s Board Advisory Agreement. The issuance of the shares to Mr. Tse was effected without registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act and the rules promulgated thereunder. On December 19, 2012, we issued a Convertible Promissory Note (the "December Note") in the amount of $37,500 to Asher Enterprises, Inc., a Delaware corporation and an accredited investor ("Asher"). The December Note is payable on September 21, 2013 and has an interest rate of 8% per annum (increases to 22% in the event of default). The December Note is convertible at the option of Asher commencing on the date that is 180 days from the date of the December Note into shares of the Company s common stock at a conversion price determined by multiplying 60% by the market price of the Company s common stock pursuant to the terms of the December Note. Asher is entitled to certain anti-dilution protection such that should the Company sell any common stock or any instrument convertible into common stock, at a price per share that is less than the conversion price, then the conversion price of the December Note shall automatically be lowered to that new price. The issuance of the December Note to Asher was exempt from registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act and the rules promulgated thereunder as Asher is an "accredited investor" as such term is defined in Rule 501(a) under the Securities Act. On March 9, 2013, we consummated a sale of shares of our common stock in a private placement to a foreign accredited investor. The private placement was conducted in connection with a securities purchase agreement under which we issued and sold the Purchase Shares at a purchase price of $0.05 per share, for aggregate consideration of $300,000. The Purchase Shares were issued in reliance upon Regulation S of the Securities Act, to an investor who is an "accredited investor," as such term is defined in Rule 501(a) under the Securities Act, in an offshore transaction (as defined in Rule 902 under Regulation S of the Securities Act), based upon representations made by such investors. On March 13, 2013, we entered into a Mutual Release and Settlement Agreement with Mr. Zwick (the "Settlement Agreement"). Pursuant to the Settlement Agreement, we agreed to issue to Mr. Zwick 150,000 shares of common stock (the "Settlement Shares") as consideration for Mr. Zwick s entrance into the Settlement Agreement and waiver of claims regarding certain compensation owed to Mr. Zwick. The Settlement Shares were issued in reliance upon Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act and comparable exemptions under state securities laws On July 16, 2013, we consummated a sale of shares of our common stock in a private placement to a foreign accredited investor. The private placement was conducted in connection with a securities purchase agreement under which we issued and sold 2,400,000 shares of our common stock for an aggregate consideration of $120,000. The shares were issued in reliance upon Regulation S of the Securities Act, to an investor who is an "accredited investor," as such term is defined in Rule 501(a) under the Securities Act, in an offshore transaction (as defined in Rule 902 under Regulation S of the Securities Act), based upon representations made by such investors. On May 30, 2014, we entered into the Purchase Agreement with Hanover. Pursuant to the terms of the Purchase Agreement, Hanover purchased from us on May 30, 2014 (i) the Convertible Note and (ii) the Warrant, for a total purchase price of $250,000. The Convertible Note was issued with an original issue discount of approximately 28.57%. The issuance of the Convertible Note and Warrant to Hanover under the Purchase Agreement was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Company made this determination based on the representations of Hanover that Hanover is an "accredited investor" within the meaning of Rule 501 of Regulation D of the Securities Act and has access to information about the Company and its investment. Item 16.Exhibit Index The following exhibits are included as part of this registration statement by reference: Exhibit No. Description 2.1 Stock Purchase Agreement, dated May 7, 2013, by and among the Company, Shenzhen CC Power Investment Consulting Co., Ltd., Jifu, the Jifu Shareholders and Hui Luo (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 3.1(a) Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 originally filed on October 14, 2009). 3.1(b) Amendment to Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on March 29, 2011). 3.1(c) Amendment to Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on June 11, 2014). 3.2 Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on April 27, 2011). 4.1 Specimen Common Stock Certificate (incorporated by reference to our Registration Statement on Form S-1 originally filed on June 18, 2009). 4.2 Senior Convertible Note, dated May 30, 2014, issued to Hanover Holdings I, LLC (incorporated by reference to our Current Report on Form 8-K filed on June 05, 2014). 4.3 Warrant, dated May 30, 2014, issued to Hanover Holdings I, LLC (incorporated by reference to our Current Report on Form 8-K filed on June 05, 2014). 5.1 Opinion of Greenberg Traurig, LLP* 10.1 Convertible Promissory Note with Empa Trading Ltd., dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.2 Form of Convertible Promissory Note (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 19, 2011). 10.3 Employment Agreement with Ronald Edward Strauss, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.4 Employment Agreement with Renyan Ge, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.5 Employment Agreement with Xili Wang, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.6 Technical Services Agreement, dated August 22, 2011 by and among Shenzhen CC Power Corporation, Shenzhen CC Power Investment Consulting Co. Ltd. and the Shareholder of Shenzhen CC Power Corporation (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.7 Loan Agreement, dated August 22, 2011 by and among the Shareholder of Shenzhen CC Power Corporation and Shenzhen CC Power Investment Consulting Co., Ltd. (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.8 Exclusive Purchase Option Agreement, dated August 22, 2011 by and among Shenzhen CC Power Corporation, Shenzhen CC Power Investment Consulting Co. Ltd. and the Shareholder of Shenzhen CC Power Corporation (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.9 Entrusted Management Service Agreement, dated August 22, 2011 by and among Shenzhen CC Power Corporation, Shenzhen CC Power Investment Consulting Co. Ltd. and the Shareholder of Shenzhen CC Power Corporation (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.10 Equity Pledge Agreement, dated August 22, 2011 by and among Shenzhen CC Power Corporation, Shenzhen CC Power Investment Consulting Co. Ltd. and the Shareholder of Shenzhen CC Power Corporation (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.11 Indemnification Agreement by and between the Company and Renyan Ge, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). Exhibit No. Description 10.12 Indemnification Agreement by and between the Company and Ronald Edward Strauss, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.13 Indemnification Agreement by and between the Company and Xili Wang, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.14 Indemnification Agreement by and between the Company and Gregory D. Tse, dated August 30, 2011 (incorporated by reference to our Current Report on Form 8-K filed on September 6, 2011). 10.15 Convertible Promissory Note issued to Asher Enterprises, Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on November 14, 2012). 10.16 Exclusive Indonesian Supply Contract With ZTE Corp. (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 14, 2012). 10.17 Board Advisory Agreement with Greg Tse dated August 14, 2012 (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 14, 2012). 10.18 Form of Securities Purchase Agreement (incorporated by reference to our Current Report on Form 8-K filed on March 14, 2013). 10.19 Mutual Release and Settlement Agreement with Jack Zwick (incorporated by reference to our Current Report on Form 8-K filed on March 14, 2013). 10.20 Investment Agreement with Dutchess Opportunity Fund, II, LP, dated April 23, 2013 (incorporated by reference to our Current Report on Form 8-K filed on April 29, 2013). 10.21 Registration Rights Agreement with Dutchess Opportunity Fund, II, LP, dated April 23, 2012 (incorporated by reference to our Current Report on Form 8-K filed on April 29, 2013). 10.22 Entrusted Management Service Agreement, dated May 7, 2013 by and among Shenzhen CC Power Investment Consulting Co. Ltd., Jifu and the Jifu Shareholders (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 10.23 Technical Services Agreement, dated May 7, 2013 by and among Shenzhen CC Power Investment Consulting Co. Ltd., Jifu and the Jifu Shareholders (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 10.24 Exclusive Purchase Option Agreement, dated May 7, 2013 by and among Shenzhen CC Power Investment Consulting Co. Ltd., Jifu and the Jifu Shareholders (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 10.25 Loan Agreement, dated May 7, 2013 by and among Shenzhen CC Power Investment Consulting Co. Ltd., Jifu and the Jifu Shareholders (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 10.26 Equity Pledge Agreement, dated May 7, 2013 by and among Shenzhen CC Power Investment Consulting Co. Ltd., Jifu and the Jifu Shareholders (incorporated by reference to our Current Report on Form 8-K filed on May 13, 2013). 10.27 Securities Purchase Agreement, dated May 30, 2014, by and between Hanover Holdings I, LLC and the Company (incorporated by reference to our Current Report on Form 8-K filed on June 05, 2014). 10.28 Registration Rights Agreement, dated May 30, 2014, by and between Hanover Holdings I, LLC and the Company (incorporated by reference to our Current Report on Form 8-K filed on June 05, 2014). 16.1 Letter of EFP Rotenberg, LLP (incorporated by reference to our Current Report on Form 8-K filed on January 9, 2013). Exhibit No. Description 21 CC Mobility Limited, a company incorporated under the laws of Hong Kong as a limited liability company; Shenzhen CC Power Investment Consulting Co. Ltd., a company incorporated under the laws of the People s Republic of China; Shenzhen CC Power Corporation, a Chinese enterprise incorporated under the laws of the People s Republic of China; Shenzhen Jifu Communication Technology Co., Ltd., a Chinese enterprise incorporated under the laws of the People s Republic of China. 23.1 Consent of Albert Wong & Co.* 23.2 Consent of Greenberg Traurig, LLP (filed as part of Exhibit 5.1)* 24 Power of Attorney* 101 Interactive Data File* *Filed Herewith Item 17.Undertakings The undersigned registrant hereby undertakes to: (a)Rule 415 Offering: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) ( 230.424 of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that: (A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 ( 239.16b of this chapter), and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and (B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 ( 239.13 of this chapter) or Form F-3 ( 239.33 of this chapter) and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) ( 230.424(b) of this chapter) that is part of the registration statement. (C) Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed securities on Form S-1 ( 239.11 of this chapter) or Form S-3 ( 239.13 of this chapter), and the information required to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB ( 229.1100(c)). 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4. If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by "Item 8.A. of Form 20-F (17 CFR 249.220f)" at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3 ( 239.33 of this chapter), a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or 210.3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3. 5. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: i. If the registrant is relying on Rule 430B ( 230.430B of this chapter): (A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) ( 230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and (B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) ( 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) ( 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or ii. If the registrant is subject to Rule 430C ( 230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A ( 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. 6. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 ( 230.424 of this chapter); ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. TABLE OF CONTENTS Page PART I - INFORMATION REQUIRED IN PROSPECTUS PROSPECTUS SUMMARY 1
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@@ -0,0 +1,122 @@
+PROSPECTUS SUMMARY
+
+ 
+
+This summary highlights selected information
+contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing
+in the common stock of Petron Energy II, Inc. (referred to herein as the "Company," "we," "our,"
+and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s
+Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying financial statements and notes
+before making an investment decision.
+
+ 
+
+Business Overview
+
+ 
+
+The Company
+was incorporated in Nevada in June 2007 as a development stage company which planned to operate as a restaurant holding company,
+specializing in the development and expansion of proven independent restaurant concepts into multi-unit locations through corporate-owned
+stores, licensing, and franchising opportunities, funding permitting. In connection with our entry into an Asset Purchase Agreement
+with Petron Energy Special Corp., we changed our business focus to oil and gas exploration and production and related operations
+and ceased undertaking any restaurant related operations. 
+
+ 
+
+The Company s oil and gas activities
+are all in the United States. The Company operates in the states of Texas and Oklahoma. In addition,
+the Company operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists
+of approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its
+oil and gas products primarily to a domestic pipeline and to an oil company.
+
+ 
+
+Investment Agreement with CPUS
+
+ 
+
+On December
+13, 2013, we entered into an investment agreement with CPUS Income Group, LLC, a Florida liability company ("CPUS").
+Pursuant to the terms of the Investment Agreement, CPUS committed to purchase up to $10,000,000 of our common stock over a period
+of up to thirty-six (36) months. From time to time during the thirty-six (36) month period commencing from the effectiveness of
+the registration statement, we may deliver a drawdown notice to CPUS which states the dollar amount that we intend to sell to
+CPUS on a date specified in the put notice. The maximum investment amount per notice shall be no more than two hundred seventy
+five percent (275%) of the average daily volume of the common stock for the ten consecutive trading days immediately prior to
+date of the applicable put notice. The purchase price per share to be paid by CPUS shall be calculated at a thirty percent (30%)
+discount to the lowest closing price of the common stock as reported by Bloomberg, L.P. during the ten (10) consecutive trading
+days immediately prior to the receipt by CPUS of the drawdown notice. We have reserved 22,100,000 shares of our common stock for
+issuance under the Investment Agreement. We have more shares reserved than are covered in this registration statement. Additionally,
+the Company has paid CPUS a commitment fee equal to $12,500 in the form of shares of the Company s common stock (the "Commitment
+Shares"), at a purchase price equal to 50% discount to the price per share on the closing date of the Investment Agreement.
+
+ 
+
+In connection with the Investment Agreement,
+we also entered into a registration rights agreement (the "Registration Rights Agreement") with CPUS, pursuant to which
+we were obligated to file a registration statement with the SEC. This initial registration statement was effective on April 25,
+2014. We are obligated to use all commercially reasonable efforts to maintain an effective registration statement until termination
+of the Investment Agreement.
+
+ 
+
+The 22,000,000 shares to be registered herein
+represent 22.45% of the shares issued and outstanding, assuming that the selling stockholder will sell all of the shares offered
+for sale.
+
+ 1
+
+ 
+
+ 
+
+ 
+
+At an assumed purchase price of $0.01106 (equal
+to 70% of the closing price of our common stock of $0.0158 on July 29, 2014), we will be able to receive up to $243,320 in gross
+proceeds, assuming the sale of the entire 22,000,000 shares being registered hereunder pursuant to the Investment Agreement. We
+previously received $119,120 and issued an aggregate of 600,000 shares of our common stock under the Investment Agreement. Accordingly,
+we would be required to register an additional 871,388,788 shares to obtain the balance of $9,637,560 under the Investment Agreement.
+We are currently authorized to issue 2,000,000,000 shares of our common stock. CPUS has agreed to refrain from holding an amount
+of shares which would result in CPUS owning more than 4.99% of the then-outstanding shares of our common stock at any one time.
+
+ 
+
+There are substantial risks to investors as
+a result of the issuance of shares of our common stock under the Investment Agreement. These risks include dilution of stockholders 
+percentage ownership, significant decline in our stock price and our inability to draw sufficient funds when needed.
+
+ 
+
+CPUS will periodically purchase our common
+stock under the Investment Agreement and will, in turn, sell such shares to investors in the market at the market price. This may
+cause our stock price to decline, which will require us to issue increasing numbers of common shares to CPUS to raise the same
+amount of funds, as our stock price declines.
+
+ 
+
+The aggregate investment amount of $10,000,000
+was determined based on numerous factors, including the following:
+
+ 
+
+ Current financial operating needs
+
+ Financing of workover projects
+
+ Acquisition of non-operating interests
+
+ Acquisition of additional oil and gas properties
+
+ Debt service
+
+ 
+
+Where You Can Find Us
+
+ 
+
+Our
+mailing address is 17950 Preston Road, Suite 960, Dallas, Texas 75252, and our telephone number is (972) 272-8190.
+
+ 2
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+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. When we refer in this prospectus to 808 Renewable, the company, our company, we, us and our, we mean 808 Renewable Energy Corporation, a Nevada corporation. This prospectus contains forward-looking statements and information relating to 808 Renewable. See Cautionary Note Regarding Forward Looking Statements on page 13. Our Company 808 Renewable Energy Corporation was formed as a Nevada corporation in May 2009 for the purpose of acquiring, developing, owning and managing renewable and efficient energy projects throughout the United States. Before forming 808 Renewable Energy Corporation, we operated 808 Energy 3, LLC, a Nevada limited liability company formed in January 2009 for the purpose of acquiring, re-commissioning and operating distributed generation ( DG ) energy facilities, also known as combined heat and power ( CHP ) plants. On August 20, 2010, 808 Renewable acquired all of the then-outstanding units of membership interest of 808 Energy 3, LLC not then already owned by 808 Renewable, thereby making 808 Energy 3, LLC a wholly-owned subsidiary of 808 Renewable. We also acquired 808 Energy 2, LLC, a Nevada limited liability company formed in August 2008 to acquire the CHP plant located at Pacific Clay Products, Inc. in Lake Elsinore, California. Effective as of June 30, 2011, 808 Renewable acquired all of the then-outstanding units of membership interest of 808 Energy 2, LLC not then already owned by 808 Renewable, thereby making 808 Energy 2, LLC a wholly-owned subsidiary of 808 Renewable. Being wholly-owned subsidiaries of 808 Renewable immediately before such event, both 808 Energy 3, LLC and 808 Energy 2, LLC were dissolved as of April 23, 2012, at which time all property, rights, privileges, powers and franchises of 808 Energy 3, LLC and 808 Energy 2, LLC vested in 808 Renewable, and all debts, liabilities and duties of 808 Energy 3, LLC and 808 Energy 2, LLC became the debts, liabilities and duties of 808 Renewable. Our principal executive offices are located at 13888 Harbor Boulevard, Suite 8A, Garden Grove, California 92843. Our telephone number is (714) 891-8282, and our website address is www.808RenewableEnergy.com. JOBS Act Recently the United States Congress passed the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ), which provides for certain exemptions from various reporting requirements applicable to public companies that are reporting companies and are emerging growth companies. We are an emerging growth company as defined in Section 3(a) of the Exchange Act (as amended by the JOBS Act, enacted on April 5, 2012), and we will continue to qualify as an emerging growth company until the earliest to occur of: (a) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the SEC) or more; (b) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (c) the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a large accelerated filer, as defined in Exchange Act Rule 12b 2. Therefore, we expect to continue to be an emerging growth company for the foreseeable future. Generally, a registrant that registers any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a smaller reporting company in Exchange Act Rule 12b-2, an auditor attestation report on management s assessment of internal control over financial reporting. However, for so long as we continue to qualify as an emerging growth company, we will be exempt from the requirement to include an auditor attestation report in our annual reports filed under the Exchange Act, even if we do not qualify as a smaller reporting company . In addition, as an emerging growth company, we are able to avail ourselves to the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and to not present to our stockholders a nonbinding advisory vote on executive compensation, obtain approval of any golden parachute payments not previously approved or present the relationship between executive compensation actually paid and our financial performance. We have irrevocably elected to comply with new or revised accounting standards even though we are an emerging growth company. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Amendment No. 7 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 808 RENEWABLE ENERGY CORPORATION (Exact name of registrant as specified in its charter) Nevada 4939 80-0651522 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 808 Renewable Energy Corporation 13888 Harbor Boulevard, Building 8A Garden Grove, California 92843 (714) 891-8282 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Copy to: Christopher A. Wilson, Esq. Wilson & Oskam, LLP 9110 Irvine Center Drive Irvine, CA 92618 Tel: (949) 752-1100/Fax: (949) 752-1144 cwilson@wilsonoskam.com Registered Agent Solutions, Inc. 4625 West Nevso Drive, Suite 2 Las Vegas, NV 89103 (888) 705-7274 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: From time to time after this registration statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer: Accelerated filer: Non-accelerated filer: Smaller reporting company: R CALCULATION OF REGISTRATION FEE(1) Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price(2) Proposed Maximum Aggregate Offering Price(3) Amount of Registration Fee(4) Common stock, par value $.001 per share 2,026,000 $ 4.00 $ 8,104,000.00 $ 1,106.00 ____________ (1) Registration fee has been paid via Fedwire. (2) This is the initial public offering, and no current trading market exists for our common stock. (3) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act. (4) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act. The offering price was estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and, in accordance with Rule 457, the offering price of $4.00 is a fixed price at which the selling stockholders may sell their shares until our common stock is listed or trading on an exchange or automated quotation system or quoted on the OTC Electronic Bulletin Board, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that any application for the listing of our common stock on an exchange or automated quotation system will be approved or that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Bulletin Board; nor can there be any assurance that such an application for quotation will be approved. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The Offering This prospectus covers shares being offered for resale by the selling stockholders, which shares were issued by us in a private placement that we effected in October 2012. The holders of shares of our common stock described in this paragraph are the selling stockholders under this prospectus.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. Overview Rocket Fuel is a technology company that has developed an Artificial Intelligence and Big Data-driven predictive modeling and automated decision-making platform. Our technology is designed to address the needs of markets in which the volume and speed of information render real-time human analysis infeasible. We are focused on the large and growing digital advertising market that faces these challenges. There are tens of billions of daily trades across all digital advertising exchanges, thousands of times more than the number of daily trades executed by NASDAQ and the NYSE combined. Our Artificial Intelligence, or AI, system autonomously purchases ad spots, or impressions, one at a time, on these exchanges to create portfolios of impressions designed to optimize the goals of our advertisers, such as increased sales, heightened brand awareness and decreased cost per customer acquisition. We believe that our customers value our solution, as our revenue retention rates were 134%, 175% and 178% for the 12 months ended December 31, 2011, 2012 and September 30, 2013, respectively. We define our "revenue retention rate" with respect to a given 12-month period as (i) revenue recognized during such period from customers that contributed to revenue recognized in the prior 12-month period divided by (ii) total revenue recognized in such prior 12-month period. Our solution is designed to optimize both direct-response campaigns focused on generating specific consumer purchases or responses, as well as brand campaigns geared towards lifting brand metrics, generally defined as cost-per-click and brand survey goals. For the three and nine months ended September 30, 2012 and 2013, direct response campaigns contributed approximately two-thirds of our revenue, with the remaining one-third of our revenue generated through brand campaigns. We have successfully run advertising campaigns for products and brands ranging from consumer products to luxury automobiles to travel and had served well over 100 billion impressions as of September 30, 2013. We provide a differentiated solution that is simple, powerful, scalable and extensible across geographies, industry verticals and the display, mobile, social and video digital advertising channels. According to MAGNA GLOBAL, display, mobile, social and video channels for digital advertising are forecast to grow from $45 billion in 2013 to $82 billion in 2017 globally. Our computational infrastructure supports over 25,000 CPU cores in eight data centers and houses 15 petabytes of data. Increasingly, companies are attempting to leverage Big Data and data scientists to make strategic and tactical decisions. At Rocket Fuel, rather than focusing on data analysis by humans, we have built tools to perform analysis and make decisions autonomously. The benefit of a general platform that autonomously adapts and learns while solving multiple problems instead of solving one specific problem at a time is that, with very little manual configuration, our platform simultaneously runs over 1,000 campaigns for advertisers with highly diverse goals. Our team of award-winning computer scientists developed and continues to enhance our disruptive technology. Our scientists have backgrounds in AI, Big Data, machine learning and high-availability and distributed systems from institutions including Massachusetts Institute of Technology, Stanford University, Indian Institute of Technology and Carnegie Mellon University. Benefiting from our unique combination of technology and industry expertise, we have rapidly grown our business, building a AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents diversified customer base that, as of September 30, 2013, included over 70 of the Advertising Age 100 Leading National Advertisers and over 40 of the Fortune 100 companies. As our customers realize the performance of their campaigns on our platform, we often receive feedback that we are a top performer, and consequently, we often receive increased advertising budget allocations that contribute to our revenue growth. For the years ended December 31, 2010, 2011 and 2012, our revenue was $16.5 million, $44.7 million and $106.6 million, respectively, representing a compound annual growth rate, or CAGR, of 154%. For the nine months ended September 30, 2012 and 2013, our revenue was $66.5 million and $155.0 million, respectively, representing period-over-period growth of 133%. For the years ended December 31, 2010, 2011 and 2012 and the nine months ended September 30, 2012 and 2013, our net loss was $(3.2) million, $(4.3) million, $(10.3) million, $(4.5) million and $(18.8) million, respectively. For the years ended December 31, 2010, 2011 and 2012 and for the nine months ended September 30, 2012 and 2013, our adjusted EBITDA was $(2.9) million, $(3.1) million, $(3.0) million, $(1.7) million and $(4.9) million, respectively. Adjusted EBITDA is a financial measure not presented in accordance with generally accepted accounting principles, or GAAP. For a definition of adjusted EBITDA, an explanation of our management's use of this measure and a reconciliation of adjusted EBITDA to our net loss, see "Selected Consolidated Financial Data Non-GAAP Financial Measures." Our Industry The convergence of several trends is generating demand for technology-driven solutions: AI is increasingly becoming an accepted and important technology used to solve complex problems. Over the last decade, AI has gained prominence in several fields, including aeronautics, securities trading, logistics, space exploration and medical diagnosis, as well as through seminal technology events, such as IBM's Watson winning Jeopardy, NASA's Curiosity landing itself on the surface of Mars and Google's self-driving cars operating on highways. AI-driven systems can rapidly process enormous amounts of data and execute transactions on a large scale, enabling decision-making capabilities that generally are not otherwise feasible or economical. The cost of computational power is rapidly decreasing, making AI solutions more practical for mainstream business applications. We believe this trend has created a significant opportunity to harness the power of AI to make complex business decisions autonomously. The proliferation of data is creating new opportunities to optimize business processes. The continuing increase in global online activity generates massive amounts of data that can be collected and analyzed to provide valuable insights for business processes, especially given the dramatic drop in computation and storage costs. According to the IDC Digital Universe Study, sponsored by EMC, the global volume of digital information created, replicated and consumed is expected to grow from 2.8 zettabytes in 2012 to 40 zettabytes in 2020, which implies a doubling of data every two years, with 68% of all digital data created and consumed by consumers in 2012. The Internet is transforming consumer habits, media consumption and advertising spending allocations. The Internet has become a primary channel for content creation, consumption, social engagement and commerce. Adults in the United States spend more time online and on mobile devices for non-voice activities than ever before. With the rapid growth of online activity and the proliferation of Internet-connected devices, advertisers are increasingly using the Internet to reach, influence and creatively engage consumers. As a result, digital advertising spending as a percentage of overall advertising spending has increased substantially in recent years. According to eMarketer, worldwide ROCKET FUEL INC. (Exact name of registrant as specified in its charter) Table of Contents digital advertising spending is expected to grow from $118 billion in 2013 to $173 billion in 2017, or from 22.7% to 28.0% of total worldwide advertising spending, respectively. Digital advertising is shifting to market-driven, real-time bidding systems. Real-time advertising exchanges are emerging and growing rapidly, and have reduced the transactional friction that historically was associated with the buying and selling of digital advertising inventory. Real-time bidding, or RTB, is the real-time purchase and sale of advertising inventory on an impression-by-impression basis on advertising exchanges. RTB is expanding faster than any other segment of the digital advertising industry as a result of a number of trends, including the emergence of programmatic buying, which enables the automated purchasing of advertising inventory; the creation of an abundance of digital advertising inventory, which has grown substantially as consumers and content have continued to migrate online; increased use of real-time advertising exchanges by publishers; and recognition by advertisers that using real-time advertising exchanges is an effective way to achieve their advertising campaign goals. Adding to these trends is the virtuous cycle that has been created as publishers increase inventory supply, enabling better advertising results, which then increases demand for additional advertising inventory, leading to increased incentives for publishers to make additional inventory available through real-time advertising exchanges. Our Market Opportunity According to MAGNA GLOBAL, display, mobile, social and video channels for digital advertising are forecast to grow from $45 billion in 2013 to $82 billion in 2017 globally, a 16% CAGR, broken into the following segments: Display. According to MAGNA GLOBAL, display advertising, excluding mobile, social and video, was a $24 billion market in 2013 and is forecast to decline to $18 billion in 2017. The market for display advertising, excluding mobile, social and video is projected to decline as overall display advertising growth has been driven by mobile, social and video advertising. However, MAGNA GLOBAL forecasts that the growth in mobile, social and video advertising will more than offset the decline in display. Mobile. According to MAGNA GLOBAL, mobile advertising, including social and display, but excluding search, was a $7 billion market in 2013 and is forecast to grow to $32 billion in 2017, a 45% CAGR. Social. According to MAGNA GLOBAL, social advertising, excluding mobile, was a $6 billion market in 2013 and is forecast to grow to $15 billion in 2017, a 24% CAGR. Video. According to MAGNA GLOBAL, online video advertising was a $7 billion market in 2013 and is forecast to grow to $17 billion in 2017, a 23% CAGR. Digital advertising across these channels is bought and sold using various methods, including RTB exchanges, which, according to IDC, is expanding faster than any other segment of the digital advertising industry. According to MAGNA GLOBAL, advertising revenue reached $490 billion in 2013 globally. We believe that advertisers will continue to shift advertising spending from traditional media to programmatic buying. Delaware (State or other jurisdiction of incorporation or organization) 7370 (Primary Standard Industrial Classification Code Number) 30-0472319 (I.R.S. Employer Identification Number) 350 Marine Parkway Marina Park Center Redwood City, CA 94065 (650) 595-1300 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Table of Contents Challenges Faced by Digital Advertisers Advertisers that want to conduct digital advertising campaigns face several challenges, including: Achieving measurable results. Increasingly, advertisers seek to measure the results of their campaigns and expect tangible and quantifiable business results, such as increased sales and heightened brand awareness. Addressing the rapidly changing and highly-fragmented consumer environment. Consumers' digital-media habits are evolving, with consumers accessing and consuming content across many different Internet-connected devices, resulting in highly-fragmented audiences. As a result, advertisers are demanding the ability to adjust their advertising spending in real time to reach and influence their prospective consumers. Navigating industry complexity. The rapid growth of the digital advertising industry has created a highly complex environment for advertisers, with multiple channels, technologies and solutions offered by industry participants. Leveraging complex data. Many large advertisers have already made significant investments in data and are struggling with the challenge of how to most effectively make use of the sheer volume of data available to them to gain valuable timely insights. Operating in real time. The massive volume and real-time creation of data generally precludes effective human review, analysis, optimization and implementation of advertising campaigns, making it difficult and time consuming for conventional providers of digital advertising solutions to make strategic adjustments in their campaigns. Our Solution Driven by our disruptive AI technology, our real-time optimization engine delivers digital advertising campaigns that are effective and efficient, and are easy for us to set up and manage. We apply our AI-driven proprietary predictive modeling and automated decision-making technology, together with Big Data and our computational infrastructure, to create a new class of technology specifically designed for powerful programmatic buying on real-time advertising exchanges. The key benefits of our solution for advertisers include: Better results faster. Our technology considers millions of attributes to determine how to respond to the tens of billions of bid requests for advertising impressions that we receive each day. We bid on billions of these impressions per day, in approximately 100 milliseconds per bid request. As our engine learns which attributes best contribute to meeting campaign goals, it adapts as campaigns run to improve performance measured against these goals. This enables us to deliver more rapid optimization and better campaign results than the periodic manual adjustments of traditional solutions. Business goal oriented. Our solution transforms the way campaigns are optimized, learning and adapting in real time, which we refer to as "Advertising that Learns," to achieve advertisers' measurable business goals, such as reduced cost per customer acquisition, increased sales and heightened brand awareness. Comprehensive solution. Our solution delivers and optimizes both direct-response campaigns focused on generating specific consumer purchases or responses, as well as brand campaigns geared towards lifting brand metrics. Our solution delivers campaigns across the display, mobile, social and video digital advertising channels and is extensible across a wide range of industry verticals on a global basis. George H. John Chief Executive Officer Rocket Fuel Inc. 350 Marine Parkway Marina Park Center Redwood City, CA 94065 (650) 595-1300 (Name, address, including zip code and telephone number, including area code, of agent for service) Table of Contents Simple and powerful. We simplify digital advertising campaign management by requiring only a limited number of initial inputs from our advertisers. Our solution then automates advertising campaigns by analyzing petabytes of data to optimize performance in real time and generates insights, analysis and, in many cases, superior results for advertisers. Scalable. Leveraging the massive amounts of inventory available through real-time advertising exchanges, our solution enables advertisers to efficiently connect with large audiences while it maintains a focus on results-driven optimization. Our Competitive Strengths We believe that the following strengths differentiate us from our competitors: Disruptive AI-driven technology that delivers exceptional results for advertisers. Our AI-driven advertising solution learns and adapts in real time with minimal human inputs. Proprietary computational infrastructure. We process and analyze massive amounts of data through our real-time optimization engine. Our computational infrastructure is capable of processing tens of billions of events per day, which allows us to automatically execute and optimize highly complex advertising campaigns and deliver compelling results for our advertisers. Scalable comprehensive solution. Our solution enables us to run direct-responses or brand campaigns for advertisers across and within the display, mobile, social and video digital advertising channels. We provide offerings that are extensible across industry verticals and geographies. Premier and diversified customer base. As of September 30, 2013, we had 938 active customers, including many of the world's leading advertisers across a broad range of industry verticals. Our diversified customer base includes more than 70 of the Advertising Age 100 Leading National Advertisers and over 40 of the Fortune 100 companies. Attractive and scalable financial model. We believe that we benefit from a scalable financial model that has demonstrated high revenue growth. We have reached significant scale since our incorporation in March 2008. Our revenue was $106.6 million in 2012 and $155.0 million for the nine months ended September 30, 2013, representing year-over-year growth of 139% and 133%, respectively. Our net loss was $(10.3) million in 2012 and $(18.8) million for the nine months ended September 30, 2013. We recorded cumulative adjusted EBITDA of $(13.9) million from 2010 through September 30, 2013. We have made significant investments in technology and sales and marketing, and we believe that these investments will provide us with long-term benefits. Our revenue retention rates were 134%, 175% and 178% for the 12 months ended December 31, 2011, December 31, 2012 and September 30, 2013, respectively. Adjusted EBITDA is a non-GAAP financial measure. For a definition of adjusted EBITDA, an explanation of our management's use of this measure and a reconciliation of adjusted EBITDA to our net loss, see "Selected Consolidated Financial Data Non-GAAP Financial Measures." Experienced team. We believe that the extensive experience and depth of our management team provides us with a distinct competitive advantage. In addition, we benefit from our corporate culture, which we believe has allowed us to attract a highly qualified employee base with substantial experience in the digital advertising and technology industries, including employees holding PhDs and Masters degrees from many top-tier institutions, as well as two winners of the Special Interest Group of Management and Data, or SIGMOD, best paper award and one author of a machine learning top 10 most cited academic publication. Copies to: Steven E. Bochner Rachel B. Proffitt Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 (650) 493-9300 JoAnn C. Covington General Counsel Chief Privacy Officer Rocket Fuel Inc. 350 Marine Parkway Marina Park Center Redwood City, CA 94065 (650) 595-1300 Mark C. Stevens Jeffrey R. Vetter James D. Evans Fenwick & West LLP 801 California Street Mountain View, CA 94041 (650) 988-8500 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Accelerated filer Smaller reporting company *For a reconciliation of these Non-GAAP financial measures, see "Selected Consolidated Financial Data Non-GAAP Financial Measures." The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Risks Affecting Us Our business is subject to numerous risks, which are highlighted in the section entitled "Risk Factors" immediately following this prospectus summary. Some of these risks include: our limited operating history makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment; if we do not manage our growth effectively, the quality of our solution or our relationships with our customers may suffer, and our operating results may be negatively affected; if we fail to make the right investment decisions in our offerings and technology platform, we may not attract and retain advertisers and advertising agencies and our revenue and results of operations may decline; we have a history of losses and may not achieve or sustain profitability in the future; we may experience fluctuations in our operating results, which make our future results difficult to predict and could cause our operating results to fall below investors' and analysts' expectations; if we are unable to attract new advertising customers and sell additional offerings to our existing customers, our revenue growth will be adversely affected; if the use of "third party cookies" is rejected by Internet users, restricted or otherwise subject to unfavorable regulation, our performance could decline and we could lose advertisers and revenue; potential "Do Not Track" standards or government regulation could negatively impact our business by limiting our access to the anonymous user data that informs the advertising campaigns we run, and as a result could degrade our performance for our customers; our international expansion subjects us to additional costs and risks and may not yield returns, including anticipated revenue growth, in the foreseeable future, and our continued expansion internationally may not be successful; and we may not be able to compete successfully against current and future competitors because competition in our industry is intense, and our competitors may offer solutions that are perceived by our customers to be more attractive than ours, which could result in declining revenue, or inability to grow our business. Recent Developments Preliminary Financial Results The following preliminary financial information for the three months and the year ended December 31, 2013 is based upon our estimates and subject to completion of our financial closing procedures. Moreover, these data have been prepared solely on the basis of currently available information by, and are the responsibility of, management. Our independent registered public accounting firm, Deloitte & Touche LLP, has not audited or reviewed, and does not express an opinion with respect to, these data. This summary is not a comprehensive statement of our financial results for this period, and our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments, completion of the audit of our financial statements and other developments that may arise between now and the time the audit of our financial statements is completed. Our actual results for the three months and the year ended December 31, 2013 will not be available until after this offering is completed. There can be no assurance that these estimates will be realized, and estimates are subject to risks and uncertainties, many of which are not within our control. For additional information regarding the various risks and uncertainties Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion, Dated January 27, 2014 PRELIMINARY PROSPECTUS 5,000,000 Shares Rocket Fuel Inc. Common Stock Table of Contents inherent in estimates of this type, see "Special Note Regarding Forward-Looking Statements" elsewhere in this prospectus. We have prepared estimates of the following preliminary financial data for the three months and the year ended December 31, 2013. (in millions) Year ended December 31, 2013 Three months ended December 31, 2013 Range Range Low High Low High GAAP Revenue $ 239.0 $ 240.0 $ 84.0 $ 85.0 Gross Profit $ 113.5 $ 114.5 $ 40.0 $ 41.0 Net loss $ (23.8 ) $ (22.1 ) $ (5.0 ) $ (3.3 ) Non-GAAP Revenue less media costs $ 135.9 $ 136.6 $ 48.6 $ 49.3 Adjusted EBITDA $ (1.9 ) $ (0.4 ) $ 3.0 $ 4.5 GAAP Revenue Our revenue for the year ended December 31, 2013 is estimated to be between $239.0 million and $240.0 million, an increase of between 124% and 125% from revenue of $106.6 million for the fiscal year ended December 31, 2012. Our revenue for the three months ended December 31, 2013 is estimated to be between $84.0 million and $85.0 million, an increase of between 109% and 112% from revenue of $40.1 million for the three months ended December 31, 2012. The estimated increase in revenue for the year and three months ended December 31, 2013 is driven by an increase in spending by existing customers and growth in our number of active customers. Our revenue retention rate for twelve months ended December 31, 2013 was approximately 168%, demonstrating continued increased spend from existing customers. As customers that use our platform continue to increase their spend in absolute dollars, the year-over-year percentage increases in spend are on average smaller, which affects our revenue retention rate. We had over 1,200 active customers as of December 31, 2013, of which over 100 active customers originated through our partnership agreement with a Japanese agency. Growth in our number of active customers was driven in part by growth in new customers, which generally spend less than customers that have used our solution for longer periods of time. The fourth quarter of our fiscal year is typically a seasonally strong quarter due to the increase in advertising activity related to the holidays. Other channel revenue increased primarily as a result of increased revenue from the mobile channel, followed by the social channel and then the video channel. Estimated revenue from the display channel and from other channels was 76% and 24%, respectively, for the year ended December 31, 2013, compared with 92% and 8% for the year ended December 31, 2012. Estimated revenue from the display channel and from other channels was 68% and 32%, respectively, for the three months ended December 31, 2013, compared to 92% and 8% for the three months ended December 31, 2012. Other channels include advertising delivered to mobile devices and through social and video channels. Gross Profit Our gross profit for the year ended December 31, 2013 is estimated to be between $113.5 million and $114.5 million, an increase of between 144% and 146% from gross profit of $46.6 million for the year ended December 31, 2012. Our gross profit for the three months ended December 31, 2013 is estimated to be between $40.0 million and $41.0 million, an increase of between 134% and 140% from Rocket Fuel Inc. is selling 2,000,000 shares of common stock, and the selling stockholders identified in this prospectus are selling 3,000,000 shares of common stock. We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders. Our common stock is listed on the NASDAQ Global Select Market under the symbol "FUEL". On January 24, 2014, the last reported sale price of our common stock on the NASDAQ Global Select Market was $62.80 per share. The underwriters have the option to purchase up to 750,000 additional shares from certain selling stockholders identified in this prospectus at the price to the public less the underwriting discounts and commissions. We are an "emerging growth company" as that term is defined in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. Investing in our common stock involves risks. See "Risk Factors" beginning on page 17. Price to Public Underwriting Discounts and Commissions(1) Proceeds to Rocket Fuel Proceeds to Selling Stockholders Per Share $ $ $ $ Total $ $ $ $ Table of Contents gross profit of $17.1 million for the three months ended December 31, 2012. The estimated increase in gross profit for the year and three months ended December 31, 2013 is primarily related to an estimated increase in revenue less media costs. Net Loss Our net loss for the year ended December 31, 2013 is estimated to be between $(23.8) million and $(22.1) million, an increase of between 131% and 115% from net loss of $(10.3) million for the fiscal year ended December 31, 2012. Our net loss for the three months ended December 31, 2013 is estimated to be between $(5.0) million and $(3.3) million, a decrease of between 15% and 44% from net loss of $(5.9) million for the three months ended December 31, 2012. The estimated increase in net loss for the year ended December 31, 2013 is primarily related to an increase in operating expenses as we continued to invest in personnel, technology, infrastructure and other growth-related activities partially offset by improvement in gross profit. Non-GAAP Revenue Less Media Costs Our revenue less media costs for the year ended December 31, 2013 is estimated to be between $135.9 million and $136.6 million, an increase of between 143% and 144% over revenue less media costs of $55.9 million for the fiscal year ended December 31, 2012. Our revenue less media costs for the three months ended December 31, 2013 is estimated to be between $48.6 million and $49.3 million, an increase of 143% and 147% over revenue less media costs of $20.0 million for the three months ended December 31, 2012. The estimated increase in revenue less media costs reflects an increase in revenue, as well as technology improvements. Adjusted EBITDA Our adjusted EBITDA loss for the year ended December 31, 2013 is estimated to be between $(1.9) million and $(0.4) million, an improvement of between $1.1 million and $2.6 million from adjusted EBITDA loss of $(3.0) million for the fiscal year ended December 31, 2012. Our adjusted EBITDA income for the three months ended December 31, 2013 is estimated to be between $3.0 million and $4.5 million, an improvement of between $4.3 million and $5.8 million from adjusted EBITDA loss of $(1.3) million for the three months ended December 31, 2012. The estimated increase in adjusted EBITDA for the year and three months ended December 31, 2013 is primarily related to an increase in revenue and gross margin. The following tables present a reconciliation of revenue less media costs and adjusted EBITDA to net loss for each of the periods indicated: (in millions) Year ended December 31, 2013 Three months ended December 31, 2013 Range Range Revenue less media costs Low High Low High Revenue $ 239.0 $ 240.0 $ 84.0 $ 85.0 Less: Media costs 103.1 103.4 35.4 35.7 Revenue less media costs $ 135.9 $ 136.6 $ 48.6 $ 49.3 (1)We have agreed to reimburse the underwriters for certain expenses. See "Underwriting." Delivery of the shares of common stock is expected to be made on or about , 2014. Neither the Securities and Exchange Commission nor any other regulatory body have approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Credit Suisse Citigroup Goldman, Sachs & Co. Needham & Company Oppenheimer & Co. Piper Jaffray BMO Capital Markets The date of this prospectus is , 2014. Table of Contents (in millions) Year ended December 31, 2013 Three months ended December 31, 2013 Range Range Adjusted EBITDA income/(loss) Low High Low High Net loss $ (23.8 ) $ (22.1 ) $ (5.0 ) $ (3.3 ) Interest expense, net 0.9 0.9 0.4 0.4 Income tax expense 0.4 0.4 0.1 0.1 Depreciation and amortization (excludes amortization of internal use software) 4.5 4.5 2.3 2.3 Stock based compensation 11.4 11.2 5.2 5.0 Change in fair value of preferred warrants 4.7 4.7 Adjusted EBITDA $ (1.9 ) $ (0.4 ) $ 3.0 $ 4.5 For additional information about our non-GAAP financial performance metrics, including the results for prior periods and how our key financial metrics are defined and measured, see "Selected Consolidated Financial Data Non-GAAP Financial Measures" below as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations Key Operating and Financial Performance Metrics." Corporate Information We were incorporated in Delaware in 2008. Our principal executive offices are located at 350 Marine Parkway, Marina Park Center, Redwood City, CA 94065. Our telephone number is (650) 595-1300. Our website address is www.rocketfuel.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Unless otherwise indicated, the terms "Rocket Fuel," "we," "us" and "our" refer to Rocket Fuel Inc., a Delaware corporation. "Rocket Fuel" is our registered trademark in the United States and the European Union, and the Rocket Fuel logo, "Advertising that Learns," and all of our solution names are our trademarks. This prospectus contains additional trade names, trademarks and service marks of ours and of other companies. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Other trademarks appearing in this prospectus are the property of their respective holders. Emerging Growth Company The Jumpstart Our Business Startups Act, or the JOBS Act, was enacted in April 2012 with the intention of encouraging capital formation in the United States and reducing the regulatory burden on newly public companies that qualify as "emerging growth companies." We are an emerging growth company within the meaning of the JOBS Act. As an emerging growth company, we may take advantage of certain exemptions from various public reporting requirements, including the requirement that our internal control over financial reporting be audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, certain requirements related to the disclosure of executive compensation in this prospectus and in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive Table of Contents Table of Contents compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which we have $1.0 billion or more in annual revenue; (ii) the date we qualify as a "large accelerated filer," under the rules of the Securities and Exchange Commission, or SEC, with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or (iv) the last day of the fiscal year ending after the fifth anniversary of our initial public offering. For certain risks related to our status as an emerging growth company, see the disclosure elsewhere in this prospectus under "Risk Factors Risks Related to this Offering, the Securities Markets and Ownership of Our Common Stock We are an 'emerging growth company,' and it is possible that the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors." Table of Contents THE OFFERING The following is a brief summary of certain terms of this offering. For a more complete description of the terms of our common stock, see "Description of Capital Stock Common Stock." Common stock offered by us 2,000,000 shares Common stock offered by the selling stockholders 3,000,000 shares Total common stock offered 5,000,000 shares Option to purchase additional shares being offered by the selling stockholders 750,000 shares Common stock to be outstanding after this offering 35,030,532 shares Use of proceeds We intend to use the net proceeds we receive from this offering for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters and capital expenditures. We also may use a portion of the net proceeds from this offering to repay outstanding indebtedness, or to acquire or invest in technologies, solutions or businesses that complement our business, although we have no present commitments to complete any such transactions at this time. See "Use of Proceeds." Voting rights Following this offering, our directors, executive officers and each of our stockholders who own greater than 5% of our outstanding common stock will beneficially own approximately 56.8% of the outstanding shares of common stock and will be able to influence or control matters requiring approval of our stockholders. See "Principal and Selling Stockholders."
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+Prospectus Summary 1
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+this prospectus. This summary is not complete and may not contain all the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under the heading Risk Factors, and our financial statements and related notes included elsewhere in this prospectus before making an investment decision. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to Calithera, the company, we, us and our refer to Calithera Biosciences, Inc. Overview We are a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer. Tumor metabolism and tumor immunology have emerged as promising new fields for cancer drug discovery, and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally new therapies for cancer patients. Our lead product candidate, CB-839, is an internally discovered, first-in-class inhibitor of glutaminase, a critical enzyme in tumor metabolism. We are currently evaluating CB-839 in three Phase 1 clinical trials in solid and hematological tumors. Our lead preclinical program in tumor immunology is directed at developing inhibitors of the enzyme arginase and may provide a first-in-class therapeutic agent for this novel target. Our ongoing research efforts are focused on discovering additional product candidates against novel tumor metabolism and immunology targets. The field of tumor metabolism seeks to exploit the unique ways in which cancer cells take up and utilize nutrients in order to grow and survive. It is now recognized that cancer cells rely on certain metabolic processes, or pathways, to a much greater extent than normal cells. The enhanced use of these pathways by cancer cells often results in a dependence on, or addiction to, these pathways that is not observed in normal cells. This creates an opportunity to selectively suppress the growth of cancer cells with therapeutic agents that specifically target these metabolic pathways. Our lead product candidate in tumor metabolism, CB-839, takes advantage of the pronounced dependency many cancers have on the nutrient glutamine for growth and survival. CB-839 inhibits glutaminase, an enzyme required by cancer cells to utilize glutamine effectively. We are currently conducting three Phase 1 clinical trials of CB-839 in the United States in patients with solid tumors, leukemias, lymphomas and multiple myeloma. The purpose of these trials is to evaluate the safety of CB-839 both as a single agent and in combination with approved therapies and to seek preliminary evidence of efficacy. Pending input from the U.S. Food and Drug Administration, or FDA, on the results of our Phase 1 trials and our Phase 2 trial protocols, we plan to initiate one or more Phase 2 clinical trials of CB-839 in late 2015 or early 2016. We currently hold all commercial rights to CB-839. The field of tumor immunology seeks to activate the body s own immune system to attack and kill cancer cells. Our preclinical program in tumor immunology is focused on developing selective inhibitors of the enzyme arginase. Arginase depletes arginine, a nutrient that is critical for the activation, growth and survival of the body s cancer-fighting immune cells. We believe that inhibitors of arginase can promote an anti-tumor immune response by restoring arginine levels, thereby allowing activation of the body s cancer-fighting immune cells. We are currently optimizing arginase inhibitors with the aim of submitting an Investigational New Drug, or IND, application to the FDA near the end of 2015. Table of Contents Index to Financial Statements The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 2014 PRELIMINARY PROSPECTUS 6,000,000 Shares Common Stock This is the initial public offering of shares of common stock of Calithera Biosciences, Inc. We are offering 6,000,000 shares of our common stock. Prior to this offering, there has been no public market for our common stock. We currently expect the initial public offering price to be between $13.00 and $15.00 per share of common stock. We have applied to list our common stock on the NASDAQ Global Market under the symbol CALA. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements for this prospectus and future filings. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 10. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting for additional disclosure regarding underwriting discounts, commissions and estimated offering expenses. Entities associated with Advanced Technology Ventures VIII, L.P., Delphi Ventures VIII, L.P., Morgenthaler Venture Partners IX, L.P. and certain other existing stockholders have indicated an interest in purchasing up to an aggregate of $15.0 million in shares of our common stock in this offering at the initial public offering price. Because these indications of interest are not binding agreements or commitments to purchase, these existing stockholders may elect not to purchase shares in this offering or the underwriters may elect not to sell any shares in this offering to such stockholders. The underwriters will receive the same discount from any shares of our common stock purchased by these stockholders as they will from any other shares of our common stock sold to the public in this offering. We have granted the underwriters the right to purchase up to 900,000 additional shares of common stock to cover over-allotments, if any. The underwriters can exercise this right at any time within 30 days after the date of this prospectus. The underwriters expect to deliver the shares against payment in New York, New York on or about , 2014. 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. Citigroup Leerink Partners Wells Fargo Securities JMP Securities , 2014 Table of Contents Index to Financial Statements Our management team has considerable experience and success in the discovery and development of small molecule oncology drugs. Susan Molineaux, Ph.D., our Chief Executive Officer, was the founder and Chief Executive Officer of Proteolix, Inc., where she and several members of our current management team led the group that discovered and advanced through Phase 2 registration trials carfilzomib (marketed as Kyprolis), which was approved on an accelerated basis in 2012 for the treatment of refractory multiple myeloma. Additional members of our management team bring extensive experience in medicinal chemistry and in the financial management of private and public companies. Our Strategy Our goal is to build a leading independent biopharmaceutical company. We intend to leverage our expertise to discover, develop and commercialize cancer therapies targeting tumor metabolism and tumor immunology pathways to treat patients with unmet medical needs. Key elements of our strategy include: Pursuing a broad clinical development program of CB-839 both as a single agent and in combination with approved therapies. Identifying and pursuing efficient clinical development programs to enable rapid regulatory approval of CB-839. Maximizing the commercial value of CB-839. Advancing our first-in-class arginase inhibitor into clinical development. Further developing our pipeline by leveraging our expertise in tumor biology, drug discovery and clinical development. Our Research and Development Programs The following table summarizes our ongoing and planned clinical trials from 2014 to 2016 for our lead programs in tumor metabolism and tumor immunology. We also intend to develop additional product candidates from our research and discovery efforts in these fields. In December 2013, we submitted two INDs to the FDA for CB-839, one for solid tumors and one for hematological tumors, covering each of the indications set forth in the table below. Note: Phase 1 trials include a dose escalation stage followed by dose expansion in select tumor types. Table of Contents Index to Financial Statements TABLE OF CONTENTS Page Summary 1
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+PROSPECTUS SUMMARY This summary highlights certain 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 the entire prospectus carefully, including the information under "Risk Factors" and our financial statements and the related notes included in this prospectus, before investing. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. Unless otherwise stated in this prospectus, references to "we," "us" or "our company" refer to The Grilled Cheese Truck, Inc. Overview We were incorporated in the state of Nevada on December 31, 2009 as GSP-1, Inc. We were formed as a vehicle to pursue a business combination. The company selected December 31 as its fiscal year end. On July 6, 2011, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from "GSP-1, Inc." to "TRIG Acquisition 1, Inc." In connection with our acquisition of Grilled Cheese, Inc. on February 19, 2013, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from "TRIG Acquisition 1, Inc." to "The Grilled Cheese Truck, Inc." Our Company The Grilled Cheese Truck, Inc. is an American entrepreneurial "emerging growth" company with a brand and menu that we intend to expand throughout the nation. We believe that gourmet grilled cheese is the "new pizza." Many Americans enjoyed eating grilled cheese sandwiches as a child and some consider grilled cheese sandwiches as a comfort food. The Grilled Cheese Truck is a fast growing, early mover in the gourmet food truck industry. Management believes that we are one of the most followed gourmet food trucks on Facebook, and we believe we are the only known gourmet food truck verified by Twitter. Whenever available, we strive to use fresh ingredients in the preparation of our sandwiches, as opposed to frozen or canned goods. Further, all of our ingredients are side-by-side taste-tested for quality prior to use. We believe that the use of fresh ingredients, when available, helps elevate our sandwiches above other local venues and we believe that partially explains why people line up in front of our trucks sometimes for over an hour to get one of our delicious creations, whether it s a Plain and Simple Melt or The Cheesy Mac and Rib fully loaded. Our grilled cheese sandwiches have received numerous accolades and social media notoriety, including being cited: by relish.com as one of America s top 10 grilled cheese sandwiches on April 9, 2013 (http://relish.com/slideshows/americas-10-best-grilled-cheese-sandwiches-2/), and by thedailymeal.com as one of the Sandwiches of the Week: America s Top 20 New Sandwiches on March 21, 2011 (Thedailymeal.com\ at http://www.thedailymeal.com/america-s-top-20-new-sandwiches?utm_source=Outbrain). The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2013 contains an explanatory paragraph regarding our ability to continue as a going concern. Our business will require significant amounts of capital to sustain operations and make the investments we need to execute our longer term business plan. Our net loss for the year ended December 31, 2013 was $5,612,919 and the deficit accumulated by us amounts to $7,916,778 as of December 31, 2013. Our net loss for the three-month period ended March 31, 2014 amounted to approximately $1.2 million and the accumulated deficit amounted to approximately $9.1 million at March 31, 2014. This raises substantial doubt about our ability to continue as a going concern. The accompanying audited consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Calculation of Registration Fee (1) Represents shares of common stock issuable upon the conversion of our 10% Convertible Senior Secured Notes, which were part of units, issued in a private placement which closed on April 18, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (2) Represents shares of common stock issuable upon the exercise of warrants, which were part of units, sold in a private placement which closed on April 18, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (3) No market presently exists for our common stock. The selling stockholders will be required to offer their shares at $1.25 per share until our common stock is listed for quotation on the OTC Bulletin Board or OTCQB Market. Assuming such listing is obtained, offers may be made at prevailing market prices or at privately negotiated prices. (4) Represents shares of common stock issuable upon the exercise of warrants, which were part of compensation due to the Placement Agent, sold in a private placement which closed on April 18, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (5) Represents shares of common stock issuable upon the conversion of our 10% Convertible Senior Secured Notes, which were part of units, issued in a private placement which closed on June 21, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (6) Represents shares of common stock issuable upon the exercise of warrants, which were part of units, sold in a private placement which closed on June 21, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). In order to continue as a going concern and achieve a profitable level of operations, we will need, among other things, additional capital resources. Management s plan to continue as a going concern includes raising capital through increased food truck sales and conducting additional financings through debt and equity transactions. However, management cannot provide any assurances that we will be successful in accomplishing any of our plans. Our ability to continue as a going concern is dependent upon management s ability to successfully implement the plans described above, including securing additional sources of financing and attaining profitable operations. Management cannot provide any assurance that unforeseen circumstances that may occur at anytime within the next twelve months or thereafter will not increase the need for us to raise additional capital on an immediate basis. We are actively targeting sources of additional financing through debt and equity transactions and other transactions, but there can be no assurance that we will be able to continue to raise funds in which case the company may be unable to meet its obligations. We generate revenue from food and beverage sales through our company-operated food trucks in Southern California and Phoenix, Arizona. In addition, we generate revenue from licensing the right to use certain portions of our intellectual property. Such licensing not only provides us with revenue, but it also enables us to further establish our brand. We have licensed these intellectual property rights for use in counties throughout California, including Ventura County, Santa Barbara County, and portions of Los Angeles County which are commonly referred to as the San Fernando Valley, where our licensees currently license and operate two trucks. Further, we intend to expand nationally and prospectively generate revenue from franchise sales, royalties based on a percentage of sales by franchisees and sales of food products to our franchisees, however there is no guarantee or assurance that we will be able to implement our franchise expansion or that we will be able to collect royalties from the sales made by our potential franchisees. In addition to our potential franchise operations, we intend to expand and increase the number of company-owned trucks, to begin operating brick and mortar restaurants, and expand our operations within sports venues and airports and bring our food trucks to special events throughout the United States and internationally. Truck Economics The current anticipated average cost to obtain a Grilled Cheese Truck franchise is estimated to be under $25,000. However, the $25,000 does not include deposits for a leased or rental truck, exterior wrap, point of sale system, equipment, permits, uniforms and new staff training, which is estimated to be $35,000, but such estimate will differ depending on location. Our Industry We believe that the United States retail market for gourmet food trucks is a large, growing and fragmented segment with increasing consumer demand. We believe our company was and is an early mover in this segment due to our current efforts to become a publically traded gourmet food truck company and a national grilled cheese chain. We believe gourmet food trucks are an alternative to fast food and quick service restaurants for consumers. Once commonplace only in big cities on the east and west coasts of the United States, food trucks can now be found in both urban and rural areas throughout the United States. The food truck provides a means for the on-the-go person to grab a quick bite at a low cost and is increasingly becoming known for gourmet fare as the popularity of food trucks continues to rise. We believe the industry is growing so rapidly because gourmet food trucks satisfy the desires of the consumer beyond quality, value and speed. Media venues such as The Food Network, The Cooking Channel and numerous websites highlight the food truck industry and promote the industry with shows and TV series dedicated to food trucks. (7) Represents shares of common stock issuable upon the exercise of warrants, which were part of compensation due to the Placement Agent, sold in a private placement which closed on June 21, 2013. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (8) Represents shares of common stock issued to Peter Goldstein on December 31, 2009 in exchange for founder services in connection with setting up and forming the Corporation. (9) Represents shares of common stock, which were part of units sold in a private placement which closed on August 27, 2012. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (10) Represents shares of common stock which were sold in a Stock Purchase Agreement to Robert Lee and Trilogy Capital Partners, Inc. on April 12, 2012. (11) Represents shares of common stock issued in connection with the Share Exchange, which closed on October 18, 2012. (12) Represents shares of common stock issuable upon the exercise of warrants, which were part of an Advisory Agreement, dated August 25, 2012 with Chord Advisors, LLC. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (13) Represents shares of common stock issuable upon the exercise of warrants, which were part of an Advisory Agreement, dated August 15, 2012 with Wesley K. Clark and Associates, LLC, and common stock issuable upon exercise of warrants, which were issued pursuant to Amendment No. 1 to the Advisory Agreement, dated September 6, 2013 with Wesley K. Clark and Associates, LLC. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (14) Represents shares of common stock issued upon the conversion of our Bridge Loan Notes. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. (15) Represents shares of common stock issued in connection with various Advisory and Employment Agreements. (16) Represents shares of common stock issued to Brian Pallas in accordance with his Advisory Agreement. (17) Represents shares of common stock to be issued to Deepak Deveraj in accordance with the Asset Purchase Agreement. (18) Represents shares of common stock to be issued to Deepak Deveraj upon exercise of warrants issued in accordance the Asset Purchase Agreement. Strategy Our objective is to become the leader in the gourmet food truck industry. Each element of our strategy is designed to differentiate and reinforce our company s brand and engender a degree of loyalty among our customers. The cornerstones of this strategy include: Maintaining our menu: We are committed to using the best available ingredients in producing the best grilled cheese sandwiches, soups and side dishes. We strive to use fresh ingredients in the preparation of our sandwiches, as opposed to frozen or canned goods. Further, all of our ingredients are side-by-side taste-tested for quality prior to use. Customer Service: We rely on repeat business and view our customers interactions with employees as critical to our long-term success. Through our emphasis on training, personal development and equity incentives, we believe we can attract and retain well-qualified, motivated employees committed to providing superior levels of customer service. Marketing: We will continue to build on our social media and mainstream media presence (television, radio, print, etc.) to communicate with existing and future customers. We will reinforce a distinctive brand image built on the quality of our food and customer service experience. Truck Design: Our trucks are typically configured to accommodate a high volume of traffic. Our truck s design is intended to be casual and comforting. Although a number of customers buy our food and return to their homes and/or offices to eat the purchased food, many of our customers enjoy eating at the truck. Although we do not personally provide organized tables and chairs for dining, we believe that approximately 25% of the locations we serve are set up for street side dining with organized tables and chairs for the customer s comfort. Truck Locations: Our strategy is to schedule truck locations in selected high-traffic, high-visibility locations in order to realize operating and marketing efficiencies and enhance brand awareness. Hub and Spoke: In order to manage costs, ensure compliance with our quality standards and provide consistency to our customers, we control our food preparation from our centrally located kitchens. We believe this hub-and-spoke format provides significant competitive advantages. Expansion: Our expansion strategy is to increase our market share in existing markets and add trucks in new markets where we believe we can become a leading gourmet food truck operator. Employee Relations: We believe that the training and knowledge of our employees and the consistency and quality of the service they deliver are central to our success. We believe that an employee-oriented culture creates a sense of personal responsibility among all employees, resulting in a higher level of customer service. We intend to encourage and support our employees by offering competitive wages and developing relevant benefits. Veteran Ownership Opportunity General Wesley K. Clark, the highly decorated retired four star general, former supreme allied commander in Europe for NATO, is our Director and Senior Veterans Advisors and will supervise the development and implementation of the recruitment and selection for prospective veteran franchisee candidates. (19) Represents shares of common stock issuable upon the exercise of warrants, which were part of an Advisory Agreement, dated July 16, 2012 with Trig Capital Partners, Inc. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (20) Represents shares of common stock issued to Chord Advisors LLC as settlement for all fees due pursuant to the Letter Agreement dated August 11, 2012. (21) Represents shares of common stock issued to Benjamin Cohen for services rendered to the company. (22) Represents shares issued to Chord Advisors LLC for services previously rendered, which was subsequently sold to an independent third party. (23) Represents shares of common stock issued and shares of common stock issuable upon the exercise of warrants, which were part of an Advisory Agreement, dated April 11, 2014 with PBNJ Advisors. (24) Represents shares of common stock issued in connection with the conversion of a promissory note, dated October 23, 2013, by R3 Trading Partners LLC. (25) Represents shares of common stock issued in connection pursuant to the terms of a promissory note, dated December 27, 2013, issued to Benjamin Cohen. (26) Represents shares of common stock and shares of common stock issuable upon the exercise of warrants, which were part of units, sold in a 506(c) private placement which closed on May 29, 2014. Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued to prevent dilution as a result of stock splits, stock dividends or similar transactions. Proposed maximum offering price per share is based on the exercise price of the warrant in accordance with Rule 457(g). (27) Represents shares of common stock and shares of common stock underlying warrants issued in connection with the conversion of 12% Secured Promissory Notes sold to investors in a private placement offering on September 12, 2012. 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. A major component of our business strategy is to market our franchises to United States veterans for our first prospective 100 mobile truck franchise operations, although there is no assurance that the first prospective 100 franchises will be solely granted to U.S. veterans. Despite their significant skill sets, many returning veterans experience difficulty finding work upon returning to civilian life. Since September 11, 2001, it is estimated that approximately 2.7 million United States veterans have served in the military with an approximate unemployment rate of 9.2 percent, compared with 7.6 percent of non-veterans, according to the Bureau of Labor Statistics. We believe that given these circumstances United States veterans would be interested in starting or buying a new business or considering doing so. General Wesley Clark, our Director and Senior Veterans Advisors, will supervise the development and implementation of recruitment and "vetting" for prospective veteran franchisees. As of the date of this prospectus, only preliminary steps have been taken to implement our veteran program (including development of a recruitment and training program). Since our focus over the past year has been primarily on expanding our business plan in preparation for implementing our franchise model, we have not yet established any estimated budgets or milestones regarding the implementation of our veteran program. Once the franchise model is in place, we intend to focus on establishing a strategy which focuses on veterans receiving the first 100 franchises, including the scope and the timeframe for implementation of the training, management and ownership of the franchises and methods we anticipate utilizing to assist prospective veteran franchisees to secure financing to acquire a franchise. Our Expansion Strategy Our expansion strategy is to add trucks in existing markets, which include Southern California (currently operating six leased trucks) and Phoenix, Arizona (currently operating three leased trucks). We intend to expand and generate revenue from additional company trucks, company stores, third-party license agreements at airports, stadiums, malls and other locations as well as franchise revenues, to consist primarily of royalties based on a percentage of sales reported by franchise revenue and franchise fees paid by franchisees as well as the development of company operated and the acquisition of grilled cheese stores. However, we cannot provide any assurance or guarantee that we will be able to implement our expansion of food trucks and stores or collect any royalties based on a percentage of sales reported by licensees or franchisees. We intend to begin operating trucks in new markets where we believe we can become a leading gourmet food truck in the area. Our business model calls for the sale of up to 100 franchises within twelve months after commencing franchise activities. The 100 trucks would include company owned trucks, licensed trucks and prospective franchised trucks. Our intent is to develop our veteran training, management and ownership program, with the goal of having 100 qualified veterans owning and operating Grilled Cheese Trucks. There is no guarantee that we will be able to increase the number of trucks that we operate to 100 trucks within twelve months after commencing franchise activities. There are several obstacles that the company will need to overcome in order to implement our expansion strategy including: (i) obtaining adequate financing, (ii) receiving legal approval for franchising in each respective state in which we seek to expand, (iii) building customer demand in new markets and (iv) streamlining our management and operations. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED June 13, 2014 THE GRILLED CHEESE TRUCK, INC. 22,105,508 Shares of Common Stock This prospectus relates to the offer for sale of an aggregate of 22,105,508 shares of common stock, par value $.001 per share, of The Grilled Cheese Truck, Inc. by the selling stockholders named herein. The company is not offering any securities pursuant to this prospectus. Our common stock is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the trading of our common stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness of the registration statement of which this prospectus forms a part. The 22,105,508 shares of our common stock can be sold by selling security holders at a fixed price of $1.25 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB Market and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to complete the necessary documents with the Financial Industry Regulatory Authority, or FINRA, nor can we provide any assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB Market or, if quoted, that a viable public market will materialize. Following the effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered hereby may be effected in one or more transactions that may take place on the OTC Bulletin Board and/or OTCQB Market, including ordinary brokers transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling stockholders. The selling stockholders and intermediaries through whom such securities are sold may be deemed "underwriters" within the meaning of the Securities Act of 1933, as amended, with respect to the securities offered hereby, and any profits realized or commissions received may be deemed underwriting compensation. We are an "emerging growth company" under the federal securities laws and may be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. You should carefully consider the matters discussed under the section entitled "Risk Factors" beginning on page 14 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is June 13, 2014. Corporate History Share Exchange Agreement On October 18, 2012, TRIG Acquisition 1, Inc. ("TRIG") entered into a share exchange agreement (the "Exchange Agreement") by and among (i) TRIG, (ii) Grilled Cheese, Inc., a California corporation, ("Grilled Cheese"), (iii) GCT, Inc., a Nevada corporation and wholly-owned subsidiary of the TRIG ("GCT Sub"); (iv) David Danhi, the majority shareholder of Grilled Cheese ("Majority Shareholder") and (v) Michelle Grant, the minority shareholder of Grilled Cheese ("Minority Shareholder", together with the Majority Shareholder, the "Grilled Cheese Shareholders"). Pursuant to the terms of the Exchange Agreement: (1) the Majority Shareholder transferred to GCT Sub all of the shares of Grilled Cheese held by such shareholder in exchange for the issuance of 4,275,000 shares of TRIG s common stock; and (2) the Minority Shareholder transferred all of the shares of Grilled Cheese held by the Minority Shareholder in exchange for $500,000 and 845,000 shares of TRIG s common stock (the "Share Exchange"). The Minority Shareholder subsequently sold her 845,000 shares of Trig s common stock in a private transaction to Robert Rein. The shares of common stock issued in connection with the Share Exchange are being registered for resale pursuant to this prospectus. Subsequent to the Share Exchange, GCT, Inc. changed its name to Grilled Cheese, Inc. The Share Exchange transaction has been accounted for as a reverse acquisition of TRIG by Grilled Cheese, but in substance as a capital transaction, rather than a business combination since TRIG had nominal operations and assets prior to and as of the closing of the Share Exchange transaction. The former stockholders of Grilled Cheese represent a significant constituency of the company s voting power immediately following the Share Exchange transaction and Grilled Cheese s management has assumed operational, financial and governance control. The Share Exchange transaction is deemed a reverse recapitalization and the accounting is similar to that resulting from a reverse acquisition. For accounting purposes, Grilled Cheese is treated as the surviving entity and accounting acquirer in accordance with "ASC 805, Business Combinations", although TRIG was the legal acquirer. Accordingly, the company s historical financial statements are those of Grilled Cheese. The accumulated losses of Grilled Cheese were carried forward after the completion of the Share Exchange. All reference to common stock shares and per share amounts have been restated to effect the reverse merger which occurred on October 18, 2012. As a result of the Share Exchange, we ceased our prior operations and, through our wholly-owned subsidiary, Grilled Cheese, we operate our food trucks, specializing in grilled cheese. Acquisition of Assets On August 8, 2013, we entered into an Asset Purchase Agreement (the "Asset Purchase Agreement"), by and among Hook & Ladder Draught House, LLC, a Texas limited liability company ("HL"), KOW Leasing Co., LLC, a Texas limited liability company ("KOW"), Deepak Devaraj, as sole member of HL and KOW, respectively ("Devaraj" and together with HL and KOW, the "Sellers"), the company and GCT Texas Master, LLC, a Nevada limited liability company and a licensee of the company ("GCT-TX", together with the company, the "Buyer"). HL is a mobile food service business that provides food and alcohol out of renovated fire engines. Pursuant to the Asset Purchase Agreement, we agreed to purchase substantially all of the Seller s rights, title and interests in and to certain assets, properties and rights of every kind, nature and description, tangible and intangible, real, personal or mixed, accrued and contingent, which were owned or leased by Sellers and used in the Sellers business, including but not limited to all equipment, customer contracts, property leases, intellectual property, vehicles, books and records, licenses and corporate and trade names. As consideration for the Sellers to enter into the Asset Purchase Agreement, we agreed to: (i) issue to Sellers 500,000 shares of our common stock, and (ii) issue a warrant to Sellers to purchase up to 250,000 shares of our common stock (the "HL Warrant"). The HL Warrant is exercisable at a price of $1.00 per share, contains customary piggyback registration rights and shall be exercisable for a period of three (3) years. The 500,000 shares of common stock issued to Seller under the Asset Purchase Agreement are subject to customary piggy-back registration rights. The 500,000 shares are being registered in this prospectus. We also agreed to appoint Devaraj to our Board of Directors, and, for so long as Devaraj holds any shares of our common stock, the Board shall take all reasonable actions such that Devaraj shall be nominated to serve as a member of the Board. Additionally, we entered into an employment agreement with Devaraj, whereby Devaraj will be employed by the company as the Director of Business Development for a period of three (3) years. Further, GCT-TX agreed to (i) issue to Devaraj Class A Membership Units of GCT-TX equal to twenty (20%) percent of the issued and outstanding membership units in GCT-TX, determined on a fully-diluted basis as of August 8, 2013; (ii) admit Devaraj as a member of GCT-TX, (iii) appoint Devaraj as Manager of GCT-TX and (iv) employ Devaraj as GCT-TX s Chief Executive Officer. Disposition of Certain Assets On September 12, 2013, we entered into an Asset Sale Agreement (the "Asset Sale Agreement"), by and between the American Food Truck Group, LLC, a Nevada limited liability company as the buyer ("AFTG") and the company as the seller, whereby AFTG agreed to purchase certain intellectual property developed and owned by KOW (the "KOW Assets") acquired by us in conjunction with the Asset Purchase Agreement described above. In consideration for the purchase of the KOW Assets, AFTG agreed to pay: (i) us an up-front non-refundable cash payment of $200,000 on or before September 16, 2013, (ii) a cash payment of $250,000 upon the closing of the Asset Sale Agreement, and (iii) issue to us membership interests in AFTG equal to twenty (20%) percent of the issued and outstanding membership interest in AFTG upon the closing. In addition, the parties agreed to entered into a truck rental lease agreement pursuant to which AFTG shall lease or rent to us, franchise or licensed operators of the company, one hundred (100) new food trucks, at prevailing market rates and on such other terms and conditions as mutually agreed to by the parties. Further, the lease commencement schedule is as follows: (i) Twenty (20) trucks on or before March 31, 2014; and (ii) a minimum of ten (10) trucks per month after March 31, 2014. There is no penalty if the minimum number of trucks is not met under the agreement. On November 13, 2013, we closed the transactions contemplated by the Asset Sale Agreement. At the closing, we transferred to AFTG certain intellectual property and AFTG paid us a final cash payment of $250,000 (for a total of $450,000) and issued us membership interests equal to twenty (20%) percent of the issued and outstanding membership interests in AFTG. The parties agreed to prepare and finalize the Truck Rental Agreement, on substantially the same terms presented above, upon the company requesting its first truck. As of the date of this prospectus, the parties have not entered into the truck lease agreement and AFTG has not provided any leased trucks. (Above pictures from left to right: Vernon Gibson, employee, General Wesley Clark, Director, and David Danhi, Director and COO) Recent Events 2012 Private Placement Offering On April 18, 2013, we completed our final closing of a "best efforts" private offering in the aggregate amount of $2,875,000 (the "2012 Private Placement Offering") of Private Placement Units (as defined below) with a group of accredited investors (the "2012 Private Placement Purchasers"). Pursuant to a subscription agreement with the Private Placement Purchasers (the "2012 Private Placement Subscription Agreement"), we issued to the Private Placement Purchasers units consisting of (i) 10% Convertible Senior Secured Notes (the "2012 Private Placement Notes") and (ii) warrants (the "2012 Private Placement Warrants") to purchase shares (the "2012 Private Placement Warrant Shares" and together with the 2012 Private Placement Notes and the 2012 Private Placement Warrants, the "2012 Private Placement Securities") of our common stock at an exercise price of $2.00 per share. The 2012 Private Placement Units each consisted of a 2012 Private Placement Note, in the principal face amount of $25,000, and 2012 Private Placement Warrants to purchase 12,500 shares of our common stock (the "2012 Private Placement Units"). 2012 Private Placement Notes The 2012 Private Placement Notes issued in the 2012 Private Placement Offering accrue interest at a rate of 10% on the aggregate principal amount, payable on the third anniversary of the issue date if not converted prior to the maturity date. The 2012 Private Placement Notes are subject to (i) an optional conversion into shares of the company s common stock at the note holder s election following the date upon which the company has a registration statement declared effective with the Securities and Exchange Commission (the "SEC") or (ii) a mandatory conversion thirty-six (36) months from the date of issuance. The shares of common stock issuable upon conversion of the 2012 Private Placement Notes shall equal: (i) the principal amount of the 2012 Private Placement Note and the accrued interest thereon through the date of conversion, divided by (ii) $1.00. 2012 Private Placement Warrants The 2012 Private Placement Warrants issued in the 2012 Private Placement Offering are exercisable for an aggregate of 1,437,500 shares of the company s common stock. The 2012 Private Placement Warrants are exercisable for a period of three years from the original issue date. The exercise price with respect to the 2012 Private Placement Warrants is $2.00 per share. The exercise price for the 2012 Private Placement Warrants is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances. 2013 Private Placement Offering On June 21, 2013, we completed our final closing of a "best efforts" private offering in the aggregate amount of $645,000 (the "2013 Private Placement Offering") of 2013 Private Placement Units with a group of accredited investors (the "2013 Private Placement Purchasers"). Pursuant to a subscription agreement with the 2013 Private Placement Purchasers (the "2013 Private Placement Subscription Agreement"), we issued to the 2013 Private Placement Purchasers units consisting of (i) 10% Convertible Senior Secured Notes (these notes mirror the 2012 Private Placement Notes) and (ii) warrants (these warrants mirror the 2012 Private Placement Warrants) to purchase shares (the "2013 Private Placement Warrant Shares" and together with the 2013 Private Placement Notes and the 2013 Private Placement Warrants, the "2013 Private Placement Securities") of our common stock at an exercise price of $2.00 per share. The 2013 Private Placement Units each consisted of a 2013 Private Placement Note, in the principal face amount of $25,000, and 2013 Private Placement Warrants to purchase 12,500 shares of our common stock (the "2013 Private Placement Units"). The form terms and provisions of the 2013 Private Placement Notes and 2013 Private Placement Warrants are substantially similar to the terms and provisions of the securities issued in the 2012 Private Placement Offering, and for a description of such securities, see the section entitled "2012 Private Placement Offering—2012 Private Placement Notes" and "2012 Private Placement Offering—2012 Private Placement Warrants" respectively. The shares of common stock issuable upon conversion of the 2012 Private Placement Notes and the 2013 Private Placement Notes and the shares of common stock issuable upon exercise of the 2012 Private Placement Warrants and 2013 Private Placement Warrants are being registered in this prospectus. Placement Agent Grandview Capital Partners, Inc. ("Grandview"), a Florida corporation that operated as an office of supervisory jurisdiction at c/o Grandview Capital Partners, Inc., 300 South Pine Island Road, Suite 240 Plantation, FL 33324, registered under the name Blackwall Capital Markets, Inc. until September 9, 2013 ("Blackwall", together with Grandview, the "Placement Agent"), a broker dealer that is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and the Securities Investor Protection Corporation and registered with the Securities and Exchange Commission acted as placement agent in connection with the 2012 Private Placement Offering and the 2013 Private Placement Offering (collectively, the "Offerings"). As consideration for acting as the placement agent, at the closing of the Offerings, the company paid to the Placement Agent (i) in cash, a fee equal to $128,500 for the 2012 Private Placement Offering and a fee equal to $32,100 for the 2013 Private Placement Offering and (ii) issued warrants to purchase up to an aggregate of 287,500 shares of our common stock in the 2012 Private Placement Offering and warrants to purchase up to an aggregate of 64,500 shares of our common stock in the 2013 Private Placement Offering. The Placement Agent warrants have an exercise price of $2.40 per share, exercisable for a term of five (5) years from the closing of each of the Offerings, respectively, and contain equitable adjustment for stock splits, stock dividends and similar events, as well as full ratchet anti-dilution provisions. Peter Goldstein, the current President, interim Chief Financial Officer and Director of the company, is the founder, chairman, chief executive officer and registered principal of Grandview Capital Partners, Inc. Mr. Goldstein did not hold any officer or director positions with the company during the 2012 Private Placement Offering or 2013 Private Placement Offering. The shares of common stock issuable upon the Placement Agent warrants issued in connection with the 2012 Private Placement and 2013 Private Placement are being registered in this prospectus. On September 6, 2013, we entered into a termination agreement (the "Placement Agent Termination Agreement"), whereby we terminated our placement agency agreement (the "Placement Agreement") with Grandview entered into on May 29, 2013 because Mr. Goldstein s relationship with the company changed. The company agreed that the provisions relating to the payment of fees (including but not limited to the tail fees specified in the Placement Agreement relating to any entities or individuals Grandview introduced to the company prior to the execution of the Placement Agent Termination Agreement), expenses, rights of first refusal, confidentiality, indemnification and contribution and the company s indemnification obligations survive the termination of the Placement Agreement. Mr. Goldstein did not hold any officer or director positions with the company when the Placement Agreement was consummated and through the company s 2013 Private Placement Offering. JOBS Act Offering On October 8, 2013, we commenced a "best-efforts" private placement offering of up to $5,000,000 representing 4,000,000 units for $1.25 per unit pursuant to Rule 506(c) of Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), and the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Each unit consists of: (i) one share of common stock and (ii) a warrant to purchase one share of common stock. The warrants may be exercised until October 31, 2016 at an exercise price of $2.50 per share. From December 20, 2013 through May 29, 2014, we held closings of our private placement offering whereby the company received an aggregate of $2,823,125 from 37 accredited investors and issued an aggregate of 2,258,500 shares of common stock and 2,258,500 warrants in connection with such closings. No fees were paid to any placement agents in connection with this offering. The shares of common stock and the shares of common stock underlying the warrants issued in connection with this offering are being registered in this prospectus. Other Background On February 1, 2011, we sold 250,000 shares of Series A Convertible Preferred Stock, par value of $0.001 per share, for $125,000 cash ($0.50/share sales price) and paid offering cost of $6,842. On February 15, 2011, the company sold 150,000 shares of Series A Convertible Preferred Stock, par value of $0.001 per share, for $75,000 cash ($0.50/shares sales price). In accordance with the terms of the Series A Preferred Stock, these shares automatically converted into common stock on February 1, 2012 and February 15, 2012, respectively. On July 5, 2012, these shareholders agreed to sell back to the company the 400,000 shares of common stock that they received from the conversion of Series A Preferred Stock in exchange for 12% Secured Notes in the amount of $200,000. The shares of common stock issuance upon conversion of the 12% Secured Notes are being registered in this prospectus. TABLE OF CONTENTS Prospectus Summary 2
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. Overview: The Real Hip-Hop Network is an emerging growth company that intends to provide family-appropriate (family-appropriate meaning it is considered suitable for all members of the average family ) Hip-Hop content to a multi-racial/multi-generational demographic through multiple distribution platforms, including via the Company s website at RHN.TV and cable/satellite broadcast provided. The Company also intends to develop and utilize broadband, digital and wireless platforms to deliver music, gaming and steaming video to mobile devices and in home gaming systems estimated within the next twelve months. The Company intends to provide a mix of approximately 45% music video-based entertainment, approximately 55% of RHN s lineup includes original programming revolving around the Hip-Hop lifestyle, culture and pro-social programs, such as first run movies, live concerts, break-dance battles, rhyme competitions, documentaries, news, DJ competitions, interviews and exciting original content. We are currently evaluating all our options to commercialize our licensed content and platforms. The Company s concept and content has been beta tested and has not been deployed for commercial sale anywhere in the world. Although the Company s technology and platform is ready for deployment each country will have different requirements for deployment, so the commercialization process is likely to be lengthy and complex. The Company may employ different strategies in different areas of the world, such as sublicensing deployment and commercialization rights for some territories while retaining rights for other territories. License Agreement: On August 15, 2011, Accelerated Acquisitions XII (now known as The Real Hip-Hop Network) entered into a Licensing Agreement ( Licensing Agreement ) that was amended on August 14, 2013 [See Exhibit(s) 10.4 &10.5] with The Real Hip-Hop Network, Broadcast Corp ( Licensor ) (The Licensor is controlled by a SSM Media Ventures Inc., a major shareholder in the Company- Voting and/or investment power for SSM Media Ventures Inc. is held by Atonn Muhammad , the CEO of the Company), pursuant to which the Company was granted an exclusive, non-transferrable worldwide license for certain first run movies, live concerts, break-dance battles, rhyme competitions, documentaries, news, DJ competitions and interviews ( media content ), distribution platforms, patents, intellectual property, know-how, trade secret information to provide intelligent, family-appropriate Hip-Hop content to a multi-racial/multi-generational demographic. Except for the rights granted under the License Agreement, Licensor retains all rights, title and interest to the content and any additions thereto although the License includes the Company s right to utilize such additions. The term of the License commences on the date of the Licensing Agreement and continues for thirty (30) years, provided that the Licensee is not in breach or default of any of the terms or conditions contained in this Agreement. In addition to other requirements, the continuation of the License is conditioned on the Company generating net revenues in the normal course of operations or the funding by the Company of specified amounts for qualifying distribution and commercialization expenses related to the media content. In addition, the Company is required to fund certain specified expenses related to the distribution of the media content as specified in the License Agreement. The license is terminated upon the occurrence of events of default specified in the License Agreement and outlined as followed: If any of the Parties are in breach or default of the terms or conditions contained in this Agreement and do not rectify or remedy that breach or default within 90 days from the date of receipt of notice by the other party requiring that default or breach to be remedied, then the other party may give to the party in default a notice in writing terminating this Agreement. Through the License Agreement the Company was assigned binding and enforceable contract with DirecTV, the term of the agreement is for the period commencing on May 8, 2013 and ending on the first anniversary of the Service Commencement Date, which is anticipated to be December of 2014 (the Term ). DirecTVshall have the option to extend the Agreement for one (1) additional year upon notice to the Company at least sixty (60) days prior to the scheduled expiration of the Term (and the Term shall be deemed to include any such extension period). The Service Commencement Date means the date on which DirecTV commences distribution of the Service via the DirecTV Distribution System for revenue-generating purposes, which date shall be on or about December 1, 2013. Furthermore, the Company was assigned binding and enforceable contract with DISH Network that began May 1, 2013 and expires February 28, 2015. The contracts with DirecTV and DISH Network are intended allow the Company to launch commercially to a viewership of an estimated 32 million subscribers. The Company has started testing the content feed to both DirecTV and DISH Network and it is estimated that the testing will be completed by the end January, 2014 with no cost to the Company. Upon completion of testing with DirecTV, the Company agreed to pay a non-refundable deposit to DirecTV of $522,000 and $261,000 per week the first year, $371,000 per week the second year and $391,000 per week the third year for services (all weekly payments are due two weeks in advance of content distribution). The services consist of a national feed to an estimated 18,411,000 million households of the programming service currently known as the Real Hip-Hop Network and/or RHN , which shall consist exclusively of the type of programming described herein, presented on a 24-hour per day, 7 days a week schedule to reach all DirecTV subscribers in the United States on an exclusive designated channel determined by DirecTV. Upon completion of testing with Dish Network, the Company agreed to pay a non-refundable deposit to Dish Network of $1,500,000 and $1,166,000 per month for services (all monthly payments are due in advance of content distribution). The services consist of a national feed to an estimated 14,000,000 million households of the programming service currently known as the Real Hip-Hop Network and/or RHN , which shall consist exclusively of the type of programming described herein, presented on a 24-hour per day, 7 days a week schedule to reach all Dish Network subscribers in the United States on an exclusive designated channel determined by Dish Network. The Company began testing with the networks in August, 2013 and anticipated completion in November of 2013 and has been delay do to testing until the end of January 2014. The Company will not be able to launch it content on either network until the aforementioned deposits and monthly fees can be paid. The Company currently has no cash or ability to pay the network fees and is relying on the primary offering in this prospectus to meet the obligations. Pursuant to the agreements there are customary representations and warranties of each of the parties and can be terminate by either party with thirty days written notice. The company is operating independently of SSM Media the majority stockholder and The Real Hip-Hop Network, Broadcast Corp., the Licensor, described in the Description of Business section herein. Revenues: Our primary sources of revenue is intended to come from affiliate fees and advertising. The Company anticipates the first one to three years of revenues will be generated by advertising as we will be paying the providers for the distribution of our content and for the third year and beyond after the Company establishes rating scores the Company intends on generating Affiliate revenues. Affiliate revenues are derived from long-term distribution agreements with cable, satellite and telecommunications operators who pay us a monthly fee for each subscriber household that receives RHN content. Risks Related to Our Business and Investment in Our Common Stock: Investing in our common stock involves a high degree of risk. You should carefully consider the risks highlighted in the section entitled Risk Factors immediately following this prospectus summary before making an investment decision. We may be unable for many reasons, including those that are beyond our control, to implement our business strategy successfully. - 4 - These risks include: Our limited operating history makes it difficult to evaluate our current business and future prospects. We have a history of losses and we may not achieve or sustain profitability in the future. We operate in a rapidly changing market, we have particularly limited experience with our non-print products and services and our business model is evolving and difficult to predict. If we do not successfully adapt to known or unforeseen market developments our business and financial condition could be materially and adversely affected. If we fail in our efforts to attract new consumers, increase and develop platforms and increase monetization of our business, our revenues will be affected adversely, which may result in a complete loss of any investment made into the Company. Corporate History and Information: We were incorporated in the State of Delaware on May 4, 2010, and established an end of March fiscal year end. Our corporate headquarters is located at 1455 Pennsylvania Avenue NW, Suite 400, Washington, DC 20004 and our telephone number is (202) 379-3115 our website is RHN.TV. The Company will not be able to commercialize either its media content or distribution platforms without additional capital, if we do not secure: Five Hundred Thousand Dollars ($500,000) for future development before August 7, 2014; Five Hundred Thousand Dollars ($500,000) for future deployment before August 15, 2015; and A minimum of an additional One Million Dollars ($1,000,000) for future deployment before August 15, 2016. If we are unable to secure minimum funding requirement of Two Million Dollars ($2,000,000) for the deployment of our content distribution over the next three years we will lose our rights to the media content and distribution platforms, which would be a material adverse impact on business development and may result in a complete loss of any investment made into the Company. Additionally, the Company will be responsible under the License Agreement to pay Licensor a royalty of (.25%) of all gross revenues resulting from the use of the Technology by Licensee. Moreover, if the technology is sub-licensed by the Company, the Company shall pay Licensor a (1%) royalty, except if otherwise modified in writing. The Company will require significant additional financing in order to meet the milestones and requirements of its Business Plan and avoid discontinuation of the License. Funding would be required for staffing, marketing, public relations and the necessary distribution to expanding the scope of its offering to include the global market. The Company intends to seek at an aggregate of $25,000,000 in 2014 through the sale of equity and the issuance of these securities could dilute existing shareholders. The Company s funding plans include selling additional capital stock and/or borrowing to fund the aforementioned expenses. The Company intends to approach Hedge Funds, Venture Capital Groups, Private Investment Groups and other Institutional Investment Groups in its efforts to achieve future funding. It is estimated that $2,755,548 will be used for sales and marketing, $12,930,077 will be used for the TV network fees, an estimated $2,049,325 will be spent on management, legal, accounting, rent, financing fees and other payables, $ 16,889 will be spent on this offering and $3,589,520 will be spent on production and programming leaving $3,658,641 in reserve for increased working capital. There is no guarantee that the Company will be able to raise this or any amount of additional capital and a failure to do so would have a significant adverse effect on the Company s ability, or would cause significant delays in its ability to address the market for the distribution of media content and achieve its Business Plan, it estimated the minimum amount of capital the company needs to raise over the ne twelve months is $2 million to continue operations. Implications of being an Emerging Growth Company: As a company with less than $1 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2013, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: - 5 - Only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure. Reduced disclosure about our executive compensation arrangements. Not having to obtain non-binding advisory votes on executive compensation or golden parachute arrangements. Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates, or we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. We have not taken advantage of these reduced reporting burdens in this prospectus. THE OFFERING Securities offered: We are offering up to 5,000,000 of our common stock. The selling stockholders are offering up to 3,126,050 shares of our common stock. Offering price: The Company is selling shares at a fixed price of $5.00 per share for the duration of the offering, and the selling stockholders are selling shares at a fixed price of $5.00 per share for the duration of the offering which is a period of 16 months from the effective date of this prospectus. March 31, 2013 ($) Financial Summary Cash and Deposits $ - Total Assets - Total Liabilities 109,626 Total Stockholder s Deficit $ (109,626) Accumulated From May 4, 2010 (Inception) to March 31, 2013 ($) $ Statement of Operations Total Expenses 114,391 Net Loss for the Period (114,391) Net Loss per Share $ 0.00 - 6 - Shares outstanding prior to offering: 29,150,000 Shares outstanding after offering: 34,150,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to be eligible for trading on the Over The Counter Bulletin Board or other U.S. trading exchange. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We intend to use the net proceeds from the sale of our 5,000,000 shares (after deducting estimated offering expenses payable by us) for professional fees, general business development, administration expenses, option fees and software fees. See Use of Proceeds on page 23 for more information on the use of proceeds. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders who are simultaneously offering 3,176,050 shares of common stock under this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders, furthermore the selling shareholders holding 2,376,050 of the 3,176,050 shares for resale have entered into Lockup Agreements. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements as of March 31, 2013 and for the period from May 4, 2010 (Inception) to March 31, 2013 and unaudited financial statements as of September 30, 2013 and for the period from May 4, 2010 (Inception) to September 30, 2013. Our working capital as at March 31, 2013 was $0. Financial Summary (audited) March 31, 2013 ($) Cash $ - Total Assets - Total Liabilities 109,626 Total Stockholder s Deficit $ (109,626) September 30, 2013 ($) Financial Summary (Unaudited) Cash $ - Total Assets - Total Liabilities 135,626 Total Stockholder s Deficit $ (135,626) - 7 - Accumulated From May 4, 2010 (Inception) to September 30, 2013 ($) Statement of Operations (Unaudited) Total Expenses $ (141,391 ) Net Loss for the Period $ 141,391 September 30, 2012 ($) Financial Summary (Unaudited) Cash $ 24 Total Assets 24 Total Liabilities 92,150 Total Stockholder s Deficit $ (92,126) Accumulated From May 10, 2010 (Inception) to September 30, 2012 ($) Statement of Operations (Unaudited) Total Expenses $ 96.891 Net Loss for the Period $ 96,891
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001500366_anpulo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001500366_anpulo_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights select information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in our ordinary shares. 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 Anpulo, Company, we, us, and our, refer to Anpulo Food, Inc., and its wholly-owned subsidiary Anpulo International Limited, a holding company formed in Hong Kong ( Anpulo HK ), Anpulo HK s wholly-owned subsidiary Guangxiang Investment Consulting Co., Ltd., a limited liability company located in Shanghai, China ( Anpulo WFOE ), and our variable interest entity Laifeng Anpulo (Group) Food Development Co., Ltd. ( Anpulo Laifeng ). Overview We process, distribute and market pork and cured pork products in the People s Republic of China, (the PRC or China ). We do not raise hogs, but instead purchase live hogs from pig farms or individual farmers in Laifeng county and its neighboring area in China for slaughtering, processing and curing. As of March 31, 2014, our product line included over 183 unique meat products, including chilled pork, frozen pork and prepared meats. We sell all of our products under our Anpulo and Linghaotuzhu brand names. Our value-added pork and cured pork products are targeting China s middle and high income class. Our products are marketed domestically to supermarkets, warehouse club stores, foodservice distributors, restaurant operators, and non-commercial establishments, such as schools, hotel chains, healthcare facilities, army bases and other food processors. As of March 31, 2014, our wholesale customers included eight fast food companies, 16 processing factories and 51 school cafeterias, factory canteens, hotels, army bases, hospitals and government departments. As of such date, we also retail through 66 supermarket counter locations and 38 third-party owned and operated specialty boutique stores. We currently have one processing plant in China, located in Laifeng County, Enshi Tujia and Miao Prefecture, Hubei province. Our total production capacity for chilled pork and frozen pork is approximately 85 metric tons per eight-hour day, or approximately 30,000 metric tons on an annual basis. In addition, we have production capacity for prepared meats of approximately 14 metric tons per eight-hour day, or approximately 5,000 metric tons on an annual basis. We have a video monitored logistics system that integrates transportation and warehouse management. As of March 31, 2014, we had over 12 temperature-controlled trucks to handle our transportation needs and the capacity for our two temperature adjustable warehouses totaled approximately 5,230 cubic meters. In 2013 and 2012, we had approximately $20.21 million and $18.12 million in sales, respectively, and $(0.87) million in net loss for 2013 and $0.23 million in net income for 2012, respectively. During the three months ended March 31, 2014 and 2013, we generated $4.4 million and $4.5 million revenues. Our net losses were ($0.1) million and ($0.2) million, respectively, for the first quarter of 2014 and 2013. In 2012, our management decided to explore a business opportunity in real estate development. On November 18, 2012, we entered into a cooperation agreement with the Laifeng County to build and operate a high-end hotel. According to such agreement, in exchange for the land use right, we shall invest no less than RMB 30 million or approximate $4,760,000 in building a hotel in Laifeng County and, after the hotel is built we are entitled to operate the hotel and profit from the hotel operation for 20 years from October 1, 2012 to September 30, 2032. After September 30, 2032, the title of the hotel shall be transferred to the Laifeng County and the Laifeng County shall not be liable for any debts associated with the hotel. In connection to the cooperation agreement, the Company also agreed to compensate for demolishing then existing properties on the land, which amount of RMB 4.2 million or $0.67 million has been paid in full. As of March 31, 2014 and December 31, 2013, we have invested $2,782,615 and $2,142,989 in the hotel construction and will need additional $2.95 million to complete the entire project, including but not limited to interior construction. On April 20, 2014, we assigned and transferred all of our rights and obligations under the cooperation agreement to Laifeng Fengming Manor Hotel Management Co., Ltd. ( Fengming ) for approximately RMB 17 million or $2.7 million. Fengming is owned by Mr. Junyi Luo, Mr. Wenping Luo s son. Mr. Wenping Luo does not have any equity interest or hold any management position in Fengming, or control Fengming by any contractual arrangement. Our History and Corporate Structure Prior to October 30, 2013, we were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. From our inception on July 30, 2010 to October 30, 2013, we did not generate any revenue and we accumulated no significant assets as we explored a possible business combination. We entered into our current line of business on October 30, 2013 by acquiring Anpulo HK, its wholly-owned subsidiary Anpulo WFOE and the variable interest entity Anpulo Laifeng. By way of background, in February 2012, Wenping Luo, the Chairman and principal shareholder of Anpulo Laifeng, took control of the Company and changed the Company s name from Europa Acquisition VII, Inc. to Anpulo Food, Inc., in contemplation of bringing Anpulo Laifeng and its holding companies public in the United States through a reverse acquisition transaction. The contemplated reverse acquisition between the Company and Anpulo Laifeng and its holding companies was a mere intent of Mr. Luo at that time and, this intention was abandoned when in January 2013 Mr. Luo took control of another reporting company that was formed to acquire a target company or business, Specializer, Inc. and changed this company s name from Specializer, Inc. to Anpulo Food Development, Inc.. In August 2013, Mr. Luo s intention of a reverse acquisition between the Company and Anpulo Laifeng and its holding companies revived, and as the sole shareholder, officer and director of the Company at that time, he made the decision to proceed with the reverse acquisition transaction. To date, Mr. Luo, in his capacity as the principal shareholder and the sole officer and director of Anpulo Food Development, Inc. intends that Anpulo Food Development, Inc. remains as a company formed to acquire a target or business. TABLE OF CONTENTS We do not directly own our business operation in China. We conduct our business operations through our variable interest entity, Anpulo Laifeng, which we control by a series of contractual arrangements. The following chart demonstrates our current corporate structure: (1) Contractual arrangements including an Entrusted Management Agreement, Exclusive Option Agreement, Shareholders Voting Proxy Agreement and Pledge of Equity Interest Agreement. For a description of these agreements, see Corporate Structure Contractual Arrangements with Anpulo and Anpulo s Shareholders. (2) The shareholders of Anpulo Laifeng are Wenping Luo (95%) and Jinfeng Hu (5%). TABLE OF CONTENTS Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee (2) Ordinary Shares, par value $0.001 per share 15,500,000 $ 0.20 $ 3,100,000 $ 399.28 (1) In accordance with Rule 416(b), the registrant is also registering hereunder an indeterminate number of additional ordinary shares of the same class are issued or issuable resulting from the split of, or the stock dividend on, the registered securities. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a). The proposed maximum offering price per share is based on the last effective private sale price for the ordinary shares of the registrant as there is currently no public market price for the registrant s ordinary shares. The last private sales price is further determined by the price at which the common stock of registrant s sole operating entity and wholly-owned subsidiary ( Anpulo HK ) was sold in a shares-for-debt transaction occurred on October 21, 2013, prior to the share exchange transaction where the common stock of Anpulo HK were subsequently exchanged for the registrant s ordinary shares. On October 21, 2013, Mr. Wenping Luo, the then shareholder of Anpulo HK transferred 280 shares of the common stock of Anpulo HK that he owned to six creditors in exchange for the cancellation of $5.6 million of debt that owed by Mr. Luo. These creditors subsequently exchanged each share of the common stock of Anpulo HK for 100,000 ordinary shares of the Company in the share exchange occurred on October 30, 2013. The last private sale price for the common stock of Anpulo HK in the shares-for-debt transaction was $20,000 per share and following the share exchange, the last effective private sale price for the registrant s ordinary share was $0.2 per ordinary share. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act or until the registration statement shall become effective on such date as the commission, acting pursuant to such section 8(a), may determine. TABLE OF CONTENTS Our Industry The meat industry in China is characterized by fragmentation, sanitation and hygiene issues, as well as social demographic trends. According to the Earth Policy Institute, more than a quarter of all the meat produced worldwide is now eaten in China. Half the world s pigs, about 476 million of them are said to reside in China. According to November 2013 report of the United States Department of Agriculture ( USDA ), since 2010 the pork market in China has become the largest national market in the world, accounting over half of global production and consumption. Production in China has consistently expanded over the past several years and is forecast at another record 54.7 million tons in 2014, according to USDA. China became a net importer of pork in 2008. It has imported approximately 400,000 tons of pork per year in recent years. This compares with global pork trade of less than seven million, according to Rabobank and Earth Policy Institute. According to USDA November 2013 report, China pork imports are expected to grow to a record 775,000 tons, yet still only account for just over 1 percent of China consumption. Competitions The production and sale of meat and food products in China are highly competitive. Our pork products compete with several large and small regional pork processors. The principal competitive elements are price, product safety and quality, brand identification, breadth and depth of product offerings, availability of products, customer service and credit terms. Our competitive strategy is to increase and sustain consumer demand and loyalty by raising safe and healthy food awareness and educating customers of our premium pork products in our marketing activities, increase brand recognition, and build support for our pricing policies. Please see Description of Business- Competition. Competitive Strengths We believe that the following competitive strengths enable us to compete effectively in the meat products market in Hubei, China: o Our Anpulo and Linghaotuzhu brand products are sold at premium prices to middle and high income market in China. Because hogs from our region are fed by local farmers with mountain grown herbs, fruits and crops, which are free from drug, hormone and heavy metals residues, we are able to price our pork products at a premium, approximately 20% to 50% higher than similar pork products. o Our geographic location offers lower cost labors and abundant hog supply. Our production and processing plant is located in Laifeng county, Enshi Tujia and Miao Autonomous Prefecture, which we believe that provides lower cost labors than that is available for many of our competitors. Laifeng county, and its neighboring counties, are rich in pig farming, which provides us reliable sources to grow and expand. TABLE OF CONTENTS o The Anpulo brand name, to our belief, is well recognized throughout our target markets in Hubei Province, China. The brand identification differentiates us from many unorganized and low-end meat product suppliers, and therefore lends us support in developing customer base and implementing our pricing strategy. For more discussion regarding our competitive strengths, please see Description of Business-Competitive Strengths. Our Growth Strategy Our long-term business strategy is to establish our Company as a leading provider of premium pork and pork products in China. Our short-term objectives are to capitalize on current market opportunities and build on our competitive strengths to increase our market presence and enhance our position as a regional leader in the premium pork markets. The key elements of our growth strategy include the following: o Continue the strategy of offering premium product at premium price. We apply different pricing strategy than our competitors, targeting health conscious consumers who are willing to pay premium price for safe, high quality pork products. We believe that food safety is a top concern of Chinese consumers who purchase meat products. Therefore, we expect that our products by giving consumers the comfort and security of safe and health food will remain marketable at extra cost. To distinguish our pork products from the rest, we plan to continue to sell our pork products at prices approximately 20% to 50% higher than the products of the same category. o Improve our warehouse capability. Our temperature adjustable warehouse capability, although totals approximately 5,230 cubic meters, falls short of the amount of products that our slaughterhouse could produce in its full capacity. As a result, we are currently utilizing less than one third of our production capacity at our slaughterhouse. We regard our logistics capabilities as a key to our growth strategy. We intend to construct new warehouse facilities with walk-in coolers and freezers. The estimated cost for this project is approximately $700,000. We are currently experiencing a lack of sufficient capital resources to fund the construction and may encounter difficulties in obtaining additional financing. See Liquidity and Capital Resource-Requirement for Additional Funding on page 62. However, if additional fund becomes available, we intend to prioritize the use of fund in constructing new warehouse facilities. o Increase our market presence in Wuhan City, Chongqing city and Hunan province. As of March 31, 2014, we operated sales offices in Laifeng County and Wuhan City and had one warehouse in each of two cities. We plan to increase our market presence by continue adding more counters in Wuhan City, at a pace of five to ten counters a year within the next five years, in new supermarkets or at new store location of supermarket already carrying our products. The estimated cost for adding one supermarket counter is approximately $50,000. We do not currently have sufficient cash reserve to fund adding more counters. To implement this strategy, we will need to seek additional financing, which may not be available, or at acceptable terms, to us at this time. See Liquidity and Capital Resource-Requirement for Additional Funding. If no fund is secured, we will have to delay or eventually abandon this strategy. In addition, though no specific action plan is formed, we are also strategizing to seek expansion opportunities in neighboring provinces. Laifeng county is located in the southwest part of Hubei province and it s also in the junction of Hubei province, Hunan province and the municipality Chongqing city. As of March 31, 2014, we sell our products to 14 specialty retail stores in Chongqing city and Hunan province and had no supermarket counter in these two provinces. We believe our Laifeng location will enable us to continue service the three provinces and municipality and expand our presence there. o Expand our product lines. As of March 31, 2014, our product lines included over 183 types of pork and cured pork products, and we had over 30 new products under development. At such day, we were unable to ascertain the timeframe by which the development can be completed. In addition to in-house product development, when our financial conditions improve, we plan to seek collaboration with outside academic and research force to optimize and expand our product lines. We estimate that these research and development efforts will cost the Company approximately $100,000. Given to the lack of fund, we are uncertain when we will start this project. o Enhance our brand awareness. We believe that we can best achieve sustainable growth through further raising awareness of our brand names Anpulo and Linghaotuzhu . We plan to build our brand by focusing on educating consumers of our pork products through our ongoing holidays and special occasion promotions, and showcase our variety of pork products through our retail channels including our supermarket counters and third-party owned and operated boutique type, specialty retail stores. We believe that our retail channels will create additional brand awareness that will benefit our wholesale customers. TABLE OF CONTENTS Requirements for Additional Funding We incurred a loss of $0.1 million for the three months ended March 31, 2014 and a loss of 0.9 million for the year ended December 31, 2013. In addition, we had loans as of March 31, 2014 for $18.9 million that are due in the next 12 months and our cash reserves was $3.8 million at the same date. We also had a negative working capital of $9.9 million as of March 31, 2014. We anticipate that our current cash reserves plus cash from our operating activities will not be sufficient to meet our ongoing obligations and fund our operations for the next twelve months. See Management s Discussion and Analysis of Financial Condition and Results of Operations-Requirements for Additional Funding. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of shares of our common stock or renewing our current obligations with loaners. We may also seek to obtain short-term loans from our directors or unrelated parties. Additional funding may not be available, or at acceptable terms, to us at this time. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. These conditions have raised a substantial doubt of our auditor as to whether we may continue as a going concern. Emerging Growth Company Status We are an emerging growth company, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to 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, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could remain as 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. Please see Risk Factors beginning on page 9 for various risks associated with investing in an emerging growth company like us. Enforceability of Civil Liabilities Against Our Assets and Management in China Our operations are conducted and our assets are located within China. In addition, all of our directors and all of our senior management personnel reside in China, where substantially all of their assets are located. You may experience difficulties in effecting service of process upon us, our directors or our senior management as it may not be possible to effect such service of process outside China. In addition, China does not have treaties with the United States and many other countries providing for reciprocal recognition and enforcement of court judgments. Therefore, recognition and enforcement in China of judgments of a court in the United States or certain other jurisdictions may be difficult or impossible. Corporate Information Our principal executive offices are located at Hangkong Road, Xiangfeng Town, Laifeng County, Hubei 445700, China and our telephone number is (86) 718 628 7598. Our website is www.anpulo.cn. No information available on or through our website is incorporated into this prospectus supplement, the accompanying prospectus or the registration statement of which it forms a part. The Offering Ordinary shares offered by selling security holders 15,500,000 ordinary shares Ordinary shares outstanding before the offering 123,000,000 ordinary shares Ordinary shares outstanding after the offering 123,000,000 ordinary shares Offering Price $0.20 per share until a public market emerges for our ordinary shares and, thereafter, at prevailing market prices. Use of proceeds We are not selling any ordinary shares covered by this prospectus, and, as a result, will not receive any proceeds from this offering.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001509697_civitas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001509697_civitas_prospectus_summary.txt
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+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001511325_portus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001511325_portus_prospectus_summary.txt
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+SUMMARY
+
+As used in this prospectus, unless the context otherwise requires, we, us, our, the Company and Portus refers to Portus Corporation. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. You should read the entire prospectus before making an investment decision to purchase our shares of common stock.
+
+About Us
+
+We were incorporated on March 2, 2010 under the laws of the State of Nevada under the name Dane Exploration Inc. On March 24, 2014, we changed our name to Portus Corporation . Our mailing address is located at P.O. Box 9293, Coral Springs, Florida, 33065 and our telephone number is (954) 778-8211.
+
+Overview of Business
+
+Our business is focused on creating a multilingual, multiple functionality, and global food and beverage service platform. Our food service cloud platform is designed to be a global, multilingual, cloud based food and beverage service online portal where customers will be able to manage an entire food and beverage service business or enterprise globally and in most languages.
+
+The food and service cloud portal that we are developing is intended to effectively and efficiently manage the food and beverage supply chain from field to fork . In particular, our cloud portal will allow our customers, being institutions (ie. hospitals, military, long-term care facilities and universities), restaurants and dining management, to source, price and order though an internet web browser, without the need of traditional on-site software. Accordingly, we anticipate that our food service platform will enable our customers to embrace the rapid pace of change in their business, operate with a more complete picture of their business and provide a modern and intuitive user experience, while substantially reducing the cost of their IT associated with their food and beverage operations. See section titled Our Business for additional information.
+
+To date, we have not earned any revenues from our business. We are presently in the development stage of developing our food service cloud platform and will be contracting the services of software developers and/or licensing software in order for our food service cloud platform to become operational. Accordingly, we can provide no assurance that our operations will provide sufficient funds to keep us operational.
+
+The Offering
+
+Shares of Common Stock Offered by Us:
+
+ shares of common stock at a fixed price of $ per share for gross proceeds of $6,000,000.
+
+Shares of Common Stock Offered by the Selling Security Holder:
+
+250,000 shares of common stock at prices determined by prevailing market prices, prices related to prevailing market prices and privately negotiated prices.
+
+Minimum Number of Shares of Common Stock To Be Sold in This Offering:
+
+None.
+
+Shares of Common Stock Outstanding Before and After the Offering:
+
+56,335,000 shares of common stock are issued and outstanding as of the date of this prospectus. Upon completion of the offering, if all shares being offered are sold, there will be shares of common stock issued and outstanding.
+
+Use of Proceeds:
+
+Any proceeds that we receive from this offering will be used by us to develop and market our food service cloud platform, pay for the expenses of this offering and as general working capital.
+
+Risk Factors:
+
+An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors under the section titled Risk Factors on page 3.
+
+5
+
+RISK FACTORS
+
+An investment in our shares of common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our shares of common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our shares of common stock, if we publicly trade at a later date, could decline due to any of these risks, and you may lose all or part of your investment.
+
+Risks Related To Our Business
+
+The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation. 
+
+If we do not obtain significant financing, our business will fail.
+
+Over the next twelve months we anticipate that our plan of operation will require us to incur $1,800,000 in order to meet the costs of developing our food service cloud platform as well as general and administrative expenses. As at September 30, 2014, we had no cash on hand. Accordingly, we will need to obtain significant financing to meet the costs associated with development of our food service cloud platform, general and administrative expenses and our ongoing reporting obligations. There is no assurance we will be successful in raising such funding or on terms that are acceptable to us. Since inception, we have been dependent on investment capital and debt financing from third parties as our primary source of liquidity. We anticipate continuing to rely on sales of shares of our common stock and loans in order to continue to fund our business operations. Issuances of additional shares will result in further dilution of our existing stockholders.
+
+We have limited operating history and face many of the risks and difficulties frequently encountered by development stage companies.
+
+We are a development stage company, and to date, our development efforts have been focused primarily on the development of our business model. Since inception, we have incurred losses of $3,124. We are in the process of developing and implementing our global, multilingual, cloud based food and beverage services portal . We have not completed the development of our portal and have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company:
+
+(i)
+
+Develop effective business plan. If we do not develop an effective business plan, we may not be able to attract enough customers to sustain growth.
+
+(ii)
+
+Launching our cloud based platform. If we are unable to launch our platform as it is envisioned, we will not be able to serve our intended clients and will not generate revenue.
+
+(iii)
+
+Meet customer standards. If we are unable to meet sufficient customer standards, we will not be able to retain customers.
+
+(iv)
+
+Attain customer loyalty. If we have not delivered the service in a form that customers will adopt nor service customers properly, we will not retain customer loyalty and limit our revenue.
+
+(v)
+
+Develop and upgrade our services. If we do not continually seek our customers feedback and continue to enhance, expand and upgrade our service we could lose market share to a competitor and affect our revenues.
+
+Our future will depend on our ability to bring our services to the market place, which requires careful planning of providing a product that meets customer standards without incurring unnecessary cost and expense.
+
+6
+
+We have had operating losses since inception and have not generated any revenues and our business model is not yet operational. If our cloud based food service portal does not become operational or if we fail to gain market acceptance, we may not have sufficient capital to pay our expenses and continue to operate.
+
+Our Company has had operating losses since inception and has generated no revenues to date. Our ultimate success will depend on generating revenues from our cloud food service management system. Most of the time of our management, and most of our limited resources have and will continue to be spent on startup activities which will include but not be limited to software development, contacting potential customers, establishing several initial customers, partners and business alliances, exploring marketing contacts, performing certain research and development activities, executing, updating and monitoring our business plan and model, and consultants and seeking capital for the Company. We have not generated any revenue and have not completed our platforms, as a result, if we never become operational or if we do not generate enough users, once we are operational, we may be unable to generate sufficient revenues from user transactions. We may not achieve and sustain market acceptance sufficient to generate revenues. If we generate no revenues or additional startup capital, we will continue to have operating losses and this will have a material adverse effect on our Company.
+
+Because we intend recognize revenue from transaction fees, our success is expected to be dependent on the volume of customers that utilize our food service cloud platform.
+
+Once our food service cloud platform is operational, we believe that our revenue will be initially derived from transaction fees. Accordingly, transactions fees will be dependent on the volume of customers that utilize our food service cloud platform. If we fail to generate a sufficient amount of transactions, our financial condition and results of operation will be negatively impacted.
+
+Our success may depend upon the acceptance, and successful measurement, of online advertising as an alternative to offline advertising.
+
+We believe that a advertisers spend significantly more on offline advertising compared to online advertising. Long-term growth of our business will depend heavily on this distinction between online and offline advertising narrowing or being eliminated, which may not happen in a manner or to the extent that we currently expect. We compete with traditional media for advertising dollars, in addition to websites with higher levels of traffic. If online advertising ceases to be an acceptable alternative to offline advertising, our business, financial condition and results of operations will be negatively impacted.
+
+Because the online marketing industry is relatively new and rapidly evolving, it uses different methods than traditional media to gauge its effectiveness. Potential customers may have little or no experience using the Internet for advertising and marketing purposes and may allocate only limited portions of their advertising and marketing budgets to the Internet. The adoption of Internet advertising, particularly by those entities that have historically relied upon traditional media for advertising, requires the acceptance of a new way of conducting business, exchanging information and evaluating new advertising and marketing technologies and services. As a result, we will need to continually evaluate changes to aspects of our business model to keep pace with the expectations of users and advertisers, and these changes may not yield the benefits we expect. In particular, we are dependent on our clients adoption of new metrics to measure the success of online marketing campaigns. We may also experience resistance from traditional advertising agencies who may be advising our clients. Any lack of growth in the market for various online advertising models could have an adverse effect on our business, financial condition and results of operations
+
+Evolving regulation of the Internet may affect us adversely.
+
+As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. For example, we believe increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information could affect our customers ability to use and share data and restricting our ability to store, process and share data with our customers. In addition, taxation of services provided over the Internet or other charges imposed by government agencies or by private organizations for accessing the Internet may also be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business.
+
+7
+
+If we do not continue to innovate and provide products and services that are useful to users, we may not remain competitive, and our revenues and operating results could suffer.
+
+Our success depends on providing products and services that make using the internet a more useful and enjoyable experience for our users. Our competitors are constantly developing innovations in web search and web-based products and services. As a result, we will be required to continuously invest significant resources in research and development in order to enhance our web portals, and introduce new products and services. In addition, these new products and services may present new and difficult technology challenges, and we may be subject to claims if users of these offerings experience service disruptions or failures or other quality issues. Our operating results would also suffer if our innovations are not responsive to the needs of our users, advertisers, and other network members; are not appropriately timed with market opportunities, or are not effectively brought to market. As search technology continues to develop, our competitors may be able to offer search results that are, or that are seen to be, substantially similar to or better than ours. This may force us to compete in different ways and expend significant resources in order to remain competitive
+
+Our growth could strain our personnel and infrastructure resources, and if we are unable to implement appropriate controls and procedures to manage our growth, we may not be able to successfully implement our business plan.
+
+Our success will depend in part upon management s ability to manage growth. To do so, we must continue to hire, train and manage new employees as needed. If our new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be harmed. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. The additional headcount and capital investments we are adding will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by offsetting expense reductions in the short term. If we fail to successfully manage our growth, we will be unable to execute our business plan.
+
+Current global financial conditions have made access to financing more difficult.
+
+Since the 2008 financial crisis there has been severe deterioration in global credit and equity markets. This has resulted in the need for government intervention in major banks, financial institutions and insurers, and has also led to greater volatility, increased credit losses and tighter credit conditions. These unprecedented disruptions in the credit and financial markets have had a significant adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase our cost of obtaining capital and financing for our operations.
+
+We operate in a highly competitive industry and compete against many large companies that may be more established and better capitalized than we are.
+
+Offering dietary and food service software is and can be a very competitive market with few barriers to entry. We expect that if our software establishes a key market niche, competition will arise from a variety of sources, from large multinational software companies to the myriad of other smaller national and regional software development and delivery companies.
+
+Many of our potential competitors have: (i) greater financial, technical, personnel, promotional and marketing resources, (ii) longer operating histories, (iii) greater name recognition, (iv) larger institutional clients than us.
+
+With few barriers to entry we cannot be certain that we will be able to compete successfully in this extremely competitive market.
+
+We may face claims that we are violating the intellectual property rights of others
+
+Although we are not aware of any potential violations of others intellectual property rights, we may face claims, including from direct competitors, other companies, scientists or research universities, asserting that our technology or the commercial use of such technology infringes or otherwise violates the intellectual property rights of others. We cannot be certain that our technologies and processes do not violate the intellectual property rights of others. If our market profile grows we could become increasingly subject to such claims.
+
+8
+
+If we were found to be infringing or otherwise violating the intellectual property rights of others, we could face significant costs to implement work-around methods, and we cannot provide any assurance that any such work-around would be available or technically equivalent to our potential technology. In such cases, we might need to license a third party s intellectual property, although any required license might not be available on acceptable terms, or at all.
+
+If we are unable to work around such infringement or obtain a license on acceptable terms, we might face substantial monetary judgments against us or an injunction against continuing to use or license such technology, which might cause us to cease operations.
+
+In addition, even if we are not infringing or otherwise violating the intellectual property rights of others, we could nonetheless incur substantial costs in defending ourselves in suits brought against us for alleged infringement. Also, if we are to enter into a license agreement in the future and it provides that we will defend and indemnify our customer licensees for claims against them relating to any alleged infringement of the intellectual property rights of third parties in connection with such customer licensees use of such technologies, we may incur substantial costs defending and indemnifying any customer licensees to the extent they are subject to these types of claims. Such suits, even if without merit, would likely require our management team to dedicate substantial time to addressing the issues presented. Any party bringing claims might have greater resources than we do, which could potentially lead to us settling claims against which we might otherwise prevail on the merits.
+
+The loss of our executive officers or directors, could adversely affect our business. 
+
+Our success depends largely upon the efforts, abilities, and decision-making of our executive officers and directors. The loss of any of these individual would have an adverse effect on our business prospects. We do not currently maintain "key-man" life insurance and there is no contract in place assuring the services our executive officers and directors for any length of time. In the event that we should lose our sole officer or directors and we are unable to find suitable replacements, we may not be able to develop our business, in which case investors might lose all of their investment. 
+
+One stockholder owns a majority of our common stock and may act, or prevent certain types of corporate actions, to the detriment of other stockholders.
+
+Portus Holdings Inc. owns 50,000,000 shares of common stock, representing approximately 92.9% of our issued and outstanding common stock. Accordingly, our majority stockholder may exercise significant influence over all matters requiring stockholder approval, including the election of a majority of the directors and the determination of significant corporate actions. This concentration could also have the effect of delaying or preventing a change in control that could otherwise be beneficial to our stockholders. 
+
+The recently enacted JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
+
+We are and we will remain an "emerging growth company" until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Exchange Act. For so long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.
+
+9
+
+Our election not to opt out of JOBS Act extended accounting transition period may not make our financial statements easily comparable to other companies.
+
+ 
+
+Pursuant to the JOBS Act, as an emerging growth company , we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the SEC. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, our company, as an emerging growth company , can adopt the standard for the private company. This may make comparison of our financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
+
+The recently enacted JOBS Act will also allow our company to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in reports filed with the SEC.
+
+ 
+
+The recently enacted JOBS Act is intended to reduce the regulatory burden on emerging growth companies . We meet the definition of an emerging growth company and so long as we qualify as an emerging growth company, we will, among other things:
+
+ 
+
+ 
+
+be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;
+
+ 
+
+be exempt from the "say on pay provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;
+
+ 
+
+be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act, as amended and instead provide a reduced level of disclosure concerning executive compensation; and
+
+ 
+
+be exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor s report on the financial statements.
+
+ 
+
+Although we are still evaluating the JOBS Act, we currently intend to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an emerging growth company . We have elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act. Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company , which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as we qualify as an emerging growth company , we may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate us. As a result, investor confidence in our company and the market price of our common stock may be adversely affected.
+
+10
+
+Risks Related To The Ownership of Our Shares
+
+If we issue additional shares of common stock in the future this may result in dilution to our existing stockholders. 
+
+Our articles of incorporation authorize the issuance of 250,000,000 shares of common stock. Our board of directors has the authority to issue additional shares of common stock up to the authorized capital stated in the articles of incorporation. Our board of directors may choose to issue some or all of such shares to provide additional financing in the future. The issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. It will also cause a reduction in the proportionate ownership and voting power of all other stockholders. 
+
+The trading price of our common stock may be volatile, with the result that an investor may not be able to sell any shares acquired at a price equal to or greater than the price paid by the investor.
+
+Our common stock is quoted on the OTC Bulletin Board and OTCQB under the symbol "PORS. Companies quoted on the OTC Markets platform have traditionally experienced extreme price and volume fluctuations. In addition, our stock price may be adversely affected by factors that are unrelated or disproportionate to our operating performance. Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. In addition, to date, there has been no trading volume for our shares on the OTC Markets platforms. As a result of this potential volatility and potential lack of a trading market, an investor may not be able to sell any of our common stock that they acquire that a price equal or greater than the price paid by the investor.
+
+Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.
+
+The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. 
+
+Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the trading price of our common stock is less than $5.00 per share, the common stock will be subject to rule 15g-9 under the Securities Exchange Act of 1934 (the Exchange Act ). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: 
+
+1.
+
+contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; 
+
+2.
+
+contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; 
+
+3.
+
+contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; 
+
+4.
+
+contains a toll-free telephone number for inquiries on disciplinary actions;
+
+5.
+
+defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and 
+
+6.
+
+contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.
+
+The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
+
+11
+
+FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF THESE AND OTHER FACTORS SET-FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.
+
+CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
+
+Certain statements contained in this Registration Statement Report constitute "forward-looking statements. These statements, identified by words such as plan, "anticipate, "believe, "estimate, "should, "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; lack of brand awareness; successful development of our food service cloud platform; acceptance of our products by our customers, our limited operating history; market fluctuations; intellectual property infringement claims and retention of key personnel, as well as those factors discussed in the section titled "Risk Factors. 
+
+Forward looking statements are based on a number of material factors and assumptions, including that consumers will accept cloud platforms, economic conditions in the United States will continue to show modest improvement in the near to medium future, there are no material changes to the competitive environment for the development of a food service cloud platform, we will be able to access sufficient qualified staff, there will be no material changes with our anticipated customer base and there will be no material changes to the tax and other regulatory requirements governing us. While we consider these assumptions to be reasonable based on information currently available to us, these assumptions may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled "Risk Factors. 
+
+We intend to discuss in our quarterly and annual reports any events or circumstances that occurred during the period to which such documents relate that are reasonably likely to cause actual events or circumstances to differ materially from those disclosed in this Registration Statement on Form S-1. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any forwarding looking statement.
+
+We advise you to carefully review the reports and documents we file from time to time with the SEC, particularly our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. 
+
+USE OF PROCEEDS
+
+We are offering a total of shares of common stock at a price of $ per share for gross proceeds of $6,000,000 under our Primary Offering. The shares being offered by us are being offered without the use of underwriters or broker-dealers and will be sold by our sole director and officer. No commissions or discounts will be paid in connection with the sale of the shares being offered by us.
+
+12
+
+The following table below sets forth the net proceeds assuming the sale of 25%, 50%, 75% and 100% of the Primary Offering. See also Plan of Operation .
+
+Item
+
+25%
+
+50%
+
+75%
+
+100%
+
+Gross proceeds 
+
+$1,500,000
+
+$3,000,000
+
+$4,500,000
+
+$6,000,000
+
+Expected offering expenses
+
+35,000
+
+35,000
+
+35,000
+
+35,000
+
+Net proceeds 
+
+$1,465,000
+
+$2,965,000
+
+$4,465,00
+
+$5,965,000
+
+We plan to use the net proceeds of the Primary Offering as set forth below (all amounts listed below are estimates):
+
+Item
+
+25%
+
+50%
+
+75%
+
+100%
+
+General Working Capital
+
+ $240,000
+
+ $360,000
+
+ $720,000
+
+ $1,080,000
+
+Legal and Accounting
+
+ $100,000
+
+ $150,000
+
+ $250,000
+
+ $ 300,000
+
+Management Expenses
+
+ $240,000
+
+ $480,000
+
+ $720,000
+
+ $ 960,000
+
+Office Expenses
+
+ $ 82,000
+
+ $120,000
+
+ $120,000
+
+ $ 180,000
+
+Product Development
+
+ $200,000
+
+ $600,000
+
+ $900,000
+
+ $1,100,000
+
+Sales/Marketing
+
+ $300,000
+
+ $700,000
+
+ $950,000
+
+ $1,200,000
+
+Multilingual Translation
+
+Cash Reserve
+
+ $250,000
+
+ $ 53,000
+
+ $350,000
+
+ $205,000
+
+ $450,000
+
+ $355,000
+
+ $ 550,000
+
+ $ 595,000
+
+Available Funds 
+
+$1,465,000
+
+$2,965,000
+
+$4,465,000
+
+$5,965,000
+
+The principal purposes of this offering is to raise sufficient capital for us to develop and market our food service cloud platform and allow us to meet general working capital requirements. If we are unable to sell any shares under the Primary Offering, we have insufficient funds to pay the costs of this offering. 
+
+Pending the use of net proceeds from the Primary Offering described above, we intend to invest our net proceeds in short-term, interest bearing, debt instruments or bank deposits.
+
+Secondary Offering
+
+The common stock offered by the Selling Security Holder are being registered for the account of the Selling Security Holder identified in this prospectus. All net proceeds from the sale of these shares will go to the Selling Security Holder. We will not receive any part of the proceeds from such sales of shares of common stock.
+
+SELLING SECURITY HOLDERS
+
+To our knowledge, the following information sets forth, in respect of the Selling Security Holder: 
+
+1.
+
+the number of shares beneficially owned prior to the offering;
+
+2.
+
+the total number of shares that are to be offered;
+
+3.
+
+the total number of shares that will be beneficially owned upon completion of the offering;
+
+4.
+
+the percentage owned upon completion of the offering; and
+
+5.
+
+the identity of the beneficial holder of any entity that owns the shares.
+
+13
+
+The Selling Security Holder listed below is not making any representation that any of the shares covered by this Prospectus will be offered for sale by it, and the Selling Security Holder may reject, in whole or in part, any proposed sale of the shares covered by this Prospectus.
+
+The information provided below assumes that the Selling Security Holder does not sell any of our securities other than the securities specifically offered in this Prospectus under the offering, and assumes that all of the securities offered by the Selling Security Holder in this Prospectus are sold.
+
+Except as specifically disclosed below, the Selling Security Holder:
+
+(i)
+
+has not had a material relationship with us other than as a stockholder at any time within the past three years; or
+
+(ii)
+
+has never been one of our officers or directors.
+
+Name Of Selling Security Holder
+
+Beneficial Ownership
+
+Before Offering (1)
+
+Number of Shares Being Offered
+
+Beneficial Ownership
+
+After Offering (1)
+
+Number of Shares
+
+Percent (2)
+
+Number of Shares
+
+Percent (2)
+
+Monarch Bay Securities, LLC(3)
+
+250,000
+
+*
+
+250,000
+
+Nil
+
+*
+
+Total
+
+250,000
+
+*
+
+250,000
+
+Nil
+
+*
+
+Notes:
+
+*
+
+Represents less than 1%.
+
+(1)
+
+The number of shares of common stock beneficially owned has been determined in accordance with Rule 13d-3 under the Exchange Act, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3, beneficial ownership includes any shares as to which the selling stockholder has sole or shared voting power or investment power and also any shares which that selling stockholder has the right to acquire within 60 days of the date of this prospectus through the exercise of any stock options, warrants or other rights. The number of shares beneficially owned after the offering assumes that the selling security holder (1) sells all of the securities being offered by them in this prospectus; (2) does not dispose of any security of ours other than the securities being offered in this prospectus; and (3) does not require any additional securities of ours.
+
+(2)
+
+The percentages of beneficial ownership are based on 56,335,000 shares of common stock as of the date of this prospectus and shares of common stock on closing of the Primary Offering.
+
+(3)
+
+The Selling Security Holder is a registered broker-dealer.
+
+PLAN OF DISTRIBUTION
+
+Primary Offering
+
+We are offering shares of common stock at a fixed price of $ per share for gross proceeds of $6,000,000. The price of $ per share was chosen by our board of directors, based on the following factors:
+
+1.
+
+The average closing price of our shares of common stock on the OTCQB marketplace;
+
+2.
+
+The current economic climate including, but not limited to, the general conditions of the securities market at the time of the Primary Offering, the volatility of securities prices of venture issuers and the seasonal trends of the prices of venture issuer securities; 
+
+3.
+
+Historical prices of other similar Primary Offerings; and
+
+4.
+
+Our judgment as to the best price as which such sales could be completed.
+
+This offering is being made by us without the use of outside underwriters or broker-dealers. The common stock to be sold by us will be sold on our behalf by our sole director and officer. Our sole director and officer will not receive commissions or proceeds or other compensation from the sale of any shares on our behalf.
+
+14
+
+Our sole director or officer will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, in reliance upon Rule 3a4-1, which sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker-dealer.
+
+1.
+
+Our sole officer and director is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act, at the time of his participation;
+
+2.
+
+Our sole officer and director will not be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
+
+3.
+
+Our sole officer and director is not, nor will any of them be at the time of participation in the offering, an associated person of a broker-dealer; and
+
+4.
+
+Our sole officer and director meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that each of them: (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of our company, other than in connection with transactions in securities; and (B) is not a broker or dealer, or been an associated person of a broker or dealer, within the preceding twelve months; and (C) has not participated in selling and offering securities for any issuer more than once every twelve months other than in reliance on paragraphs (a)(4)(i) or (a)(4)(iii).
+
+Secondary Offering
+
+The Selling Security Holder named in this prospectus may sell its shares on a continuous or delayed basis for a period of nine months after this registration statement is declared effective. The Selling Security Holder may sell some or all of their shares in one or more transactions, including block transactions:
+
+1.
+
+On such public markets as the shares may from time to time be trading;
+
+2.
+
+In privately negotiated transactions;
+
+3.
+
+Through the writing of options on the shares;
+
+4.
+
+In short sales; or
+
+5.
+
+In any combination of these methods of distribution.
+
+The Selling Security Holder named in this prospectus may also sell their shares directly to market makers acting as agents in unsolicited brokerage transactions. Any broker or dealer participating in such transactions as agent may receive a commission from the selling security holder, or, if they act as agent for the purchaser of such shares, from such purchaser. The Selling Security Holder will likely pay the usual and customary brokerage fees for such services.
+
+We are bearing all costs relating to the registration of this offering. The Selling Security Holder, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the shares.
+
+Concurrent Offerings
+
+Our Primary Offering will continue to have a fixed price of $ per share. However, the Selling Security Holder can sell shares under the Secondary Offering at prevailing market prices, prices related to prevailing market prices or at privately negotiated prices. Therefore, the price of shares offered, under the Primary Offering may, in the future differ from the price of shares offered under the Secondary Offering.
+
+15
+
+Stabilization and Other Activities
+
+Our sole director and officer and the Selling Security Holder named in this prospectus must comply with the requirements of the Securities Act and the Exchange Act in the offer and sale of the shares. Our sole director and officer is deemed to be an underwriter within the meaning of the Securities Act in connection with our offering of shares of common stock. The Selling Security Holder and any broker-dealers who execute sales for the Selling Security Holder may be deemed to be an underwriter within the meaning of the Securities Act in connection with such sales. In particular, our sole director and officer and during such times as the Selling Security Holder may be deemed to be engaged in a distribution of the shares, and therefore be considered to be an underwriter, they must comply with applicable law and may among other things:
+
+1.
+
+Not engage in any stabilization activities in connection with our shares;
+
+2.
+
+In the case of the Selling Security Holder, furnish each broker or dealer through which shares may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
+
+3.
+
+Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Exchange Act.
+
+Our sole director and officer is aware and the Selling Security Holder should be aware that the anti-manipulation provisions of Regulation M under the Exchange Act will apply to purchases and sales of shares of common stock by us and the Selling Security Holder, respectively, and that there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, the Company, the selling security holder and their agents may not bid for, purchase, or attempt to induce any person to bid for or purchase, our shares of common stock while such persons are distributing shares covered by this prospectus. In addition, it shall be unlawful for any person to short sell our common stock and purchase the shares offered in the Primary Offering or Secondary Offering while the Primary Offering and Secondary Offering are taking place. The selling security holder are advised that if a particular offer of shares is to be made on terms constituting a material change from the information set forth above with respect to the Plan of Distribution, then, to the extent required, a post-effective amendment to the accompanying registration statement must be filed with the SEC.
+
+DILUTION
+
+The price of the Primary Offering is at $ per share.
+
+This price is greater than the 50,000,000 shares of our common stock issued to Portus Holdings Inc., a beneficial holder of more than five percent of our outstanding shares, for the assets that comprise the Portus Cloud business (the Portus Assets ). The acquisition of the Portus Assets was completed pursuant to the terms of the Asset Purchase Agreement dated January 29, 2014 (the Asset Purchase Agreement ) among PHI, the Company, Dane Acquisition Corp. ( Dane Sub ), our wholly owned subsidiary, and David Christie, our sole executive officer, director and majority stockholder at the time of entering into the Asset Purchase Agreement. Portus Holdings Inc. is controlled by Mr. Murray, our sole executive officer and director.
+
+Based on the foregoing, you will suffer immediate dilution if you purchase common stock under this Primary Offering.
+
+Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution arises mainly as a result of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholders.
+
+Based on our latest unaudited quarter end data at September 30, 2014, the following tables sets forth your dilution based on completion of 25%, 50%, 75% and 100% of the Primary Offering.
+
+16
+
+Percent of Primary Offering
+
+25%
+
+50%
+
+75%
+
+100%
+
+Number of shares sold 
+
+ 
+ 
+ 
+ 
+
+Total shares outstanding 
+
+ 
+ 
+ 
+ 
+
+Offering price per share
+
+ 
+ 
+ 
+ 
+
+Gross proceeds
+
+ 
+ 
+ 
+ 
+
+Offering expenses
+
+ 
+ 
+ 
+ 
+
+Net proceeds
+
+ 
+ 
+ 
+ 
+
+Total net tangible book value as at 
+
+September 30, 2014
+
+ 
+ 
+ 
+ 
+
+Net tangible book value per share as at September 30, 2014
+
+ 
+ 
+ 
+ 
+
+Total net tangible book value after offering
+
+ 
+ 
+ 
+ 
+
+Net tangible book value after offering
+
+ 
+ 
+ 
+ 
+
+Dilution
+
+ 
+ 
+ 
+ 
+
+DESCRIPTION OF SECURITIES TO BE REGISTERED
+
+General
+
+Our authorized capital stock consists of 250,000,000 shares of common stock, with a par value of $0.001 per share.
+
+Common Stock
+
+Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing a majority of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors. 
+
+The holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.
+
+Upon liquidation, dissolution or winding up of our company, the holders of shares of our common stock will be entitled to receive pro rata all assets of our company available for distribution to such holders.
+
+In the event of any merger or consolidation of our company with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash).
+
+ 
+
+Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock. 
+
+17
+
+Dividend Rights
+
+We have never declared, nor paid, any dividend since our incorporation and does not foresee paying any dividend in the near future since all available funds will be used to conduct exploration activities. Any future payment of dividends will depend on our financing requirements and financial condition and other factors which the board of directors, in its sole discretion, may consider appropriate.
+
+Under the Business Corporations Act, we are prohibited from declaring or paying dividends if there are reasonable grounds for believing that we are insolvent or the payment of dividends would render us insolvent.
+
+INTERESTS OF NAMED EXPERTS AND COUNSEL
+
+No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the shares was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in our company or any of its parents or subsidiaries. Nor was any such person connected with our company, or any of its parents or subsidiaries, a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
+
+Northwest Law Group has assisted us in the preparation of this prospectus and registration statement and will provide counsel with respect to other legal matters concerning the registration and offering of the shares.
+
+MaloneBailey LLP ( MaloneBailey ), our independent registered public accountants, has reviewed our financial statements included in this prospectus and registration statement.
+
+OUR BUSINESS
+
+Overview
+
+We were incorporated on March 2, 2010 under the laws of the State of Nevada.
+
+On February 11, 2014, we completed the acquisition of the assets that comprise the Portus Cloud business (the Portus Assets ) from Portus Holdings Inc. ( PHI ). The acquisition of the Portus Assets was completed pursuant to the terms of the Asset Purchase Agreement dated January 29, 2014 (the Asset Purchase Agreement ) among PHI, the Company, Dane Acquisition Corp. ( Dane Sub ), our wholly owned subsidiary, and David Christie, our sole executive officer, director and majority stockholder at the time of entering into the Asset Purchase Agreement.
+
+Under the terms of the Asset Purchase Agreement, PHI transferred to Dane Sub all of its right, title and interest in and to the Portus Assets. In consideration for the Portus Assets, we issued to PHI 50,000,000 shares of our common stock.
+
+Concurrently, in connection with the closing of the Asset Purchase Agreement, Mr. Christie returned for cancellation 49,800,000 shares of our common stock, representing 99.6% of the shares beneficially owned by him as at closing.
+
+Upon completion of the acquisition of the Portus Assets, Mr. Christie resigned as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director. Following Mr. Christie s resignation, G. Dale Murray, II was appointed as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and as a Director.
+
+Prior to closing our acquisition of the Portus Assets, we were engaged in the acquisition and exploration of two mineral claims called the Judy Claims that are located two kilometers northeast of Cassiar, British Columbia, Canada. As a result of our acquisition of the Portus Assets, we have now changed our business to a global, multilingual, cloud-based food and beverage service platform and have elected to allow the Judy Claims to lapse on their renewal date.
+
+To date, we have not earned any revenues from our business. We are presently in the development stage of developing our food service cloud platform and will be contracting the services of software developers and/or licensing software in order for our food service cloud platform to become operational. Accordingly, we can provide no assurance that our operations will provide sufficient funds to keep us operational.
+
+18
+
+Food Service Cloud Platform
+
+Our business is now focused on creating a multilingual, multiple functionality, and global food and beverage service platform. Our food service cloud platform is designed to be a global, multilingual, cloud based food and beverage service online portal where customers will be able to manage an entire food and beverage service business or enterprise globally and in most languages.
+
+The food and service cloud portal that we are developing is intended to effectively and efficiently manage the food and beverage supply chain from field to fork . In particular, our cloud portal will allow our customers, being institutions (ie. hospitals, military, long-term care facilities and universities), restaurants and dining management, to source, price and order though an internet web browser, without the need of traditional on-site software. Accordingly, we anticipate that our food service platform will enable our customers to embrace the rapid pace of change in their business, operate with a more complete picture of their business and provide a modern and intuitive user experience, while substantially reducing the cost of their IT associated with their food and beverage operations.
+
+The services that our food service cloud portal will offer are:
+
+Food and Dining Management
+
+Our customers will be able to manage their food operations by sourcing, pricing and ordering food through our internet web browser cloud portal. Each customer will be able to personalize their portal to provide ordering preferences, track costs and select preferred suppliers, distributors and/or growers. In a typical transaction, a customer will review supplier costs, sourcing information and timing of deliveries. Once a customer has found a preferred supplier and/or distributor, a customer will place an order through our cloud portal and then the supplier and/or distributor will receive the order and make the delivery to our customer.
+
+Recipe Management
+
+We are developing our cloud based portal to include a database of recipes accessible to our customers. Customers will be able to scale, source and price recipes. Once completed, our customers will place orders based on the calculations provided in our recipe management portal. In addition, the database will also provide nutritional profiles and preparation instructions to ensure safety and quality control.
+
+Inventory Management & Spend Controls
+
+In the food industry, inventory management is essential to ensure funds are not wasted on unnecessary inventory. We are developing our system to allow our customers to track inventory, whether on-site or ordered, and set out spending controls. Our spend controls systems will allow customers to accurately budget their spending and compare anticipated spending to inventory levels.
+
+Staffing Management
+
+Our customers will be able to manage staffing and scheduling directly on the cloud portal. By creating an all-in-one system, customers will be coordinate staffing with deliveries, meal planning and inventory management. Such coordination allows customers to efficiently manage their business and reducing costs.
+
+Patient Information System
+
+We are also developing our portal specifically for healthcare users by including a patient information system. The patient information system will allow healthcare systems to integrate their medical records to track patient information for dining operations. Our goal is to allow healthcare users to reduce redundant data entry, mistakes, outages and wasted meals. 
+
+19
+
+User Accessibility of our Food Service Cloud Platform
+
+We are currently designing our cloud portal as a Software as a Service ( SaaS ), which will allow our customers to access our portal through any internet web browser. The major characteristics of SaaS are: (i) customers share a single version of the software (application), (ii) customers share the same IT infrastructure and operational resources, (iii) updates are included with the service at no extra charge; (iv) customers enjoy world class security for data center operations, applications and data; (v) service level guarantees that define and ensure up time, backup and disaster recovery; (vi) ongoing maintenance, development and performance tuning; and (vii) no perpetual licenses pay as you go pricing.
+
+Traditionally, the food service industry sources, prices and orders products through traditional on-site software. Onsite software is generally dedicated to a single workspace, functions one at a time and are limited in scope and size to the internal resources that are available. In addition, traditional software requires that a client maintain adequate IT personnel to ensure that proper functionality. 
+
+The two most significant differences between cloud based software and traditional on site software programs is that the user no longer owns the software and it does not matter where the software is located. Users simply pay to use the application. SaaS can be accessed at any time and from any place from any Internet-connected device (PC, Laptop, Tablet or Smart Phone, etc.).
+
+We are also in the process of developing our cloud platform to be multilingual. Initially, we anticipate that our food service cloud platform will be accessible in English, French, Portuguese, Spanish or German. By utilizing a multilingual translator, our customers will be able to source foods in regions where a foreign language may be a barrier to entry. It will also enable the creation of recipes and menus, sourcing, costing and ordering the ingredients for proper preparation and presentation and where needed clinical feedback and in multiple languages.
+
+Sales and Market
+
+Sale of Services
+
+Once our food service cloud platform is operational, we intend to derive revenue from two primary sources:
+
+1.
+
+Transaction Fees. Transaction fees will consist of fees charged to providers along the supply chain to access our customers. As we are in the development stage, we have yet to determine a final pricing model.
+
+2.
+
+Advertising Revenue. We also plan to monetize our business by charging food providers to advertise on our food service cloud platform. The advertising rate will be determined at a later date in conjunction with the number of users.
+
+Our ability to derive revenues is subject to a successful launch of the food service cloud platform, of which there is no assurance.
+
+Market for Services
+
+We are currently focused on providing our services to the food service sector, which includes institutions, restaurants and dining management. We believe that there is increasing awareness and focus of proper nutrition and the growing concern by the public in general to reduce obesity and diabetes in the U.S. Our services will provide the tools to improve the way people eat. The core business segments below represent our target markets for our food service cloud platform:
+
+Institutions
+
+The institutions we intend to target include hospitals, assistant living facilities, nursing homes, schools, universities and the armed forces. Hospitals, skilled nursing, assisted living, schools, universities, and armed services receive the benefit of scalable services that provide ingredients, menus, pricing of meals, and barcode inventory management. With this product, the opportunity is created to expand globally to multi-national companies offering an enterprise resource management solution to companies now using many different software platforms that do not interface and work together.
+
+20
+
+Restaurants
+
+We intend to supply a platform for all restaurants to manage their commercial kitchen operations seamlessly through the cloud. 
+
+Dining Management
+
+We intend to enter into contracts with dining management providers and enable them to use our system in accessing recipes, menus, and inventory management applications in their daily operations. We intend this to be a cost-effective solution that improves their operations and ensures quality.
+
+Marketing Strategy
+
+Our objective is to be a leading provider of on-demand application services for the food service industry worldwide. The key element to our strategy is to create brand awareness by highlighting that our cloud portal is intended to extend product offerings from the current end user to each participant in the supply train, including:
+
+1.
+
+Producers of food products can use our exposure to the end user to identify demand and to advertise their existing and new products to the key purchasers and users of our service.
+
+2.
+
+Manufacturers can populate our data base with their exact nutrient, caloric, and allergen content of any product which will provide them a product placement and competitive advantage. Manufacturers through our service can record all information about their products into our database and track them the entire way to the consumer.
+
+3.
+
+Distributors will have a link with end users allowing the end user to read and link inventories of each as well as pricing and ordering of food by the end user commercial kitchen.
+
+4.
+
+End user commercial kitchen benefits by having access to the entire supply chain and knowing the complete "chain of title" to the food they serve lowering risk. The commercial kitchen through our service can take advantage due to its connectivity to, and information from the entire food supply chain enabling it to take advantage of competitive pricing, inventory management, new product offerings, and quality data for ingredient resourcing.
+
+This marketing strategy is designed to offer our service to and bringing value to all participants in the food supply chain.
+
+Competition
+
+The market for food service software applications is highly competitive and subject to changing technology, shifting customer needs and frequent introductions of new products and services. Our entry into the Cloud has set us apart from the majority of vendors. However, the Cloud and the virtualization of markets are rapidly evolving. We expect completion to significantly intensify in the future and expect that new entrants will continue to enter the market and develop technologies that, if commercialized, may compete with our product.
+
+We will also be competing with vendors of packaged dietary management software (DMS), whose software is installed by the customer directly or is hosted by first generation, application service providers (ASP) on the customer s behalf, which requires substantial IT and hardware costs. We also compete with internally developed applications and face, or expect to face, competition from enterprise software vendors and online service providers who may develop and/or bundle DMS products with their products in the future.
+
+Our current principal competitors include:
+
+Computrition. Computrition is a subsidiary of Constellation Software of Canada. Computrition has a large client base. 
+
+Momentum Healthware. Momentum is a Microsoft platform dietary management solution, which primarily focuses in the skilled and long term care markets. They offer a full suite of products but have limited capabilities as it pertains to SaaS and have no cloud solution.
+
+21
+
+Simplified Nutrition Online. SNO is a cloud based application focusing mainly on skilled nursing. 
+
+CBord. CBord is one of the largest competitors in the market and a subsidiary of Roper Industries. The company currently relies on a server based business model. 
+
+Vision Software. Vision is a cloud based competitor.
+
+Patents and Trademarks
+
+We do not own, either legally or beneficially, any patent or trademarks.
+
+Effect of Government Regulations
+
+We are also subject to a number of United States federal, state and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy, libel, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment services. In particular, we are subject to United States federal, state and foreign laws regarding privacy and protection of user data. Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the United States. United States federal, state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations is often uncertain, particularly in the new and rapidly-evolving industry in which we operate.
+
+In connection with the operation of our business, we anticipate that the primary market of our services will be the healthcare industry, which is a highly regulated industry. Therefore, our customers are subject to numerous governmental regulations, including Medicare and Medicaid, which directly affect the facilities ability to pay the costs of our products and services. The regulations on the healthcare industry as it relates to food service create pressure to minimize the costs. Because we deliver our service as a transaction fee based service that it is accessible from any internet connected device, it lowers the cost to our healthcare clients significantly versus traditional installed software solutions.
+
+Research and Development
+
+As of the date of this prospectus, we have not incurred any research and development expenditures. However, we expect that substantial investment into research and development of our cloud food and beverage portal. 
+
+Environmental Compliance
+
+As a software company, compliance with environmental standards has had little impact on us.
+
+Employees
+
+Aside from our sole executive officer, we have no employees at present.
+
+Reports to Security holders
+
+We file annual, quarterly and current reports and other information with the Securities and Exchange Commission. You may read and copy any reports, statement or other information that we file with the Commission at the Commission's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the Commission at (202) 551-8090 for further information on the public reference room. These Commission filings are also available to the public from commercial document retrieval services and at the Internet site maintained by the Commission at http://www.sec.gov.
+
+22
+
+PROPERTIES
+
+We currently do not own any real property. Our mailing address is located at P.O. Box 9293, Coral Springs, Florida, 33065.
+
+LEGAL PROCEEDINGS
+
+We are not a party to any other legal proceedings and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.
+
+MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
+
+Holders of Our Shares
+
+As of the date of this prospectus, there were 11 registered holders of record of our common stock. We believe that a large number of stockholders hold stock on deposit with their brokers or investment bankers registered in the name of stock depositories.
+
+Market for Information
+
+Our shares of common stock are quoted on the OTC Bulletin Board under the symbol PORS . The high and the low bid prices for our shares from the date we commenced quotation, being July 1, 2013, to our fiscal year ended December 31, 2013 and period ended September 30, 2014 were:
+
+QUARTER
+
+HIGH ($)
+
+LOW ($)
+
+September 30, 2013
+
+N/A
+
+N/A
+
+December 31, 2013
+
+N/A
+
+N/A
+
+March 31, 2014
+
+N/A
+
+N/A
+
+June 30, 2014
+
+N/A
+
+N/A
+
+September 30, 2014
+
+$0.60
+
+$0.31
+
+The high and low bid price information provided above was obtained from the OTC Bulletin Board. The market quotations provided reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
+
+Dividend Rights
+
+We have not declared any dividends on our common stock since our inception and we do not expect to declare any dividends in the foreseeable future. We expect to spend any funds legally available for the payment of dividends on the exploration of our mineral properties. There are no provisions in our Articles of Incorporation or bylaws that limit our ability to pay dividends on our common stock. Chapter 78 of the Nevada Revised Statutes (the NRS ), does provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:
+
+(a)
+
+we would not be able to pay our debts as they become due in the usual course of business; or
+
+(b)
+
+except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.
+
+Outstanding Options, Warrants or Convertible Securities
+
+As of the date of this prospectus, we do not have any outstanding options, warrants to purchase our shares or securities convertible into shares of our common stock.
+
+23
+
+FINANCIAL STATEMENTS
+
+1.
+
+Unaudited interim financial statements for the period ended September 30, 2014, including:
+
+ 
+ 
+ 
+
+ 
+(a)
+
+Balance Sheet as of September 30, 2014;
+
+ 
+(b)
+
+Statements of Operations for the six months ended September 30, 2014; 
+
+ 
+(c)
+
+Statement of Stockholders Equity (Deficiency) from inception on February 11, 2014 to September 30, 2014; 
+
+ 
+(d)
+
+Statements of Cash Flows for the six months ended September 30, 2014; and
+
+ 
+(e)
+
+Notes to the Financial Statements.
+
+ 
+ 
+ 
+
+24
+
+Portus Corporation 
+
+Condensed Balance Sheet
+
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+September 30th
+
+2014 
+
+(unaudited)
+
+ 
+
+ 
+
+ 
+
+ASSETS
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CURRENT ASSETS
+
+ 
+
+ 
+
+Cash
+
+ 
+
+ 
+$
+
+- 
+
+ 
+
+ 
+
+ 
+ 
+
+Total current assets
+
+ 
+
+ 
+- 
+
+ 
+
+ 
+
+ 
+ 
+
+Total Assets
+
+ 
+
+ 
+$
+
+- 
+
+ 
+
+ 
+
+ 
+ 
+
+LIABILITIES AND STOCKHOLDERS DEFICIT
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+CURRENT LIABILITIES
+
+ 
+
+ 
+ 
+
+ Accounts Payable
+
+ 
+
+ 
+$
+
+24 
+
+ 
+
+ 
+
+ 
+ 
+
+Total current liabilities
+
+ 
+
+ 
+24 
+
+ 
+
+ 
+
+ 
+ 
+
+Total Liabilities
+
+ 
+
+ 
+$
+
+24 
+
+ 
+
+ 
+
+ 
+ 
+
+COMMITMENTS AND CONTINGENCIES
+
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+STOCKHOLDERS DEFICIT
+
+ 
+
+ 
+ 
+
+Common shares, 250,000,000 shares with par value $0.001 authorized;
+
+56,085,000 shares issued and outstanding as of September 30th, 2014
+
+ 
+
+ 
+$
+
+56,085 
+
+Additional paid-in capital
+
+ 
+
+ 
+(52,985)
+
+Accumulated deficit
+
+ 
+
+ 
+(3,124)
+
+Total stockholders deficit
+
+ 
+
+ 
+(24)
+
+ 
+ 
+ 
+ 
+
+ Total Liabilities and Stockholders Deficit
+
+ 
+
+ 
+$
+
+- 
+
+25
+
+Portus Corporation 
+
+Condensed Statement of Operations
+
+(Unaudited)
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+Three Months Ended
+
+September 30th 2014
+
+ 
+
+ 
+
+February 11th 2014 (inception) through
+
+September 30th 2014
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+OPERATING EXPENSES:
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Bank Charges
+
+ 
+
+ 
+$
+
+- 
+
+ 
+ 
+ 
+$
+
+93 
+
+Professional fees
+
+ 
+
+ 
+- 
+
+ 
+ 
+ 
+1,000 
+
+General and administrative expenses
+
+ 
+
+ 
+- 
+
+ 
+ 
+ 
+876 
+
+Licenses
+
+ 
+
+ 
+- 
+
+ 
+ 
+ 
+1,155 
+
+Total operating expenses
+
+ 
+
+ 
+- 
+
+ 
+ 
+ 
+3,124 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+Net Loss
+
+ 
+
+ 
+$
+
+- 
+
+ 
+ 
+ 
+$
+
+(3,124)
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+Basic and diluted loss per common share
+
+ 
+
+ 
+$
+
+(0.00)
+
+ 
+ 
+ 
+$
+
+(0.00)
+
+Basic and diluted weighted average shares outstanding
+
+ 
+
+ 
+
+56,082,011 
+
+ 
+ 
+ 
+55,078,117 
+
+26
+
+Portus Corporation 
+
+Condensed Statements of Cash Flows
+
+(Unaudited)
+
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+
+ 
+
+February 11th 2014 (inception) through
+
+September 30th 2014
+
+ 
+
+ 
+
+ 
+
+Cash flows from operating activities:
+
+ 
+
+ 
+
+Net loss for the period
+
+ 
+
+ 
+$
+
+(3,124)
+
+Change in operating liabilities
+
+ 
+ 
+ 
+
+Accounts Payable
+
+ 
+ 
+24 
+
+ 
+
+ 
+
+ 
+ 
+
+Net cash used in operating activities
+
+ 
+
+ 
+(3,100)
+
+ 
+
+ 
+
+ 
+ 
+
+Cash flows from financing activities:
+
+ 
+
+ 
+ 
+
+Common stock issued for cash
+
+ 
+
+ 
+3,000 
+
+Contribution to capital
+
+ 
+
+ 
+100 
+
+ 
+
+ 
+
+ 
+ 
+
+Net cash provided by financing activities
+
+ 
+
+ 
+3,100 
+
+ 
+
+ 
+
+ 
+ 
+
+Net increase in cash
+
+ 
+
+ 
+-. 
+
+ 
+
+ 
+
+ 
+ 
+
+Cash, beginning of period
+
+ 
+
+ 
+- 
+
+ 
+
+ 
+
+ 
+ 
+
+Cash, end of period
+
+ 
+
+ 
+$
+
+- 
+
+ 
+ 
+ 
+ 
+
+27
+
+Portus Corporation
+
+Notes to Unaudited Financial Statements
+
+1.
+
+Basis of Presentation
+
+The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the Company s audited 2013 annual financial statements and notes thereto filed on Form 8-K. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure required in the Company s 2013 annual financial statements have been omitted.
+
+The Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.
+
+2.
+
+Going Concern
+
+The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since inception, the Company has incurred losses. In addition, the Company generated negative cash flows from operations during the period from inception through September 30, 2014. These factors, among others, raise substantial doubt about the Company s ability to continue as a going concern for a reasonable period of time.
+
+If necessary, the Company will pursue additional equity and/or debt financing while managing cash flows from operations in an effort to provide funds to meet its obligations on a timely basis and to support future business development.
+
+The consolidated financial statements do not contain any adjustments to reflect the possible future effects on the classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
+
+3.
+
+Significant Accounting Policies
+
+Fair Value of Financial Instruments
+
+The Company measures its financial assets and liabilities in accordance with the requirements of ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
+
+28
+
+Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
+
+Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
+
+Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management s best estimate of fair value.
+
+4.
+
+Portus Acquisition
+
+On February 11, 2014, we completed the acquisition of the assets that comprise the Portus Cloud business (the Portus Assets ) from Portus Holdings Inc. ( Portus ) in which Portus Holdings Inc. received 50,000,000 shares of common stock and Dane shareholders retained 3,800,000 shares of common stock. The acquisition of the Portus Assets was completed pursuant to the terms of the Asset Purchase Agreement dated January 29, 2014 (the Asset Purchase Agreement ) among Portus, the Company, Dane Acquisition Corp. ( Dane Sub ), our wholly owned subsidiary, and David Christie, our sole executive officer, director and majority stockholder at the time of entering into the Asset Purchase Agreement.
+
+Under the terms of the Asset Purchase Agreement, Portus transferred to Dane Sub all of its rights, title and interest in and to the Portus Assets. In consideration for the Portus Assets, we issued to Portus 50,000,000 shares of our common stock.
+
+Concurrently, in connection with the closing of the Asset Purchase Agreement, Mr. Christie returned for cancellation 49,800,000 shares of our common stock, representing 99.6% of the shares beneficially owned by him.
+
+The transaction is being treated as a reverse merger and recapitalization of the Portus assets as of February 11, 2014. The Portus assets are deemed to be a business in this transaction. 
+
+Upon completion of the acquisition of the Portus Assets, Mr. Christie resigned as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director. Following Mr. Christie s resignation, G. Dale Murray, II was appointed as our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and as a Director.
+
+29
+
+5.
+
+Common Stock
+
+Subsequently on February 20, 2014, Portus Sold 10,000 shares attached with 5,000 warrant to an accredited investor for $3,000 under a Subscription Agreement. The exercise price of the warrant is $0.3 per share and were exercisable immediately and up to 1 year.
+
+On February 21, 2014, Portus Corporation entered into a Consulting Agreement with Haytarr LLC. For payment Haytarr LLC accepted 275,000 shares of common stock. The Company does not have an active trading market, and the Company does not have any assets, nor generates revenue. Therefore, the shares were considered to have no value.
+
+A contribution by a shareholder of $100 was made in February 2014.
+
+On May 20, 2014, Portus Corporation entered into a Consulting Agreement with Burkman and Associates. For payment Burkman and Associates accepted 2,000,000 shares of common stock. The Company does not have an active trading market, and the Company does not have any assets, nor generates revenue. Therefore, the shares were considered to have no value.
+
+6.
+
+Subsequent Events
+
+On October 1, 2014, the Company entered into a 10% convertible note with Tangiers Investment Group, LLC. The face value of the note is up to $220,000 with a purchase price of $200,000. The interest rate is 10%, and it is convertible into common stock, the conversion price shall be equal to 50% of the lowest volume weighted average price of the Company s common stock during the 20 consecutive trading days prior to the conversion date. As of the date of filing, the Company borrowed $60,500 in total, the Company only received $55,000 in cash. The remaining $5,500 was retained by the Tangiers Investment Group LLC through the original issue discount for due diligence and legal bills related to the transaction. 
+
+30
+
+MANAGEMENT S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATION
+
+PLAN OF OPERATION
+
+Overview
+
+We plan to develop and launch our food service cloud platform over the next twelve months. In order to launch our cloud based platform, we anticipate that we will need to complete a product development phase, a testing phase and a marketing phase as set forth below.
+
+Product Development Phase. During the product development phase, the food service cloud platform s functionality will be developed by contract software designers guided by our development manager. The desired functionality for commercial kitchens will be designed and combined with applicable food data bases to create the food management platform offered by our cloud based technology. The product development phase will include supply chain management, multilingual application and commercial kitchen functionality. Once the desired functionality has been developed, the project manager will coordinate the development of each new language to create the multilingual feature. We expect the development phase to take approximately 6 months and launching of the product will take place after testing.
+
+Testing Phase. Once product development is near completion, the product will be tested at selected customer sites to assure accuracy, proper functionality, ease of use and speed of information and retrieval. The tests will be repeated and product refined until the desired results are achieved.
+
+Marketing Phase. The marketing phase will begin immediately upon commencement of the development phase. The marketing efforts will be aimed at providing customer awareness of the food service cloud platform and its capabilities, applications and solutions. The initial marketing phase will include calling on potential large users of the food service cloud platform including commercial kitchens, distributors, manufacturers and producers. The marketing phase will also include displays at numerous trade shows and conventions of the food industry to develop product and brand awareness.
+
+We expect the product development stage, testing phase and marketing phases to cost $1,150,000.
+
+Cash Requirements Over Next Twelve Months
+
+We anticipate that we will incur over the next twelve months the following expenses:
+
+Category
+
+Planned Expenditures Over the Next Twelve Months
+
+Product Development
+
+$ 400,000
+
+Research and Development
+
+$ 150,000
+
+Multilingual Translator
+
+$ 600,000
+
+General and Administrative
+
+$ 650,000
+
+TOTAL
+
+$ 1,800,000
+
+As of September 30, 2014, we had insufficient cash to meet the anticipated costs of completing plan of operation or meeting our financial obligations over the next twelve months. Therefore, we will require additional financing. There is no assurance that we will be able to acquire such additional financing on terms that are acceptable to us, or at all.
+
+RESULTS OF OPERATION
+
+The acquisition of the Portus Assets has been treated as a reverse merger for accounting purposes. As a result, the Portus Assets has been treated as the acquiring entity for accounting and financial reporting purposes. As such, the following discussion of our results of operation reflects the operations of Portus Assets since February 11, 2014.
+
+31
+
+Period Ended September 30, 2014
+
+Revenues
+
+Since inception, we have not generated revenues and do not anticipate generating revenues unless we are successful in securing additional funding to launch our food service cloud based platform.
+
+Operating Expenses and Net Loss for the Period for the three months ended September 30th, 2014
+
+Since our acquisition of the Portus Assets, our focus has been identifying potential financing activities and expanding the presence of our business. In connection with this we incurred no operating expenses 
+
+Our Net Loss for this period was $0.
+
+Operating Expenses and Net Loss since Inception.
+
+Since our acquisition of the Portus Assets, we have incurred operating expenses of $3,124. Our operating expenses consisted of bank charges of $93, general and administrative of $876, professional fees of $1,000 and licenses of $1,155.
+
+We anticipate that our net loss will increase significantly as we develop our food service cloud platform over the next twelve months.
+
+LIQUIDITY AND CAPITAL RESOURCES
+
+At September 30, 2014, we had no cash and no liabilities resulting in a working capital deficit of $nil.
+
+We anticipate that we will require additional financing in order to implement our plan of operation and meeting our ongoing expenditures. If we sell additional shares of our common stock, existing stockholders will experience a dilution of their proportionate interests in our Company.
+
+OFF-BALANCE SHEET ARRANGEMENTS 
+
+We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
+
+CRITICAL ACCOUNTING POLICIES
+
+The preparation of financial statements in conformity with generally accepted accounting principles ( GAAP ) in the United States has required our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. Our significant accounting policies are disclosed in the notes to the interim financial statements for the period ended September 30, 2014.
+
+DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
+
+The following tables set forth information regarding our sole executive officer and director:
+
+Name
+
+Age
+
+Positions
+
+G. Dale Murray, II 
+
+35
+
+Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director
+
+Set forth below is a brief description of the background and business experience of our sole executive officer and director for at least the past five years.
+
+32
+
+Mr. Murray, 35, has over ten years business experience owning, operating and consulting for companies in the technology, energy and manufacturing fields.
+
+Mr. Murray has served as our Chief Executive Officer and President since February 2014. Mr. Murrary has also served as president of Portus Inc., the majority stockholder in Portus Holdings Inc., since its inception in August 2011. From 2009 through 2011 Mr. Murray served as the Chief Operating Officer of Simplified Nutrition Online, a cloud-based technology company specializing in dietary management software. His experience at this position has given Mr. Murray a unique insight into the food and beverage industry and how to provide the necessary tools to that industry. From 2006 through 2008 Mr. Murray served as president of Lightsource Mining Company and as managing member of Burnmore Coal Group, LLC. Both of these companies were engaged in mining activities in Eastern Kentucky. Also during this period, Mr. Murray served as an independent consultant for several public and private companies.
+
+During his business career Mr. Murray has cultivated relationships in both the public and private sectors. Mr. Murray is a high-energy, fiscally conscious and goal driven executive.
+
+Term of Office
+
+Members of our board of directors are appointed to hold office until the next annual meeting of our stockholders or until his or her successor is elected and qualified, or until he or she resigns or is removed in accordance with the provisions of the Nevada Revised Statutes (the NRS ). Our officers are appointed by our board of directors and hold office until removed by the board.
+
+Significant Employees
+
+We have no significant employees other than our sole executive officer and director.
+
+Family Relationships
+
+There are no family relationships between our executive officers and directors.
+
+EXECUTIVE COMPENSATION
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001512074_rmg_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001512074_rmg_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..4d4eb43235f6b01b6c98a241578d8641b30669e4
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001512074_rmg_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights selected information contained in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully, including the risk factors, and the financial statements before making an investment decision. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Risk Factors and elsewhere in this prospectus. Unless the context otherwise requires, when we use the words the Company, RMG Networks, we, us, or our Company in this prospectus, we are referring to RMG Networks Holding Corporation, a Delaware corporation f/k/a SCG Financial Acquisition Corp., and its subsidiaries, including RMG Enterprise Holdings Corporation, f/k/a Symon Holdings Corporation ( Symon ) and RMG Networks Holdings, Inc., f/k/a Reach Media Group Holdings, Inc. ( RMG ), unless it is clear from the context or expressly stated that these references are only to RMG Networks Holding Corporation. When we use the word SCG , we are referring to SCG Financial Acquisition Corp., prior to its acquisitions of Symon and RMG and the change of its corporate name to RMG Networks Holding Corporation. Our Company RMG Networks Holding Corporation, or RMG Networks, is a global provider of enterprise-class digital signage solutions and media applications. Through our suite of products, including media services, proprietary software, software-embedded hardware, technical services and third-party displays, we are able to deliver complete end-to-end intelligent visual communication solutions to our clients. We believe that we are one of the largest integrated digital signage solution providers globally and conduct our operations through our RMG Enterprise Solutions and RMG Media Networks business units. Our RMG Enterprise Solutions business unit provides end-to-end digital signage applications to power intelligent visual communication implementations for critical contact center, supply chain, employee communications, hospitality, retail and other applications with a large concentration of customers in the financial services, telecommunications, manufacturing, healthcare, pharmaceutical, utility and transportation industries, and in federal, state and local governments. We believe our solutions are relied upon by over 70% of the North American Fortune 100 companies and thousands of overall customers in locations worldwide. The installations of our Enterprise Solutions business deliver real-time intelligent visual content that enhances the ways in which organizations communicate with employees and customers. The solutions we provide are designed to integrate seamlessly with a customer s IT infrastructure and data and security environments. These solutions are comprised of a suite of products that includes proprietary software, software-embedded hardware, maintenance and support services, content and creative services, installation services and third-party displays. We also provide cost-effective digital signage solutions to small and medium sized businesses through our cloud-based ChalkboxTV product, which allows businesses to communicate promotional messages to customers using their existing screen hardware. Our RMG Media Networks business unit engages elusive audience segments with relevant content and advertising delivered through digital place-based networks. These networks include the RMG Airline Network, the RMG Office Network and the RMG Mall Media Network. The RMG Airline Network is a U.S.-based network focused on selling advertising across airline digital media assets in executive clubs, on in-flight entertainment, or IFE, systems, on in-flight Wi-Fi portals and in private airport terminals. The network, which spans all major commercial passenger airlines in the United States, delivers to advertisers an audience of affluent travelers and business decision makers in a captive and distraction-free video environment. Based on information provided by our airline, airport, IFE and Wi-Fi partners, we estimate that the RMG Airline Network is comprised of over 120,000 IFE screens, nearly 3,000 aircraft, and 145 airline and private terminal lounges and can reach an audience of over 35 million passengers per month. As of September 30, 2013, we had partner relationships providing access to sell media inventory across 11 unique airlines. In many cases we maintain multiple relationships with the same airline. We work with six airlines to sell their IFE system assets. We work with seven airlines to sell their media assets in their executive clubs. We work with nine airlines to sell their onboard Wi-Fi media assets. All the partner relationships are exclusive with the exception of two airline partnership agreements to sell IFE system assets, providing us with what we believe will be a growing revenue opportunity as airlines continue to install additional digital media assets. The RMG Office Network, which we believe will be the United States largest in-office digital media network to engage audiences with sight, sound, and motion, will debut at approximately 650 Regus, the global workplace provider, business centers in top DMAs including New York, Los Angeles, Chicago, Boston and San Francisco. The RMG Mall Media Network reaches over 62 million Nielsen measured monthly viewers in 161 shopping malls across the United States. We believe that we power more than one million digital screens and end-points, and that the diversity of products that we offer and our technical expertise provide our partners and customers with digital signage solutions that differentiate us from our competitors. We are led by an experienced senior management team with a proven track record of building and successfully running technology and advertising businesses. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED FEBRUARY 7, 2014 PRELIMINARY PROSPECTUS 447,261 Shares of Common Stock This prospectus relates to the resale by selling securityholders of up to 447,261 shares of common stock issued in private transactions. The selling securityholders may dispose of their shares of common stock or warrants in a number of different ways and at varying prices. See Plan of Distribution. Our common stock is traded on the Nasdaq Global Market under the symbol RMGN. The closing bid price for our common stock on February 6, 2014, was $4.38 per share, as reported on the Nasdaq Global Market. We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus and any amendments or supplements carefully before you make your investment decision. Investing in our common stock involves risks. You should consider the risks that we have described in Risk Factors beginning on page 8 of this prospectus before buying our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. You should rely only on the information contained in this prospectus or any prospectus supplement or amendment. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where such offer is not permitted. The date of this prospectus is February 7, 2014. Our Industry Digital Signage. We believe the proliferation of digital signage in business and out-of-home environments allows advertisers and companies to engage consumers, employees and targeted audiences more effectively than traditional means. The digital signage industry is comprised of hardware, software and professional services that create solutions for advertising and business to business networks. The deployment of digital signage networks has continued to increase through the recent economic downturn. Frost & Sullivan, in its 2012 Digital Signage Systems Market report, estimates that the market for digital signage in 2013 will be approximately $1.5 billion and expects the market to grow from 2013 to 2017 at a compound annual growth rate of 14.0%. As digital signage systems have evolved, they have become more cost effective and able to provide richer media content. The initial costs of planning and deploying digital signage infrastructure have dropped, reducing a significant barrier to growth. Today s solutions support remote manageability, energy efficiency and the ability to process and blend rich media content. Customers are recognizing the flexibility and cost-effectiveness digital signage can provide compared to other forms of communication. Digital Out-of-Home Advertising. Digital out-of-home advertising is a relatively new form of advertising, but is becoming an effective way for advertisers to reach their target audience in captive locations for long periods of time. According to Magna Global, Global Advertising Revenue Forecast and Historical Data, December, 2012, the digital out-of-home advertising market accounted for a small but rapidly growing portion of the $146 billion U.S. advertising market in 2011. U.S. digital out-of-home advertising revenue grew to $1.3 billion in 2011, representing a 10-year compound annual growth rate of 20.9%, and is expected to grow to approximately $2.5 billion by 2017. We believe the increase in advertising spending in this medium is largely a result of better research and overall visibility of the medium and digital technology, which have enhanced the reach and the overall value proposition of digital out-of-home advertising for local, regional, national and international advertisers. PQ Media states that Digital Place-based Networks, or DPN, growth is being driven by a number of factors, including consumers spending more time consuming media outside the home, DPNs are close to the point of purchase, the media buying process and the corresponding audience metrics are continually improving, and DPNs are resistant to the ad-skipping technology that impacts the television market. Our Competitive Strengths We believe that the following factors differentiate us from our competitors and position us for continued growth: Complete and customizable end-to-end solutions. Our technology solution is scalable, extensible and security certified to meet demanding requirements. Our products can be easily adapted to satisfy a wide array of customer applications. We are trusted by some of the largest organizations in the world. We serve customers through a global footprint. Targeted national advertising network. Experienced management team. Our Growth Strategy Our growth strategy is to leverage and continue to build upon the advantages developed by us, including through the following: Expanding our customer base or increasing revenue potential. Pursuing targeted acquisitions. Cross selling between our business units. Our Products and Solutions We deploy digital signage solutions in highly efficient global networks with both the features and functions required for rich media solutions. Our RMG Enterprise Solutions and RMG Media Networks business units provide distinct but complementary products and solutions: TABLE OF CONTENTS Page Prospectus Summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001515635_north_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001515635_north_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..2e048a8a1a066419f07dd491c780fc9dc91e9271
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001515635_north_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The information presented is a brief overview of the key aspects of the offering. The prospectus summary contains a summary of information contained elsewhere in this prospectus. You should carefully read all information in the prospectus, including the financial statements and the notes to the financial statements under the Financial Statements section beginning on page F-1 prior to making an investment decision. Our Business North American Oil & Gas Corp. and subsidiaries ( NAMG, the Company, we, or our ) is an exploration and development stage oil and gas company. The Company was formed to purchase, operate, explore and develop oil and gas properties. NAMG acquired oil and gas leases and began development of a plan for oil and gas exploration and producing operations. The Company is actively engaged in leasing properties focused in the San Joaquin Basin in California, and pursuing crude oil and natural gas opportunities, with existing foundation assets targeting exploration and exploitation of oil and gas projects located near infrastructure and existing discoveries. There is no assurance that we will be successful in raising the necessary funds to drill and complete one or more of the oil and gas well locations; there are no assurances that if we are successful in raising the necessary funds to drill and complete one or more of the oil and gas well locations that they will produce oil and gas. There are no assurances that should oil and gas will be produced from one or more of the oil and gas well locations, that the Company will be profitable. We are a development stage company, and to date have earned limited revenue. Our Corporate History and Background We were incorporated as Calendar Dragon, Inc. on July 22, 2008 in the State of Nevada. From inception until we completed our Agreement and Plan of Merger Dated November 16, 2012 (the Agreement and Plan of Merger ), by and among the Company, Lani Acquisition, LLC, a Nevada limited liability company and a wholly-owned subsidiary of the Company ( Lani Acquisition ), and Lani, LLC, a California limited liability company ( Lani ) the Company was in the development stage of creating a new calendaring software application. On October 11, 2012, the Company filed an amendment to our Articles of Incorporation to: 1. Increase the number of shares of authorized common stock from 65,000,000 to 200,000,000; 2. Increase the number of shares of authorized blank check preferred stock from 10,000,000 to: 25,000,000; 3. Effect a change of our name from Calendar Dragon Inc. to North American Oil & Gas Corp. (the Name Change ) As a result of this amendment to our Articles of Incorporation, all stock has retroactively been restated and recalculated, and all presentations of our Equity and Common Stock is consistently presented. During that time, we had no revenue and our operations were limited to capital formation, organization, and development of our business plan and target customer market. Our prior operations were focused on creating a new calendaring software application. As a result of the merger with Lani, on November 20, 2012, we ceased our prior operations and we are now a holding company and our wholly owned subsidiary engages in an exploration stage oil and gas enterprise focused on the acquisition, stimulation, rehabilitation and asset improvement of small to medium sized manageable oil and gas fields throughout North America. We entered into this line of business because that was the business and expertise of Lani prior to the merger. OVERVIEW The Company is engaged primarily in the acquisition of oil and gas properties focused in the San Joaquin Basin in California; pursuing crude oil and natural gas opportunities, with existing foundation assets targeting exploration; and exploitation of oil and gas projects located near infrastructure and existing discoveries. The Company has leasehold interests in three prospects in the San Joaquin Basin in California and is the operator on each lease. NAMG is partners on the Tejon Extension lease, Tejon Main lease, and White Wolf lease with Avere Energy Corp, a Delaware corporation ( Avere ) and Solimar Energy LLC, a California limited liability company ( Solimar ) to develop these leaseholds. The Company holds a 40 % working interest in the Tejon Main lease, a 50% working interest in the White Wolf lease, and a 75 % working interest in the Tejon Extension lease. Avere holds a 50% working interest in the Tejon Main lease, 50% working interest in the White Wolf lease, and a 25% working interest in the Tejon Extension lease, and Solimar holds a 10% working interest in the Tejon Main lease. NAMG owns lease interests in over 174 individual leases covering its three prospects. Per seismic evaluation, these leases hold at least fourteen potentially identified drill sites for future exploration. Provided adequate funding through capital raising and farm-outs the Company s current plan involves permitting four wells, three in the Tejon Main lease area, and one in the Tejon Extension area, with exploration of at least one well in 2014. There are no assurances that should oil and gas be produced from one or more of the oil and gas well locations that the Company will be profitable. The Company drilled Well 77-20 on the Tejon Ranch Extension in November, 2012, and underwent testing through December 2012. Drilling on this well was suspended February 13, 2013 in order to review more thoroughly the remaining zones to be tested. Five geological reviewed the data from the seven drilled zones, analyzing seismic data purchased February 26, 2013, and determined at that time that the well did not result in commercially recoverable production. The well was shut in February 2013, and remains shut in. Management does not find it economically feasible at this time to re-enter the well for addition zonal testing. There has not been any further drilling activities on the prospects, however, the Company continues to review identified drill sites and is planning, given adequate funding, to drill one well in the last quarter of 2014 on the Tejon Extension lease. The company accumulated losses of $2,256,288 from Inception, through March 31, 2014. Over the twelve months through June 1, 2015 the Company will need to secure accumulated funds of at least $500,000 to remain operational. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which indicates a substantial doubt of its ability to continue as a going concern. The Company s auditors, Malone Bailey, have issued the Company a Going Concern statement. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations. The Company plans to continue using a combination of capital raisings and farm-in opportunities to develop our leased acreage. Currently, the leaseholds are not held by drilling, and all required lease payments are made in order to retain properties for development of exploration and drilling. The further implementation of our business plan will require significant capital. We do not have this capital and as a result, we will require additional financing to acquire and develop our leasehold obligations. We may use debt or equity to fund our ongoing operations. There can be no assurance that any financing will be available, and if available, will be on terms and conditions acceptable to the Company. If we rely on equity financing, our shareholders will experience significant dilution. If we rely on debt financing, we may not be able to satisfy our debt obligations. The Terms of the Offering Securities Being Offered: 71,428,571 shares of common stock being registered on behalf of the Selling Stockholder (maximum offering). Offering Period: Until all shares are sold by the Selling Stockholder or until 36 months from the date that the registration statement becomes effective, whichever comes first. Risk of Factors:
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001517498_merion-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001517498_merion-inc_prospectus_summary.txt
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+prospectus summary is qualified in its entirety by, and should read in conjunction with, the more detailed information and our Financial Statements and Notes thereto appearing elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully. Our Company Our Company is a provider of Health and Nutritional supplements and Personal Care products through our website by means of a network of Direct Sales Associates or DSA s. Although we have a network of DSA s, unlike many other multi-level marketing companies, it is our policy that DSA s should purchase our products strictly for personal use rather than to resell or to distribute our products. Notwithstanding our direct selling structure, all purchases are made directly on our website. The primary business purpose of DSA s is to refer new members or new customers to our website for them to purchase products directly from us for their own personal use. All products are shipped directly to the customer by us from the USA to our foreign customers and not sent to a DSA to distribute to the customer. Unlike many traditional multi-level marketing companies, we do not have physical locations of stores and offices and do not undertake any actions physically in foreign countries where our DSA s are located. We are not actively promoting our direct selling business model or holding any training seminar or any related activities physically in foreign countries. As of March 5, 2014, we had 3,392 active DSA's in 8 countries. Company History E-World USA Holding, Inc., a California corporation and our predecessor, was established in January 2007. From 2007 to 2010, the Company issued Type A Warrants to new members in addition to the products they acquired when they became a member. This process was discontinued in 2011, and the Company no longer issues Type A Warrants or any other securities to new members when they sign up to become a member. In addition, in 2009 and 2010, the Company issued Type B Warrants to existing members as a reward for outstanding sales/services or recruiting efforts as well as to members who purchased stock in 5CTV, a failed start-up in which the Company had also invested. Because Type B warrants were issued as a bonus to the members, in case of the Company failing to go public, the warrants are not exercisable for stock nor are they refundable. In April 2011, E-World USA Holding, Inc., a California corporation entered into a merger agreement with its wholly-owned subsidiary, E-World USA Holding, Inc., a Nevada corporation which was the survivor of the merger. Under the Merger Agreement, we issued 90,000,000 shares of our common stock on a one share for one share basis for each share of E-World USA Holding, Inc., a California corporation, common stock issued and outstanding at the date of the merger. In addition, we issued the Type A Warrants and Type B Warrants in exchange for comparable Warrants issued and outstanding of E-World USA Holding, Inc., a California corporation, at the date of the merger. There were no written warrant exercise provisions in the Type A Warrants or Type B Warrants. Instead, the Company told Warrant Holders orally that the exercise of the Type A and Type B Warrants would be triggered by a going public event. The term going public event was not defined. Based upon SEC staff comments on a prior registration statement, now withdrawn, the Company believed that in order to proceed with the going public process, Warrants would need to be exercised prior to the filing of this selling stockholder registration statement. Thus the Company defined the term going public event as the upcoming filing of a registration statement on Form S-1 covering shares of common stock received upon conversion of the Warrants. Commencing September 15, 2012, and continuing for a 30-day period until October 15, 2012, the Company requested, by means of an Information Statement provided to holders of Type A Warrants and consistent with the foregoing, that holders of Type A Warrants make an exercise election for additional products, refunds or issuance of shares of common stock, as described above. No Type A Warrant Holder receiving the Information Statement expressed any objection to being required to make an election at the point in time they made their election or at any time thereafter. In addition, on October 20, 2012, all Type B Warrants were automatically converted into Common Stock without an Information Statement as Type B Warrants converted automatically into shares of common stock, without any further action or election of a Type B Warrant Holder, at the same time as Type A Warrants were converted. All Type A and Type B Warrants have been fully exercised and none are currently issued and outstanding. We inadvertently stated on the cover page of the Information Statement that we provided to warrant holders concerning the exercise of the warrants that it was the SEC s position that required warrant holders to exercise their warrants. In fact, the SEC did not take a position requiring warrant holders to exercise their warrants, that the information statement distributed to warrant holders incorrectly asserted this, and that the SEC has not taken any position that would prevent such holders from taking action against the Company and its affiliates resulting from any securities law violations in connection with the offering or sale of the warrants or their subsequent exercise. The Company admits that all the above-referenced offerings of securities may have been done in violation of federal securities laws. In connection therewith, the Company admits that the offering could be deemed to have involved a general solicitation of the public at large. The Company admits that it solicited members through a public website and warrants were part of the membership package. The Company assumed if the persons acquiring the securities were sophisticated enough to understand and buy the Company s products, the investors could be deemed by the Company to be sophisticated, although the Company made no independent investigation or verification thereof. Specifically, the Company admits that securities were being offered through its website and that our presumption of sophistication was solely based on the fact that individuals were signing up to be members. We had a registration statement on Form S-1 for the same shares that are the subject of this registration statement filed on Form S-1 declared effective October 2, 2013 but withdrawn on November 12, 2013. As disclosed in the withdrawal request which has been granted by the SEC staff, due to a lapse in the Company s disclosure controls and procedures, the Company was the victim of a fraud perpetrated by a third party hired by the Company to obtain information in the form of an opinion and related consent which was included in the withdrawn Registration Statement. The Company thus withdrew the offering under that Registration Statement due to this situation. No securities were sold pursuant to that Registration Statement. The Company has adopted new disclosure controls and procedures designed to prevent any future occurrence of a similar situation, related to the verification of any information provided by any third party in this Registration Statement, including obtaining new opinions and consents through direct attorney-client relations with all law firms providing any opinion and consent included in this Registration Statement. These controls and procedures were implemented in making this filing. Our principal executive office is located at 9550 Flair Dr., Suite 308, El Monte, CA 91731. Our telephone number is (626) 448-3737. Our corporate website is www.usaeworld.com. Nothing on our website is part of this registration statement. The terms "Our Company" "we," "us" and "our" as used in this registration statement refer to E-World USA Holding, Inc. Emerging Growth Company We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of: (a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement; (c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. These exemptions are also available to us as a Smaller Reporting Company. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. The Offering As of the date of this registration statement, we had 142,828,993 shares of common stock outstanding, including 1,947,108 shares issued to U.S. citizens or residents upon the exercise of Type A Warrants, 21,270,900 shares issued to non-U.S. citizens or residents upon the exercise of Type A Warrants, 178,600 shares issued to U.S. citizens or residents upon the exercise of Type B Warrants, and 2,307,108 shares issued to non U.S. citizens or residents upon the exercise of Type B Warrants. Selling shareholders are offering up to 2,125,708 shares of common stock. The selling shareholders will offer their shares at $0.50 per share until our shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders. The 2,125,708 shares of Common Stock which were recently issued to holders of Type A Warrants under the terms of Type A Warrants exercised by U.S. citizens or residents and to holders of Type B Warrants under the terms of Type B Warrants exercised by U.S. citizens or residents. Selected Financial Data Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this registration statement, including the financial statements and their explanatory notes before making an investment decision. For the year-ended Dec. 31, 2013 2012 Statement of Operation Revenues $ 4,681,178 $ 460,874 Cost of Goods Sold $ 654,788 $ 285,275 Gross Profit $ 4,026,390 $ 175,599 Operating Expense $ 1,780,382 $ 1,636,129 Other Income (Expenses) $ (13,011 ) $ - Net income (loss) from Continuing Operation $ 2,232,997 $ (1,460,530 ) Balance Sheet 2013 2012 Assets $ 5,906,016 $ 1,417,556 Liabilities $ 14,906,077 $ 12,650,614 Stockholders' Equity $ (9,000,061 ) $ (11,233,058 ) Total Liabilities and Stockholders' Equity $ 5,906,016 $ 1,417,556
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001522216_biopharma_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001522216_biopharma_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..3e6f2a2585a385c2176a738cf74ee816bb57fae5
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+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History The Company provides a broad spectrum of specialized services to the biotechnology and pharmaceutical industries. The Company was incorporated in the State of Delaware in April 2011, and was formerly known as Beachwood Acquisition Corporation. In August 2011, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. At that time, the shareholders of the Company and its board of directors also unanimously approved the change of the Company s name from Beachwood Acquisition Corporation to BioPharma Manufacturing Solutions. On October 11, 2012, the Company acquired BioPharmaceutical Process Engineering and Consulting Services ("BPECS"), a component of GMR Engineering Inc. ("GMR"), in a stock-for-assets transaction (the "Acquisition"). BPECS consists of the components of GMR which comprise its consulting, design and engineering services, but does not include GMR s manufacturing components or equipment. GMR was incorporated in the State of California in June 1996 to engage in professional practice in automated process control and instrumentation systems in the pharmaceutical industry. Prior to the Acquisition, the Company had no ongoing business or operations and was established for the purpose of completing a business combination with a target company, such as BPECS. As a result of the Acquisition, the Company acquired the operations and business of BPECS. While the Company has taken over the business and operations of BPECS, GMR remains a separate entity with its own independent business and operations. The purpose of the Acquisition was to facilitate and prepare BPECS, as part of the Company, for a registration statement and/or public offering of securities. The Company is located at 8001 Irvine Center Dr., Suite 400, Irvine, California 92618. The Company s main phone number is (562) 244-9785. Business The Company provides technology transfer and scale-up, project management, process design, value engineering, process automation and process validation consulting services to biotechnology and pharmaceutical manufacturers in the life sciences industry. The Company assists its clients in all phases of biopharmaceutical project lifecycle from concept, risk assessment and design through installation, validation and Food and Drug Administration ("FDA") approval. In a typical situation, the Company would assist its clients with technical transfer and scale-up of the process used to manufacture a development stage or FDA approved drug. Once the process design and risk assessment is complete, the Company would then design and/or procure the requisite manufacturing equipment needed to produce the medicine. Upon completion and receipt of equipment, the Company would manage installation of procured equipment and the critical utilities required to support this equipment. After installation, the Company would then assist its clients in the qualification and validation of the installed equipment, critical utilities and automation/electronic reporting systems. Subsequently, the Company would provide technical support for the conformance runs and process validation of the completed biopharmaceutical process and facility leading up to FDA submission. Finally, the Company also provides follow-up technical services to help its clients address any relevant FDA post-submission questions. The Company (having acquired the BPECS portion of GMR) has a 16-year successful business track record in delivering turnkey, fast-track, on-time, on-budget quality manufacturing processes. The Company is a valuable long-term partner with its clients in being able to provide legacy and after-market lifecycle support services for FDA-approved biopharmaceutical processes and facilities. The Company also provides technical assistance in helping its clients resolve CAPA, FDA 483 and Warning Letter issues related to the manufacturing of their products. For example, the Company provides reliable, secure and efficient automated manufacturing processes and data collection/retrieval systems designed to reduce the risk of non-compliance, and in addition, the Company provides the analytical expertise to help its clients determine root causes of compliance failure, and then correct and prevent any future non-compliance issues that might arise in the lifecycle of a typical biopharmaceutical process and facility. In addition to growing its existing engineering and consulting services business, future plans for the Company plans include developing in-house manufacturing capabilities and growing its own line of biopharmaceutical process equipment and automation systems targeted for both clinical and commercial scale markets. Additional future plans for the Company include leveraging its technology transfer, scale-up and process engineering expertise to contract or build its own modular clinical scale manufacturing facility. The Company s intent is to cultivate its relationships with industry and academic research communities and provide technical transfer, scale-up and contract manufacturing services ranging from clinical scale manufacturing of development-stage medicines to contract manufacturing of generic medicines. The potential scope of medicines that may benefit from the Company s services broadly range from development-stage stem-cell cancer treatments or other cutting-edge, niche clinical medicines to biotechnology and pharmaceutical drugs The Company believes that providing a "ready to use" clinical scale manufacturing facility can shorten the Investigational New Drug (IND) application time frame, provide a more cost-effective and repeatable process for getting these drugs into, and through, clinical trials and provide increased commercial opportunities for pharmaceutical companies by improving the chance of success for development-stage drug projects. Risks and Uncertainties facing the Company The Company has limited operating history as an independent working business, as BPECS was previously a part of the business of GMR. The Company may experience losses in the near term. The Company may need to create a source of additional revenue or locate a source of additional financing in order to continue its developmental plans. As BPECS has not previously operated as its own independent entity, the Company has no prior experience in building and marketing construction and development plans similar to that of the Company and in executing a business on such a broad scale. One of the biggest challenges facing the Company will be in continuing to locate and obtain new clients and business opportunities. Previously, BPECS received its business and clients from its affiliation with GMR. While it is expected that GMR and BPECS may have a close working relationship in the near term, GMR may not continue to be an active source of new business opportunities and potential clients for the Company. Secondarily, as the Company continues to build its business and expand its operations, a major challenge will be identifying and targeting effective sales, marketing and distribution strategies to reach its intended end customers. The Company will need to develop and implement effective sales, marketing and advertising strategies. Due to financial constraints and the affiliation of BPECS with GMR (which has a successful business track record spanning more than 16 years since its original incorporation), the Company has to date conducted limited advertising and marketing to reach customers. In addition, the Company has not yet located the sources of funding to develop an expanded business plan and a wider scope of operations. If the Company were unable to locate such financing and/or later develop strong and reliable sources of potential customers and a means to efficiently reach buyers and customers, it is unlikely that the Company could develop its operations to return revenue sufficient to further develop the extent of its business plan and wider corporate objectives. The Company is aware of these risks and is addressing them in the following manner: (i) by continuing to focus on maintaining and growing the proven organic business brought into the Company in its merger with BPECS; (ii) addressing the added resource requirements necessary to grow this organic business by maintaining key relationships with its experienced personnel; (iii) bringing aboard resources that have sales and marketing, accounting, engineering, R&D, automation, quality and regulatory experience in biopharmaceutical or related industries; and (iv) actively marketing the engineering expertise and reputation gained by the Company s acquisition of BPECS, which has, to date, resulted in the Company being awarded multiple engineering service contracts with a global pharmaceutical company. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can be no
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001523404_jp-energy_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001523404_jp-energy_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001528760_exeo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001528760_exeo_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..6e2ac5780db404317f98f1eca7f0526afed358b7
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+PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our financial statements and related notes, and especially the risks described under "Risk Factors" beginning on page 6. All references to "we," "us," "our," "Exeo," "Company" or similar terms used in this prospectus refer to Exeo Entertainment, Inc.. Unless otherwise indicated, the term "fiscal year" refers to our fiscal year ending November 30. Unless otherwise indicated, the term "common stock" refers to shares of the Company s common stock. Corporate Background and Business Overview We were incorporated in the state of Nevada on May 12, 2011. Our offices are currently located at 4478 Wagon Trail Avenue, Las Vegas, NV 89118. Our telephone number is 702-361-3188. Our registered agent in the State of Nevada is Business Filings Incorporated, 311 S. Division Street, Carson City, Nevada 89703. We are in the business of designing, developing, licensing, manufacturing, and marketing consumer electronics in the video gaming and smart TV sector. Products under development include The Zaaz wireless keyboard, The Extreme Gamer ; a multi-disc video game changer, and the Psyko Krypton surround sound gaming headphones. From inception through August, 31, 2013, we have not generated any revenues. Our net loss from inception through August 31, 2013 is $1,469,490. In its audit opinion issued in connection with our balance sheets as of November 30 , 2012 and December 31, 2011 and our statements of operations, stockholders equity and cash flows for the years then ended, our independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern given our lack of working capital. We are in process of completing the engineering on the three aforementioned products and are working with contractors in China to establish manufacturing capabilities. Once manufacturing is established we intend on utilizing existing consumer electronics distributers, such as Synnex Corp. (SNX) to distribute our products to big box retailers such as Best Buy, GameStop, and Fry s Electronics. We have not made any significant purchases or sale of assets, nor have we been involved in any mergers, acquisitions or consolidations. We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have two executive officers, our President, Jeffrey A. Weiland, and our Chief Financial Officer, Robert S. Amaral, both serve as our two directors. Both of our officers and directors reside in the State of Nevada. Implications of Being an Emerging Growth Company As a company with less than $1 billion in revenue in our last fiscal year, we are defined as an "emerging growth company" under the Jumpstart Our Business Startups ("JOBS") Act. We will retain "emerging growth company" status until the earliest of: The last day of the fiscal year during which our annual revenues are equal to or exceed $1 billion; The last day of the fiscal year following the fifth anniversary of our first sale of common stock pursuant to a registration statement filed under the Securities Act of 1933, as amended, which we refer to in this document as the Securities Act; The date on which we have issued more than $1 billion in nonconvertible debt in a previous three-year period; or The date on which we qualify as a large accelerated filer under Rule 12b-2 adopted under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (i.e., an issuer with a public float of $700 million that has been filing reports with the U.S. Securities and Exchange Commission ("SEC") under the Exchange Act for at least 12 months). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to SEC reporting companies. For so long as we remain an emerging growth company we will not be required to: have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Wall Street Reform and Consumer Protection Act of 2002; comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); submit certain executive compensation matters to stockholder non-binding advisory votes; submit for stockholder approval golden parachute payments not previously approved; disclose certain executive compensation related items, as we will be subject to the scaled disclosure requirements of a smaller reporting company with respect to executive compensation disclosure; and present more than two years of audited financial statements and two years of selected financial data in this registration statement and future filings, instead of the customary three years for audited financial statements and five years for selected financial data. Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of The JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates. Section 107 of the JOBS Act provides that our decision to opt into the extended transition period for complying with new or revised accounting standards is irrevocable. Because the worldwide market value of our common stock held by non-affiliates, or public float, is below $75 million, we are also a "smaller reporting company" as defined under the Exchange Act. Some of the foregoing reduced disclosure and other requirements are also available to us because we are a smaller reporting company and may continue to be available to us even after we are no longer an emerging growth company under the JOBS Act but remain a smaller reporting company under the Exchange Act. As a smaller reporting company we are not required to: have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and present more than two years of audited financial statements in our registration statements and annual reports on Form 10-K and present any selected financial data in such registration statements and annual reports. Summary of the Offering Shares of common stock being offered by the selling stockholders: 515,000 shares of our common stock. Offering price: $0.05 per share of common stock. Number of shares outstanding before the offering: 23,444,060 Number of shares outstanding after the offering, if all the shares are sold: 23,444,060 Our executive officers and directors currently hold approximately 74.00% of our outstanding shares, and, as a result, they retain significant control over our direction. Market for the common stock: There is no public market for our common stock. After the effective date of the registration statement of which this prospectus is a part, we intend to seek a market maker to file an application on our behalf to have our common stock quoted on the Over-the-Counter Bulletin Board. We currently have no market maker who is willing to list quotations for our stock. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Use of Proceeds: We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders identified in this prospectus. The selling stockholders will receive all net proceeds from the sale of the shares offered by this prospectus.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common units. The information presented in this prospectus assumes (1) an initial public offering price of $20.00 per common unit (the midpoint of the price range set forth on the cover page of this prospectus) and (2) unless otherwise indicated, that the underwriters option to purchase additional common units is not exercised. You should read the entire prospectus carefully, including the section describing the risks of investing in our common units under Risk Factors and the consolidated financial statements contained elsewhere in this prospectus before making an investment decision. Some of the statements in this summary constitute forward-looking statements. See Special Note Regarding Forward-Looking Statements. For the definitions of certain terms used in this prospectus, see Appendix B: Certain Defined Terms Business and Appendix C: Certain Defined Terms Offering Structure. References in this prospectus to Foresight Energy LP, we, our, us, or like terms when used in a historical context refer to the business of our predecessor, Foresight Energy LLC and its subsidiaries, which will be our wholly-owned subsidiaries following this offering. When used in the present tense or prospectively, those terms refer to Foresight Energy LP and its subsidiaries, giving effect to the IPO Reorganization (as defined below). References in this prospectus to Foresight Reserves refer to Foresight Reserves, L.P., our sponsor, and its affiliates. Foresight Energy LP We believe we are the lowest cost and highest margin bituminous thermal coal producer in the United States. This statement is based on a comparison of our cash costs and margins against publicly available information for other bituminous thermal coal producers as of year-end 2013. We operate exclusively in the Illinois Basin, which is the fastest growing coal producing region in the country due to its favorable geology, low costs and growing demand for its coal. Since our inception, we have invested over $2.0 billion to construct a fleet of state-of-the-art, low-cost and high productivity longwall mining operations and related transportation infrastructure. We control over 3 billion tons of coal in the state of Illinois, which, in addition to making us one of the largest reserve holders in the United States, provides significant organic growth. Our reserves are comprised principally of three large contiguous blocks of uniform, thick, high heat content (high Btu) thermal coal, which are ideal for high productivity longwall operations. We currently operate three longwall mines and a continuous miner operation. Our fourth longwall began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days. We have submitted permits and made preliminary capital expenditures for our fifth and sixth longwalls. We have sufficient assigned reserves to support up to nine longwalls, with a portion of the existing surface infrastructure, slopes and shafts available to be shared among our existing, and most of our future, longwalls. We produced, and expect to produce, 18.0 million tons and 24.1 million tons in 2013 and the twelve months ending June 30, 2015, respectively. The full productive capacity of our existing mines, including the longwall that is scheduled to begin operations in 2014, is 32.7 million tons of high Btu coal per year, and the potential future productive capacity of our operations if all nine longwalls are constructed would be 67.2 million tons of high Btu coal per year. We believe that, relative to estimated production for the twelve months ending June 30, 2015, our excess existing installed capacity, and potential future capacity, will provide us with the opportunity to significantly grow our production, free cash flow and cash available for distributions to our unitholders. Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 9, 2014 PRELIMINARY PROSPECTUS FORESIGHT ENERGY LP 17,500,000 Common Units Representing Limited Partner Interests This is the initial public offering of our common units representing limited partner interests. Prior to this offering, there has been no public market for our common units. We are offering 17,500,000 common units in this offering. We currently expect the initial public offering price to be between $19.00 and $21.00 per common unit. The underwriters have the option to purchase up to 2,625,000 additional common units from us at the initial public offering price, less the underwriting discounts and a structuring fee payable to Barclays Capital Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC, within 30 days from the date of this prospectus to cover over-allotments, if any. We have applied to have our common units listed on the New York Stock Exchange under the symbol: FELP. The listing is subject to the approval of our application. We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ) and, as such, may elect to comply with certain reduced public company reporting requirements. See Prospectus Summary Our Emerging Growth Company Status on page 11. Investing in our common units involves risks. See Risk Factors beginning on page 22. The risks include the following: We may not have sufficient cash to enable us to pay the minimum quarterly distribution on our common units following establishment of cash reserves and payment of costs and expenses, including reimbursement of expenses to our general partner. A further decline in coal prices could adversely affect our results of operations and cash available for distribution to our unitholders. We compete in a global coal market and could be negatively impacted by an increase in global coal supply as well as a decrease in global market demand. Our mining operations are subject to extensive and costly environmental laws and regulations, and such current and future laws, regulations or enforcement could materially increase our operating costs or limit our ability to produce and sell coal. Foresight Reserves, L.P. owns and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including Foresight Reserves, L.P., have conflicts of interest with us and limited duties, and they may favor their own interests to the detriment of us and our unitholders. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, or initially to remove our general partner without its consent. Unitholders will experience immediate and substantial dilution of $19.35 per common unit. There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop. The price of our common units may fluctuate significantly, and unitholders could lose all or part of their investment. Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service were to treat us as a corporation for federal income tax purposes or we were to become subject to material additional amounts of entity-level taxation for state tax purposes, then our cash available for distribution to you could be substantially reduced. Our unitholders will be required to pay taxes on their share of income even if they do not receive any cash distributions from us. 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. Per Common Unit Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds to Foresight Energy LP (before expenses)(2) $ $ (1) Excludes a structuring fee of 0.75% of the gross proceeds of this offering payable to Barclays Capital Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC. The underwriters will receive compensation in addition to the underwriting discount. See Underwriting. (2) We intend to use the net proceeds from this offering to repay certain amounts of our Term Facility (as defined herein) and distribute the remaining net proceeds to Foresight Reserves, L.P. and a member of management, pro rata, and we will not retain any proceeds from this offering. Please see Use of Proceeds. The underwriters expect to deliver the common units to purchasers on or about , 2014. Barclays Citigroup Morgan Stanley J.P. Morgan Goldman, Sachs & Co. Deutsche Bank Securities Stifel Credit Agricole CIB PNC Capital Markets LLC Huntington Investment Company , 2014 Table of Contents We operated three of the four most productive underground coal mines in the United States during 2013 on a clean tons produced per man hour basis based on MSHA data. Source: Top 25 most productive underground mines out of 255 mines with over 100,000 tons produced during 2013 on a clean tons produced per man hour basis based on MSHA data. Note: Darker shading denotes mines operated by Foresight Energy. We have been able to sustain our high productivity and low operating costs since we started operating longwalls in 2008 and the high productivity at the new mines we have developed demonstrates the repeatability of our mine design. The high productivity translates into low costs, and in 2013, our operations had an average cash cost of $19.53 per ton sold, which we believe is significantly below the average cash costs of our competitors in the Illinois, Northern Appalachian and Central Appalachian Basins. Please see footnote 6 under Summary Historical Consolidated Financial and Other Information for a US GAAP reconciliation of cash costs per ton sold. We have developed a transportation and logistics network that provides each of our complexes with two or more competing rail and barge transportation options, which we believe provides us operational and marketing flexibility, reduces the cost to deliver our coal to market and allows us to realize a higher netback to our mines. We believe our low cost structure, the high heat content of our coal, our access to competing transportation options and our location makes our coal the lowest cost option on a delivered and heat content adjusted basis to a large percentage of Eastern United States baseload coal fired power plants. We believe that this in turn provides us with higher margins per ton than our competitors and better positions us to maintain profitability through the commodity cycle. Our operations are located in the Illinois Basin, which we believe is the best positioned thermal coal basin in the country due to the growing demand in the Eastern United States for high Btu, high sulfur coal from scrubbed power plants and the low cost structure of the Illinois Basin. Due to increasingly stringent restrictions on sulfur emissions under the Clean Air Act and other federal and state regulations, there has been a significant increase in the percentage of coal fired power generation that utilizes pollution abatement technology, or scrubbers. We believe that scrubbed power plants purchase coal largely based on the delivered cost of coal adjusted for heat content. This growing fleet of scrubbed plants represents a growing market for Illinois Basin Coal. According to Wood Mackenzie s projections, demand for Illinois Basin coal from scrubbed power plants in the Eastern United States will increase from 102 million tons per year to 185 million tons per year from 2013 to 2020. Table of Contents As demand for high sulfur, high Btu coal grows due to increasing scrubber capacity, the Illinois Basin s low cost, attractive geology, and access to multiple transportation routes have altered the dynamic in the Eastern United States coal market by displacing higher cost supply from the Central Appalachian and Northern Appalachian basins. We believe this dynamic is similar to the manner in which shale gas producing basins have disrupted traditional U.S. energy markets by injecting low cost supply into the U.S. natural gas market. Our reserves of thick, uniform and laterally contiguous seams of high Btu thermal coal result in significantly lower mining costs than the Central Appalachian and Northern Appalachian Basins. Due to the connectivity of the basin via multiple national rail lines and major river systems to coal fired power plants, the relative proximity of the basin to the large and growing market of scrubbed power plants, and the higher heat content of coal, we believe the Illinois Basin has an advantage on a delivered cost of coal adjusted for heat content for much of the Eastern United States. We also have favorable access to the international market through the Canadian National Railway and an export terminal owned by an affiliate of our sponsor, and we have been exporting coal through New Orleans since 2008. We believe we are among the largest U.S. exporters of thermal coal. Since 2008, we have exported approximately 36% of our coal production to Europe, South America, Africa and Asia, including approximately 6.9 million tons in 2012, 6.5 million tons in 2013 and 1.8 million tons for the three months ended March 31, 2014. These international markets provide us with alternatives to the domestic market and have been an important economic outlet for our coal. While current margins on international sales are lower than the domestic market, the domestic and international markets are driven by different fundamentals, and we consider the international market, given its growth potential, to be a fundamental part of our marketing strategy. We sell a significant portion of our coal under agreements with terms of one year or longer. We market and sell our coal to a diverse customer base, including electric utility and industrial companies in the Eastern United States and the international market. As of March 31, 2014, we have secured coal sales commitments for approximately 20.5 million tons for 2014, 15.4 million tons for 2015 and 11.6 million tons for 2016, which represents approximately 85%, 64%, and 48%, respectively, of our expected production for the twelve-month period ending June 30, 2015. Our Operations We operate four mining complexes: Williamson, Sugar Camp and Hillsboro, which are longwall operations, and Macoupin, which is currently a continuous miner operation. We have the capability to support up to nine longwall mining systems, with a combined long-term potential productive capacity of up to 67.2 million tons of high Btu coal per year. The geology, mine plan, equipment and infrastructure at each of the Williamson, Sugar Camp and Hillsboro mines are relatively similar and we anticipate similar productive capacity and productivity levels as we add additional longwalls. We estimate that each additional longwall mining system or complex could take approximately 24 to 48 months to develop and cost approximately $240.0 million to $425.0 million (based on our experience developing our existing operations and the projected mine plans). We will have the option to construct these additional longwalls, or alternatively, one of our sponsor s affiliates may construct the longwalls and offer to sell them to us at fair market value once they are complete. Each of our mining complexes was designed to provide at least 20 years of reserve life at their designed productive capacity without the need to spend significant capital to develop new slopes and shafts for initial access to the coal seam. We believe this design will significantly reduce our maintenance capital expenditures compared to other underground coal producers, which should enable more of our Adjusted EBITDA to result in free cash flow and sustainable distributions for our unitholders. Our maintenance capital expenditures allow us to continue operating at a productive capacity which, inclusive of our fourth longwall that began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days, is 32.7 million tons for the life of our reserves (125 years based on our estimated production for the twelve months ending June 30, 2015). Our forecasted maintenance capital expenditures do not include actual or estimated Table of Contents capital expenditures for replacement of our coal reserves as these expenditures are immaterial due to our current expected mine life. The following table presents our existing and future potential mining operations: (short tons in millions) Williamson Sugar Camp Hillsboro Macoupin Total * Coal Reserves(1) 388 1,366 880 459 3,092 Existing Operations: Mine Type Longwall Longwall Longwall CM / Longwall Number of Existing Longwall Mining Systems(5) 1 2 1 0 4 2010 Production(2) 5.8 0.3 0.0 1.0 7.2 2011 Production(2) 7.2 0.9 0.5 1.8 10.4 2012 Production(2) 7.5 4.7 2.4 1.7 16.3 2013 Production(2) 6.7 6.5 4.8 0.7 18.8 2014 Production(3) 1.8 1.5 1.6 0.3 5.2 Future Operations: Second Longwall 2017-2019 Third Longwall 2016-2018 2018-2020 Fourth Longwall 2017-2019 Total number of Potential Longwall Mining Systems(4) 1 4 3 1 9 Current Annual Productive Capacity(6) 7.5 13.5 9.0 2.7 32.7 Long-term Annual Productive Capacity(7) 7.5 27.0 24.0 8.7 67.2 (1) See Business Coal Reserves for more information on how we define reserves and the price at which we no longer consider our reserves to be economic. Coal reserve data is as of January 1, 2014. With respect to Williamson, the reserves shown include approximately 10 million tons of reserves that are subject to partial ownership and lack of exclusive control. (2) As reported by MSHA through December 31 of the respective year. (3) As reported by MSHA for the three months ended March 31, 2014. (4) Represents total number of longwall mining systems that could be deployed, including the three currently in operation, one each at Williamson, Sugar Camp and Hillsboro and the second at Sugar Camp that began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days. (5) The second longwall system at Sugar Camp began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days. (6) Based on current annual productive capacity of Williamson, Sugar Camp, the second longwall at Sugar Camp that began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days, Hillsboro and Macoupin. (7) Long-term potential annual productive capacity is an estimate of the design capacity at each of Williamson, Sugar Camp, Hillsboro and Macoupin. We determine the number of longwall mining systems based on the size of the reserves for each mine, access to those reserves and the associated surface infrastructure in place at each mine. A longwall mining system includes the production of one longwall and one or two continuous miner units supporting each longwall. The third and fourth longwalls at Sugar Camp will require new surface infrastructure and a new slope and will form a new mining complex. Although Macoupin is not currently operating a longwall, Macoupin s long-term productive capacity is shown assuming operation with three continuous miner units, along with a separate longwall system. Achievement of full productive capacity and the timing are subject to risks and uncertainties, including, among others, market conditions, adverse geology, equipment breakdowns and other operational issues, delays in obtaining required permits, engineering and mine design adjustments, and access to the liquidity necessary to develop the mines, any of which may reduce productive capacity or delay planned start-up and ramp-up or result in additional costs. Additionally, to the extent production capacity exceeds sales, we may, from time to time, temporarily adjust work schedules or idle mines to fit our sales position. We estimate we or an affiliate of our sponsor will Table of Contents invest additional capital expenditures of between $240.0 million to $425.0 million in order to achieve full productive capacity at each incremental longwall mining system. See Risk Factors for a more detailed discussion of these and other risks and uncertainties. * Due to rounding, the amounts set forth above may not total to the amounts set forth in each column. Longwall mining is a highly-automated, underground mining technique that generates high volumes of low-cost coal production. A longwall mining system is supported by one or two continuous mining units. While the continuous mining units contribute to coal production, the primary function is to prepare an area of the mine for longwall operations. With over 3 billion tons of coal reserves, we believe we are among the largest holders of coal reserves in the United States, and our reserves are sufficient to support 125 years based on our estimated production for the twelve months ending June 30, 2015; and over 45 years of production at our estimated full productive capacity, assuming all nine of our potential longwalls are constructed. Our reserves are located in Illinois and consist primarily of three large contiguous blocks of coal in the Herrin #6 and Springfield #5 coal seams. These thick coal seams are characterized by roof and floor geology favorable for longwall mining. Our operations are strategically located near multiple rail and river transportation access points, giving us cost-competitive transportation options. We have developed infrastructure that provides each of our four mining complexes with multiple transportation outlets including direct and indirect access to five Class I railroads. Our access to competing rail carriers as well as access to truck and barge transport provides us with operating flexibility and minimizes transportation costs. We have contractual access to a 25 million ton per year barge-loading river terminal on the Ohio River owned by an affiliate. We have contractual rights to 11 million tons per year of current export terminal capacity in the Gulf of Mexico, including a terminal owned by an affiliate. We also have long-term, fixed price rail contracts from our mines to both of these terminals. These logistical arrangements give us transportation cost certainty and the flexibility to direct shipments to markets that provide the highest margin for our coal sales. Our Strengths Industry-leading productivity resulting in low production costs and attractive margins. The three longwall mines that we currently operate were three of the four most productive underground coal mines in the United States for the year ended December 31, 2013, on a clean tons produced per man hour basis based on MSHA data. Our industry leading productivity results from a combination of favorable geology, innovative mine design, a highly motivated and skilled non-unionized workforce, newly constructed automated longwall mining systems and significant investment in infrastructure. This high productivity results in low operating costs. Our consolidated cash cost per ton sold for the years ended December 31, 2013 and 2012 was $19.53 and $21.51, respectively, which we believe makes us the lowest cost bituminous producer in the United States, based on publicly available information, and significantly below the average cash costs of producers in the Illinois Basin. Our low costs drive margins that we believe are among the highest in the U.S. coal industry. In 2013 and 2012, we generated cash margins per ton sold of $21.33 and $25.30, respectively. We believe our high productivity and low cost structure will allow us to outperform our competitors and generate positive cash flow throughout the commodity cycle. Given our favorable cost position, we believe our coal will remain competitive and retain its position as base load fuel for our customers. Favorable Illinois Basin Dynamics. The Illinois Basin is the second largest coal producing basin in the United States and the fastest growing coal producing region in the country. The basin s growth is being driven by an increasing demand for its coal by domestic utilities that have installed or plan to install scrubbers. According to Wood Mackenzie estimates, 215 GWs, or 70% of total coal-fired generation capacity in the United States, is estimated to be scrubbed in 2013. Wood Mackenzie expects scrubbed capacity to increase to 258 GWs, or approximately 100% of total capacity, by 2025. During the same period, Wood Mackenzie forecasts an increase in domestic Illinois Basin coal demand of more than 65 million tons, with much of the demand derived from the South Atlantic and East North Central regions. We believe that scrubbed coal fired utilities purchase coal largely Table of Contents based on the delivered cost of coal adjusted for heat content. We believe that when adjusted for heat content and transportation cost, Illinois Basin coal in general, and our coal in specific, is the lowest cost fuel supply for a substantial majority of scrubbed coal fired generating capacity in the Eastern United States. Portfolio of sales contracts provide revenue visibility and stability. We believe our long-term coal sales contracts provide significant revenue visibility and will generate stable and consistent cash flows. As of March 31, 2014, we have secured coal sales commitments for approximately 20.5 million tons for fiscal year 2014, 15.4 million tons for fiscal year 2015 and 11.6 million tons for fiscal year 2016, respectively, of which approximately 18.8 million tons in fiscal year 2014, approximately 10.1 million tons in fiscal year 2015 and approximately 5.0 million tons in fiscal year 2016 are priced. Committed sales as a percentage of estimated production for the twelve months ending June 30, 2015 are 85%, 64% and 48% for calendar years 2014, 2015 and 2016, respectively. Significant growth opportunities enabled by over $2.0 billion of capital investment. At full run rate production, including our longwall that began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days, we estimate that our existing operations have total productive capacity of approximately 32.7 million tons per year. Additionally, our reserves are sufficient to support up to nine longwalls, with a portion of the existing surface and underground infrastructure available to be shared among our existing, and most of our future, longwalls. The potential future capacity of our operations if all nine longwalls are constructed would be 67.2 million tons per year. We have already made the significant investment in large scale surface and underground infrastructure, and we believe our growth from these complexes will have shorter lead time and lower costs than greenfield development, which should enable us to generate a higher return on incremental capital employed. Preliminary work has already begun on the third and fourth longwalls on the Sugar Camp reserve, which have been named Logan and Tanner, respectively. These longwall operations will be built as a separate mining complex. The initial development work includes preliminary engineering, permitting (IDNR Permit submitted November 2013) and initial capital expenditures for longwall equipment and certain property right of ways. Large, contiguous, high quality reserve base supports long mine lives and minimizes maintenance capital expenditure. We control over 3 billion tons of coal reserves, which we believe makes us one of the largest reserve holders in the United States and ranks us 4th among public companies in the United States as of December 31, 2013. Almost all of our reserves are in three large, contiguous blocks of coal: two in central Illinois and one in southern Illinois, where the size of reserves and the geologic conditions are favorable for longwall mining. The contiguous nature of our reserves enables us to develop centrally located mining complexes with long mine lives, which means we do not have to continually develop new mines to replace mines with depleted reserves. As a result, we expect to reduce the amount of capital expenditures necessary to maintain our production levels, thus enabling us to translate more of our Adjusted EBITDA to free cash flow. Please see footnote 3 under Summary Historical Consolidated Financial and Other Information for a US GAAP reconciliation of Adjusted EBITDA. Broad domestic and export market access through a variety of transportation options allows us to maximize margins. We complement our low cost mining operations with competitive low cost transportation options to the domestic and international markets. Our mines are attractively positioned in close proximity to railroads and rivers and each of our mining complexes has access to two or more competing forms of transportation. We have direct and indirect access to five Class I rail lines. We have contractual access to a 25 million ton per year barge-loading river terminal on the Ohio River owned by an affiliate, an additional barge-loading river terminal on the Mississippi River and two export terminals in Louisiana. We have entered into agreements with railroads, barge carriers and terminals with terms up to 20 years. Transportation optionality allows us to negotiate competitive rates and control costs. The total cost of mining and transporting coal to our primary domestic markets in the Southeast and the Ohio River Valley compares favorably to Henry Hub natural gas forward prices on a dollars per million Btu basis as of December 31, 2013. Across all transportation options, we have contractual access to 11 million tons of current export terminal capacity in the Gulf of Mexico, Table of Contents including a terminal owned by an affiliate. Our affiliate has plans to increase this export capacity to 26 million tons per year. This broad market access enables us to maximize prices and margins realized for our coal sales. As a result, despite the recent decline in seaborne thermal coal benchmark prices, our low cost structure allows us to profitably deliver coal to the European market. Best-in-class management capabilities. Chris Cline, our Principal Strategy Advisor, and senior operations personnel have, on average, more than 30 years of experience in the coal industry. They are hands-on operators and have substantial experience in designing and developing new mines, increasing productivity, reducing costs, building infrastructure, implementing marketing strategies and operating safe mines. In addition to their operating strengths, our senior executives have experience in identifying, acquiring, financing and integrating relevant businesses that we believe will enhance the value of our assets. Strong relationship with our sponsor. One of our principal strengths is our relationship with our sponsor, Foresight Reserves, who will have a significant interest in our partnership through its ownership of a 85.9% limited partner interest in us as well as a 99.33% ownership interest in our general partner and incentive distribution rights. We have entered into a development agreement with Foresight Reserves that offers Foresight Reserves the right to develop additional longwalls on the Sugar Camp, Hillsboro and Macoupin reserve base. If Foresight Reserves accepts and develops the additional longwall mines, we have the option to purchase the developed mines at fair market value upon commencement of longwall production. We also have a strong relationship with the Cline Group, Foresight Reserves indirect parent, which has a well-established 30-year history in the development and operation of coal mining facilities. In addition, in September 2007, Foresight Reserves received an investment from an affiliate of Riverstone Holdings LLC ( Riverstone ). Riverstone is an energy and power-focused private investment firm founded in 2000 with approximately $27 billion of equity capital raised. As such, we believe that our relationship with our sponsor will provide us with growth opportunities as it will potentially acquire, develop and drop down qualifying assets to us to help drive our growth. Our Strategy Our business strategy is to steadily and sustainably increase cash distributions to our common unitholders by: Operating mines with high productivity and industry-leading cost structure. We believe we are the lowest cost bituminous coal producer in the United States, based on publicly available information. We believe low operating costs are critical to maintain stable financial performance and sustain profitability and cash flow throughout business and commodity cycles. Growing production and operating cash flows. We expect our coal production and cash flow to increase with the commencement of the second longwall mining system at Sugar Camp that began start-up testing and operations in late May, 2014 and is expected to achieve normal run-rate within the next thirty days. We have a visible pipeline of additional organic growth projects to further develop our vast reserve base by incrementally adding longwall systems at our existing mining complexes and developing new mining complexes. Minimizing maintenance capital expenditures. We have designed each of our mines to have at least 20 years of productive life from our initial mine development. This design reduces the amount of expected future capital expenditures necessary for surface infrastructure to maintain the productive capacity as the mines get older. Reducing maintenance capital expenditures (which are those cash expenditures made to maintain our long-term production capacity and net income) in the future should enable more of our Adjusted EBITDA to result in free cash flow. Maintaining a stable revenue base. We currently have approximately 72.1 million tons of coal sales under contract for delivery through December 31, 2020. We intend to continue to expand our portfolio of long-term coal supply agreements as our production grows to maintain the stability of our operating cash flows and mitigate the effects of coal price volatility. Table of Contents Expanding the diversity of our sales portfolio. We believe that it is essential to have a diverse base of end-users for our coal including international coal consumers. Customer diversity enables us to manage concentration risks with a particular end-user or market and optimize sales to various market subsectors based on the most attractive margins on a net back basis at the mines. We have sold coal or are currently selling coal to 110 different customers and end-users in 19 states in the United States and 17 countries around the world and no single customer represented greater than 10% of our revenues for the year ended December 31, 2013. Maintaining our transportation and logistics network. We believe that it is important for our coal to be low cost on a delivered basis to end-users. As a result, we have developed infrastructure to ensure that we have access to multiple low cost transportation options that provide wide market access to reach existing and new customers in the domestic and international markets. Continuing to operate with industry-leading safety standards. Safety is our priority and it is incorporated in all aspects of our operations, including mine design, equipment selection and operating processes. We will continue to work with equipment manufacturers to make our mining equipment and mining process safer. We will continue to implement safety measures to maintain the high quality of our underground infrastructure, including using ventilation and roof control measures that exceed industry standards. Coal Market Overview Coal remains an in-demand, cost-competitive energy source. According to the EIA, total United States electricity generation is expected to grow by 14% from 2013 to 2025. Despite recent reductions in coal-fired electrical demand, coal is expected to retain the largest share of electrical power generation in the United States, representing an average 38% share of domestic electricity generation through 2025. Coal, particularly coal produced in the Illinois Basin, has historically been a low-cost, stable and reliable source of energy relative to alternative fuel sources. Conventional coal powered generation plants also have a lower levelized capital cost relative to alternative energy sources, such as nuclear, hydroelectric, wind and solar power. Demand for Illinois Basin coal is growing in the United States. Many domestic utilities have installed or plan to install scrubbers. This increase in scrubbers is expanding the market for high sulfur coal from the Illinois Basin. According to Wood Mackenzie estimates, 215 GWs, or 70% of total coal-fired generation capacity in the United States, is estimated to be scrubbed in 2013. Wood Mackenzie expects scrubbed capacity to increase to 258 GWs, or approximately 100% of total capacity, by 2025. During the same period, Wood Mackenzie forecasts an increase in domestic Illinois Basin coal demand of more than 65 million tons, with much of the demand deriving from the South Atlantic and East North Central regions. Expected long-term increases in international demand and the United States export market. While international coal market prices have declined recently, we believe that over the long-term, Pacific Basin demand for global seaborne thermal coal will continue to increase and create a shortfall in the Atlantic Basin supply as quantities of thermal coal from traditional European, Colombian and South African suppliers will shift to Asia over the decade. This shift, which was evident in 2011 and 2012, should continue to create opportunities for U.S. and South American producers to export to coal-fired plants in Europe and Asia in the future. Developments in U.S. regional coal markets. Coal production in the Central Appalachian region of the United States has declined in recent years because of production challenges, reserve degradation and difficulties acquiring permits needed to conduct mining operations. In addition, underground mining operations have become subject to additional, more costly and stringent safety regulations, which have had the effect of increasing the operating costs of older mines with large areas to maintain. Table of Contents
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+S-1/A 1 c68409_s1a.htm As Filed with the Securities and Exchange Commission on March 3, 2014 Registration No. 333-179435 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 6 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Market Vectors Commodity Trust (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6799 (Primary Standard Industrial Classification Code Number) 45-4471545 (I.R.S. Employer Identification Number) 335 Madison Avenue New York, New York 10017 (212) 293-2000 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) Jonathan R. Simon, Esq. Van Eck Absolute Return Advisers Corp. 335 Madison Avenue New York, New York 10017 (212) 293-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Stuart M. Strauss, Esq. Dechert LLP 1095 Avenue of the Americas New York, New York 10036 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price Per Unit Proposed Maximum Aggregate Offering Price1 Amount of Registration Fee2 Market Vectors Low Volatility Commodity ETF, Common Units of Beneficial Interest 2,000,000 $50.001 $100,000,000 $12,880 1. The proposed maximum aggregate offering price has been calculated assuming that all Shares are sold at a price of $50.00 per Share. 2. Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. OR SALE OF THE SHARES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER, SOLICITATION OR SALE. AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN TRANSACTING IN SHARES. SEE "PLAN OF DISTRIBUTION." Margin. Shares will be eligible for margin accounts. Investing in the Shares does not insulate Shareholders from certain risks, including price volatility. There can be no assurance that the Fund will achieve its investment objective or avoid substantial losses. The Managing Owner has the discretion to change the Fund s investment objective or policies at any time without prior notice. The Fund has not commenced trading and does not have any performance history. The market price of the Shares on the secondary market is expected to fluctuate generally in relation to changes in the NAV of the Fund. The Index The Index is a fully collateralized commodity futures index that uses a momentum rule to determine if each Index Commodity Contract is held long or flat. A long position is a position that will increase in market price if the price of the Index Commodity Contract is rising during the period when the position is open. A flat position is a position that will not increase in market price whether the price of the Index Commodity Contract to which it relates is rising or falling. The momentum rule establishes whether a position in an Index Commodity Contract will be long or flat, as described below. To implement the momentum rule, Morningstar calculates a "linked" price (described further below), which is used to determine the long or flat positions in the Index Commodity Contracts. Whether a position will be long or flat is determined, at the time of a monthly repositioning, by comparing the linked price of each Index Commodity Contract to its 12-month moving average. For example, if, at a monthly repositioning, the linked price for an Index Commodity Contract exceeds its 12-month moving average, the Index takes the long side in the subsequent month. Conversely, if the linked price for an Index Commodity Contract is below its 12-month moving average, the Index moves the position to cash (i.e. flat). The linked price is determined on the basis of price changes and roll yields. Rolling a futures contract means closing out a position on near-dated (i.e., commodity futures contracts that are nearing expiration) commodity futures contracts before they expire and establishing an equivalent position in a longer-dated futures contract (i.e., commodity futures contracts that have an expiration date further in the future) on the same commodity. Roll yield is the amount of return generated (either positive or negative) by rolling a futures contract. Futures contacts can be in "backwardation," which means that futures contracts with longer-term expirations are priced lower than those with shorter-term expirations, or can exhibit "contango," which means that futures contacts with longer-term expirations are priced higher than those with shorter-term expirations. In backwardation, market roll yields are positive. In contango, market roll yields are negative. To be considered for inclusion in the Index, a commodity future must be listed on a U.S. futures exchange, be denominated in U.S. dollars and rank in the top 95% by total U.S. dollar value of the total open interest pool of all eligible commodities. The weight of each individual Index Commodity Contract in the Index is the product of two factors: magnitude and the direction of the momentum signal (i.e., 1 for long or 0 for flat). On the annual reconstitution date, the magnitude is the open interest weight of the Index Commodity Contract, calculated on the second Friday of December, using data through the last trading day of November. Individual contract weights are capped at 10%. Between reconstitution dates, the weights vary based on the performance of the individual Index Commodity Contract positions. The Index is reconstituted annually and directions (i.e., whether long or flat) of each Index Commodity Contract are determined monthly on the second Friday of each month, which is one week prior to the repositioning day. the trader. Certain futures contracts, such as those for stock or other financial or economic indices approved by the CFTC or Eurodollar contracts, settle in cash (irrespective of whether any attempt is made to offset such contracts) rather than delivery. In market terminology, a trader who purchases a futures contract is "long" in the market and a trader who sells a futures contract is "short" in the market. Before a trader closes out the trader s long or short position by an offsetting sale or purchase, his outstanding contracts are known as open trades or open positions. The aggregate amount of open positions held by traders in a particular contract is referred to as the open interest in such contract. Options on Futures Contracts Options on commodity futures contracts are standardized contracts traded on an exchange. An option on a futures contract gives the buyer of the option the right, but not the obligation, to take a position at a specified price (the exercise price) in the underlying futures contract on or before a specified date. The buyer of a call option acquires the right, but not the obligation, to purchase or take a long position in the underlying futures contract, and the buyer of a put option acquires the right, but not the obligation, to sell or take a short position in the underlying futures contract. The seller of an option is obligated to take a position in the underlying contract at a specified price on or before a specified date opposite to the option buyer if the option is exercised. Thus, the seller of a call option must stand ready to take a short position in the underlying contract at the exercise price if the buyer should exercise the option. The seller of a put option, on the other hand, must stand ready to take a long position in the underlying contract at the exercise price. A call option is said to be "in-the-money" if the exercise price is below current market levels, "out-of-the-money" if the exercise price is above current market levels and "at-the-money" if the exercise price is at current market levels. Conversely, a put option is said to be "in-the-money" if the exercise price is above the current market levels and "out-of-the-money" if the exercise price is below current market levels. Options have limited life spans, usually tied to the delivery or settlement date of the underlying contract. The purchase price of an option is referred to as its premium, which consists of its intrinsic value plus its time value. Intrinsic value of an option is the value of exercising it prior to expiration, corresponding to the difference between the strike price and underlying spot price. Prior to expiration, any premium in excess of intrinsic value is the time value. As an option nears its expiration date, the time value shrinks and the market and intrinsic values move into parity. An option that is "out-of-the-money" at the time it expires becomes worthless. On certain exchanges, "in-the-money" options are automatically exercised on their expiration date, but on others, unexercised options simply become worthless after their expiration date. Regardless of how much the market swings, the most an option buyer can lose is the option premium. The option buyer deposits his premium with his broker, and the money goes to the option seller. Option sellers, on the other hand, face risks similar to participants in the futures markets. For example, since the seller of a call option on futures is assigned a short futures position if the option is exercised, his risk is the same as someone who initially sold a futures contract. Because no one can predict exactly how the market will move, the option seller posts margin to demonstrate his ability to meet any potential contractual obligations. The information in this Prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated March 3, 2014 Market Vectors Low Volatility Commodity ETF 2,000,000 Common Units of Beneficial Interest Market Vectors Commodity Trust (the "Trust") is a Delaware statutory trust organized as a series trust. Market Vectors Low Volatility Commodity ETF (the "Fund") is a series of the Trust that will issue common units of beneficial interest, or "Shares," which represent units of fractional undivided beneficial interest in and ownership of the Fund. Shares may be purchased from the Fund only by certain eligible financial institutions, called "Authorized Participants," and only in one or more blocks of 50,000 Shares, each called a "Basket." The Fund will continuously offer its Shares in Baskets to Authorized Participants at the net asset value ("NAV") of 50,000 Shares. The Fund s Participant Agreements set forth the terms and conditions on which Authorized Participants may purchase or redeem Baskets. The Shares of the Fund are expected to be listed for trading, subject to notice of issuance, on NYSE Arca, Inc. ("NYSE Arca" or the "Exchange"), under the symbol "LVCM" (quoted in U.S. dollars). The Fund will seek to track changes, whether positive or negative, in the performance of the Morningstar Long/Flat Commodity IndexSM (the "Index") over time. The Fund will seek to achieve its investment objective by investing principally in exchange-traded futures contracts on commodities comprising the Index ("Index Commodity Contracts"). The Index is a rules-based commodity futures index that employs a momentum rule to determine if exposure to a particular Index Commodity Contract should be maintained with its prescribed weighting (a "long position") or moved to cash (a "flat position"). For each Index Commodity Contract represented by the Index, Morningstar , Inc. ("Morningstar") calculates a "linked" price that incorporates both price changes and roll yield. Whether a position will be long or flat is determined, at the time of a monthly repositioning (defined below), by comparing the linked price of each Index Commodity Contract to its 12-month moving average. The Fund does not seek to outperform the Index. Van Eck Absolute Return Advisers Corp. (the "Managing Owner") will seek to cause the NAV of the Fund to track the Index during periods in which the Index is flat or declining as well as when the Index is rising. Except when aggregated in Baskets, the Shares are not redeemable securities. These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission ("SEC") or by any state securities commission. Neither the SEC nor any state securities commission has passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The Trust is a not a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"), and is therefore not subject to regulation thereunder. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. The Shares are speculative securities and their purchase involves a high degree of risk. You should consider all risk factors before investing in the Fund. Please refer to "The Risks You Face" beginning on page 14. The Fund has no operating history. Futures trading prices are volatile and even a small movement in market prices could cause large losses. Historical performance of the Index is limited and not necessarily indicative of the future performance of the Index or the Fund. Holders of Shares ("Shareholders") could lose all or substantially all of their investment in the Fund. The Fund is subject to fees and expenses that are payable regardless of the Fund s performance or profitability. The Fund s return may not match the return of the Index due to, among other factors, the Fund incurring operating expenses, and speculative position limits imposed by the Commodity Futures Trading Commission ("CFTC") and commodity exchanges. Tracking error may reduce the Fund s returns. The Fund will be subject to actual and potential conflicts of interest with respect to the Managing Owner and its affiliates, the commodity broker, the custodian, Morningstar and its affiliates and Authorized Participants, including the initial Authorized Participant. The Fund will distribute to Shareholders Schedule K-1s that will contain information regarding the income and expenses of the Fund. Schedule K-1 is a complex form and a Shareholder may find that preparing the Shareholder s tax return may require the services of an accountant or other tax preparer at the Shareholder s expense. On [ ], 2014, Van Eck Securities Corporation, as the initial purchaser (the "Initial Purchaser"), subject to certain conditions, agreed to purchase and take delivery of 100,000 Shares, which comprise the initial Baskets, at a purchase price of $50.00 per Share ($2,500,000 per Basket), as described in "Plan of Distribution." This price has been arbitrarily determined inasmuch as the Shares will have no inherent value at the Fund s inception, and it is not indicative of prices that will prevail in the trading market. The Initial Purchaser proposes to offer the Shares to the public at a per-Share price that will vary depending upon, among other factors, the trading price of the Shares on the NYSE Arca, the NAV per Share and the supply of and demand for the Shares at the time of offer. Shares offered by the Initial Purchaser at different times may have different offering prices. The Initial Purchaser will not receive from the Fund, the Managing Owner or any of their affiliates any fee or other compensation in connection with its sale of Shares to the public. Authorized Participants may from time-to-time offer to the public Shares from any Baskets they create. Shares offered to the public by Authorized Participants will be offered at a per-Share offering price that will vary depending upon, among other factors, the trading price of the Shares on the NYSE Arca, the NAV per Share and the supply of and demand for the Shares at the time of offer. Shares initially comprising the same Basket but offered by Authorized Participants to the public at different times may have different offering prices. Authorized Participants will not receive from the Fund, the Managing Owner or any of their affiliates any fee or other compensation in connection with their sale of Shares to the public. An Authorized Participant may receive commissions or fees from Shareholders who purchase Shares through their commission or fee-based brokerage accounts with the Authorized Participant. In addition, the Marketing Agent (defined below) will be paid a fee for its services. For more information regarding items of compensation paid to Financial Industry Regulatory Authority ("FINRA") members, please see the "Plan of Distribution" section on page 70. The Fund qualifies as an "emerging growth company" as defined under the Jumpstart Our Business Startups Act of 2012. This is not a description of the Fund as an investment vehicle or the type of investment strategies it will use. Shares are neither interests in nor obligations of any of the Managing Owner, the Trustee, the Initial Purchaser, any other Authorized Participant or any of their respective affiliates. Shares are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. [ ], 2014 COMMODITY FUTURES TRADING COMMISSION RISK DISCLOSURE STATEMENT YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL. FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 37 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 11. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 14. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. SWAPS TRANSACTIONS, LIKE OTHER FINANCIAL TRANSACTIONS, INVOLVE A VARIETY OF SIGNIFICANT RISKS. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR SWAP TRANSACTION NECESSARILY DEPEND UPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. IN GENERAL, HOWEVER, ALL SWAPS TRANSACTIONS INVOLVE SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK. HIGHLY CUSTOMIZED SWAPS TRANSACTIONS IN PARTICULAR MAY INCREASE LIQUIDITY RISK, WHICH MAY RESULT IN A SUSPENSION OF REDEMPTIONS. HIGHLY LEVERAGED TRANSACTIONS MAY EXPERIENCE SUBSTANTIAL GAINS OR LOSSES IN VALUE AS A RESULT OF RELATIVELY SMALL CHANGES IN THE VALUE OR LEVEL OF AN UNDERLYING OR RELATED MARKET FACTOR. Purchasing and Selling Shares The Shares of the Fund are expected to be listed for trading, subject to notice at issuance, on NYSE Arca under the symbol "LVCM" (quoted in U.S. dollars). Shareholders may purchase and sell Shares through traditional brokerage accounts. Secondary market purchases and sales of Shares are subject to customary brokerage commissions and charges. Shareholders are encouraged to review the terms of their brokerage accounts for applicable charges. Baskets of Shares may be created and redeemed only by Authorized Participants, except that the initial Baskets will be created by the Initial Purchaser. The market price of the Shares may not be identical to the NAV per Share. The intra-day indicative value per Share is based on the prior day s final NAV per Share, adjusted every 15 seconds throughout the day to reflect the continuous price changes of the Fund s futures contracts and Other Instruments, if any, to provide a continuously updated indicative intra-day value per Share. The Fund is not involved in or responsible for the calculation or dissemination of the indicative intra-day value per Share and makes no warranty as to the accuracy of the indicative intra-day value per Share. Pricing Information Available on NYSE Arca and Other Sources The following table lists NYSE Arca symbols and their descriptions with respect to the Shares and the Index: Ticker Description LVCM Market price per Share on NYSE Arca LVCM.IV Indicative intra-day value per Share LVCM.NV End of day NAV MSDILFTR Intra-day and Index closing level as of close of NYSE Arca from the prior day LVCM.SO Number of outstanding Shares The intra-day data in the above table is published once every 15 seconds throughout each trading day. The current market price per Share (symbol: "LVCM") (quoted in U.S. dollars) will be published continuously as trades occur throughout each trading day on the consolidated tape by market data vendors. The intra-day indicative value per Share (symbol: "LVCM.IV") (quoted in U.S. dollars) will be published by NYSE Arca once every 15 seconds throughout each trading day on the consolidated tape by market data vendors. The most recent end-of-day NAV (symbol: "LVCM.NV") (quoted in U.S. dollars) will be published by the Managing Owner as of the close of business by market data vendors and on the Managing Owner s website at www.vaneck.com, or any successor thereto, and will be published on the consolidated tape. The intra-day level and the most recent end-of-day closing level of the Index (symbol: "MSDILFTR") will be published by NYSE Arca once every 15 seconds throughout the Exchange s Core Trading Session and as of the close of business for NYSE Arca, respectively, on the consolidated tape by market data vendors. Spot Markets Commodity prices fluctuate based on the supply and demand of any commodity. If there is excess supply, then inventories build up until there is downward pressure on prices and producers reduce supplies in response to that price signal. Conversely, in the case of excess demand, inventories will be drawn down until the shortage causes prices to rise and equilibrium is restored. However, it can take a significant time period for inventories to be regulated through price changes due to production and storage situations, leading to sustained trends in commodity spot prices. These trends in commodity spot prices are reflected in futures prices. Commodity Futures Markets Large fluctuations in spot prices can lead to the risk of operating losses for both commercial commodity producers (e.g., wheat farmers) and consumers (e.g., cereal manufacturers), so they both have incentives to hedge against the risk of future price fluctuations. The commodity futures markets provide one of the most common and effective ways of hedging price risk. When there are more producers than consumers who need to hedge, speculators (including investors pursuing commodity futures strategies) enter the market and provide insurance against falling spot prices by taking the long side. Speculators receive a premium for this insurance in the form of a futures price that is less than the expected future spot price. Hence, they expect the futures price to trend upward as it approaches the actual future spot price over the life of the contract. Conversely, net hedging pressure can be greater on the long side. That is, when there are more consumer hedgers than producer hedgers, speculators provide insurance against rising futures prices by taking the short side, leading to a futures price that is higher than the expected future spot price. Hence, they expect the futures price to trend downward as it approaches the spot price over the life of the contract. Storage Markets Producers of stable commodities use inventories to fill gaps between production and sales. Similarly, consumers use inventories to fill gaps between consumption and purchases. This creates a market for storage. Storage is costly, however, besides the direct cost of physical storage, there is also an opportunity cost because the money tied up in the commodity could be earning interest. On the margin then, an extra unit is only worth storing if the benefits of storage are at least equal to the costs (including the opportunity to earn interest). If this benefit is high enough (so that it makes sense to store the commodity for later use or sale rather than using or selling it now), the futures price will be lower than the spot price, causing time to expiration and the futures price to be inversely related so that the further out the futures contract, the lower the price, thus compensating for the cost of storage. If this is the case, we say that there is "backwardation" in the futures market. In a backwardated market, owners of a commodity in storage are being more than compensated for the costs of storage, but the compensation is not in monetary payments. Rather, it is in less-tangible benefits such as securing a supply of fuel as insurance against an energy crunch. However, investors who are taking long positions in futures contracts can realize this compensation monetarily by replacing the contracts that they are holding with longer-term ones, thus locking in profits. As shown below, Chart A illustrates the relationship between the price and the term of a futures contract when the market is in backwardation. The price curve slopes downward from left to right and the buy transaction of a longer term contract is at a lower price. Roll yields are positive. The market condition in which this takes place is called backwardation. Likewise, when the marginal benefits of storage are low, the relationship between time to expiration and the futures price is positive, a market condition known as "contango." In contangoed markets, roll yields are negative because replacing contracts results in locking in a loss. The benefit of storage tends to be high when inventories are low. For example, when a commodity is scarce, having it in REGULATORY NOTICES THIS POOL HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE HISTORY. THE BOOKS AND RECORDS OF THE FUND WILL BE MAINTAINED AS FOLLOWS: ACCOUNTING AND CERTAIN OTHER FINANCIAL BOOKS AND RECORDS (INCLUDING THE FUND S ACCOUNTING RECORDS, LEDGERS WITH RESPECT TO ASSETS, LIABILITIES, CAPITAL, INCOME AND EXPENSES, THE REGISTRAR, TRANSFER JOURNALS AND RELATED DETAILS) ARE MAINTAINED BY THE BANK OF NEW YORK MELLON, 2 HANSON PLACE, 12TH FLOOR, BROOKLYN, NEW YORK 11217, TELEPHONE NUMBER (718) 315-7500. ALL MARKETING MATERIALS WILL BE MAINTAINED BY VAN ECK SECURITIES CORPORATION, 335 MADISON AVENUE, NEW YORK, NEW YORK 10017, TELEPHONE NUMBER (212) 293-2000. ALL OTHER BOOKS AND RECORDS OF THE FUND (INCLUDING MINUTE BOOKS AND OTHER GENERAL CORPORATE RECORDS, TRADING RECORDS AND RELATED REPORTS AND OTHER ITEMS RECEIVED FROM THE FUND S FUTURES COMMISSION MERCHANTS) WILL BE MAINTAINED AT THE FUND S PRINCIPAL OFFICE, C/O VAN ECK ABSOLUTE RETURN ADVISORS CORP., 335 MADISON AVENUE, NEW YORK, NEW YORK 10017, TELEPHONE NUMBER (212) 293-2000. SHAREHOLDERS WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS, TO HAVE ACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS) SUCH BOOKS AND RECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. MONTHLY ACCOUNT STATEMENTS FOR THE FUND CONFORMING TO CFTC AND NATIONAL FUTURES ASSOCIATION ("NFA") REQUIREMENTS WILL BE POSTED ON THE MANAGING OWNER S WEBSITE AT WWW.VANECK.COM. ADDITIONAL REPORTS MAY BE POSTED ON THE MANAGING OWNER S WEBSITE IN THE DISCRETION OF THE MANAGING OWNER AS REQUIRED BY REGULATORY AUTHORITIES. THERE WILL SIMILARLY BE DISTRIBUTED TO SHAREHOLDERS, NOT MORE THAN 90 DAYS AFTER THE CLOSE OF THE FUND S FISCAL YEAR, CERTIFIED AUDITED FINANCIAL STATEMENTS AND THE TAX INFORMATION RELATING TO SHARES OF THE FUND NECESSARY FOR THE PREPARATION OF SHAREHOLDERS ANNUAL FEDERAL INCOME TAX RETURNS. ------------------------------------------------------------------------------ THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION STATEMENT OF THE FUND on file with the sec. YOU CAN READ AND COPY any materials filed by the fund with the sec AT THE SEC S PUBLIC reference Room at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. ------------------------------------------------------------------------------ NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE MANAGING OWNER, THE AUTHORIZED PARTICIPANTS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY OFFER, SOLICITATION IN EVALUATING THE RISKS AND CONTRACTUAL OBLIGATIONS ASSOCIATED WITH A PARTICULAR SWAP TRANSACTION, IT IS IMPORTANT TO CONSIDER THAT A SWAP TRANSACTION MAY BE MODIFIED OR TERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ON INDIVIDUALLY NEGOTIATED TERMS. THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOL OPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOL S OBLIGATIONS OR THE POOL S EXPOSURE TO THE RISKS ASSOCIATED WITH A TRANSACTION PRIOR TO ITS SCHEDULED TERMINATION DATE. The number of outstanding Shares (symbol: "LVCM.SO") will be published once every 15 seconds throughout the trading day and as of the close of business for NYSE Arca and on the consolidated tape by market data vendors. Disclosure regarding the components of the Index and the long and flat positions therein will be available at http://corporate.morningstar.com/US/asp/subject.aspx?page=2649&filter=Commodity&xmlfile=2738.xml. The intra-day levels and Index closing levels and the intraday values and closing NAV are published by NYSE Arca. The Fund is not issued, sponsored, endorsed, sold or promoted by NYSE Arca, and NYSE Arca makes no representation regarding the advisability of investing in the Fund. NYSE ARCA MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE ARCA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. Breakeven Point per Share In order for an investor to break-even on an investment during the first twelve months of an investment, the Fund must earn approximately 0.67% per annum, or $0.34 per annum per Share at $50.00 as the NAV per Share. See "Breakeven Point" below for more information. Risk Factors An investment in Shares is speculative and involves a high degree of risk. There is no assurance that the Fund will achieve its investment objective. A potential Shareholder should not invest in the Shares unless he or she can afford to lose the entire investment. Before investing in the Shares, a potential Shareholder should be aware of the various risks of investing in the Fund, including those described below. Additional risks and uncertainties not presently known by the Fund or not presently deemed material by the Fund may also impair the Fund s operations and performance. The summary risk factors set forth below are intended to highlight certain risks of investing in the Fund. A more extensive discussion of these risks appears beginning on page 14 in "The Risks You Face." The Fund has no operating history. Therefore, a potential Shareholder has no performance history to serve as a factor in evaluating an investment in the Fund. Past performance of the Fund, when available, is not necessarily indicative of future results and past performance history of the Index is limited and not necessarily indicative of the future performance of the Index or the Fund. The Fund is subject to the fees and expenses as described in this Prospectus, which are payable regardless of the Fund s performance or profitability. The futures trading activities of the Fund take place in very volatile markets that may be subject to sudden and rapid changes. Consequently, all or substantially all of your investment in the Shares could be lost. storage will improve commercial consumers readiness to meet their needs in the near future, leading to backwardation and positive roll yields. Conversely, the benefits of storage are low when inventories are plentiful, leading to contango. Chart B illustrates the futures price curve in a contango market. The price curve slopes upward from left to right and the buy transaction of a longer term contract is at a higher price. Roll yields are negative. Since inventory conditions in some commodities are slow to adjust due to the time it takes to increase their production, backwardation or contango could persist for a period of time, causing investors to consistently experience positive or negative roll yield over the period. The persistence of backwardated markets over time does not necessarily imply that contract rolls will consistently be positive or profitable. This is because both the slope and the relative position of the futures price curve could change or move up or down. Similarly, the persistence of contango markets over time does not necessarily imply that contract rolls will be negative or unprofitable. The slope and position of the futures price curves are dynamic and reflect a broad range of global economic and supply and demand factors which affect the prices of the specific commodities underlying the futures contracts. Source: Morningstar, Inc. Hedgers and Speculators The two broad classes of persons who trade commodity futures contracts are "hedgers" and "speculators." Commercial interests, including farmers, that market or process commodities, and financial institutions that market or deal in commodities, including interest rate sensitive instruments, foreign currencies and stocks, and which are exposed to currency, interest rate and stock market risks, may use the futures markets for hedging. Hedging is a protective procedure designed to minimize losses that may occur because of price fluctuations occurring, for example, between the time a processor makes a contract to buy or sell a raw or processed commodity at a certain price and the time he must perform the contract. The futures markets enable the hedger to shift the risk of price fluctuations to the speculator. The speculator risks his capital with the hope of making profits from price fluctuations in futures interests contracts. Speculators rarely take delivery of commodities, but rather close out their positions by entering into offsetting purchases or sales of futures interests contracts. Since the speculator may take either a long or short position in the futures markets, it is possible for him to make profits or incur losses regardless of whether prices go up or down. Futures Exchanges Generally Futures exchanges provide centralized market facilities for trading futures contracts and options (but not forward contracts). Members of, and trades executed on, a particular exchange are subject to the MARKET VECTORS COMMODITY TRUST TABLE OF CONTENTS SUMMARY 1
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+PROSPECTUS SUMMARY The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. To understand our business and this offering fully, you should read this entire prospectus carefully, including the financial statements and the related notes beginning on page F-1. This prospectus contains forward-looking statements and information relating to US-Tianxia Software Technology Int l, Inc. See Cautionary Note Regarding Forward Looking Statements on page 19. Our Company The Company was formed on October 22, 2010 in the State of California. The selling shareholders in this offering are underwriters. Business Strategy We are a development stage company. The Company will be a language and educational computer software exporter. We will sell software to buyers on an international basis. We have a twenty year contract with Harbin Jufeng Computer Co., Ltd., and will work towards modernizing language and educational software to make sure that individuals and firms the world over may more efficiently work on their computers in their native languages, as well as learn new languages, such as Chinese. The agreement merely creates a trading relationship with our potential joint venture partner and lays out the intent of the partners for the terms of a joint venture. The Company has not yet generated any revenue and will not create any revenue until the formal Joint Venture begins. The agreement confirms their mutual intent to identify and work for certain projects together in the next 20 years. There is no time limit for the start of the Joint Venture although it is anticipated that the start will be within 12 months of the effectiveness of the registration statement and the agreement merely creates a trading relationship at this time. If the parties enter into a formal Joint Venture in the future the registrant s percentage will be 10.3% of the Joint Venture. The trading partner is a well established entity in the PRC operating and generating revenue for a number of years. On August 8, 2011, California State Senate Republican Caucus Chairman Bob Huff sent a letter to Wen Hua Zhao of the PRC Heilongjiang Province Department of Commercial Affairs, inviting an official delegation from Heilongjiang Province, China to visit California in the Fall of 2011. The letter made explicit that the invitation was extended to twenty-four listed individuals. Mr. Huff made clear that the delegation's purpose was to encourage culture, trade, economic and business exchange between the United States and China, and that the letter could be used for visa applications at a consulate. As the company would benefit from the fostering of culture, trade, economic and business exchange to which Mr. Huff referred, it was decided that the company would take part in sponsoring the delegation's visit. Such sponsorship is hoped to improve the name-recognition of the company, and to encourage goodwill among potential customers, vendors, etc. and gain additional potential trading partners, in the future. To that end, the company has helped pay for a portion of the expenses incurred by the delegation. Several U.S. cities were visited, including New York, Buffalo, Pittsburgh, Los Angeles, and San Francisco. Members of the delegation learned much useful information about local culture, entrepreneurial practices, and academics. The company paid for portions of the travel costs, including airfare and automobile expenses. The company has helped pay for a portion of the costs of boarding. In certain cities, dinner receptions were held in honor of the delegation members. In San Francisco, for example, a dinner reception was held on October 26, 2011. Officers and/or representatives of the company were present at that event. The corporation paid for a portion of the cost involved in renting the space, and preparing for the event: food, planning, decorations, etc. Additionally, there was an important meeting on March 26, 2012 in Hong Kong discussing the development of the company, and of commerce with Heilongjiang Province. The meeting discussed cooperation between US-based companies and China-based companies. Heilongjiang Province government officials attended, as did officers of the company, flying to Hong Kong. Airfare, other travel expenses, and lodging, were borne by the corporation. Officials from the registrant attended these events which lead to the signing of the cooperation agreement. These events were costly formal official ceremonies and heavily attended. The registrant can provide the commission with pictures of its officials at these events should the Commission deem it necessary. The Company has continued to foster these relationships to narrow down the types and specifications of products which will have the greatest interest and revenue generation possibilities in the PRC. Other companies with relations to our promoter and who are funded by our shareholder, Monica Dong were among the companies participating including but not limited to US-Ruquan Dairy Production Int l, Inc., US-BLH Bio-Engineering Int l, Inc., US-DADI Fertilizer Industry International, Inc., US-PS Energy Save Construction Material Int l, Inc., US-HM Straw Construction Material Int l, Inc., US-LBJ Husbandry Industry Int l, Inc., US-Lujia Pharmaceutical Industry International, Inc., US-TH Energy Science & Technology Int l, Inc., US-Feiwo Agricultural Industry International, Inc., US-TQ Beverage Products Int l, Inc. all of whom have filed registration statements with the SEC. The Company has an accumulated deficit of $76,743 since inception and our auditors issued a going concern opinion in its December 31, 2012 audit. The Company is an emerging growth company under the Jumpstart Our Business Startups Act. The Company shall continue to be deemed an emerging growth company until the earliest of-- (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. . As an emerging growth company the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Our executive offices are located at 699 Serramonte Blvd. Ste 212, Daly City, CA 94015. Our telephone number is (650) 530-0699. The Offering This prospectus covers up to 19,500,000 shares to be sold by our selling shareholders who will sell at a fixed price of $0.02 per share. ABOUT THIS OFFERING Securities Being Offered Up 19,500,000 shares of common stock of US-Tianxia Software Technology Int l, Inc. to be sold by selling shareholders who will sell at a fixed price of $0.02 per share. The selling shareholders in this offering are underwriters. Initial Offering Price Up 19,500,000 shares of common stock of US-Tianxia Software Technology Int l, Inc. to be sold by selling shareholders at a fixed price of $0.02. Terms of the Offering The selling shareholders will sell at a fixed price of $0.02. Termination of the Offering The offering will conclude when the selling shareholder have sold all of the 19,500,000 shares of common stock offered by them.
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+PROSPECTUS SUMMARY 1
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+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 ordinary shares, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk factors and Management s discussion and analysis of financial condition and results of operations, in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to us, our, Globoforce, we, the Company and similar designations refer to Globoforce Group plc and its subsidiaries. Company overview We are a leading provider of a cloud-based, social recognition software solution that organizations use to engage their employees worldwide to create alignment with values and advance company goals and culture. We achieved this leadership position through our innovative technologies, our ability to deliver a comprehensive solution to large, multinational firms, and our experience operating in the social recognition industry. Our Software-as-a-Service, or SaaS, platform enables employee-to-employee recognition that is broadcast socially and made visible throughout the organization. Our clients leverage the widespread employee adoption of our social recognition solution to elevate recognition to a strategic imperative that drives business results. In addition, the interactions between employees using our social recognition solution generate data that provides our clients with deep management insights about their talent and culture. Our growth has been driven by our clients ability to use our social recognition solution to increase employee engagement, improve employee retention and strengthen company culture. We have developed innovative technologies that power our full-service strategic solution and differentiate us from other recognition solution providers. We designed our social recognition solution to provide organizations with actionable intelligence about their talent and culture typically not found in traditional human resource solutions. We deliver this information through powerful enterprise social graphs, talent mapping and interactive info-graphics. These insights into employee performance complement the more traditional processes such as performance reviews, succession planning and career management, collectively referred to as human capital management, or HCM. Through our SaaS platform, our clients benefit from a shorter implementation cycle, low total cost of ownership and access to the latest version of our software. Additionally, our social recognition solution has intuitive web and mobile-based user interfaces that are easy for employees to use across desktop and mobile computing environments. Our seamless employee adoption model and client-specific branding often leads to viral and organic adoption, and our SaaS platform scales to support large, global implementations. Our social recognition solution has been successfully adopted in complex environments throughout the world. As of December 31, 2013, our client base consisted of more than 100 companies, with more than 1.9 million users located in more than 140 countries using our solution in 29 languages and dialects. Representative clients include: Abbott Laboratories, Celestica Inc., CitiCorp North America, Inc., Eaton Corporation, General Electric Company, IM Flash Technologies LLC, InterContinental Hotels Group, Intuit, Inc., JetBlue Airways Corporation, LSI Corporation, Premier Farnell Corporation, Quintiles, Inc. and Symantec Corporation. For the year ended December 31, 2013, only one of our clients, General Electric Company, represented more than 10% of our total revenue at 31%, and over 80% of our total revenue was derived from North America and the European Union, with a majority coming from the United States. Table of Contents The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell 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 March 20, 2014 Prospectus 3,804,969 shares Ordinary shares We are offering 2,941,177 of our ordinary shares and the selling shareholders identified in this prospectus are offering 863,792 of our ordinary shares. We will not receive any of the proceeds from the sale of the shares sold by the selling shareholders. This is our initial public offering, and no public market currently exists for our shares. We expect the initial public offering price to be between $14.00 and $15.00 per share. Our ordinary shares are approved for listing on the NASDAQ Global Market under the symbol THNX. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ Proceeds to the selling shareholders, before expenses $ $ (1) We have agreed to reimburse the underwriters for certain FINRA-related expenses. See Underwriting. The selling shareholders have granted the underwriters an option for a period of 30 days to purchase up to an additional 570,745 of our ordinary shares solely to cover over-allotments. We will not receive any proceeds from the sale of shares by the selling shareholders. The selling shareholders include one of our principal shareholders and certain of our directors and officers, including our chief executive officer and chief financial officer. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. Investing in our ordinary shares involves a high degree of risk. Please read Risk factors beginning on page 13. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Delivery of the shares is expected to be made on or about , 2014. J.P. Morgan Credit Suisse UBS Investment Bank Stifel Raymond James , 2014 Table of Contents Our solution reinforces the praise delivered through recognition and extends employees recognition moments by providing awards with economic value. Employees redeem their awards through our global e-commerce rewards network that has a broad array of locally relevant options including retail, online shopping, dining, travel and charitable giving. We derive our billings primarily from recognition awards processed through our solution and associated transaction fees. The majority of our revenue is recognized when our clients employees redeem their awards through our global e-commerce rewards network, primarily for gift cards, and we deliver the redeemed item. In addition, the delivery of our social recognition solution includes various activities such as website configuration, hosting, upgrades, software functionality for award processing and call-center support. The billings for these various activities, which are derived primarily from our transaction fees, are recorded as solution and services revenue over the service period of the contractual arrangement with our clients. Our revenue increases as clients adopt and expand their usage of our social recognition solution. Our total revenue has grown from $100.0 million in 2010 to $135.8 million in 2011, to $157.7 million in 2012 and to $186.8 million in 2013, representing a three-year compound annual growth rate, or CAGR, of 23.2%. During the years ended December 31, 2010, 2011, 2012 and 2013, our net income (loss) was $3.1 million, $(0.8) million, $(1.8) million and $(6.5) million, respectively, and our free cash flow was $4.6 million, $7.4 million, $3.1 million and $2.0 million, respectively. During the years ended December 31, 2012 and 2013, our net loss increased and free cash flow decreased as we invested heavily in expansion of our sales and marketing team. For further explanation of our management s use of free cash flow, limitations of its use, and a reconciliation of it to the most directly comparable GAAP measure, net cash provided by (used in) operating activities, please see Summary consolidated financial data Free cash flow. Industry background Increasingly diverse and geographically-dispersed workforces combined with intense competition to hire and retain qualified employees have forced organizations to elevate their approach to employee engagement. The transformation of social recognition from ad hoc, informal practices into a strategic imperative enables organizations to drive business results and enhance their ability to attract, evaluate, develop and retain human capital. Gartner notes they are beginning to see organizations require tighter integration between recognition systems and talent management applications (particularly performance management and compensation). (1) For decades, companies have attempted to use employee recognition programs to engage and motivate employees and to strengthen employee dedication to company values. Traditionally, recognition solutions have included in-house or third-party solutions that are focused on gifts, and are limited in that they often focus only on top performers or a small segment of the employee base and do not reinforce a consistent culture or set of values across an organization. Furthermore, Gartner estimates that traditional recognition programs can account for as much as 2% of payroll costs, yet there is little direct correlation of this investment to improved employee performance, retention or improved business outcomes. (2) Traditional recognition programs are not strategic, as they do not use recognition awards to drive specific actions and behaviors across the organization. We therefore believe that traditional programs are not able to consistently measure impact on employee engagement or business results. Strategic recognition-based programs, if designed correctly, are cost-effective and valuable tools that can help raise employee morale and lower stress, absenteeism and turnover. Taking a social approach to rewards and recognition programs can drive significant advantages over traditional models by improving (1) Gartner, Hype Cycle for Human Capital Management Software, 31 July 2013. (2) Gartner, IT Market Clock for Human Capital Management Software, 26 August 2013. Table of Contents Table of Contents workforce engagement, which has a proven impact on business outcomes, such as quality of service (QoS), customer retention, operational efficiency, revenue and profitability.(3) A study by Gallup Consulting indicates that companies in the top quartile of employee engagement generated 16% higher profits and 18% higher productivity than those in the bottom quartile, and those with world-class engagement have 3.9 times the earnings per share, or EPS, growth rate compared with organizations with lower engagement in the same industry.(4) Additionally, studies by Towers Watson found that recognizing employee performance can increase engagment by almost 60%,(5) and that companies with high sustainable engagement can have operating margins as much as three time higher than companies with low traditional engagement.(6) A culture of recognition can also have an even stronger impact on potential employee flight risks, and thus reduce costs. We believe that to be most impactful, recognition solutions require innovative features to enable effective management of strategic recognition programs. Most traditional solutions have limited tools to inform strategic decision making and do not have technology or locally relevant reward options to provide full-service, global programs. They also typically do not have a social element to giving and communicating awards, which limits their impact with employees. Market opportunity In a July 2012 white paper that we commissioned, IDC estimated that the North America Recognition Market will grow from $22 billion in 2011 to $32 billion in 2016, an 8% CAGR.(7) In that same white paper, IDC also found that nearly 40% of study respondents expected to use a full-service third-party provider for all aspects of recognition in the twelve months ended July 31, 2013.(8) There are several important secular trends that we believe are fueling the evolution of the recognition market. The transformation of social recognition into a strategic business imperative. Social recognition as a key business initiative not only improves organizations abilities to drive business results, but also enhances their abilities to successfully recruit, evaluate, train and retain qualified workforces. The rise of social solutions as important communications tools in organizations. The growth and penetration of social solutions has made it increasingly critical for enterprises to leverage employee collaboration and social platform technologies within their operations. The continued adoption of SaaS solutions in the enterprise. Ease and speed of deployment and a desire for low total cost of ownership continue to drive growth in the SaaS market. The continued strength of e-commerce. E-commerce continues to demonstrate strong growth, both in the United States and abroad. Our solution The key benefits of our social recognition solution include: Social recognition drives engagement and aligns employees with cultural values. Our solution enables employees across all levels of an organization to recognize each other for actions and behaviors that align with company values. This social employee-to-employee recognition is highly impactful as it originates from people who understand the value of the contribution, strengthens relationships within the organization, identifies important actions as they occur and is shared across a group or an entire organization. (3) Gartner, IT Market Clock for Human Capital Management Software, August 2013. (4) Gallup Consulting, Employee Engagement What s Your Engagement Ratio?, 2010. (5) Towers Watson, Perspectives: Turbocharging Employee Engagement The Power of Recognition from Managers, 2010. (6) Towers Watson, Global Workplace Study Engagement at Risk: Driving Strong Performance in a Volatile Global Environment, 2012. (7) IDC, White Paper Employee Recognition Driving Business Results, July 2012. (8) IDC, White Paper Employee Recognition Driving Business Results, July 2012. Table of Contents Table of Contents Facilitates viral and organic adoption among employees. Our social recognition solution has intuitive web and mobile-based user interfaces that do not require special training, making it simple for employees to use. These interfaces allow employees and managers to easily nominate one another for awards and then subsequently approve and redeem awards. Enables measurability and provides unique insights. Our solution provides our clients with deep management insights through powerful social graphing and talent mapping tools. Organizations use our social recognition solution to capture, measure and gain actionable intelligence about their organization and talent. Highly relevant rewards that perpetuate usage of our social recognition solution. Our global e-commerce rewards network is an expansive set of both widely applicable and locally relevant reward choices. Employees may choose rewards that are meaningful to them, from both online and local suppliers, which include retail, online shopping, dining, travel and charitable giving. Global capabilities. Our solution allows our clients to provide a single recognition program available to all of its employees globally. Our social recognition solution supports multiple currencies and languages and includes locally relevant rewards, which facilitates adoption by both multinational firms and regional companies. Highly scalable and configurable solution. Our SaaS platform is built with enterprise-class scalability, reliability and uptime and is currently adopted by some of the world s largest companies. Our SaaS platform is a true multi-tenant architecture, which allows for configuration to meet the needs of each client. Our SaaS platform enables fast and low cost global deployments through centralized administration that is designed to meet our clients IT and security demands. Our business model strengths We believe our key competitive strengths include: Clients pay when their employees use our social recognition solution. We generate our revenue primarily from the number and monetary value of the awards our clients provide to their employees through our social recognition solution as well as associated transaction fees. We therefore share in our clients successes, as they benefit from our solution and their employees increase adoption. High client retention. Our overall billings retention rate exceeded 100% for each of the years ended December 31, 2010, 2011, 2012 and 2013. This stickiness has resulted in a consistent, recurring revenue profile from our client base. As organizations scale our social recognition solution, which increases employee engagement, our solution becomes a strategic and operational platform from which clients draw valuable insights about their talent and culture. For further explanation of our management s use of billings retention rate, please see Management s discussion and analysis of financial condition and results of operations Key metrics Billings retention rate. E-commerce rewards network benefits from economies of scale. We seek to continually expand and diversify the items available on our global e-commerce rewards network to meet the demands of new and existing clients. This increases the value of our social recognition solution for each of our clients as the broad array of choices on our global e-commerce rewards network become available to them. In addition, as the volume of rewards increases across our client base, our ability to negotiate better terms with certain of our rewards suppliers improves. Align recognition and rewards with full range of HR systems. Our solution provides our clients with insights into their talent through our powerful social graphs, talent mapping and interactive info-graphic displays. We Table of Contents Table of contents Page Prospectus summary 1
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," "THE COMPANY" REFERS TO TICKET CORP. THE FOLLOWING SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. GENERAL INFORMATION ABOUT OUR COMPANY Ticket Corp. was incorporated in the State of Nevada on January 17, 2013. We are an active development stage company with the intention of becoming a seller of tickets to concerts, sporting events, theatre and other entertainment events. Our current target market is the San Francisco Bay area. Our intent is to develop our software application ("app") that will allow the general public to purchase tickets using their smart phones and tablets such as Android and Apple enabled devices. The app, when purchased and downloaded by the customer will allow them to receive their tickets with barcodes directly onto their Android and Apple smart phones and tablets. When our customers arrive at the event venue, the unique barcode on their smart phones or tablets will be verified with the existing scanners already in use at event venues. Our proposed software applications are designed to reduce the risk of lost tickets and ticket fraud. Additional features will include recommended parking locations at the venue, proper venue entrance instructions, and allow our ticket purchasers to directly purchase event related merchandise. We also intend to process orders from our customers and track their buying history. We intend to use our potential customers' purchasing history to make recommendations for upcoming events based upon their previous purchases. Our intention is to maintain our potential customers' purchasing history as private information and not sell or share this information to others. Our business plan is based in part on our ability to purchase and re-sell tickets for special events, attractions, and shows / exhibits. We have begun the initial phase of our business plan of operations by continuing to develop our website and our ticket application software, which includes our proprietary price fluctuation and data analysis software which we intend to use for marketing purposes. This software allows the company to track and analyze ticket pricing trends in order to purchase tickets as close as possible at their lowest purchase point and sell as close as possible at their highest selling point. As of the date of this prospectus, we intend to offer our proprietary data analysis software to non-competitor companies as an interim source of cash flow and have secured our first contract to provide this software to a customer per a software development contract. Management estimates that revenues from a current contract for software development will provide initial funding of $30,000 during the early part of our business plan. This will allow us to move forward with the first phase of our plan of operations and replenish or supplement cash we are using for near-term regulatory filings, legal and accounting costs. Management estimates it will take 6 months from the completion of this Offering to implement our plan of operations to the point where we will be able to generate revenue from ticket and app sales. There is no guarantee that we will earn revenue in six month or ever. We intend to use the net proceeds from this offering to further develop our business operations, which is the sale of our software application that will allow the general public to purchase event tickets using their smart phones or tablets such as Android and Apple enabled devices. This will allow our customers to receive their tickets with barcodes directly onto their Android and Apple smart phones and tablets. Management estimates it will take the full amount of the offering, $49,500, to accomplish our business goals. (See "Business of the Company" and "Use of Proceeds".) We are an active development stage company with $44,000 in revenues and a limited operating history. The mailing address for the principal executive offices is 9625 Mission Gorge Road, Suite B2 #318, Santee, CA 92071. The telephone number is (775)352-3936. We received our initial funding of $33,000 through the sale of common stock to Russell Rheingrover, an officer and director who purchased 33,000,000 shares of our common stock at $0.001 per share on January 31, 2013. After the completion of this offering he will own 69% of the outstanding common stock of the company. (See "Risk Factors", specifically page 10, to be advised of the risks to other shareholders due to his majority ownership). Our financial statements from inception (January 17, 2013) through April 30, 2014 report $71,500 in revenues and a net loss of $24,112. Based on the 33,000,000 shares outstanding at April 30, 2014 and the additional 15,000,000 shares we plan to issue during this offering, the implied aggregate market price of our stock at the issue price of $0.0033 is $158,400 in aggregate. As is it likely the company will have deficits during the first year, these deficits will affect the implied aggregate price of the common stock. Our total stockholders' equity as of April 30, 2014 is $8,888. Our independent auditor has issued an audit opinion for Ticket Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. We will not be able to execute our full business plan until this offering is completed. In the meantime Management is actively working on software development, including work on the proprietary price fluctuation and data analysis software per a Software Consulting and Development Agreement. All rights to our software are owned by Ticket Corp. and will be utilized for our own data analysis as an integral part of our planned marketing efforts. Per this Agreement we generated $30,000 in revenue, and intend to utilize this funding during the coming months of our business plan in order to replenish or supplement cash we are using for near-term regulatory filings, legal and accounting costs which will allow us to move forward with the first phase of our plan of operation. Our cash balance at April 30, 2014 was $315 with $22,500 in accounts receivable. Management estimates our current monthly "burn rate" to be $3,000 and estimate our current cash and receivables will last until December 2014, if no additional revenues are realized. Mr. Rheingrover, who currently owns 100% of our outstanding voting stock, is also the Chief Executive Officer of Jiffy Tickets, a national reseller of concert, theater, sporting and event tickets. He currently devotes approximately 5 hours of his business time to our affairs and the balance to Jiffy Tickets. He owes a fiduciary duty of loyalty to us, but also owes similar fiduciary duties to Jiffy Tickets. Due to his responsibilities to serve both companies, there is potential for conflicts of interest. He will use every effort to avoid material conflicts of interest generated by his responsibilities to both companies, but no assurance can be given that material conflicts will not arise which could be detrimental to our operations and financial prospects. There is no current public market for our securities. As our stock is not publicly traded, investors should be aware they probably will be unable to sell their shares and their investment in our securities is not liquid. We anticipate making an application for trading of our common stock on the over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance that our shares will be traded on the bulletin board, or if traded, that a public market will materialize.
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+Prospectus Summary 1
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+++ b/parsed_sections/prospectus_summary/2014/CIK0001577423_arco-iris_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our securities. You should read the entire prospectus, including "Risk Factors" and the consolidated financial statements and the related notes before making an investment decision. "We," "us," "our company," "our," "Arco-Iris" and the "Company" refer to Arco-Iris Gold Corporation, but do not include the shareholders of Arco-Iris Gold Corporation. Business Overview We were incorporated under the laws of the State of Nevada on September 17, 2012. We are an exploration-stage company engaged in exploration of the Golden Idol Mine located in the Yavapai County in the State of Arizona for gold. We have identified three gold bearing quartz veins on the Golden Idol Mine. We intend to explore those three veins to test the mineralization within the property. Provided that we successfully identify commercially viable mineral deposits, we intend to engage in a joint venture or partnership with a larger, more established mining operator to commence mining, processing and distributing the mineral deposits. Calculation of Registration Fee Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Offering Price per Share (1) Proposed Maximum Aggregate Offering Price Amount of Registration Fee (2)(3) Common stock, par value $0.00001 per share 1,000,000 $ 0.03 $ 30,000 $ 4.10 (1) The offering price has been arbitrarily determined by the Company and bears no relationship to assets, earnings, or any other valuation criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this, or at any price. (2) Calculated pursuant to Rule 457(o) under the Securities Act. (3) Offset pursuant to Rule 457(p) under the Securities Act by the registration fee of $4.10 paid on August 30, 2013 pursuant to the Registrant s S-1 Registration Statement, File No. 333-190929 The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001578523_image_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001578523_image_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..9f2bfc5025fc2be238e6b107db2c0554477bf421
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001578523_image_prospectus_summary.txt
@@ -0,0 +1,1233 @@
+Prospectus
+Summary This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it may not contain
+all of the information that is important to you. Accordingly, you are urged to carefully review this prospectus in its entirety,
+including the risks of investing in our securities discussed under the caption "Risk Factors" and the financial statements
+and other information that is incorporated by reference into this prospectus before making an investment decision. Except as otherwise
+specifically noted, all references in this prospectus to the "Company," "we," "us" and "our"
+refer to Owlhead Minerals Corp., a Nevada corporation.
+
+ 
+
+Summary
+Information about Owlhead Minerals Corp. Owlhead Minerals Corp. ("Owlhead" or the "Company") was incorporated
+in the state of Nevada on July 25, 2005 under the name Eardley Ventures. It is in the process of applying to become a public company
+listed on the OTCBB venue in the United States. On April 21, 2008, the name was changed to Owlhead Minerals Corp. in order to
+more appropriately reflect the Company s business plan. In April 2008, the Company began examining 14 mineral claims located
+in the province of Quebec, Canada. After careful due diligence, Management decided that these claims were not of high enough quality
+and therefore did not fit the Company s requirements. Management examined a number of other potential opportunities in Africa
+and North and South America.
+
+ 
+
+In
+December 2012, the Company was presented with a group of claims ("cells") known as the Teako property. The Teako cells
+are located half way between Terrace and Smithers, British Columbia and are near the original gold rush town of Hazelton B.C.
+which was founded in 1866, the site of the original gateway and staging area for the famous Omineca Gold rush days of 1869-1873.
+
+ 
+
+Initially,
+a total of 20 cells were acquired totaling 296 hectares (approx. 730 acres). After preliminary examination of the area, the Company
+came to the conclusion that the area appeared to have significant potential. Therefore, Company management requested that the
+Prospector/Vendor, Mr. John Kemp, stake more cells adjacent or adjoining the original claim group on behalf of the Company. An
+additional 778 hectares (approx. 1922 acres) were staked, bringing our land package to a total of 1074 hectares, or about 2652
+acres. In early November 2013, following the assay of a series of chip and grab samples taken by Mr. Kemp and a second visit to
+the area by our geologist, Linda Caron, M.Sc., P. Eng., an additional 112 claims were staked adding 4442.992 acres to our holdings
+bringing the total acreage to 7,098.122. The cells have good access to many miles of new logging roads that have recently been
+opened up in the area.
+
+ 
+
+The Company acquired the initial
+cells for a cash payment of Cdn$10,000 and 1,500,000 restricted shares. The shares are to be issued pursuant to key events as
+follows:
+
+ 
+
+(a)150,000
+ shares issued in the name of the Optionor, John Kemp or his assignees upon the completion
+ of a satisfactory initial geological report on the claims by a qualified and independent
+ geologist engaged Owlhead Minerals Corp.
+ 
+ 
+
+(b)150,000
+ shares issued in the name of the John Kemp or his assignees upon completion of initial
+ work program of up to $50,000 and the completion of a satisfactory 43-101 report on the
+ claims conducted or supervised by a qualified and independent geologist.
+ 
+ 
+
+(c)200,000
+ shares issued in the name of the John Kemp or his assignees upon the completion of a
+ work program costing up to $200,000 showing satisfactory results on the claims by a qualified
+ and independent geologist engaged by Owlhead Minerals Corp.
+ 
+ 
+
+(d)1,000,000
+ shares issued in the name of the John Kemp or his assignees upon the successful results
+ of a ten hole drilling program.
+
+ 
+
+All
+the additional cells were staked on behalf of the Company.
+
+ 
+
+ 4
+
+ 
+
+ 
+
+ 
+
+Our
+plan to initiate the exploration phase of our business plan is based on the success of this offering and a specific timetable.
+Our business office is located at 250 H Street #123, Blaine, WA 98230. Our fiscal year end is March 31. As of March 31, 2013,
+Owlhead had raised $105,501 through the sale of common stock. There is $53,563 of cash on hand and in the corporate bank account.
+Owlhead currently has outstanding liabilities of $308,666 for expenses accrued during the start-up of the corporation. As of the
+date of this prospectus we have not yet generated or realized any revenues from our business operations. The following financial
+information summarizes the more complete historical financial information as indicated on the audited financial statements filed
+with this prospectus.
+
+ 
+
+This
+summary provides an overview of selected information contained in this prospectus. It does not contain all the information you
+should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read
+the more detailed information in this prospectus and review our financial statements.
+
+ 
+
+The
+Offering:
+
+ 
+
+Securities
+Being Offered Up to 6,475,000 shares of common stock. This
+represents 46.05% of the 14,059,000 shares currently issued and outstanding.
+
+ 
+
+Offering
+Price The selling shareholders will sell their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board,
+and thereafter at prevailing market prices or privately negotiated prices. We cannot ensure that our shares will be quoted on
+the OTC Bulletin Board. We determined this offering price based upon the price of the last sale of our common stock to investors.
+
+ 
+
+Terms
+of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus.
+
+ 
+
+Termination
+of the Offering The offering will conclude when all 6,475,000 shares of common stock have been sold, the shares no longer
+need to be registered to be sold or we decide to terminate the registration of the shares.
+
+ 
+
+Securities
+Issued and to be Issued
+
+ 
+
+14,059,000
+shares of our common stock are issued and outstanding as of the date of this prospectus. All of
+the common stock to be sold under this prospectus will be sold by existing shareholders.
+
+ 
+
+Use
+of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders.
+
+ 
+
+Risk
+Factors
+
+ 
+
+For
+a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully
+review and consider the section entitled "Risk Factors" on page 6 of this prospectus.
+
+ 
+
+Private
+Placement
+
+ 
+
+An
+initial private placement was conducted between May 27, 2010 and June 7, 2010 for an aggregate of up to 8,000,000 shares at a
+price of $0.001 per share of common stock. The offering raised proceeds to the Company of $8,000 for which 8,000,000 shares of
+common stock were issued. No legal, accounting, consulting or finder fees relating to the offering were paid.
+
+ 
+
+ 5
+
+ 
+
+ 
+
+ 
+
+On
+June 1, 2012, we initiated a second private placement offering of an aggregate of up to 2,000,000 shares at a price of $0.10 per
+share of common stock. The offering raised proceeds to the Company of $97,500 for which 975,000 shares of common stock were issued.
+No legal, accounting, consulting or finder fees relating to the offering were paid. This private placement was concluded on March
+6, 2013.
+
+ 
+
+Summary
+Financial Information
+
+ 
+
+Balance
+Sheet
+
+ 
+
+ 
+ 
+ 
+ As
+ at
+
+ December 31, 2013
+
+ $
+
+ 
+ 
+ As
+ at 
+March 31, 2013 
+$ 
+ As
+ at 
+March 31, 2012 
+$ 
+
+ 
+ 
+ (unaudited)
+ 
+ 
+ (audited) 
+ (audited) 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Cash
+ 
+ 
+ 23,029 
+ 
+ 
+ 56,563 
+ 4,417 
+
+ Total
+ Assets
+ 
+ 
+ 54,253 
+ 
+ 
+ 87,777 
+ 4,417 
+
+ Total
+ Liabilities
+ 
+ 
+ 71,461 
+ 
+ 
+ 308,666 
+ 246,666 
+
+ Total
+ Stockholders Equity (Deficit)
+ 
+ 
+ (17,208 
+ ) 
+ 
+ (220,889) 
+ (242,249)
+
+ 
+
+Statement
+of Operations
+
+ 
+
+ 
+ Nine
+ months
+ ended
+ 
+ December 31, 2013 
+$ 
+ Accumulated
+ from
+ July 25, 2005
+
+ (date of inception) to
+
+ March 31, 2013 
+$ 
+
+ 
+ (unaudited) 
+ (audited) 
+
+ 
+ 
+ 
+
+ Revenue 
+ – 
+ – 
+
+ Net
+ Loss 
+ (243,846 ) 
+ (392,598)
+
+ 
+
+RISK
+FACTORS
+
+ 
+
+Risks
+Related to Our Business
+
+ 
+
+Investment
+in our common stock involves very significant risks.
+
+ 
+
+An
+investment in our common stock involves a number of very significant risks. You should carefully consider the following known
+material risks and uncertainties in addition to other information in this prospectus in evaluating our company and its business
+before purchasing shares of our company s common stock. Our business, operating results and financial condition could be
+seriously harmed due to any of the following known material risks. You could lose all or part of your investment due to any of
+these risks.
+
+ 
+
+ 6
+
+ 
+
+ 
+
+ 
+
+We
+will require additional financing in order to commence and sustain exploration.
+
+ 
+
+We
+will require significant additional financing in order to maintain an exploration program and an assessment of any commercial
+viability of our mineral properties. As our mineral properties do not contain any reserves or any known body of economic mineralization,
+we may not discover commercially exploitable quantities of ore on our mineral properties that would enable us to enter into commercial
+production, achieve revenues and recover the money we spend on exploration. Exploration activities on our mineral properties may
+not be commercially successful, which could lead us to abandon our plans to develop the property and its investments in exploration.
+Additionally, future cash flows and the availability of financing will be subject to a number of variables,
+including potential production and the market prices of various minerals including gold, silver and copper. Further, debt financing
+could lead to a diversion of cash flow to satisfy debt-servicing obligations and create restrictions on business operations.
+
+ 
+
+We
+have not begun the initial stages of exploration of our claims, and thus have no way to evaluate the likelihood whether we will
+be able to operate our business successfully. 
+
+ 
+
+We
+are a new entrant into the precious minerals exploration and development industry without profitable operating history. We were
+incorporated on July 25, 2005 and to date have been involved primarily in organizational activities and obtaining our claims.
+As a result, there is only limited historical financial and operating information available on which
+to base your evaluation of our performance. We have not earned any revenues and we have never achieved profitability as
+of the date of this prospectus. Potential investors should be aware of the difficulties normally encountered by new mineral exploration
+companies and the high rate of failure of such enterprises. The likelihood of success must be considered in the light of problems,
+expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that
+we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration
+and additional costs and expenses that may exceed current estimates. We have no history upon which to base any assumption as to
+the likelihood that our business will prove successful, and we can provide no assurance to investors that we will generate any
+operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks our business will likely
+fail and you will lose your entire investment in this offering.
+
+ 
+
+We
+have received a going concern opinion from our independent auditors report accompanying our March 31, 2012 and 2013 consolidated
+financial statements.
+
+ 
+
+The
+independent auditors report accompanying our March 31, 2012 and 2013 consolidated financial statements contains an explanatory
+paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared
+"assuming that the Company will continue as a "going concern," which contemplates that we will realize our assets
+and satisfy our liabilities and commitments in the ordinary course of business. Our ability to continue as a going concern is
+dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. There
+can be no assurance that we will be able to raise sufficient additional capital or eventually have positive cash flow from operations
+to address all of our cash flow needs. If we are not able to find alternative sources of cash or generate positive cash flow from
+operations, our business will be materially and adversely affected and our shareholders will lose their entire investment.
+
+ 
+
+If
+we are unable to obtain additional funding, our business operations will be harmed and if we do obtain additional financing, our
+then existing shareholders may suffer substantial dilution.
+
+ 
+
+There
+is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay any indebtedness or that
+we will not default on our debt obligations, jeopardizing our business viability. We are continually at risk of default on obligations
+to and on behalf of our creditors, requiring ongoing funding, on a monthly basis, to avoid these defaults. Furthermore, we may
+not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary
+to conduct our business. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if
+at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to
+conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing
+and development plans and without adequate financing or revenue generation, possibly cease our operations. Any additional equity
+financing may involve substantial dilution to our then existing shareholders.
+
+ 
+
+ 7
+
+ 
+
+ 
+
+ 
+
+We
+may need to raise additional capital, which may not be available on acceptable terms or at all.
+
+ 
+
+We
+may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations.
+We estimate that our capital requirements in the next twelve months will be approximately $250,000. There can be no assurance
+that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital
+may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely
+be required to curtail our research and development plans. Any additional equity financing may involve substantial dilution to
+our then-existing shareholders.
+
+ 
+
+We
+currently expect a shortfall in funding of between up to $250,000
+
+ 
+
+The
+Company currently expects a shortfall in funding of up to $250,000. Our business depends on raising additional capital to fund
+ongoing operations. There can be no assurance that the Company will be able to obtain adequate financing in the future or that
+the terms of such financing will be favorable. Failure to obtain such financing could result in a material adverse effect, delay
+or indefinite postponement of further exploration and development of our projects with the possible loss of such assets. Further,
+any additional financing by the Company may subject existing shareholders to substantial dilution. If the Company is forced to
+sell some of its assets in a situation of distress, it may not recover their full value. Each project involves minimum lease payments
+and work commitments. In the event the Company is unsuccessful in raising funds in a timely fashion there is a risk project leases
+will terminate.
+
+ 
+
+We
+plan to acquire additional mineral exploration properties, which may create substantial risks.
+
+ 
+
+As
+part of our growth strategy, we intend to acquire additional minerals exploration properties. Such acquisitions may pose substantial
+risks to our business, financial condition, and results of operations. In pursuing acquisitions, we will compete with other companies,
+many of which have greater financial and other resources to acquire attractive properties. Even if we are successful in acquiring
+additional properties, some of the properties may not produce revenues at anticipated levels, or failure to develop such prospects
+within specified time periods may cause the forfeiture of the lease in that prospect. There can be no assurance that we will be
+able to successfully integrate acquired properties, which could result in substantial costs and delays or other operational, technical,
+or financial problems. Further, acquisitions could disrupt ongoing business operations. If any of these events occur, it would
+have a material adverse effect upon our operations and results from operations.
+
+ 
+
+If
+we do not find a joint venture partner for the continued development of our claims, we may not be able to advance exploration
+work.
+
+ 
+
+If
+the initial results of an exploration program are successful, we may try to enter a joint venture agreement with a partner for
+the further exploration and possible production of our claims. We would face competition from other junior mineral resource exploration
+companies who have properties that they deem to be the most attractive in terms of potential return and investment cost. In addition,
+if we entered into a joint venture agreement, we would likely assign a percentage of our interest in the claims to the joint venture
+partner. If we are unable to enter into a joint venture agreement with a partner, or raise additional financing, we may fail and
+you will lose your entire investment in this offering.
+
+ 
+
+Because
+of the speculative nature of mineral property exploration, there is substantial risk that no commercially exploitable minerals
+will be found and our business will fail.
+
+ 
+
+Exploration
+for minerals is a speculative venture necessarily involving substantial risk. We can provide investors with no assurance that
+our claims contain commercially exploitable reserves. The exploration work that we intend to conduct on the claims may not result
+in the discovery of commercial quantities of gold, silver, copper or other minerals. Problems such as unusual and unexpected rock
+formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such
+a case, we would be unable to complete our business plan and you would lose your entire investment in this offering.
+
+ 
+
+ 8
+
+ 
+
+ 
+
+ 
+
+Because
+of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct
+our business.
+
+ 
+
+The
+search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including
+pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. If a hazard
+were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all our assets resulting
+in the loss of your entire investment in this offering.
+
+ 
+
+The
+potential profitability of mining gold properties if economic quantities of gold are found is dependent upon many factors and
+risks beyond our control, including, but not limited to:
+
+ 
+
+ unanticipated
+ ground and water conditions and adverse claims to water rights;
+
+ 
+
+ geological
+ problems;
+
+ 
+
+ metallurgical
+ and other processing problems;
+
+ 
+
+ the
+ occurrence of unusual weather or operating conditions and other force majeure events;
+
+ 
+
+ lower
+ than expected ore grades;
+
+ 
+
+ accidents;
+
+ 
+
+ delays
+ in the receipt of or failure to receive necessary government permits;
+
+ 
+
+ delays
+ in transportation;
+
+ 
+
+ labor
+ disputes;
+
+ 
+
+ claims
+ by First Nations or other indigenous organizations;
+
+ 
+
+ government
+ permit restrictions and regulation restrictions;
+
+ 
+
+ unavailability
+ of materials and equipment; and
+
+ 
+
+ the
+ failure of equipment or processes to operate in accordance with specifications or expectations.
+
+ 
+
+The
+risks associated with exploration and development and if applicable, mining as described above could cause personal injury or
+death, environmental damage, delays in mining, monetary losses and possible legal liability. We are not currently engaged in mining
+operations because we are in the exploration phase and have not yet any proved mineral reserves. We do not presently carry property
+and liability insurance nor do we expect to get such insurance for the foreseeable future. Cost effective insurance contains exclusions
+and limitations on coverage and may be unavailable in some circumstances.
+
+ 
+
+ 9
+
+ 
+
+ 
+
+ 
+
+Because
+access to our claims is sometimes restricted by inclement weather, we may be delayed in our exploration and any future mining
+efforts.
+
+ 
+
+Access
+to the claims may be restricted to the period between March and November of each year due to snow in the area. As a result, any
+attempts to visit, test, or explore the property may be limited to these months of the year when weather permits such activities.
+These limitations can result in delays in exploration efforts, as well as mining and production in the event that commercial amounts
+of minerals are found. Such delays can result in our inability to meet deadlines for exploration expenditures. This could cause
+our business venture to fail and the loss of your entire investment in this offering unless we can meet deadlines.
+
+ 
+
+The
+gold exploration and mining industry is highly competitive and there is no assurance that we will be successful in acquiring additional
+claims or leases.
+
+ 
+
+The
+gold exploration and mining industry is intensely competitive, and we compete with other companies that have greater resources.
+Many of these companies not only explore for and produce gold or other minerals, but also market gold and other products on a
+regional, national or worldwide basis. These companies may be able to pay more for productive gold properties and exploratory
+prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources
+permit. In addition, these companies may have a greater ability to continue exploration activities during periods of lower gold
+market prices. Our larger competitors may be able to absorb the burden of present and future federal, provincial state, local
+and other laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to
+acquire additional properties and to discover productive prospects in the future will be dependent upon our ability to evaluate
+and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because we have
+fewer financial and human resources than many companies in our industry, we may be at a disadvantage in bidding for exploratory
+prospects and producing gold properties.
+
+ 
+
+The
+marketability of natural resources will be affected by numerous factors beyond our control.
+
+ 
+
+The
+marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control.
+These factors include market fluctuations in commodity pricing and demand, the proximity and capacity of natural resource markets
+and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of
+gold and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination
+of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.
+
+ 
+
+Gold
+mining operations are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess
+of those anticipated.
+
+ 
+
+If
+economic quantities of gold are found on any claims owned by the Company in sufficient quantities to warrant mining operations,
+such mining operations are subject to federal, provincial, state and local laws relating to the protection of the environment,
+including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Mining
+operations are also subject to federal, provincial, state, and local laws and regulations which seek to maintain health and safety
+standards by regulating the design and use of mining methods and equipment. Various permits from government bodies are required
+for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed
+by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities.
+Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus
+resulting in an adverse effect on the Company. Additionally, we may be subject to liability for pollution or other environmental
+damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been
+required to spend material amounts on compliance with environmental regulations. However, we may be required to do so in future
+and this may affect our ability to expand or maintain our operations.
+
+ 
+
+ 10
+
+ 
+
+ 
+
+ 
+
+Our
+ability to function as an operating mining company is dependent on our ability to mine our properties at a profit.
+
+ 
+
+Our
+ability to operate on a positive cash flow basis is dependent on mining sufficient quantities of gold at a profit sufficient to
+finance our operations and for the acquisition and development of additional mining properties.
+
+ 
+
+Because
+we have limited capital, inherent mining risks pose a significant threat to us. 
+
+ 
+
+Because
+we are small with limited capital, we are unable to withstand significant losses that can result from inherent risks associated
+with mining, including environmental hazards, industrial accidents, flooding, interruptions due to weather conditions and other
+acts of nature. Such risks could result in damage to or destruction of any infrastructure or production facilities we may develop,
+as well as to adjacent properties, personal injury, environmental damage and delays, causing monetary losses and possible legal
+liability.
+
+ 
+
+More
+stringent federal, provincial or state regulations could adversely affect our business. 
+
+ 
+
+If
+we are unable to obtain or maintain permits or water rights for development of our properties or otherwise fail to manage adequately
+future environmental issues, our operations could be materially and adversely affected. Mining and mining exploration companies
+in the Province of British Columbia, Canada are governed by Chapter 53: Part 5 (Remediation of Mineral Exploration Sites of the
+British Columbia Environment Management Act. The Act covers all aspects of mining and related activities and establishes strict
+environmental protection codes over these activities. Essentially, the Act requires mine owners and operators to prevent the release
+of any substance into the land air or water that might be deleterious to the environment and requires the remediation of all mineral
+exploration sites and mines by the mine owner or operator.
+
+ 
+
+We
+have spent a considerable amount of managerial and consultant time to ascertain what is required, to comply with environmental
+protection laws, regulations and permitting requirements and we anticipate that we will be required to continue to do so in the
+future. Although we believe our properties comply in all material respects with all relevant permits, licenses and regulations
+pertaining to worker health and safety as well as those pertaining to the environment and radioactive materials, the historical
+trend toward stricter environmental regulation may continue.
+
+ 
+
+ 11
+
+ 
+
+ 
+
+ 
+
+The
+volatility of gold prices makes our business uncertain. 
+
+ 
+
+The
+volatility of gold prices makes long-range planning uncertain and raising capital difficult. The price of gold is affected by
+numerous factors beyond our control, including political and economic conditions, legislation and costs of production of our competitors.
+
+ 
+
+Our
+inability to obtain insurance would threaten our ability to continue in business. 
+
+ 
+
+We
+currently have do not liability and property damage insurance. It should be noted that if we decide to obtain such insurance,
+the insurance industry is undergoing change and premiums are being increased. If premiums should increase to a level we cannot
+afford, we could be forced to discontinue business.
+
+ 
+
+If
+we cannot add reserves to replace future production, we would not be able to remain in business. 
+
+ 
+
+Our
+future gold production if any, cash flow and income are dependent upon our ability to mine our current properties and acquire
+and develop additional reserves. There can be no assurance that our properties will be placed into production or that we will
+be able to continue to find and develop or acquire additional reserves.
+
+ 
+
+Competition
+from better-capitalized companies affects prices and our ability to acquire properties and personnel. 
+
+ 
+
+There
+is global competition for gold properties, capital, customers and the employment and retention or qualified personnel. In the
+production and marketing of gold there are numerous major producing entities, some of which are government controlled and all
+of which are significantly larger and better capitalized than we are.
+
+ 
+
+Mineral
+exploration, development and mining are subject to environmental regulations which may prevent or delay the commencement or continuance
+of our operations.
+
+ 
+
+Mineral
+exploration and development and future potential gold
+mining operations are or will be subject to federal, provincial, state, and local laws and regulations relating to improving or
+maintaining environmental quality. Our operations are also subject to many environmental protection laws. Environmental laws often
+require parties to pay for remedial action or to pay damages regardless of fault. Environmental laws also often impose liability
+with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago.
+
+ 
+
+Future
+potential gold mining operations and current exploration activities are or will be subject to extensive laws and regulations governing
+prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation
+of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters.
+
+ 
+
+Mining
+is subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a
+result of mineral exploration and production.
+
+ 
+
+Mining
+is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring
+as a result of mineral exploration and production. Compliance with these laws and regulations will impose substantial costs on
+us and will subject us to significant potential liabilities. Costs associated with environmental liabilities and compliance are
+expected to increase with the increasing scale and scope of operations and we expect these costs may increase in the future. We
+believe that our operations comply, in all material respects, with all applicable environmental regulations. However, we are not
+fully insured against possible environmental risks at the current date.
+
+ 
+
+ 12
+
+ 
+
+ 
+
+ 
+
+Any
+change to government regulation or administrative practices may have a negative impact on our ability to operate and potential
+profitability.
+
+ 
+
+The
+laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in Canada
+or the United States or any other applicable jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally
+alter our ability to carry on business. The actions, policies or regulations, or changes thereto, of any government body or regulatory
+agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative
+impact on our ability to operate and/or our profitably.
+
+ 
+
+We
+may be unable to retain key employees or consultants or recruit additional qualified personnel.
+
+ 
+
+Our
+limited personnel means that we would be required to spend significant sums of money to locate and train new employees in the
+event any of our employees resign or terminate their employment with us for any reason. Further, we do not have key man life insurance
+on any of our employees. We may not have the financial resources to hire a replacement if any of our officers were to die. The
+loss of service of any of these employees could therefore significantly and adversely affect our operations.
+
+ 
+
+Our
+officers and directors may be subject to conflicts of interest involving their available time.
+
+ 
+
+Two
+of our executive officers and directors Mr. Armstrong and Mr. King serve on a full time basis. Mr. Low, the Company s Chief
+Financial Officer and a Director works as a Chief Financial Officer for other companies. From time to time, Mr. Armstrong, the
+Company s President, Secretary and a Director may occasionally devote part of his working time in a part-time, short-term
+advisory relationship with other corporate entities and will have short-term, part-time responsibilities to these other entities.
+In Mr. Armstrong s case, such responsibilities will include the preparation of and assistance with the preparation of corporate
+documents and agreements, assistance with legal and regulatory documents, assistance with required legal and regulatory filings,
+assistance with the preparation and filing of quarterly and annual reports, disclosure forms and news releases. Mr. Low s
+possible duties as CFO to other companies will include working as the bookkeeper assisting with the keeping of the books of account
+and assisting with the preparation of financial statements These potential relationships do not include advising or making decisions
+on business opportunities that might conflict with the Company s business. None of our executive officers and directors
+is engaged in other businesses that present any potential for conflict of interest.
+
+ 
+
+Under
+Nevada law, our articles of incorporation and our Bylaws permit us broad indemnification powers.
+
+ 
+
+Under
+Nevada law, our articles of incorporation and our Bylaws permit us broad indemnification powers to all persons against all damages
+incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have
+the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor
+judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers
+and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances.
+
+ 
+
+Risks
+Related to Our Common Stock
+
+ 
+
+We
+are not listed or quoted on any exchange and we may never obtain such a listing or quotation. 
+
+ 
+
+There
+may never be a market for our stock and shares held by our shareholders may have little or no value. 
+
+ 
+
+There
+is presently no public market in our shares. While we intend to contact an authorized OTC Bulletin Board market maker for sponsorship
+of our securities, we cannot guarantee that such sponsorship will be approved and our stock listed and quoted for sale. Even if
+our shares are quoted for sale, buyers may be insufficient in numbers to allow for a robust market, it may prove impossible to
+sell your shares.
+
+ 
+
+ 13
+
+ 
+
+ 
+
+ 
+
+Even
+if we obtain a listing on an exchange and a market for our shares develops, sales of a substantial number of shares of our common
+stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock
+and could affect your ability to realize the current trading price of our common stock.
+
+ 
+
+The
+trading price of our common stock may fluctuate significantly and stockholders may have difficulty reselling their shares.
+
+ 
+
+Additional
+issuances of equity securities may result in dilution to our existing stockholders. Our Articles of Incorporation authorize the
+issuance of 100,000,000 shares of common stock.
+
+ 
+
+Our
+common stock is subject to the "penny stock" rules of the SEC.
+
+ 
+
+Our
+common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited,
+which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
+
+ 
+
+Because
+our stock is not traded on a stock exchange or on the NASDAQ National Market or the NASDAQ Small Cap Market and because the market
+price of the common stock is less than $5.00 per share, the common stock is classified as a "penny stock. The Securities
+and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes
+relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less
+than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
+
+ 
+
+That
+a broker or dealer approve a person s account for transactions in penny stocks; and
+
+ 
+
+The
+broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of
+the penny stock to be purchased.
+
+ 
+
+In
+order to approve a person s account for transactions in penny stocks, the broker or dealer must:
+
+ 
+
+Obtain
+financial information and investment experience objectives of the person; and
+
+ 
+
+Make
+a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge
+and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
+
+ 
+
+The
+broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission
+relating to the penny stock market, which:
+
+ 
+
+ 
+ 
+ Sets
+ forth the basis on which the broker or dealer made the suitability determination; and;
+
+ 
+ 
+ 
+
+ 
+ 
+ That
+ the broker or dealer received a signed, written agreement from the investor prior to the transaction.
+
+ 
+
+Generally,
+brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make
+it more difficult for investors to dispose of our common stock and may cause a decline in the market value of our stock.
+
+ 
+
+Disclosure
+also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the
+commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the
+rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to
+be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny
+stocks.
+
+ 
+
+ 14
+
+ 
+
+ 
+
+ 
+
+A
+decline in the future price of our common stock could affect our ability to raise further working capital and adversely impact
+our operations.
+
+ 
+
+A
+majority of our directors and officers reside outside the United States, with the result that it may be difficult for investors
+to enforce within the United States any judgments obtained against us or any of our directors or officers. 
+
+ 
+
+Investing
+in our Common Stock will provide you with an equity ownership in a mineral resource company. As one of our stockholders, you will
+be subject to risks inherent to our business. The trading price of your shares will be affected by the performance of our business
+relative to, among other things, competition, market conditions and general economic and industry conditions. The value of your
+investment may decrease, resulting in a loss. You should carefully consider the following factors as well as other information
+contained in this Prospectus before deciding to invest in shares of our Common Stock.
+
+ 
+
+The
+factors identified below are important factors that could cause actual results to differ materially from those expressed in any
+forward-looking statement made by, or on behalf of, the Company. Where any such forward-looking statement includes a statement
+of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases
+to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results, and the differences
+between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking
+statement, the Company, or its management, expresses an expectation or belief as to the future results, such expectation or belief
+is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation
+or belief will result, or be achieved or accomplished. Taking into account the foregoing, the following are identified as important
+risk factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by,
+or on behalf of, the Company:
+
+ 
+
+We
+are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging
+growth companies will make our common stock less attractive to investors.
+
+ 
+
+The JOBS
+Act permits "emerging growth companies" like us to rely on some of the reduced disclosure requirements that are already
+available to companies having a public float of less than $75 million, for as long as we qualify as an emerging growth company.
+During that period, we are permitted to omit the auditor s attestation on internal control over financial reporting
+that would otherwise be required by the Sarbanes-Oxley Act. Companies with a public float of $75 million or more must otherwise
+procure such an attestation beginning with their second annual report after their initial public offering. For as long as we qualify
+as an emerging growth company, we are also excluded from the requirement to submit "say-on-pay", "say-on-pay
+frequency" and "say-on-parachute" votes to our stockholders and may avail ourselves of reduced executive
+compensation disclosure compared to larger companies. In addition, as described in the following risk factor, as an emerging growth
+company we can take advantage of an extended transition period to comply with new or revised accounting standards applicable to
+public companies.
+
+ 
+
+ 15
+
+ 
+
+ 
+
+ 
+
+Until
+such time as we cease to qualify as an emerging growth company, investors may find our common stock less attractive because we
+may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active
+trading market for our common stock and our stock price may be more volatile.
+
+ 
+
+As
+an "emerging growth company" we may take advantage of an extended transition period to comply with new or revised
+accounting standards applicable to public companies.
+
+ 
+
+Section
+107 of the JOBS Act also provides that, as an emerging growth company, we 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. We can therefore
+delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However,
+we have not elected to take advantage of the benefits of this extended transition period.
+
+ 
+
+At
+such time as we cease to qualify as an "emerging growth company" under the JOBS Act, the costs and demands placed
+upon management will increase.
+
+ 
+
+We
+will continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which we
+had total annual gross revenues of $1,000,000,000 (as indexed for inflation), (ii) the last day of the fiscal year following the
+fifth anniversary of the date of the first sale of common stock under a registration statement under the Securities Act ; (iii)
+the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv)
+the date on which we are deemed to be a , ' ': large accelerated filer as defined by the SEC, which would generally
+occur upon our attaining a public float of at least $700 million. Once we lose emerging growth company status, we expect
+the costs and demands placed upon management to increase, as we would have to comply with additional disclosure and accounting
+requirements, particularly if our public float should exceed $75 million.
+
+ 
+
+We
+will incur significant costs as a result of becoming a reporting public company, and our management will be required to devote
+substantial time to new compliance requirements, including establishing and maintaining internal controls over financial reporting,
+and we may be exposed to potential risks if we are unable to comply with these requirements.
+
+ 
+
+As
+a reporting public company, we will incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002,
+together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose
+various requirements on public companies, including requiring certain corporate governance practices. Our management and other
+personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase
+our legal and financial compliance costs and will make some activities more time-consuming and costly.
+
+ 
+
+The
+Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure
+controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over
+financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required
+by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 may require that we incur substantial accounting expenses
+and expend significant management efforts. Our testing may reveal deficiencies in our internal controls over financial reporting
+that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal
+controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose
+confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC or
+other applicable regulatory authorities.
+
+ 
+
+87.2%
+of our shares of Common Stock are controlled by Principal Stockholders and Management. 
+
+ 
+
+87.2%
+of our Common Stock is controlled by four stockholders of record. This figure includes stock controlled by our directors and officers
+who are the beneficial owners of about 84% of our Common Stock. Such ownership by the Company s principal shareholders,
+executive officers and directors may have the effect of delaying, deferring, preventing or facilitating a sale of the Company
+or a business combination with a third party.
+
+ 
+
+If
+the selling shareholders sell a large number of shares all at once or in blocks, the value of our shares would most likely decline.
+
+ 
+
+The
+Company has 14,059,000 shares of Common Stock outstanding as of December 31, 2013, of which 6,475,000 are transferable under this
+Prospectus. The availability for sale of such a large amount of shares may depress the market price for our Common Stock and impair
+our ability to raise additional capital through the public sale of Common Stock. The Company has no arrangement with any of the
+holders of the foregoing shares to address the possible effect on the price of the Company s Common Stock of the sale by
+them of their shares.
+
+ 
+
+ 16
+
+ 
+
+ 
+
+ 
+
+Our
+auditors have expressed substantial doubt about our ability to continue as a going concern.
+
+ 
+
+The
+accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. As discussed
+in Note 1 to the financial statements, we were incorporated on July 25, 2005, and we do not have a history of earnings, and as
+a result, our auditors have expressed substantial doubt about our ability to continue as a going concern. Continued operations
+are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not
+be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result
+from the outcome of this uncertainty.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001578809_enzymotec_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001578809_enzymotec_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001578809_enzymotec_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001579910_resonant_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001579910_resonant_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d787ad9aa3e672df488c65b2ab0c1661e1d89618
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001579910_resonant_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before investing in our common stock, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. Overview Resonant is a development-stage company creating innovative filter designs for radio frequency, or RF, front-ends for the mobile device industry. We use a fundamentally new technology that we call Infinite Synthesized NetworksTM, or ISN, to configure resonators, the building blocks of RF filters. Filters are a critical component of the RF front-end. They are used to select desired radio frequency signals and reject unwanted signals. ISN is a technology for finding superior designs to previously intractable problems in RF filters. ISN is a systematic process that employs a comprehensive suite of patented and proprietary circuit design methods and tools to create filters. Our process starts from the ground up and is not constrained by conventional design limitations. The current approach to RF transmit filters is incremental optimization of a fundamental design patented in 1931. This approach was adequate until the recent growth in wireless data which has required an increase in the number of wireless channels or frequency bands. This increase in bands requires new classes of filter designs. We plan to use ISN to develop new classes of designs that have eluded other RF engineers. We have fabricated circuitry that demonstrates the feasibility of ISN, and have created working versions of some of our designs. We have not yet fabricated a commercially viable device using ISN. The RF front-end is the circuitry in a mobile device responsible for analog signal processing and is located between the device's antenna and its digital baseband. We believe ISN will disrupt the RF front-end market through the following advantages: Significant cost reductions, Smaller size, Fewer components, and Improved performance. Our immediate focus is innovative single-band and tunable filter designs for the RF front-end. These designs present the greatest near-term potential for commercialization of our ISN technology. According to Navian, the combined market for RF front-end filters (including duplexers) in mobile devices was $2.7 billion in 2013 and is forecasted to reach $5.2 billion by 2017. This represents a compound annual growth rate of approximately 18%. Our Technology Current RF filter design techniques for mobile devices are based on technology that has changed very little over the past century. The prevailing filter design, an "acoustic wave ladder," is based on a single-topology approach with a fixed design structure. The current technology is constrained by its own design assumptions and has not bred any fundamentally new structures to address emerging industry challenges. By contrast, our ISN technology is a universal approach that allows many components to be adjusted in order to achieve a particular set of specifications. We have fabricated circuitry that AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents demonstrates the feasibility of our approach and believe it will yield new generations of designs not available with the single-topology approach inherent in the current technology. Challenges Faced by the Mobile Device Industry Rising consumer demand for always-on wireless broadband connectivity is creating an unprecedented need for high performance RF front-ends for mobile devices. Mobile devices such as smartphones and tablets are quickly becoming the primary means of accessing the Internet. The exponential growth in mobile data traffic is testing the limits of existing wireless bandwidth. Carriers and regulators have responded by opening new swaths of RF spectrum, driving up the number of frequency bands in mobile devices. This substantial increase in frequency bands has created at least two significant problems. Both problems involve the filters and duplexers in the RF front-end. Duplexers are two filters combined into a single component which simultaneously selects both the transmit and receive signals. Today's RF front-ends have multiple filters and duplexers, and they constitute a large percentage of the physical size and cost of the front-end. We believe that filters and duplexers will comprise more than half of the RF front-end market by 2017. The first problem is that many of the new bands require filters and duplexers that use a relatively expensive technology called bulk acoustic wave, or BAW. The second, and bigger problem, is that the rapid increase in bands is causing a corresponding increase in the number of filters and duplexers in mobile devices. Each of these problems is significantly driving up the cost and size of RF front-ends. Our Solutions Our immediate focus is to address these problems with innovative single-band and tunable designs. These designs present the greatest near-term potential for commercialization of our ISN technology. Longer term, we believe our technology will enable more cost effective utilization of spectrum through new paradigms such as cognitive radio. Single-Band Designs. We are currently developing our first duplexer design in collaboration with Skyworks Solutions, Inc., a large supplier of RF front-end modules, under the terms of a development agreement. This will be the first in a series of surface acoustic wave, or SAW, duplexer designs for RF frequency bands presently limited to the larger and more expensive BAW duplexers. We believe we can design SAW duplexers for many of these bands that can be manufactured at less than half the cost of BAW duplexers. We have demonstrated in a test environment our ability to design SAW filters that perform well in these bands. Tunable Designs. We also plan to develop a series of tunable filter designs that can be electronically programmed in real time for different RF frequency bands. Existing filter designs only work with a single frequency band, which requires today's smartphones and other mobile devices to contain as many as nine duplexers and a larger number of individual filters. We believe our tunable designs will replace multiple filters and duplexers and significantly lower the cost and size of RF front-ends. Our design team has fabricated circuitry that demonstrates the feasibility of our tunable filter designs. Our Business Model We believe licensing our designs is the most direct and effective means of delivering our solutions to the market. Our target customers make part or all of the RF front-end and sell directly to the cell phone and mobile device manufacturers. There are approximately ten companies that dominate this field, specializing in specific areas such as power amplifiers, RF switches and SAW and BAW filters and duplexers. A subset of this market (around six companies) combines two or more of these components RESONANT INC. (Exact name of registrant as specified in its charter) Table of Contents into integrated front-end modules. We intend to retain ownership of our designs and charge royalties based on sales of RF front-end modules that incorporate our designs. We do not intend to manufacture or sell any physical products or operate as a contract design company developing designs for a fee. We plan to license specific, custom designs to our customers. Our plan is to charge royalties at a fixed amount per filter and not as a percentage of sales. We expect to generate substantially all of our revenues with these types of licensing arrangements. Each filter design and related royalty stream is expected to have a finite life as mobile devices continue to evolve. Our plan is to offer our customers replacement designs as existing designs become obsolete. We have advantages that we believe present significant barriers to entry for potential competitors: a large and growing portfolio of patents; a suite of proprietary software design tools; a highly experienced design team; and a multi-year technology lead. Our First Commercial Duplexer Design We are currently developing our first commercial duplexer design in collaboration with Skyworks Solutions, Inc. pursuant to a development agreement. Skyworks is an innovator in high performance analog semiconductors and a leading supplier of RF front-ends for mobile devices. Skyworks has developed a set of proprietary specifications for our duplexer based on the demands of its customers. We expect to complete work on a production-ready duplexer design before the end of 2014. Skyworks has an option to license our duplexer design at already agreed-upon royalty rates upon completion. We will own our duplexer design and all related intellectual property. There is no assurance that we can complete our design or that our design will have acceptable performance. In addition, our design will compete with other products and solutions available to Skyworks and may not be selected even if fully compliant with all specifications. Risks Related to Our Business Our business is subject to numerous risks, which are highlighted in the section entitled "Risk Factors" immediately following this prospectus summary. Some of these risks include: our limited operating history makes it difficult to evaluate our business and prospects; we have an agreement with only one potential customer and we will most likely be depending on a small number of customers for a significant portion of our revenue in the future; we may not be able to complete a design that meets our potential customer's specifications; even if we succeed in developing a design that meets all the specifications in our development agreement, our potential customer could decline to use our design in its product or our customer's product could fail in the marketplace; we are a development stage company, have a history of operating losses and we may never achieve or maintain profitability; in addition, the report of our independent registered public accounting firm on our financial statements appearing at the end of this prospectus contains an explanatory paragraph stating that our liquidity risk raises substantial doubt about our ability to continue as a going concern; our technologies are not yet verified in practice or on a commercial scale; Delaware (State or other jurisdiction of incorporation or organization) 3674 (Primary Standard Industrial Classification Code Number) 45-4320930 (I.R.S. Employer Identification No.) 110 Castilian Drive, Suite 100 Goleta, California 93117 (805) 308-9803 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents laboratory conditions differ from commercial manufacturing conditions and field conditions, which could affect the effectiveness of our designs; our customers may rely on subcontractors to fabricate our circuit designs, and market acceptance of our designs could be adversely affected if the subcontractors decline to manufacture our designs; if our designs or our customers' products that incorporate our designs do not achieve widespread market acceptance, we will not be able to generate the revenue necessary to support our business; our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our solution without compensating us, thereby eroding our competitive advantages and harming our business; we may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies; our industry is subject to intense competition and rapid technological change, which may result in products or new solutions that are superior to our designs under development or other future designs we may bring to market from time to time and if we are unable to anticipate or keep pace with changes in the marketplace and the direction of technological innovation and customer demands, our designs may become less useful or obsolete and our operating results will suffer; and if our principal end markets fail to grow or experience declines, the amount of revenues we may be able to generate following development of our designs may decrease. For further discussion of these and other risks you should consider before making an investment in our common stock, see the section titled "Risk Factors" immediately following this prospectus summary. Corporate Information Resonant Inc. was incorporated in Delaware in January 2012. Resonant LLC was formed in California during May 2012. Resonant LLC commenced business in July 2012 with initial funding from our founders. Resonant Inc. acquired all of the outstanding membership interests of Resonant LLC in June 2013, and Resonant LLC became a wholly-owned subsidiary of Resonant Inc. Resonant Inc. was dormant until that time. Our principal executive offices are located at 110 Castilian Drive, Suite 100, Goleta, California 93117. Our telephone number is (805) 308-9803. Our website address is www.resonant.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Unless otherwise indicated, the terms "Resonant," "we," "us" and "our" refer to Resonant Inc., a Delaware corporation. "Resonant" and the Resonant logo are our trademarks. This prospectus contains additional trade names, trademarks and service marks of ours and of other companies. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with these other companies, or endorsement or sponsorship of us by these other companies. Other trademarks appearing in this prospectus are the property of their respective holders. Terry Lingren Chief Executive Officer Resonant Inc. 110 Castilian Drive, Suite 100 Goleta, California 93117 (805) 308-9803 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Emerging Growth Company The Jumpstart Our Business Startups Act, or the JOBS Act, was enacted in April 2012 with the intention of encouraging capital formation in the United States and reducing the regulatory burden on newly public companies that qualify as "emerging growth companies." We are an emerging growth company within the meaning of the JOBS Act. As an emerging growth company, we may take advantage of certain exemptions from various public reporting requirements, including the requirement that our internal control over financial reporting be audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, certain requirements related to the disclosure of executive compensation in this prospectus and in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on executive compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest to occur of (1) the last day of the fiscal year in which we have $1.0 billion or more in annual revenue; (2) the date we qualify as a "large accelerated filer," with at least $700 million of equity securities held by non-affiliates; (3) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering. For certain risks related to our status as an emerging growth company, see the disclosure elsewhere in this prospectus under "Risk Factors Risks Related to this Offering, the Securities Markets and Ownership of Our Common Stock We are an 'emerging growth company,' and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors." Copies to: John J. McIlvery Louis Wharton Stubbs Alderton & Markiles, LLP 15260 Ventura Boulevard, 20th Floor Sherman Oaks, California 91403 (818) 444-4500 Daniel G. Christopher Vice President and General Counsel Resonant Inc. 110 Castilian Drive, Suite 100 Goleta, California 93117 (805) 308-9803 Andrew Hudders Carl Van Demark Golenbock Eiseman Assor Bell & Peskoe LLP 437 Madison Avenue, 40th Floor New York, NY 10022 (212) 907-7300 Table of Contents THE OFFERING The following is a brief summary of certain terms of this offering. For a more complete description of the terms of our common stock, see "Description of Capital Stock Common Stock." Common stock offered by us 2,250,000 shares Common stock to be outstanding after this offering 6,037,666 shares (6,375,166 shares, if the underwriter exercises its over-allotment option in full) Over-allotment option to purchase additional shares from us 337,500 shares Use of Proceeds We estimate that the net proceeds from the sale of shares of our common stock in this offering will be approximately $11,435,000 (or approximately $13,278,000 if the underwriter's option to purchase additional shares of our common stock from us is exercised in full), based upon the assumed initial public offering price of $6.00 per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds we receive from this offering for product development to commercialize our technology, research and development, the development of our patent strategy and expansion of our patent portfolio, to pay accrued interest on outstanding indebtedness, and for working capital and general corporate purposes. We also may use a portion of the net proceeds from this offering to acquire or invest in technologies, solutions or businesses that complement our business, although we have no present commitments to complete any such transactions at this time.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. Overview We are a leading interactive entertainment company for the mobile world. Our mission is to provide highly engaging content to our audience to match their mobile lifestyles: anywhere, anytime and on any device. In December 2013, an average of 128 million daily active users played our games more than 1.2 billion times per day and, in February 2014, an average of 144 million daily active users played our games more than 1.4 billion times per day. In the fourth quarter of 2013, 73% of our gross bookings were derived from our mobile audience. Our leading games include Candy Crush Saga, Pet Rescue Saga, Farm Heroes Saga, Papa Pear Saga and Bubble Witch Saga. We believe Candy Crush Saga, our top title to date, is one of the largest interactive entertainment franchises of all time. Our focus is to provide a highly engaging, differentiated entertainment experience where the combination of challenge and progress drives a sense of achievement. We make our games available for free, while players can purchase virtual items priced relative to the entertainment value they provide. We embed social features in our content that enhance the player experience. We build on a unique and passionate company culture predicated on collaboration, humility and respect. We believe all of these in combination have made our content a core part of our audience s daily entertainment. We have been a leading developer and publisher of casual games on digital platforms since 2003. Casual games typically include a puzzle element, are easy to learn but hard to master, can be played in a few minutes and are suitable for play on a wide range of devices. They have enjoyed broad appeal since they were first offered in a digital format in the 1980s. Casual gaming is large and growing quickly, driven by key technology and consumer trends, creating the potential for leading entertainment franchises to emerge from the category. The proliferation of mobile devices is dramatically expanding the global gaming audience, much of which is attracted to casual titles. Social connectivity has become a pervasive feature of interactive entertainment, transforming the scale and economics of the industry through viral content distribution. Lastly, free-to-play business models have vastly increased the revenue potential of the category by eliminating upfront barriers and facilitating streams of small payments throughout the game journey. We believe we have a repeatable and scalable game development process that is unparalleled in our industry. In the last decade, we have developed a catalog of more than 180 game IPs, which we continuously expand. We refer to our game IP as the intellectual property assets that includes its name, game play mechanic, visual expression, graphics and design. We introduce new game IPs in a tournament format on our royalgames.com website, where we are able to gather rapid feedback from a subset of our sophisticated, highly engaged player base, which we refer to as VIPs. We adapt the most popular game IPs to our proven Saga format for launch on mobile and Facebook. We believe this approach has allowed us to develop games faster, at lower risk and at lower cost than our competitors. The result has been category-leading franchises including Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga. We believe the inherently social nature of our games, our data-driven marketing processes, our cross-platform technology infrastructure and massive player network are key competitive advantages. We obtain the vast majority of our installs organically or through viral channels that are driven by the effectiveness of our social features. We seed these channels by leveraging our significant capabilities in paid player acquisition. We run Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED MARCH 25, 2014 Preliminary Prospectus 22,200,000 shares Ordinary Shares This is the initial public offering of ordinary shares of King Digital Entertainment plc. Prior to this offering, there has been no public market for our ordinary shares. We are offering 15,533,334 ordinary shares and the selling shareholders identified in this prospectus are offering 6,666,666 ordinary shares. We will not receive any proceeds from the sale of the shares by the selling shareholders. The initial public offering price is expected to be between $21.00 and $24.00 per share. We have been authorized to list our ordinary shares on the New York Stock Exchange under the symbol KING. Investing in our ordinary shares involves risk. See Risk Factors beginning on page 13. Per share Total Initial public offering price $ $ Underwriting discounts and commissions (1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to the selling shareholders $ $ (1) See Underwriting for a description of compensation payable to the underwriters. The underwriters have an option to purchase a maximum of 3,330,000 additional ordinary shares from the selling shareholders, less the underwriting discounts and commissions, to cover over-allotment shares, if any. The underwriters can exercise this option at any time within 30 days from the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the ordinary shares to purchasers on , 2014. J.P. Morgan Credit Suisse BofA Merrill Lynch Barclays Deutsche Bank RBC Capital Markets BMO Capital Markets Cowen and Company Pacific Crest Securities Piper Jaffray Stifel Wedbush Securities Raine Securities LLC , 2014 Table of Contents thousands of discrete campaigns every 24 hours, each with individual target metrics, and all subject to the same target return parameters. As of December 31, 2013, we had a massive network of 324 million monthly unique users and a track record of long-term retention driven by game longevity and our proven ability to cross-promote new games to our audience. We have put the long-term retention of our players at the heart of our business model. While our players are able to enjoy our games for free, we generate revenue by selling virtual items to a subset of players who wish to enhance their entertainment experience. Our approach is to make our pricing transparent and consistent throughout the game journey. Following these principles, we have gathered a wide base of approximately 12 million average monthly unique payers, representing approximately 4% of our monthly unique users as of December 31, 2013. We believe that targeting a modest share of our customer s entertainment spend drives game longevity and customer loyalty, and is the most effective way of building a sustainable business over the long term. We have built our business to significant scale with limited capital investment and disciplined business management. We have raised only $9 million of primary capital to date and we have generated positive cash flow from operations for each of the last nine years. We have generated significant growth as our game portfolio, player network and mobile footprint have scaled. From the first quarter of 2012 to the fourth quarter of 2013, our gross bookings by quarter grew from $29 million to $632 million. Our revenue, the most directly comparable IFRS measure, grew from $22 million in the first quarter of 2012 to $602 million in the fourth quarter of 2013. Our profit (loss) also grew from $(1) million in the first quarter of 2012 to $159 million in the fourth quarter of 2013. For a description of how we calculate gross bookings and the limitations of this non-GAAP and non-IFRS financial measure, see Selected Consolidated Financial Data Non-GAAP Financial Measures. Our Mission and Vision Our mission is to provide highly engaging content to our audience to match their mobile lifestyles: anywhere, anytime and on any device. Our players always come first. We believe this approach is the most effective way of creating lasting value for our stakeholders. Our vision is to build the leading entertainment company for a mobile world. We aim to deliver our games to a vast and socially-connected audience retained over the long term. Our Heritage Is the Foundation of Our Success We have been a leading developer and publisher of casual games on digital platforms since 2003. Over the last decade, we have acquired deep experience in casual game design and have built a massive network of loyal and dedicated players. We have operated a free-to-play business model as well as used social features to drive player engagement and retention. Lastly, we have built a technology infrastructure capable of managing very high volumes of gameplays. These assets, capabilities and business processes have been the foundation of our mobile and social success to date and we believe, position us uniquely to capture the current market opportunity. Industry Background and Our Opportunity The digital entertainment industry is currently undergoing dramatic change driven by significant technology and consumer trends, including the rapid growth of mobile platforms, social networks as part of the entertainment fabric, and app stores as key distribution and payment gateways. These trends are having a significant impact on the digital gaming industry: the size of the global gaming audience is increasing dramatically, free-to-play models have vastly expanded the revenue opportunity and sophisticated targeting strategies have made acquisition of large player populations economically viable in a sustainable way. These developments together are driving disproportionate growth in casual gaming relative to the broader gaming industry. We believe this creates an opportunity to establish leading entertainment franchises in this category: Casual has been one of the most popular gaming categories for decades. Casual games are an enduring category of entertainment: they have been enjoyed since Egyptian times. Many of today s most popular Table of Contents Table of Contents sub-genres were pioneered in Japan in the 1980s and have spawned historical global franchises such as Space Invaders, Pac-Man and Tetris. The size of the casual audience is dramatically expanding. Mobile device proliferation and social connectivity are driving growth in the casual audience because of the category s broad appeal and inherent suitability to mobile. Free-to-play has created the potential for casual to lead other categories by revenue. The effectiveness of free-to-play business models combined with this dramatic increase in the casual audience has created the potential for leading entertainment franchises to emerge from the category. Our Value Proposition for Players To address this opportunity, we have designed our mobile and social games with the following characteristics: Anytime. Our games can be enjoyed in short sessions allowing frequent and unplanned breaks in game play that do not detract from the quality of the experience. Anywhere. Our games can be enjoyed wherever our players are and on the vast majority of devices, connected or not. Seamlessly synchronized. A distinguishing feature of our platform is to allow players to switch seamlessly between devices and platforms and continue their game wherever they left off. Our platform offers real-time synchronization of level progression, social graph and virtual items. Highly engaging. Our games are easy to learn, but hard to master. While gameplay is simple and intuitive, it takes skill to progress. This creates the sense of achievement that underpins the high engagement in our games. Inherently social. Our games provide social interactions that enhance the player experience: social connectivity is built around sharing achievements and helping each other to progress. Free-to-play. Our players can enjoy our games for free. Most of those that reach the highest level of a game do so without making a purchase. For those who do, we price our virtual items relative to the entertainment value they deliver. Our Core Strengths We have developed a repeatable and scalable process for bringing successful mobile and social titles to a global audience quickly and cost effectively, while minimizing business risk. We believe our model is fundamentally differentiated from competitors, will be challenging to replicate and strengthens our ability to deliver business predictability and sustainability. Game Design Capabilities, IP Catalog and Laboratory Over the last decade, we have developed a proprietary catalog of more than 180 game IPs which we offer in a tournament format on royalgames.com. Developing a new game IP has typically taken a team of three people 20 weeks, and we have created game IPs in most casual sub-genres over the years. On royalgames.com, we first release new game IPs to a subset of sophisticated, highly experienced players, who we call VIPs. We have found that the underlying game mechanic of a game that is popular with VIPs is highly likely to be successful when adapted for mobile and social platforms. Unique, Repeatable, Scalable Game Development Process We have a standardized process to adapt our popular casual game IPs into a proven game format for launch on mobile and social platforms. Our first game format, the Saga, is a game development framework designed to Table of Contents Table of Contents provide a deep, viral and social game experience. It comprises a path through hundreds of game levels, social features that allow interactions with others, viral mechanics and a variety of virtual items available for purchase. Popular new features developed in one game studio are productized and added to the development platform for use by all game studios. Cross-platform Architecture Enhances Player Experience and Economics Our unique cross-platform architecture allows our audience to play wherever they are: on Apple s iOS, Google s Android or Amazon s Kindle mobile devices, or on their desktop on Facebook. It also allows players to switch seamlessly between devices and platforms and continue their game wherever they left off. Cross-platform gameplay has been widely adopted by our audience and has driven increased engagement, cross-platform virality and retention. Our architecture provides a shared user database, analytical platform and network marketing infrastructure, so that our Saga games share a substantial majority of common server-side code. This has allowed us to scale organically from one to six game studios in 24 months while preserving a low risk, low cost, high speed development and service platform. Efficient Engine to Drive Acquisition, Engagement and Retention Our model for player acquisition is primarily viral and organic, supplemented by a data-centric, rules-based approach to marketing. The inherently social nature of our games drives virality. This virality is enhanced by our cross-platform synchronization. We enjoy a virtuous cycle where players that play our games on various platforms and devices share their enjoyment and progress with their friends who in turn then discover our games. In addition, a large number of players discover our games through organic channels. This results in attracting large numbers of players for whom there is no direct marketing expense. We also make large investments in paid player acquisition, where returns are boosted by the viral impact. We have built extensive proprietary capabilities and technology infrastructure, which allow us to run acquisition campaigns in a highly granular and data-driven way. Every 24 hours, we operate thousands of campaigns targeting hundreds of discrete clusters through a mix of channels and formats across multiple platforms, all subject to the same target return parameters. Massive Player Network and Loyal Customer Base As of December 31, 2013, we have amassed a network of 324 million monthly unique users and our players enjoyed over 41 billion gameplays in the month of December 2013. We have a track record of successfully attracting our audience to new games and retaining them within our network. To drive retention and cross-promotion, we use a data-centric, rules-based approach aimed at maximizing aggregate return on investment (ROI) regardless of content, channel or advertising format. Out of this audience, we have built a wide base of approximately 12 million monthly unique payers, representing approximately 4% of our monthly unique users as of December 31, 2013. Our Business Model We believe that targeting a modest share of the entertainment spend of a wide base of customers is a source of game longevity and customer loyalty, and the most effective way of building a sustainable business over the long term. Our Approach The overarching goal of our business model is to foster long-term player retention within our network. As a result, we have developed, and continue to enhance, our model on the basis of the following principles: we focus on retention, our audience can enjoy our games for free, and our pricing is transparent and consistent throughout the game journey. Table of Contents Table of Contents Our Virtual Items We offer a range of virtual items to our customers. These currently include entertainment time, where players can extend the duration of their game session; skill enhancements, where players can buy a wide variety of boosters that help them to progress; and access to content, where players can pay to unlock new episodes. Our Key Metrics Our key financial metrics, which include gross bookings, revenue and adjusted EBITDA, and our key operating metrics, which include daily active users (DAUs), monthly active users (MAUs) and monthly unique payers (MUPs) have grown significantly in the last two years. We believe this trend is a result of our ability to profitably grow, retain and monetize our massive player network and loyal customer base. For a description of how we calculate each of these metrics and factors that have caused fluctuations in these metrics, see Management s Discussion and Analysis of Financial Condition and Results of Operations Key Business Metrics. The charts below highlight our key metrics: Gross bookings and adjusted EBITDA are not calculated in accordance with IFRS. For a description of how we calculate gross bookings and adjusted EBITDA, the limitations of these financial measures and a reconciliation of these financial measures, see Selected Consolidated Financial Data Non-GAAP Financial Measures. Table of Contents TABLE OF CONTENTS Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights select information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider
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+This summary highlights information appearing elsewhere in this prospectus. This summary is not complete and does not contain all of the information that may be important to you. You should carefully read the entire prospectus, including the information presented under "Risk Factors" on page 20 and the pro forma and historical financial statements and related notes included elsewhere in this prospectus. Certain oil and gas industry terms used in this prospectus are defined in the "Glossary of Oil and Natural Gas Terms" beginning on page A-1 of this prospectus. Except as otherwise indicated or unless the context otherwise requires, the terms "EP Energy," "we," "us," "our," "the Company" and "our company" refer to (i) EP Energy Corporation and its subsidiaries on a consolidated basis for periods following the completion of the Corporate Reorganization on August 30, 2013 and (ii) EPE Acquisition, LLC and its predecessor entities and their subsidiaries on a consolidated basis for periods prior to the Corporate Reorganization (including the operations of predecessor entities prior to the Acquisition (as defined below)). Except as otherwise indicated, all of the information in this prospectus assumes or reflects (i) no exercise of the underwriters' option to purchase up to 6,000,000 additional shares of common stock from us, (ii) an initial offering price of $25.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and (iii) the 62.553-for-one stock split effected on January 2, 2014. The number of shares of common stock to be outstanding after completion of this offering is based on 40,000,000 shares of our common stock to be sold by us in this offering and, except where indicated otherwise, does not give effect to 12,433,749 shares of common stock reserved for future issuance under the Omnibus Incentive Plan (as defined in "Management Executive Compensation" on page 138). Estimates of our oil, natural gas and NGLs reserves, related future net cash flows and the present values thereof as of September 30, 2013 included in this prospectus were prepared by our internal staff of engineers and audited by the independent petroleum engineering firm of Ryder Scott Company, L.P. ("Ryder Scott"). Unless we indicate otherwise, all production, reserve and operating data in this prospectus give effect to our pending and recently completed divestitures described in " Recent Divestitures" on page 9. Our Company We are an independent exploration and production company engaged in the acquisition and development of unconventional onshore oil and natural gas properties in the United States. We are focused on creating shareholder value through the development of our low-risk drilling inventory located in four core areas: the Eagle Ford Shale (South Texas), the Wolfcamp Shale (Permian Basin in West Texas), the Altamont field in the Uinta Basin in northeastern Utah and the Haynesville Shale (North Louisiana). In our core areas, we have identified approximately 5,200 drilling locations (including 916 drilling locations to which we have attributed proved undeveloped reserves as of September 30, 2013), of which approximately 96% are oil wells. At current activity levels, this represents approximately 24 years of drilling inventory. As of September 30, 2013, we had proved reserves of 513 MMBoe (54% oil and 67% liquids) and for the three months ended September 30, 2013, we had average net daily production of 88,149 Boe/d (45% oil and 54% liquids). Our management team has significant experience identifying, acquiring and developing unconventional oil and natural gas assets. The majority of our senior management team has worked together for over a decade at prominent oil and gas companies that have included El Paso Corporation, ConocoPhillips and Burlington Resources. We believe our management's experience in both acquiring resource-rich leasehold positions and efficiently developing those properties will enable us to generate attractive rates of return from our capital programs. Table of Contents Sensitivity Analysis. The table below presents the hypothetical sensitivity of our commodity-based price risk management activities to changes in fair values arising from immediate selected potential changes in oil and natural gas prices, discount rates and credit rates at September 30, 2013: Oil and Natural Gas Derivative Instruments 10 Percent Increase 10 Percent Decrease Fair Value Fair Value Change Fair Value Change (in millions) Price impact(1) $ 62 $ (443 ) $ (505 ) $ 557 $ 495 Oil and Natural Gas Derivative Instruments 1 Percent Increase 1 Percent Decrease Fair Value Fair Value Change Fair Value Change (in millions) Discount rate(2) $ 62 $ 60 $ (2 ) $ 64 $ 2 Credit rate(3) $ 62 $ 62 $ $ 63 $ Amendment No. 4 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents MARKET AND INDUSTRY DATA This prospectus includes statements regarding factors that have impacted our and our customers' industries, such as our customers' access to capital. Such statements regarding our and our customers' industries and market share or position are statements of belief and are based on market share and industry data and forecasts that we have obtained from industry publications and surveys, as well as internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. Although we believe that the third party sources are reliable, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. In addition, while we believe that the market share, market position and other industry information included herein is generally reliable, such information is inherently imprecise. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under "Risk Factors" on page 20. PRESENTATION OF RESERVES INFORMATION The Securities and Exchange Commission (the "SEC") permits oil and gas companies, in their filings with the SEC, to disclose only estimated proved, probable and possible reserves that meet the SEC's definitions of such terms. We disclose estimated proved reserves in this prospectus. Our estimates of proved reserves contained in this prospectus were estimated by our internal staff of engineers and comply with the rules and definitions promulgated by the SEC. For the year ended December 31, 2012 and the nine months ended September 30, 2013, we engaged Ryder Scott Company, L.P., an independent petroleum engineering consultant firm, to perform reserve audit services with respect to a substantial portion of our proved reserves. EQUIVALENCY This prospectus presents certain production and reserves-related information on an "equivalency" basis. When we refer to oil and natural gas in "equivalents," we are doing so to compare quantities of oil with quantities of natural gas or to express these different commodities in a common unit. In calculating equivalents, we use a generally recognized standard in which one Bbl of oil and/or NGLs is equal to six Mcf of natural gas. Also, when we refer to cubic feet measurements, all measurements are at a pressure of 14.73 pounds per square inch. These conversions are based on energy equivalency conversion methods primarily applicable at the burner tip and do not represent value equivalencies at the wellhead. Although these conversion factors are industry accepted norms, they are not reflective of price or market value differentials between product types. USE OF NON-GAAP FINANCIAL INFORMATION In this prospectus, we use certain non-GAAP financial measures. We believe these supplemental measures provide meaningful information to our investors. Below are the non-GAAP measures used along with reference to where they are defined and reconciled with their comparable GAAP measures: EBITDAX please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Non-GAAP Measures" on page 81; Adjusted EBITDAX please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Non-GAAP Measures" on page 81; (1)PV-10 is a non-GAAP measure and is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure. To determine PV-10 we used SEC pricing, including the unweighted arithmetic average of the historical first-day-of-the-month prices for the prior 12 months, which were $95.20 per barrel of oil and $3.60 per MMBtu of natural gas as of September 30, 2013. The standardized measure of discounted future net cash flows as of September 30, 2013 is $6,718 million which differs from our PV-10 as the standardized measure reflects discounted future income taxes related to our domestic operations. Please see " Summary Pro Forma Operating and Reserve Information" on page 18. (2)Represents daily production for the three months ended September 30, 2013. (3)Calculated as total proved reserves as of September 30, 2013 divided by the annualized Average Net Daily Production for the three months ended September 30, 2013. (4)Comprised of South Louisiana Wilcox and Arklatex Tight Gas assets. Operating Areas Core Areas Eagle Ford Shale. The Eagle Ford Shale, located in South Texas, is one of the premier unconventional oil plays in the United States, having produced over 750 MMBoe since 2008, including approximately 348 MMBoe in 2012. We were an early entrant into this play in late 2008, and since that time have acquired a leasehold position in the core of the oil window, primarily in La Salle and Atascosa counties. The Eagle Ford formation in La Salle county has up to 125 feet of net thickness (165 feet gross), which we believe results in some of the most prolific acreage in the area. Due to its high carbonate content, the formation is also very brittle, and exhibits high productivity when fractured, with initial 30-day oil equivalent production rates up to 1,100 Boe/d, comprised of 893 Bbl/d of oil, EP ENERGY CORPORATION (Exact name of registrant as specified in its charter) Table of Contents Pro Forma Adjusted EBITDAX please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Non-GAAP Measures" on page 81; Cash Operating Costs please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Cash Operating Costs and Adjusted Cash Operating Costs" on page 74; Adjusted Cash Operating Costs please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Cash Operating Costs and Adjusted Cash Operating Costs" on page 74; Reserve Replacement Ratio please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Reserve Replacement Ratio/Reserve Replacement Costs" on page 67; Reserve Replacement Costs please see "Management's Discussion and Analysis of Financial Condition and Results of Operations Reserve Replacement Ratio/Reserve Replacement Costs" on page 67 and PV-10 please see "Summary Summary Pro Forma Operating and Reserve Information" on page 18. Table of Contents 97 Bbl/d of NGLs and 662 Mcf/d of natural gas. We currently have 96,126 net (109,603 gross) acres in the Eagle Ford, in which we have identified 951 drilling locations. For the three months ended September 30, 2013, our average net daily production was 40,169 Boe/d, representing growth of 75% over the same period in 2012. As of September 30, 2013, we had six rigs running and we plan to drill 126 wells in 2013 (of which 100 have been drilled through September 30, 2013), representing 58% of our total wells planned in 2013. For the nine months ended September 30, 2013 our average cost per gross well was $7.3 million ($6.7 million per net well), representing a 14% decline from our average cost per gross well (22% per net well) for the same period in 2012. We expect our average cost per well to continue to decline. Wolfcamp Shale. The Wolfcamp Shale is located in the Permian Basin, which has produced more than 29 billion barrels of oil and 75 Tcf of gas over the past 90 years and is estimated by industry experts to contain recoverable oil and natural gas reserves exceeding what has already been produced. With oil production of over 880 MBbls/d from over 80,000 wells during the six months ended June 30, 2013, the Permian Basin represented 51% of the crude oil produced in the State of Texas and approximately 17% of the crude oil and condensate produced onshore in the lower 48 United States. The basin is characterized by numerous, stacked oil reservoirs that provide excellent targets for horizontal drilling. We are currently targeting the Wolfcamp Shale in the Southern Midland Basin, where industry horizontal drilling has added over 50 MBoe/d to the basin's production since 2010. In 2009 and 2010, we leased 138,130 net (138,469 gross) acres on the University of Texas Land System in the Wolfcamp Shale, located primarily in Reagan, Crockett, Upton and Irion counties. Our large, contiguous acreage positions are characterized by stacked pay zones, including the Wolfcamp A, B, and C, which combine for over 750 feet of net (approximately 1,000 feet of gross) thickness. The Wolfcamp has high organic content and is composed of interbedded shale, silt, and fine-grained carbonate that respond favorably to fracture stimulation. We are currently in full development of the Wolfcamp B and C. Our initial 30-day oil equivalent production rates are up to 600 Boe/d, comprised of 494 Bbl/d of oil, 50 Bbl/d of NGLs and 336 Mcf/d of natural gas. On our most recent four wells, our initial 30-day oil equivalent production rates have averaged 469 Boe/d, comprised of 350 Bbl/d of oil, 57 Bbl/d of NGLs and 374 Mcf/d of natural gas. As of September 30, 2013, we have identified 2,923 drilling locations in the Wolfcamp A, the Wolfcamp B and the Wolfcamp C across our acreage. The acreage is also prospective for the Cline Shale, which has approximately 100 feet of net (approximately 200 feet of gross) thickness, and potential vertical drilling locations in the Spraberry and other stacked formations. For the three months ended September 30, 2013, our average net daily production was 6,383 Boe/d, representing growth of 185% over the same period in 2012. As of September 30, 2013, we had three rigs running and we plan to drill 65 wells in 2013 (of which 48 have been drilled through September 30, 2013), representing 30% of our total wells planned in 2013. For the nine months ended September 30, 2013 our average cost per gross well was $5.6 million ($5.6 million per net well), representing a 27% decline from our average cost per gross well (27% per net well) for the same period in 2012. Similar to the Eagle Ford Shale, we expect our average cost per well to continue to decline. Altamont. The Altamont field is located in the Uinta Basin in northeastern Utah. The Uinta Basin has produced 577 MMbbls since its discovery in 1949 and is characterized by naturally fractured, tight oil sands with multiple zones. Our operations are primarily focused on developing the Altamont Field Complex (comprised of the Altamont, Bluebell and Cedar Rim fields), which is the largest field in the basin. We own 170,523 net (315,272 gross) acres in Duchesne and Uinta Counties, making us the largest lease owner in the Altamont Field Complex. Since their discovery, the Altamont, Bluebell and Cedar Rim fields have produced a combined total of over 300 MMBbls from the oil-rich Wasatch and Green River sandstones. With gross thicknesses over 4,300 feet across multiple sandstone and (1)For more information regarding our acreage and inventory data, see "Business Our Properties and Core Areas" on page 93. (2)Represents gross operated wells to be completed in 2013. (3)Calculated as Drilling Locations divided by 2013 Drilling Locations. Other In addition to our core areas, we have other producing assets that contribute cash flow toward the development of our oil-focused core areas. These assets are comprised of our South Louisiana Wilcox assets, located primarily in Beauregard Parish, Louisiana, and our Arklatex Tight Gas assets located in Northern Louisiana that produce from reservoirs such as Travis Peak, Hosston, and Cotton Valley. 1001 Louisiana Street Houston, Texas 77002 713-997-1200 (Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) Table of Contents Business Strategy We are a high-growth, 100% onshore U.S., oil-weighted company with a large inventory of high-return, low-risk drilling locations. We are focused on creating shareholder value by implementing the following strategies: Grow Oil Production, Cash Flow and Reserves through the Development of our Extensive Drilling Inventory We have assembled a drilling inventory of approximately 5,200 drilling locations (including 916 drilling locations to which we have attributed proved undeveloped reserves as of September 30, 2013) across approximately 441,000 net (619,000 gross) acres in the Eagle Ford Shale, the Wolfcamp Shale, Altamont and the Haynesville Shale. The concentration and scale of our core leasehold positions, coupled with our technical understanding of the reservoirs, should allow us to efficiently develop our core areas and allocate capital to maximize the value of our resource base. In 2012, we invested $1.5 billion (92% in our core oil areas) of capital expenditures and grew oil production by 11,578 Bbls/d, or 95%, from an average of 12,203 Bbls/d in 2011 to an average of 23,781 Bbls/d in 2012. Pro Forma Adjusted EBITDAX increased by 39% from 2011 to 2012 and consolidated income from continuing operations, including $221 million of transition and restructuring costs in 2012, decreased by 102% from 2011 to 2012. We also increased proved oil reserves by 81 MMBbls, or 47%, from 174 MMBbls at December 31, 2011 to 255 MMBbls at December 31, 2012. In 2013, we plan to invest approximately $1.9 billion of capital expenditures, of which 95% is dedicated to developing our core oil areas. For the nine months ended September 30, 2013, our capital expenditures were $1,403 million. We believe that our extensive inventory of low-risk drilling locations, combined with our operating expertise, will enable us to continue to deliver production, cash flow and reserve growth and create shareholder value. We consider our inventory of drilling locations to be low risk because they are in areas where we (and other producers) have extensive drilling and production experience and success. For additional information regarding Pro Forma Adjusted EBITDAX, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations Supplemental Non-GAAP Measures" on page 81. Maintain an Extensive Low-Risk Drilling Inventory We have a demonstrated track record of identifying and cost effectively acquiring low-risk resource development opportunities. We follow a geologically driven strategy to establish large, contiguous leasehold positions in the core of prolific basins and opportunistically add to those positions through bolt-on acquisitions over time. We were an early entrant into the Eagle Ford and Wolfcamp Shales through grassroots leasing efforts, amassing average positions of over 100,000 net acres, and we methodically expanded our position in Altamont through targeted acquisitions. We will continue to identify and opportunistically acquire additional acreage and producing assets to add to our multi-year drilling inventory. Enhance Returns by Continuously Improving Capital and Operating Efficiencies We maintain a disciplined, returns-focused approach to capital allocation. Our large and diverse portfolio of drilling locations allows us to conduct cost-efficient operations and allocate capital to our highest-margin assets in a variety of commodity price environments. We continuously monitor and adjust our development program in order to maximize the value of our extensive portfolio of drilling opportunities. In each of our core areas, we have realized improvements in EURs while delivering reductions in drilling and completion costs since 2011. We have reduced our average cost per gross well in the Wolfcamp by 43% (43% per net well), Eagle Ford by 26% (32% per net well) and Altamont by 17% (26% per net well) from 2011 through the first nine months of 2013. These cost reductions have been due to many improvements, including substantial reductions in cycle times and successful Marguerite N. Woung-Chapman Senior Vice President, General Counsel and Corporate Secretary EP Energy Corporation 1001 Louisiana Street Houston, Texas 77002 713-997-1200 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents negotiations for supplies and services. We expect further cost reductions going forward due to additional learning and efficiencies, including drilling wells from common pad sites, shared use of pre-existing central facilities and other economies of scale. Identify and Develop Additional Drilling Opportunities in our Portfolio Our existing asset base provides numerous opportunities for our highly experienced technical team to create shareholder value by increasing our inventory beyond our currently identified drilling locations. In the Permian Basin, we have evaluated multiple Wolfcamp horizons, and we are currently running pilot delineation programs in the Wolfcamp A and C horizons. Additionally, this acreage is prospective for the Cline Shale, the Spraberry and other stacked formations. We believe Altamont has a significant inventory of low-risk, vertical infill drilling locations. Altamont is also currently being assessed for additional horizontal development potential in multiple shale and tight sands intervals. Our primary focus in the Eagle Ford Shale is increasing incremental returns through a reduction in drilling and completion costs. Our 3-D seismic programs in the Uinta and Permian Basins should further enhance our ability to increase the number of and high grade our drilling locations. Maintain Liquidity and Financial Flexibility We intend to fund our organic growth predominantly with internally generated cash flows while maintaining ample liquidity. We will continue to maintain a disciplined approach to spending whereby we allocate capital in order to optimize returns and create shareholder value. Upon completion of this offering, we will have $2.5 billion available for borrowing under our reserve-based revolving credit facility (the "RBL Facility"). As we pursue our strategy of developing high-return opportunities in our core areas, we expect our cash flow and borrowing base to grow, thereby further enhancing our liquidity and financial strength. We protect these future cash flows and liquidity levels by maintaining a three year rolling hedge program. In general, we target hedging levels of over 50% of expected production on a rolling three year basis. Competitive Strengths We believe the following strengths provide us with significant competitive advantages: Large, Concentrated Operated Positions in the Core Areas of Prolific Oil Resource Plays We own and operate contiguous leasehold positions in the core areas of three of the premier North American oil resource plays: the Eagle Ford Shale, the Wolfcamp Shale and Altamont. We have approximately 405,000 net (563,000 gross) acres across these three plays that we have substantially de-risked through our ongoing drilling programs. We view this acreage as de-risked because the drilling locations were selected based on our extensive delineation drilling and production history in the area and well-established industry activity surrounding our acreage. Since 2010, we have drilled and completed 401 horizontal wells across these three plays with a success rate of approximately 99%. Based on our analysis of subsurface data and the production history of our wells and those of offset operators, we have confirmed high quality reservoir characteristics across a broad aerial extent with significant hydrocarbon resources in place. Based upon our well costs and production rates, we believe our core oil areas offer some of the best single well rates of return of all North American resource plays. Multi-Year Inventory of Low-Risk Drilling Opportunities Our approximately 5,200 low-risk drilling locations across our core areas as of September 30, 2013 (including 916 drilling locations to which we have attributed proved undeveloped reserves as of September 30, 2013) provide us with approximately 24 years of drilling inventory, of which 96% are oil Table of Contents Production Volumes and Drilling Summary Production Volumes. Below is an analysis of our production volumes by area and commodity for the following periods: Nine months ended September 30, Year ended December 31, 2013 2012 2012 2011 2010 United States (MBoe/d) Eagle Ford Shale 36 18 20 7 1 Wolfcamp Shale 5 2 2 1 Altamont 11 10 11 9 9 Haynesville Shale 29 51 48 44 24 Other domestic 5 8 7 7 9 Divested assets(1) 26 20 56 72 Total Consolidated 86 115 108 124 115 Unconsolidated affiliate (MBoe/d)(2) 8 9 9 10 10 Total Combined (MBoe/d) 94 124 117 134 125 Oil and condensate (MBbls/d) Consolidated volumes 35 22 24 12 7 Divested assets(1) 1 1 3 5 Unconsolidated affiliate volumes(2) 1 1 1 1 1 Total Combined 36 24 26 16 13 Natural Gas (MMcf/d) Consolidated volumes 264 384 368 328 209 Divested assets(1) 144 108 304 383 Unconsolidated affiliate volumes(2) 37 43 42 46 47 Total Combined 301 571 518 678 639 NGLs (MBbls/d) Consolidated volumes 7 3 3 1 Divested assets(1) 1 1 2 4 Unconsolidated affiliate volumes(2) 1 1 1 1 2 Total Combined (MBbls/d) 8 5 5 4 With copies to: Rosa A. Testani John Goodgame Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY 10036 212-872-8115 Gregory A. Ezring Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 212-373-3458 Sean T. Wheeler Latham & Watkins LLP 811 Main Street, Suite 3700 Houston, TX 77002 713-546-7418 Table of Contents wells. We have used the subsurface data from our development programs to identify and prioritize our inventory. These drilling locations are included in our inventory after they have passed through a rigorous technical evaluation. In addition to our approximately 5,200 identified drilling locations, we believe we have the potential to increase our multi-year drilling inventory with horizontal drilling locations in the Cline Shale and vertical drilling locations in the Spraberry and other stacked formations in the Permian Basin, and vertical infill and horizontal drilling locations in the Wasatch and Green River formations in Altamont. Our ongoing technical assessment and development activities provide the potential for identification of additional drilling opportunities on our properties. High-Quality Proved Reserve Base with Substantial Current Production Our leasehold position and inventory of low-risk drilling locations is complemented by a substantial proved reserve base. As of September 30, 2013, we had proved reserves of 513 MMBoe (54% oil and 67% liquids) with a PV-10 of $8.1 billion (84% oil and 91% liquids) and a standardized measure of discounted future net cash flows of $6.7 billion. For the three months ended September 30, 2013, our average net daily production was 88,149 Boe/d, which was 45% oil and 54% liquids. Our current production provides a stable source of cash flow to fund the development of our core programs. This significantly reduces our reliance on outside sources of capital. In addition, our extensive inventory improves our ability to replace and grow proved reserves. Significant Operational Control with Low Cost Operations Our significant operational control permits us to efficiently manage the amount and timing of our capital outflows, allowing us to continually improve our drilling and operating practices. We operate over 88% of our producing wells and have operational control of approximately 95% of our core area drilling inventory as of September 30, 2013. We employ a centralized operational structure to accelerate our internal knowledge transfer between our drilling and completion programs and to continually enhance our field operations and base production performance. We have decreased our average cost per gross well by 27% (27% per net well), 14% (22% per net well) and 6% (21% per net well) in the Wolfcamp Shale, Eagle Ford Shale and Altamont, respectively, for the nine months ended September 30, 2013, compared to our average cost per well for the same period in 2012. Capital Allocation Flexibility and Scale across Multiple Basins Our existing assets are geographically diversified among many of the major basins of North America, which helps to insulate us from regional commodity pricing and cost dislocations that occur from time to time. While our existing producing assets are well diversified, they are also of a critical mass (on average over 100,000 net acres in each core area), which enables us to drive efficiencies and benefit from economies of scale across multiple basins. Furthermore, because of our centralized operational structure, we are able to quickly transfer operational efficiencies from one project to the next. From January 1, 2008 to September 30, 2013, we have drilled 443 horizontal shale wells. From this deep operational knowledge base and sizeable, concentrated positions in multiple basins, we have the flexibility to allocate significant amounts of capital across our properties in an efficient and value-maximizing manner. Ability to Direct Capital to the Prolific Haynesville Shale The Haynesville Shale is a key asset for us and is likely to compete for development capital if natural gas prices improve. Because our operations are surrounded by existing infrastructure, future returns are primarily driven by drilling and completion costs and natural gas prices. Since our Haynesville wells have demonstrated high initial production rates and strong EURs, small movements in natural gas prices can drive significant incremental value creation. Since these leases are held-by-production, we have the ability to redirect capital to this prolific asset in the future. Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.: Large Accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company (1)Consists of South Louisiana Wilcox, Arklatex Tight Gas and approximately $70 million of capitalized general and administrative, interest and other costs. (2)Active Rigs as of September 30, 2013. (3)Represents gross operated wells to be completed in 2013. In the beginning of the year, we projected a 2013 capital program of approximately $1.7 billion. Based on the results of the first half of the year and the results of our asset divestitures, we increased our 2013 capital program by up to $175 million for incremental drilling and completion activity. This incremental capital has added 36 wells to the original budget of 182 wells to be completed in 2013. For 2014, our total capital budget will be approximately $2 billion, substantially all of which will be expended in our core oil programs. CALCULATION OF REGISTRATION FEE Title of Each Class Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price per Share(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee Class A Common Stock, $0.01 par value per share 46,000,000 $27.00 $1,242,000,000 $160,729.60 (1)Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes 6,000,000 additional shares of common stock that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)The Registrant previously paid $13,640 of the total registration fee in connection with prior filings of this Registration Statement. Concurrently with the filing of this Amendment No. 4 to the Registration Statement, the Registrant has transmitted $147,089.60, representing the additional filing fee. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Recent Divestitures During the third quarter of 2013, we sold certain of our natural gas properties, including our CBM properties (Raton, Arkoma and Black Warrior Basin), the majority of our Arklatex natural gas properties and our natural gas properties in South Texas, in three separate transactions. The total consideration from these transactions was approximately $1.3 billion, and proceeds were used to repay outstanding borrowings under the RBL Facility and to fund capital expenditures. In July 2013, certain of our subsidiaries entered into a Quota Purchase Agreement relating to the sale of all of our Brazil operations. Pursuant to the Quota Purchase Agreement, the subsidiaries have agreed to sell all of our equity interests in two Brazilian subsidiaries to a third party. The transaction is expected to close by the end of the first quarter of 2014, subject to Brazilian regulatory approval and certain other customary closing conditions. Additionally, in September 2013, we sold our approximate 49% equity interest in Four Star for approximately $183 million. As a result of these pending and completed divestitures, we are a higher-growth, 100% onshore U.S., oil-weighted company with a large inventory of high-return, low-risk drilling locations.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001585149_dengfeng_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001585149_dengfeng_prospectus_summary.txt
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@@ -0,0 +1,89 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND ROMULUS CORP. REFERS TO ROMULUS CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+ROMULUS CORP.
+
+Corporate Background and Business Overview
+
+Romulus Corp. was founded in the State of Nevada on April 16, 2013. We are a development stage company and intend to commence operations in the business of placing and operating coin operated boxing machines in Czech Republic. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. There is no assurance that we will ever generate any revenue. As of
+
+May 1
+
+, 2014 we have cash reserves of approximately $2,578. Our monthly burn rate is $667, therefore we will run out of funds without the addition of capital by the end of July, 2014. As
+
+ of the most recent balance sheet date,
+
+February 28, 2014
+
+,
+
+ our total stockholders deficit was $1,897.
+
+ The implied aggregate price of our common stock based on the offering price of $0.01 is $80,000.
+
+Being a development stage company, we have a very limited operating history. If we do not generate any revenue we may need a minimum of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our principal executive offices are located at Erbenova 15, Prague, Czech Republic 15000. Our phone number is +420228880393.
+
+From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (April 16, 2013) through February 28, 2014, reports no revenues and a net loss of $9,897. Our independent registered public accounting firm has issued an audit opinion for Romulus Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and entered into a Sales Contract with Guangzhou Amusement Electronics Co., Ltd ( GAEC ), on January 8, 2014 which provides for GAEC to supply the Company with arcade boxing machines to be delivered to Prague, Czech Republic. As of the date of this prospectus, Artem Rusakov, our sole officer and director, owns 100% of the Company s common stock. He will continue to own after completion of the offering sufficient shares to control the operations of the company.
+
+As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. 
+
+We do not anticipate earning revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully assemble, construct and sell any products or services related to our planned activities. 
+
+Page| 5
+
+THE OFFERING
+
+The Issuer:
+
+ 
+
+ROMULUS CORP.
+
+Securities Being Offered:
+
+ 
+
+8,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Nature of the Offering
+
+The offering is a self-underwritten, best-efforts offering with no minimum subscription requirement.
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 8,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 8,000,000 shares registered under the Registration Statement of which this Prospectus is part. We do not reserve the right to extend the offering beyond the 240-day period.
+
+ 
+
+Gross Proceeds
+
+ 
+
+$80,000
+
+Securities Issued and Outstanding:
+
+There are 8,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Artem Rusakov. 
+
+If we are successful at selling all the shares in this offering, we will have 16,000,000 shares issued and outstanding.
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001585206_formous_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001585206_formous_prospectus_summary.txt
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@@ -0,0 +1,83 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND FORMOUS CORP. REFERS TO FORMOUS CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+FORMOUS CORP.
+
+ 
+
+We are a development stage company and intend to commence operations in the distribution of workwear
+
+ such as coverall and insulated coverall as well as construction jackets and insulated construction jacket
+
+. Formous Corp. was incorporated in Nevada on July 12, 2013. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $25,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. However, there is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue. Being a development stage company, we have very limited operating history. If we are unable to raise a minimum funding of $25,000 required to conduct our business over the next 12 months, our business may fail. After twelve months period we may need additional financing. Our principal executive offices are located at Asanbay Microdistrict, 23-10, Bishkek, Kyrgyzstan 720060. Our phone number is 996-777026772.
+
+From inception until the date of this filing, we have had limited operating activities. Our financial statements from inception (July 12, 2013) through
+
+February 28, 2014
+
+, reports no revenues and a net loss of $
+
+7,117
+
+. Our independent registered public accounting firm has issued an audit opinion for Formous Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have
+
+formed the Company,
+
+developed our business plan and entered into a Marketing and Sales Distribution Agreement with our supplier, OsOO TEDIS, dated January 14, 2014. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success.
+
+THE OFFERING
+
+The Offering
+
+This is a self-underwritten, direct primary offering with no minimum purchase requirement.
+
+The Issuer:
+
+ 
+
+FORMOUS CORP.
+
+Securities Being Offered:
+
+ 
+
+5,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.01
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 5,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 5,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$50,000
+
+Securities Issued and Outstanding:
+
+There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Nurzada Kermalieva 
+
+ 
+
+Subscriptions
+
+All subscriptions once accepted by us are irrevocable.
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $8,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001585573_lorilay_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001585573_lorilay_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..8a36539678b5d4fbc943274fbd79539938a038b6
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001585573_lorilay_prospectus_summary.txt
@@ -0,0 +1,71 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND LORILAY CORP. REFERS TO LORILAY CORP. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+LORILAY CORP.
+
+ 
+
+We are a development stage company and intend to sell crepes in Russia. Lorilay Corp. was incorporated in Nevada on December 27, 2012. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 10-12 after completion of this offering. However, there is no assurance that we will generate any revenue in the first 12 months after completion our offering or ever generate any revenue. Being a development stage company, we have very limited operating history. If we are unable to raise a minimum funding of $40,000 required to conduct our business over the next 12 months, our business may fail. After twelve months period we may need additional financing. Our principal executive offices are located at 89 Rublevskoye highway, Building 3, Suite 10, Moscow, Russia 121467. Our phone number is (702) 997-2590.
+
+From inception (December 27, 2012) until the date of this filing, we have had limited operating activities. Our financial statements from inception (December 27, 2012) through December 31, 2013, reports no revenues and a net loss of $514. Our independent registered public accounting firm has issued an audit opinion for Lorilay Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. To date, we have developed our business plan and entered into a Sales Agreement with Changzhou Huibo Food Machinery Co., Ltd., dated April 9, 2014. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering its shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success.
+
+THE OFFERING
+
+The Offering
+
+This is a self-underwritten, direct primary offering with no minimum purchase requirement.
+
+The Issuer:
+
+ 
+
+LORILAY CORP.
+
+Securities Being Offered:
+
+ 
+
+4,000,000 shares of common stock.
+
+Price Per Share:
+
+ 
+
+$0.02
+
+Market for the common shares:
+
+There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application.
+
+ 
+
+There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale.
+
+Duration of the Offering:
+
+ 
+
+The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 4,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ 
+
+Gross Proceeds
+
+ 
+
+$80,000
+
+Securities Issued and Outstanding:
+
+There are 4,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Elena Sheveleva 
+
+ 
+
+Registration Costs
+
+We estimate our total offering registration costs to be approximately $7,000.
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001585738_ethos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001585738_ethos_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..b8a35d3ed618e30f747a773e8e962398bb12d1ab
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001585738_ethos_prospectus_summary.txt
@@ -0,0 +1,1171 @@
+PROSPECTUS SUMMARY
+
+ 
+
+Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges.
+
+This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding EYE ON MEDIA NETWORK, INC. ( Us, We, Our, EOMN, the Company, or the Corporation ) and our financial statements and the related notes appearing elsewhere in this prospectus.
+
+The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser s written consent to the transaction. If a market for our common stock does develop and our shares trade below $5.00 per share, it will be a penny stock. Consequently, the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the ability of purchasers in the offering to sell our shares in the secondary market. Trading in our common stock will be subject to the penny stock rules. Due to the thinly traded market of these shares investors are at a much higher risk to lose all or part of their investment. Not only are these shares thinly traded but they are subject to higher fluctuations in price due to the instability of earnings of these smaller companies. As a result of the lack of a highly traded market in our shares investors are at risk of a lack of brokers who may be willing to trade in these shares.
+
+The Company
+
+(a)
+
+Business 
+
+Eye On Media Network, Inc. ( we , us , our , or the Company ) is a company that was incorporated in the State of Florida on August 2, 2013. Since inception on August 2, 2013, the Company has been engaged in organizational efforts and obtaining initial financing. The Company was formed as a vehicle to pursue a business combination with an existing company. The business purpose of the Company had been to seek the acquisition of or merger with, an existing company. The Company selected August 31 as its fiscal year end. On September 3, 2013 we filed a Registration Statement on Form 10-12G with the United States Securities and Exchange Commission. We are a reporting company and file all reports required under sections 13 and 15d of the Exchange Act. On January 22, 2014 we entered into share exchange agreements with the shareholders of Eye On South Florida, Inc. ( EOSF ), pursuant to which we acquired all of the issued and outstanding capital stock of EOSF. EOSF is now a wholly-owned subsidiary of our Company.
+
+(b)
+
+Implications of Being an Emerging Growth Company
+
+We qualify as an emerging growth company as that term is used in the Jumpstart Our Business Startups 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 included:
+
+(i)
+
+A requirement to have only two years of audited financial statements and only two years of related Management Discussion & Analysis disclosures;
+
+(ii)
+
+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;
+
+(iii)
+
+Reduced disclosure about the emerging growth company s executive compensation arrangements; and
+
+(iv)
+
+No non-binding advisory votes on executive compensation or golden parachute arrangements.
+
+We have already taken advantage of these reduced reporting burdens, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act ).
+
+In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act ) for complying with new or revised accounting standards. We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private 
+
+6
+
+companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. 
+
+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) which issued more than $1 billion in non-convertible debt during the preceding three-year period.
+
+(c)
+
+Business of Issuer
+
+As of August 31, 2013, the Company, based on proposed business activities, was a blank check company. The U.S. Securities and Exchange Commission (the SEC ) defines those companies as any development stage company that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange Act of 1934, as amended (the Exchange Act ), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies. Under SEC Rule 12b-2 under the Exchange Act, the Company also qualified as a shell company, because it had no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of blank check companies in their respective jurisdictions.
+
+As a former shell company , the limitation on public re-sales of our issued, restricted securities by our shareholders includes a prohibition against the use of SEC Rule 144 until such time as the conditions set forth in Rule 144(i) are met. Rule 144(i) provides that if the issuer of the securities previously had been a shell company but has ceased to be a shell company and is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and has filed current Form 10 information with the Commission reflecting its status as an entity that is no longer a shell company, then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed Form 10 information with the Commission.
+
+The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. As of August 31, 2013, the Company had not entered into any definitive agreement with any party, nor had there been any specific discussions with any potential business combination candidate regarding business opportunities for the Company. On January 22, 2014, the Company entered into Share Exchange Agreements (collectively referred to as the Exchange Agreement ) with the shareholders ( Shareholders ) of Eye On South Florida, Inc. Mr. Namer discussed potential business combinations with four different companies in late 2013. Mr. Namer decided to cause the Company to acquire EOSF because the business was more established than others he considered and because the shareholders are his friends and family and he wanted to provide them with potential liquidity for their securities holdings that otherwise was not available for a private company such as EOSF. Mr. Namer believes that the transaction is fair to shareholders of both companies because it may provide liquidity and an exit strategy for shareholders of EOSF and it brought an operating company into an entity that was previously a shell company with no operations. 
+
+At the time of execution of the Exchange Agreement, our sole officer and director, Jack Namer also served as an officer and director for EOSF. Mr. Namer also was one of two majority shareholders who each held ten million (10,000,000) shares of the EOSF common stock prior to consummation of the Exchange Agreement. The other shareholder who also held ten million (10,000,000) shares of the EOSF common stock prior to consummation of the Exchange Agreement was Ms. Amy Nalewaik. Mr. Namer is the sole officer and director for both EOSF and the Company. Under such circumstances, Mr. Namer may be viewed as having a conflict of interest in connection with the transaction involving the Company s acquisition of EOSF. Notwithstanding the foregoing, Mr. Namer believes that the transaction was and remains fair to the shareholders of both companies. 
+
+After consummation of the Exchange Agreement, Mr. Namer and Ms. Nalewaik each held zero (-0-) shares of EOSF common stock. After consummation of the Exchange Agreement Mr. Namer held eleven million (11,000,000) shares of our common stock and Ms. Nalewaik held ten million (10,000,000) shares. Prior to consummation of the Exchange Agreement, Mr. Namer and Ms. Nalewaik held one million (1,000,000) and zero (-0-) shares of our common stock, respectively.
+
+Before consummation of the Exchange Agreement Mr. Namer and Ms. Nalewaik each owned 40.44% of the issued and outstanding EOSF common stock. After consummation of the Exchange Agreement, Mr. Namer and Ms. Nalewaik each held zero (-0-) shares and zero percent (0.00%) of the issued and outstanding shares of EOSF common stock.
+
+Before consummation of the Exchange Agreement, Mr. Namer held 33.33% of the issued and outstanding shares of our common stock and Ms. Nalewaik held 0.00% of the issued and outstanding shares of our common stock. After consummation of the Exchange Agreement Mr. Namer held 39.66% of the issued and outstanding shares of our common stock and Ms. Nalewaik held 36.07% of the issued and outstanding shares of our common stock.
+
+7
+
+Pursuant to the Exchange Agreement, the Shareholders agreed to exchange each of their shares of EOSF common stock (the Target Shares ) for one (1) share of restricted common stock of the Company. As of the consummation of the Exchange Agreements, EOSF became a wholly-owned subsidiary of the Company. Our principal business activities are now conducted through our operation of EOSF.
+
+Upon completion of the transaction involving the Exchange Agreement, there were 27,725,000 shares of our common stock issued and outstanding.
+
+Our subsidiary, Eye On South Florida, Inc. was incorporated in the State of Florida on January 18, 2013. EOSF is actively engaged in the acquisition, development, production and distribution of television and multi-media programming content.
+
+EOSF is generating revenue from banner advertisements on our website (www.eyeonsouthflorida.com), commercial productions, event planners, corporate videos, infomercials, public announcements, pay-per-view live broadcasted transmissions and advertisers, desiring to promote their productions, events and brands alongside the various distribution mediums. In addition, the Company is generating revenue from other production companies and/or television networks that request on-site filming and/or our original feeds with the use of our communication technology and equipment. Eye On South Florida has been assisting and providing valuable airtime pro-bono to non-profit organizations with sponsored ads, in order to promote their fund raising events for important causes in the community. Some of our clients currently include Hard Rock Hotel & Casino, AutoNation, Florida Metro Rail, Fort Lauderdale Chamber of Commerce, Shino Bay Dermatology, DelVecchio Pizza and Universal Insurance.
+
+The Offering
+
+Number of Shares Being Offered:
+
+The selling security holders may sell up to 1,090,000 shares of common stock at $1.00 per share. Affiliated persons are not offering any shares. Issuance of these shares to the selling security holders was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Non-affiliated selling security holders will sell at the fixed price for the duration off the offering. Selling shareholders may be deemed underwriters as defined under the Securities Act of 1933.
+
+Number of Shares Outstanding After the Offering:
+
+There are 27,725,000 shares of our common stock issued and outstanding. We also have 50,000,000 shares of our Series A Convertible Preferred Stock issued and outstanding.
+
+RISK FACTORS
+
+Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial conditions and results of operations.
+
+Risks Related To the Company
+
+(1) Our auditor has expressed substantial doubt about our ability to continue as a going concern.
+
+These financial statements included with this registration statement have been prepared on a going concern basis. We have a working capital deficiency of $3,530, and have an accumulated deficit of $6,530 since inception as of November 30, 2013. We may not be able to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that we will be able to continue as a going concern. The Company to date has funded its initial operations through the sale of unregistered securities in the amount of $3,000 and related party loans in the amount of $6,000. Management plans to continue to provide for its capital needs by the issuance of common stock and related party advances. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
+
+8
+
+(2) Our access to credit markets may be limited, which may adversely impact our liquidity.
+
+We may require additional capital from outside sources from time to time. Our ability to arrange financing, and the cost of such capital, is dependent on numerous factors, including: 
+
+ 
+
+ 
+
+ 
+
+credit availability from banks and other financial institutions; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+investor confidence in us; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+our levels of indebtedness; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+competitive, legislative and regulatory matters; 
+
+ 
+
+ 
+
+ 
+
+cash flows; and,
+
+ 
+
+ 
+
+ 
+
+provisions of tax and securities laws that may impact raising capital.
+
+In addition, volatility in the capital markets may adversely affect our ability to access any available borrowing capacity under our revolving credit facility. 
+
+(3) Our operating results and financial condition may be adversely affected by unfavorable general economic conditions.
+
+Unfavorable economic conditions worldwide contribute to slowdowns. If global economic conditions or economic conditions in the U.S. remain uncertain or persist, spread or deteriorate further, we may experience material adverse impacts on our results of operations, cash flows and financial condition. 
+
+(4) Our profitability depends on the demand for the services we sell in the markets we serve.
+
+Any sustained reduction in demand for our media services in markets we serve could result in a significant reduction in the volume of services that we sell, thereby adversely affecting our results of operations, cash flows and financial condition. Factors that could lead to a reduction in demand include: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+an increase in the price of services including cost of labor; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+higher taxes, including federal excise taxes or sales taxes or other governmental or regulatory actions that increase, directly or indirectly; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+adverse economic conditions which result in lower spending by consumers and businesses on services we sell; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+higher taxes or other governmental or regulatory actions that increase the cost of the services we provide; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+effects of weather, natural phenomena, terrorism, war, or other similar acts; 
+
+ 
+
+ 
+
+ 
+
+a shift by consumers to more technologically advanced media providers; and,
+
+ 
+
+ 
+
+ 
+
+ 
+
+decisions by our customers or suppliers to use alternate service providers for a portion or all of their needs, operate in different markets not served by us, reduce operations or cease operations entirely. 
+
+ 
+
+(5) Because of the limited nature of our operating history, our success depends on our ability to obtain new sources of business, which is dependent on factors beyond our control.
+
+We have no control over the level of business available in our areas of operation. In addition, we have no control over business owners or their decisions, which are affected by, among other things, the availability and cost of capital, prevailing and projected prices, and demand for services, levels of reserves, and/or other governmental regulations.
+
+(6) Our establishment of new areas may not result in the anticipated revenue increases and is subject to unanticipated regulatory, political, legal and economic risks which could adversely affect our business.
+
+One of the ways we intend to grow our business is through the establishment of new sales areas. The additions or modifications to our existing business and of new areas could involve a variety of regulatory, political and legal uncertainties beyond our control and may require the expenditure of significant amounts of capital. If we undertake such projects, they may not be completed on schedule or at the budgeted cost, or at all. Moreover, our revenue may not increase immediately upon the expenditure of funds on a particular project. For instance, if we expand into a new geographical area, the expansion may occur over an extended period of time and we will not receive any material increases in revenue until the project is completed. Moreover, we may construct or rent facilities to capture anticipated future growth in production in a region in which such growth does not materialize. To the extent we rely on estimates of 
+
+9
+
+future production in our decision to expand, such estimates may prove to be inaccurate because of numerous uncertainties inherent in estimating quantities of future production. As a result, new areas may not be able to attract enough demand to achieve our expected investment return which could adversely affect our results of operations, cash flows and financial condition.
+
+(7) We may be unable to generate sufficient or positive cash flows from the sale of services to adequately support our financial or operational results. 
+
+Our marketing results depend upon our ability to generate sufficient or positive cash flows from our media productions, sales, advertising revenue and cost to provide our services. Our cash flows are affected by many factors beyond our control, including: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+availability of parties willing to enter into purchase and sale transactions with us; 
+
+ 
+
+ 
+
+ 
+
+increases in operational or capital costs; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+availability of funds from our operations and credit facilities to support marketing activities; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+availability of counterparties willing to offer credit to us; and,
+
+ 
+
+ 
+
+ 
+
+ 
+
+reductions in demand for, and supply of, media and advertising services for any reason. 
+
+ 
+
+ 
+
+ (8) We operate in a highly competitive business environment, and competitive pressures could adversely affect our business. 
+
+We compete with similar enterprises in our areas of operation. Our competitors may expand or construct sales systems and associated infrastructure that would create additional competition for the services we provide to our customers. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and our customers. Uncertainty and possible adverse publicity may make us more susceptible to the loss of customers to our competitors. All of these competitive pressures could have a material adverse effect on our business, results of operations and financial condition. 
+
+(9) Because our financial statements reflect results from inception, financial information in our current and future financial statements may not be comparable to prior periods. 
+
+The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period.
+
+(10) We have minimal revenues and a limited operating history.
+
+We are a company with limited revenues and a limited operating history and our auditor has expressed substantial doubt about our ability to continue as a going concern. Our record of limited revenues and a limited operating history pose specific risks that may adversely affect our business or an investment in our common stock. There can be no assurances that we will generate sufficient revenue from future operations to implement our business plan or otherwise allow management to continue to devote any time to our business operations. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our services, the level of our competition and our ability to attract and maintain key management and employees.
+
+Our prospects are subject to the risks and expenses encountered by start-up companies, such as ours, in establishing a television media business. Our limited operating history makes it difficult or impossible to predict future results of our operations. We may not establish a client base that will make us profitable, which might result in the loss of some or all of your investment in our common stock.
+
+You should consider our prospects in light of the risks and difficulties frequently encountered by early stage companies in the rapidly evolving consulting market. These risks include, but are not limited to, an unpredictable business environment, the difficulty of managing growth and the use of our business model among these risks. To address these risks, we must, among other things:
+
+ 
+
+ 
+
+expand our customer base;
+
+ 
+
+enhance our name recognition;
+
+ 
+
+expand our product and service offerings;
+
+ 
+
+successfully implement our business and marketing strategy;
+
+ 
+
+10
+
+provide superior customer service;
+
+ 
+
+respond effectively to competitive and technological developments; and,
+
+ 
+
+attract and retain qualified personnel.
+
+(11) Adverse developments in our existing areas of operation could adversely impact our results of operations, cash flows and financial condition. 
+
+Our operations are focused on utilizing our sales efforts which are principally located in the Southeast region of the U.S. As a result, our results of operations, cash flows and financial condition depend upon the demand for our services in these regions. Due to our current lack of broad diversification in industry type and geographic location, adverse developments in our current segment of the television media industry, or our existing areas of operation, could have a significantly greater impact on our results of operations, cash flows and financial condition than if our operations were more diversified. 
+
+(12) As a public company, we will be subject to additional financial and other reporting and corporate governance requirements that may be difficult for us to satisfy will raise our costs and may divert resources and management attention from operating our business. 
+
+We have limited history as a public company. We currently file with the SEC annual and quarterly information and other reports that are specified in the Securities Exchange Act of 1934, as amended (the Exchange Act ), and SEC regulations. Thus, we will need to ensure that we continue to have the ability to prepare, on a timely basis, financial statements that comply with SEC reporting requirements. We will also become subject to other reporting and corporate governance requirements, including the listing standards of any securities exchange upon which we may list our Common Stock, and the provisions of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act ), and the regulations promulgated thereunder, which impose significant compliance obligations upon us. As a public company, we will be required, among other things, to: 
+
+ 
+
+ 
+
+ 
+
+ 
+
+prepare and distribute reports and other stockholder communications in compliance with our obligations under the federal securities laws and the applicable national securities exchange listing rules; 
+
+ 
+
+ 
+
+ 
+
+define and expand the roles and the duties of our Board of Directors and its committees; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+institute more comprehensive compliance, investor relations and internal audit functions; 
+
+ 
+
+ 
+
+ 
+
+ 
+
+evaluate and maintain our system of internal control over financial reporting, and report on management s assessment thereof, in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and related rules and regulations of the SEC; and, 
+
+ 
+
+ 
+
+ 
+
+ 
+
+involve and retain outside legal counsel and accountants in connection with the activities listed above.
+
+The adequacy of our internal control over financial reporting must be assessed by management for each year commencing with the year ending August 31, 2013. Our internal control over financial reporting may not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act. We will incur additional costs in order to improve our internal control over financial reporting and comply with Section 404, including increased auditing and legal fees and costs associated with hiring additional accounting and administrative staff. Ultimately, our efforts may not be adequate to comply with the requirements of Section 404. If we are unable to implement and maintain adequate internal control over financial reporting or otherwise to comply with Section 404, we may be unable to report financial information on a timely basis, may suffer adverse regulatory consequences, may have violations of the applicable national securities exchange listing rules and may breach covenants under our credit facilities. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. 
+
+The significant obligations related to being a public company will continue to require a significant commitment of additional resources and management oversight that will increase our costs and might place a strain on our systems and resources. As a result, our management s attention might be diverted from other business concerns. In addition, we might not be successful in implementing and maintaining controls and procedures that comply with these requirements. If we fail to maintain an effective internal control environment or to comply with the numerous legal and regulatory requirements imposed on public companies, we could make material errors in, and be required to restate, our financial statements. Any such restatement could result in a loss of public confidence in the reliability of our financial statements and sanctions imposed on us by the SEC. 
+
+(13) We are exposed to the creditworthiness and performance of our customers and transactional counterparties, and any material nonpayment or nonperformance by one or more of these parties could adversely affect our financial and operational results. 
+
+11
+
+There can be no assurance we have adequately assessed the creditworthiness of each of our existing or future customers, suppliers or transactional counterparties or that there will not be a rapid or unanticipated deterioration in their creditworthiness, which may have an adverse impact on our financial condition and results of operations. Nor is there certainty that our counterparties will perform or adhere to existing or future contractual arrangements. We plan to be paid upfront for the services that we provide, however in order to garner business in the early stages, we may have to provide consulting services and then invoice the clients. In many cases there could be as much as 30-60 days before cash flow begins. In essence we are extending credit to our clients.
+
+We manage our exposure to credit risk through credit analysis and credit monitoring procedures and policies, including credit support requirements for customers and counterparties to which we extend no or limited unsecured credit, such as letters of credit, prepayments, and guarantees. Additionally, we apply a risk/reward analysis on each client to insure that their projections and business assumptions are accurate, reasonable and provide a likelihood of success. However, these procedures and policies cannot fully eliminate counterparty credit risks, and to the extent our procedures and policies prove to be inadequate, our financial and operational results may be negatively impacted. 
+
+(14) We are dependent on the services of a certain key employee. the limited experience in operating a public company and the loss of his services could harm our business.
+
+Our success largely depends on the continuing services of our Chief Executive Officer and Chairman, JACK NAMER. Our continued success also depends on our ability to attract and retain qualified personnel. We believe that Mr. NAMER possesses valuable knowledge, experience and leadership abilities that would be difficult in the short term to replicate. The loss of him as a key employee could harm our operations, business plans and cash flows. Mr. NAMER has agreed to dedicate his services full time (approximately 40 hours per week) to the development of our business. This amount of time that Mr. NAMER is able to devote to the development of our business on a weekly basis may be insufficient to generate sufficient revenue to maintain our business as a going concern. Furthermore, management has limited experience in operating a public company.
+
+ (15) For the period ending February 28, 2014, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and we concluded that they were not effective.
+
+With respect to the period ending February 28, 2014, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon our evaluation regarding the period ending February 28, 2014, the Company s management, including its Principal Executive Officer and Principal Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company s limited internal resources and lack of ability to have multiple levels of transaction review. Material weaknesses noted are lack of an audit committee, lack of a majority of outside directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and management is dominated by two individuals, without adequate compensating controls. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.
+
+Risks Related To This Offering
+
+(16) There is no public market for our shares, and we do not know if one will develop due to the limited demand for stocks in the business services we offer.
+
+Purchasers of these shares are at risk of no liquidity for their investment. Prior to this offering, there has been no established trading market for our securities, and we do not know that a regular trading market for the securities will develop. Due to the limited services we offer in the television media industry, we anticipate that demand for our shares may not be very high. If a trading market does develop for the securities offered hereby, we do not know if it will be sustained. We plan to apply to have our stock quoted on the over-the-counter ( OTCQB ) Electronic Bulletin Board. Such application will be filed with the Financial Industry Regulatory Authority ( FINRA ). We must obtain the services of a FINRA approved broker-dealer/market maker to file an application for our company and we do not know if such market maker will be to obtain a listing or if an established market for our common stock will be developed.
+
+(17) Because it may be difficult to effect a change in control of EYE ON MEDIA NETWORK, INC. without current management consent, management may be entrenched even though stockholders may believe other management may be better. 
+
+12
+
+JACK NAMER, our President and CEO, currently holds approximately 11,000,000 shares of our outstanding common stock and 50,000,000 shares of our Series A Convertible Preferred Stock (with 10 votes per share), of which no shares are being registered in this offering. If Mr. NAMER chooses to keep all of his stock (that is, he sells none of his stock privately during this offering), Mr. NAMER could retain HIS status as a controlling security holder. Such concentration of ownership may have the effect of delaying, deferring or preventing a change in control of the Company and entrenching current management even though stockholders may believe other management may be better. MR. NAMER has the ability to control the outcome on all matters requiring stockholder approval, including the election and removal of directors; any merger, consolidation or sale of all or substantially all of our assets; and the ability to control our management and affairs.
+
+(18) The possible sale of shares of common stock by our selling security holders may have a significant adverse effect on the market price of our common stock should a market develop. 
+
+Our ability to raise additional capital through the sale of our stock in a private placement may be harmed by these competing re-sales of our common stock by the selling security holders. Potential investors may not be interested in purchasing shares of our common stock if the selling security holders are selling their shares of common stock. The selling of stock by the security holders could be interpreted by potential investors as a lack of confidence in us and our ability to develop a stable market for our stock. The price of our common stock could fall if the selling security holders sell substantial amounts of our common stock. These sales 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 appropriate because the selling security holders may offer to sell their shares of common stock to potential investors for less than we do.
+
+(19) Our lack of business diversification could result in the devaluation of our stock if our revenues from our primary services decrease.
+
+We expect our business to solely consist of the production and broadcast of television media and the sale of advertising services. We do not have any other lines of business or other sources of revenue if we are unable to compete effectively in the marketplace. This lack of business diversification could cause you to lose all or some of your investment if we are unable to generate additional revenues since we do not expect to have any other lines of business or alternative revenue sources.
+
+ (20) There has been no independent valuation of the stock, which means that the stock may be worthless than the purchase price.
+
+The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on our recent sale of stock at par value, not based on perceived market value, book value, or other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
+
+(21) Investors may never receive cash distributions which could result in an investor receiving little or no return on his or her investment.
+
+Distributions are payable at the sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.
+
+ (22) The penny stock rules could restrict the ability of broker-dealers to sell our shares having a negative effect on our offering.
+
+The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser s written consent to the transaction. If a market for our common stock does develop and our shares trade below $5.00 per share, it will be a penny stock. Consequently, the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the ability of purchasers in the offering to sell our shares in the secondary market. Trading in our common stock will be subject to the penny stock rules. Due to the thinly traded market of these shares investors are at a much higher risk to lose all or part of their investment. Not only are these shares thinly traded but they are subject to higher fluctuations in price due to the instability of earnings of these smaller companies. As a result of the lack of a highly traded market in our shares investors are at risk of a lack of brokers who may be willing to trade in these shares.
+
+13
+
+ (23) We might not be successful in achieving our objectives if there are significant changes in the economic and regulatory environment surrounding our business.
+
+EONM will be subject to risks related to national economic conditions, changes in the investment climate for business consulting governmental rules and fiscal policies, and other factors beyond the control of our management. 
+
+(24) Our business may be significantly harmed by a slowdown in the economy.
+
+ 
+
+An overall decline in the economy or the occurrence of a natural disaster could decrease the need of our services. . This could restrict our success in attracting clients and significantly harm our business, financial condition and liquidity. 
+
+(25) To the extent that we expand our operations to new markets, our business operations may suffer from our lack of experience, which may adversely affect our revenues.
+
+Currently, EOMN operates in Florida. Depending on the market and our performance, we plan to expand our operations throughout the United States. However, we have limited experience outside of the market in which we currently operate. Any difficulties encountered by us in this regard could adversely affect our operating results, slow down our expansion plans, which may diminish our revenues. 
+
+ 
+
+(26) The issuance of additional shares of stock to obtain additional financing may dilute the holdings of our existing stockholders or reduce the market price of our stock.
+
+The 1,090,000 shares of common stock owned by the selling security holders will be registered with the U.S. Securities Exchange Commission. The security holders may sell some or all of their shares immediately after they are registered. In the event that the security holders sell some or all of their shares, the price of our common stock could decrease significantly. Additional equity offerings by us may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both. Any decision to issue securities in any future offering will depend on market conditions and other factors beyond our control. EOMN cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock or diluting their stock holdings in us. 
+
+(27) Because we were formerly a shell company there will be limitations on future public re-sales of our issued, restricted securities.
+
+As a former shell company , the limitation on public re-sales of our issued, restricted securities by our shareholders includes a prohibition against the use of SEC Rule 144 until such time as the conditions set forth in Rule 144(i) are met. Rule 144(i) provides that if the issuer of the securities previously had been a shell company but has ceased to be a shell company and is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and has filed current Form 10 information with the Commission reflecting its status as an entity that is no longer a shell company, then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed Form 10 information with the Commission.
+
+A NOTE CONCERNING FORWARD-LOOKING STATEMENTS
+
+This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipates, believes, plans, expects, future, intends, and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by EYE ON MEDIA NETWORK, INC. described in Risk Factors and elsewhere in this prospectus. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include:
+
+(a)
+
+an abrupt economic change resulting in an unexpected downturn in demand for our services;
+
+(b)
+
+governmental restrictions or excessive taxes on our services;
+
+(c)
+
+economic resources to support the development of our projects;
+
+(d)
+
+expansion plans, access to potential clients, and advances in technology; and.
+
+(e)
+
+lack of working capital that could hinder acquisitions for development of our projects.
+
+Use of Proceeds.
+
+14
+
+We will not receive any proceeds from the sale of the common stock offered through this Prospectus by the selling shareholders.
+
+Determination of Offering Price.
+
+The price of the shares we are offering was arbitrarily determined by us. The offering price bears no relationship whatsoever to our assets or earnings. Among factors considered were:
+
+(a)
+
+Our recent sales of securities under Regulation D and Section 4(2) of the Securities Act of 1933, as amended, at $0.001;
+
+(b)
+
+Our relative cash requirements; and, 
+
+(c)
+
+Our management expertise.
+
+Dilution
+
+We are not offering any shares of our common stock by this prospectus. 1,090,000 shares of the common stock to be sold by the selling shareholders is common stock that is currently issued and outstanding. All shares of our common stock that are being registered are owned by the selling shareholders, who will offer such shares at a fixed price of $1.00 per share for the duration of the offering.
+
+As of February 28, 2014 the negative net tangible book value of our shares was ($1,803,956), based upon 27,725,000 shares outstanding. 
+
+Upon completion of this offering there is no dilution effect to the potential shareholders since the common stock to be sold in this Offering is common stock that is currently issued and outstanding.
+
+The following table identifies the prices that common stock has been issued within the last 5 years in compliance with Regulation S-K Item 506.
+
+Shareholder
+
+Number of shares
+
+Price paid per share
+
+Consideration paid
+
+Jack Namer, President, CEO, Director (1)
+
+1,000,000
+
+$0.001
+
+$1,000
+
+James Fish
+
+1,000,000
+
+$0.001
+
+$1,000
+
+Newton Berwig
+
+1,000,000
+
+$0.001
+
+$1,000
+
+All other investors
+
+24,725,000
+
+$0.001
+
+Share Exchange (2)
+
+(1)
+
+Jack Namer also received 10,000,000 shares of our common stock pursuant to the share exchange agreement with the Company in his capacity as a shareholder of Eye On South Florida, Inc.
+
+(2)
+
+All other shareholders of the Company received their shares of common stock pursuant to the tax free share Exchange Agreement they entered into with the Company on January 22, 2014. 
+
+Selling Security Holders.
+
+This prospectus will be used for the offering of shares of our common stock owned by selling security holders. The selling security holders may offer for sale up to 1,090,000 of the 3,725,000 shares of our common stock originally issued to them in connection with the tax free share exchange agreement they entered into with the Company on January 22, 2014. The shares of common stock were issued pursuant to Regulation D and Section 4(2) of the Securities Act of 1933 and the exempt transaction provisions of applicable state law. All shareholders are sophisticated investors who were personally known by our president, JACK NAMER. Selling security holders must sell their shares at $1.00 for the duration of the offering. We will not receive any proceeds from such sales. The resale of the securities by the selling security holder is subject to the prospectus delivery and other requirements of the Securities Act. All selling security holders have been advised to notify any purchaser of their shares that none of the proceeds from the sale of their stock will go to the Company. All expenses of this offering are being paid for by us on behalf of selling security holders. The following table sets forth information on our selling security shareholders. Explanatory footnotes relating to the footnote references appearing in the headings of this table are set forth below.
+
+15
+
+Table 1.0 Selling Security Holders 
+
+Name of security holder
+
+Shares owned as of the date of prospectus(1)
+
+Shares beneficially owned as of the date of prospectus (2)
+
+Percent owned as of the date of prospectus
+
+Maximum number of shares to be sold pursuant to this prospectus
+
+Percent owned after offering is complete (3)
+
+Position, office or other material relationship to the company within the last three years
+
+Steve Rahseparian
+
+1,535,000
+
+1,535,000
+
+5.53%
+
+100,000
+
+5.17%
+
+Business colleague
+
+Copens Motors (4)
+
+250,000
+
+250,000
+
+0.90%
+
+75,000
+
+0.63%
+
+Friend
+
+Joe Benemerito
+
+40,000
+
+40,000
+
+0.14%
+
+40,000
+
+0.00%
+
+Friend
+
+Brian Wynn
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Jaclyn Namer
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Family (non-minor)
+
+ShariAnn Namer
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Family (non-minor)
+
+Nicole Namer
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Family (non-minor)
+
+Faith Chirico
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Family (ex-wife)
+
+Terry Kemp
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Robert Cappeli
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+David Carpenter
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Mita Del Fierro
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Michalene Leonardo
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Jacqueline J. McAniff
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Kathy Clark
+
+15,000
+
+15,000
+
+0.054%
+
+15,000
+
+0.00%
+
+Friend
+
+Andrew Sawyer
+
+250,000
+
+250,000
+
+0.90%
+
+75,000
+
+0.63%
+
+Business colleague
+
+Jason Leonardo
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Robert Nimkoff
+
+50,000
+
+50,000
+
+0.18%
+
+50,000
+
+0.00%
+
+Friend
+
+Frank Horkey
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Michael Mayville
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Sheila & Gill Roman
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Victor Levy
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Marisela Garcia
+
+50,000
+
+50,000
+
+0.15%
+
+50,000
+
+0.00%
+
+Business colleague
+
+Edwin L. Crammer
+
+10,000
+
+10,000
+
+0.036%
+
+10,000
+
+0.00%
+
+Accounting services
+
+Jeff Barnes
+
+100,000
+
+100,000
+
+0.36%
+
+50,000
+
+0.18%
+
+Friend
+
+Gineen Bresso
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Legal services
+
+Robert Schulman
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Legal Services
+
+Evan Golden
+
+25,000
+
+25,000
+
+0.090%
+
+25,000
+
+0.00%
+
+Friend
+
+Gabriel Tyner
+
+10,000
+
+10,000
+
+0.036%
+
+10,000
+
+0.00%
+
+Friend
+
+Gary Deweese
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+Aicon Investment Ltd.(5)
+
+500,000
+
+500,000
+
+1.80%
+
+100,000
+
+1.44%
+
+Business colleague
+
+Anamco Ltd.(6)
+
+500,000
+
+500,000
+
+1.80%
+
+100,000
+
+1.44%
+
+Business colleague
+
+Felice Crammer
+
+5,000
+
+7,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Accounting services
+
+Dennis Muller
+
+70,000
+
+70,000
+
+0.25%
+
+70,000
+
+0.00%
+
+Friend
+
+Patricia Ghaffari
+
+50,000
+
+50,000
+
+0.15%
+
+50,000
+
+0.00%
+
+Friend
+
+Kenneth J. Haiko
+
+5,000
+
+5,000
+
+0.018%
+
+5,000
+
+0.00%
+
+Friend
+
+David Crammer
+
+2,000
+
+7,000
+
+0.007%
+
+2,000
+
+0.00%
+
+Accounting services
+
+LaShaundria D. Barfield
+
+1,000
+
+1,000
+
+0.0036%
+
+1,000
+
+0.00%
+
+Friend
+
+Max J. Lembke
+
+2,000
+
+2,000
+
+0.0036%
+
+2,000
+
+0.00%
+
+Friend
+
+(1)
+
+This column represents the actual number of shares owned by the shareholder without consideration of any shares beneficially owned by any selling shareholder s spouse or minor child. 
+
+(2)
+
+This column represents the actual number of shares beneficially owned in that Felice and David Crammer are husband/wife. All other blood related parties to any of the Affiliates are adults, emancipated and live independent of each other in different households. Accordingly none of these relationships fall under the term of Affiliate . 
+
+(3)
+
+This column represents the percentage held in the event all of the 1,090,000 shares in the
\ No newline at end of file
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+PROSPECTUS SUMMARY This summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in shares of our common stock and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before you decide to invest in our common stock, you should read the entire prospectus carefully, including "Risk Factors" beginning on page 13 and the financial statements and related notes included in this prospectus. Unless the context indicates otherwise, as used in this prospectus, the terms "Egalet," "we," "us," "our," "our company" and "our business" refer both to Egalet Corporation and Egalet Limited on a consolidated basis giving effect to the Share Exchange discussed under "Summary Our Corporate Information." "Egalet US" refers to Egalet Corporation and "Egalet UK" refers to Egalet Limited. The Egalet logo is our trademark and Egalet is our registered trademark. All other trade names, trademarks and service marks appearing in this prospectus are the property of their respective owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned in this prospectus, appear with the trade name, trademark or service mark notice and then throughout the remainder of this prospectus without the trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive or generic sense. Overview Our Company We are a specialty pharmaceutical company developing and planning to commercialize proprietary, abuse-deterrent oral products for the treatment of pain and in other indications. Using our proprietary technology platform, we have developed a pipeline of clinical-stage, opioid-based product candidates in tablet form that are specifically designed to deter abuse by physical and chemical manipulation while also providing the ability to tailor the release of the active pharmaceutical ingredient, or API. Our lead product candidate, Egalet-001, is an abuse-deterrent, extended-release, oral morphine formulation in development for the treatment of moderate to severe pain. There are currently no commercially available abuse-deterrent formulations of morphine, and we believe that Egalet-001, if approved, would fill a significant unmet need in the marketplace. We have completed our Phase 1 clinical trials of Egalet-001 and we plan to initiate pivotal trials to establish the bioequivalence of Egalet-001 to MS-Contin , a currently approved oral morphine formulation, in the first quarter of 2014 and submit a new drug application, or NDA, to the U.S. Food and Drug Administration, or FDA, in the fourth quarter of 2014. Our second product candidate, Egalet-002, is an abuse-deterrent, extended-release, oral oxycodone formulation in development for the treatment of moderate to severe pain. We believe that Egalet-002, if approved, will have advantages over commercially available, long-acting, abuse-deterrent oxycodone products due to its differentiated abuse-deterrent properties and a pharmacokinetic, or PK, profile that demonstrates low peak-to-trough concentration variability in drug exposure. We have conducted Phase 1 trials of Egalet-002 and have completed initial abuse deterrence studies in compliance with the FDA draft guidance. We plan to initiate the first of two Phase 3 trials for Egalet-002 in the fourth quarter of 2014 and to submit an NDA to the FDA in the first half of 2016. In November 2013, we entered into a collaboration and license agreement with Shionogi Limited, or Shionogi, granting Shionogi an exclusive, royalty-bearing, worldwide license to develop, manufacture and commercialize abuse-deterrent hydrocodone-based product candidates using our technology. Shionogi will be responsible for all expenses associated with the development of these product candidates and is responsible for the completion of all clinical trials necessary to support NDA filings for the product candidates. Under the terms of the agreement, Shionogi made an upfront payment to us of $10.0 million. PRE-EFFECTIVE AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents We are eligible to receive additional payments upon the achievement of specified regulatory and sales-based milestones. These milestone payments may exceed $300 million in the aggregate if multiple product candidates are approved. If any products are approved for marketing, we are also eligible to receive royalties at percentage rates ranging from the mid-single digits to the low-teens on net sales of licensed products. IMS Health, or IMS, a healthcare information firm, estimates that total U.S. sales of analgesic narcotics, or opioids, for therapeutic purposes were $8.3 billion for the 12 months ended September 30, 2012. Of this total opioid market, long-acting opioids accounted for approximately $4.1 billion in total sales on 14.8 million prescriptions. Egalet-001 and Egalet-002 will target this long-acting opioid market. Long-acting morphine-based products and oxycodone-based products are the two most commonly prescribed long-acting, oral opioids, with over 13.3 million prescriptions in the aggregate resulting in sales of $3.4 billion in the United States for the 12 months ended September 30, 2012. Drug-related deaths, 40% of which involved the use of opioids in 2008 according to the National Center for Health Statistics, became the leading cause of accidental death in the United States in 2009, surpassing deaths caused by automobile accidents, according to a 2011 report by the U.S. Centers for Disease Control and Prevention. A 2011 research report prepared by the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services, or SAMHSA, estimated that nearly 35 million Americans have used prescription pain relievers, including opioid-containing drugs, for non-prescription purposes at least once in their lifetime. The total costs of prescription drug abuse were estimated to be up to $72.5 billion annually for public and private healthcare payors in the United States, according to a 2013 report in the American Journal of Managed Care. Prescription medications, particularly opioids, are prone to being abused through physical and chemical manipulation for the purpose of increasing drug concentration in the bloodstream in order to accelerate and intensify their effects. Common methods of manipulating medications in pill or tablet form include crushing in order to swallow, snort or smoke, and dissolving in order to inject. Our product candidates are specifically designed to deter these common methods of abuse, as well as to prevent alcohol dose dumping, which is the acceleration of the release of the API by consuming alcohol at the same time. In reaction to the increasing costs and other consequences of widespread prescription opioid abuse, the U.S. government and a number of state legislatures have introduced, and in some cases have enacted, legislation and regulations intended to encourage the development and adoption of abuse-deterrent forms of pain medications. In January 2013, the FDA issued draft guidance that for the first time outlined a regulatory pathway for the approval of drugs with abuse-deterrent claims in their product label. In addition to our planned clinical trials for Egalet-001 and Egalet-002, we are currently conducting abuse deterrence studies with both product candidates in accordance with the FDA draft guidance, with the goal of obtaining abuse-deterrent claims in our product labels. We plan to seek U.S. regulatory approval of Egalet-001 and Egalet-002 pursuant to Section 505(b)(2) of the U.S. Federal Food, Drug, and Cosmetic Act, or Section 505(b)(2), which permits companies to rely upon the FDA's previous findings of safety and effectiveness for an approved product, such as morphine and oxycodone. If either of our clinical-stage product candidates achieves regulatory approval, we intend to establish our own specialty sales force to market the product in the United States by targeting physicians specializing in pain management. To supplement our internal U.S. sales force, we intend to contract with third parties to access sales representatives who target primary care and internal medicine physicians in the United States. Our technology can be applied broadly across different classes of pharmaceutical products and can be used to develop combination products that include multiple APIs with similar or different release profiles. In addition to our two clinical-stage product candidates and the preclinical hydrocodone-based product candidates licensed to Shionogi, we are developing a portfolio of preclinical, abuse-deterrent product Egalet Corporation (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 46-3575334 (I.R.S. Employer Identification Number) Egalet Corporation 460 East Swedesford Road, Suite 1050 Wayne, PA 19087 (610) 833-4200 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Robert S. Radie President and Chief Executive Officer Egalet Corporation 460 East Swedesford Road, Suite 1050 Wayne, PA 19087 (610) 833-4200 (Name, address, including zip code and telephone number, including area code, of agent for service) Copies to: David S. Rosenthal, Esq. Dechert LLP 1095 Avenue of the Americas New York, New York 10036 (212) 698-3500 Babak Yaghmaie, Esq. Brent B. Siler, Esq. Brian F. Leaf, Esq. Cooley LLP 1114 Avenue of the Americas New York, NY 10036-7798 (212) 479-6000 Table of Contents candidates for the treatment of pain and in other indications. We exclusively own the rights to Egalet-001, Egalet-002 and our technology platform. Members of our management team have substantial experience in product development, manufacturing, clinical development, regulatory affairs and sales and marketing and have been closely involved with the development and commercialization of several pain and central nervous system products, including Opana , Zyprexa and Prozac . We believe this experience will help us to successfully develop and commercialize our abuse-deterrent product candidates. Our Abuse Deterrence Technology Platform We have created two distinct drug delivery systems, each with novel abuse-deterrent features and the ability to control the release profile of the API. Our one-component system is used to produce tablets, such as Egalet-001, that consist of a hard matrix that is difficult to crush, grind or dissolve and that also controls the release of the API. The matrix, which contains the API as well as inactive agents known as excipients, erodes over time in the gastrointestinal, or GI, tract, releasing the API. Our two-component system is used to produce tablets, such as Egalet-002, that consist of a matrix similar to the matrix that is a part of our one-component system, but that is surrounded by a water-impermeable, non-eroding, hard shell made of polylactic acid that creates a cylinder, with the API-containing matrix exposed at both ends. The shell serves to limit the portion of the matrix's surface area that is exposed to the GI tract, which allows us to tailor the release rate of the API and makes it even more difficult to crush or grind the tablet, thereby enhancing its abuse-deterrent properties. We use an injection molding technology that is used in the manufacture of medical devices, including implants and diagnostics, to create our matrix and shell. We believe that we are the first company to combine standard pharmaceutical production with plastic injection molding to produce orally delivered pharmaceutical products. We believe that our systems offer the following advantages: Abuse Deterrence. Abusers often seek to accelerate the absorption of opioids into the bloodstream by crushing in order to swallow, snort or smoke, or dissolving in order to inject, the drug. Tablets produced using our systems have physical and chemical barriers intended to deter these common methods of abuse. Using our systems, we have produced oral formulations of morphine and oxycodone that are difficult to crush, grind or vaporize, and that also resist dissolution into an injectable form by becoming gelatinous in the presence of water and other common household solvents. We believe that tablets made using our proprietary technology deter the most common methods of manipulating opioids for the purpose of abuse. Ability to Tailor Release. In our tablets, the API is integrated into the matrix, which makes it difficult for abusers to extract quickly. However, when the tablet is exposed to GI fluids, the matrix erodes, thereby releasing the API. Using our technology, we can change the amount and composition of the polymer used to create the matrix formulation and can vary the surface area of the matrix exposed to the GI tract. By varying the matrix composition and surface area, we can control the rate of erosion of the matrix and the rate of release of the API which allows us to develop products with immediate release, or IR, extended release, or ER, and sustained release, or SR, profiles. Broad Applicability. Our technology can also be used to develop other abuse-deterrent products with other APIs, as well as combination products containing two APIs that can be released at the same or different rates. We have developed prototypes and conducted feasibility studies of these combination products, both independently and in collaboration with major pharmaceutical companies. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. Table of Contents Our Product Candidates Egalet-001 Our lead product candidate, Egalet-001, is an abuse-deterrent, extended-release, oral morphine formulation. Egalet-001 utilizes our proprietary one-component system, which allows the development of customized ER profiles. Egalet-001 consists of an approved and well-characterized drug substance, morphine sulfate, together with inactive ingredients deemed safe for chronic oral use. Morphine-based products, including MS-Contin, have been available in the U.S. market for many years and have a well-established safety profile. All ingredients in Egalet-001 are present in approved drug products on the U.S. market. We are developing Egalet-001 for administration two to three times a day. According to IMS, long-acting morphine was the most commonly prescribed long-acting opioid in the United States for the 12 months ended September 30, 2012 with sales of approximately $560 million on 7.1 million prescriptions. We believe that Egalet-001, if approved, would provide patients and physicians with the following benefits when compared to existing morphine-based products: Abuse-deterrent features: Egalet-001 is designed to resist the most common methods of abuse, including crushing in order to swallow, snort or smoke, and dissolving in order to inject. Egalet-001 uses our one-component system, which is designed to enhance the deterrence of abuse by injection in particular, which is the most common method of abuse of morphine-based products. No alcohol dose dumping: Egalet-001 slows the release of the API in the presence of alcohol, contrary to the effects seen with some other morphine-based products, in which the release of the API is accelerated in the presence of alcohol. No food effect: The PK profile of Egalet-001 is similar to that of other long-acting morphine formulations with or without the presence of food. This feature provides more consistent pain relief, as well as improved patient convenience. Morphine only: Egalet-001 has the potential to be the first abuse-deterrent, ER morphine product that does not contain opioid-receptor antagonists. Abuse-deterrent products with antagonists include additional APIs that may have adverse effects. Convenient dosing: Egalet-001 offers patients the option of a convenient two to three times daily dosing regimen, thereby increasing the likelihood of patient adherence. We intend to make Egalet-001 in 15, 30, 60 and 100 mg doses, which are consistent with currently available morphine formulations. Consistent relief: Two to three times a day dosing can offer around-the-clock pain relief. Egalet-001, with its ER profile, is designed to provide consistent relief of moderate to severe chronic pain over an eight- or 12-hour period per dose. We plan to seek approval of Egalet-001 under the FDA's Section 505(b)(2) approval pathway, and as a result we believe that Egalet-001 should have an accelerated path to approval if we are able to establish bioequivalence. We have completed our Phase 1 clinical trials of Egalet-001 and plan to initiate pivotal trials of Egalet-001 in the first quarter of 2014 to establish its bioequivalence to MS-Contin. We also plan to conduct additional abuse deterrence studies in the first quarter of 2014, in accordance with the FDA draft guidance, with the goal of obtaining abuse-deterrent claims in our product label. We intend to rely on the FDA's previous conclusions of safety with respect to MS-Contin, and we do not expect that any additional preclinical safety studies will be required for our formulation. Based on the expected timing of our studies and trials, we anticipate submitting an NDA for Egalet-001 in the fourth quarter of 2014. Egalet-002 Our second product candidate, Egalet-002, is an abuse-deterrent, extended-release, oral oxycodone formulation. Egalet-002 utilizes our proprietary two-component system, which allows the development of 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, as amended (the "Securities Act"), check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(2)(3) Common Stock, par value $0.001 per share 4,025,000 $13.00 $52,325,000.00 $6,739.46 (1)Pursuant to Rule 416 under the Securities Act, this registration statement shall be deemed to cover the additional securities of the same class as the securities covered by this registration statement issued or issuable prior to completion of the distribution of the securities covered by this registration statement as a result of a split of, or a stock dividend on, the registered securities. (2)Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the Securities Act and includes the offering price of shares that the underwriters have the option to purchase to cover over-allotments. (3)Previously paid. Table of Contents customized ER profiles. Egalet-002 consists of an approved and well-characterized drug substance, oxycodone hydrochloride, together with inactive ingredients deemed safe for chronic oral use. Oxycodone-based products, including OxyContin OP , have been available in the United States for many years and have a well-established safety profile. All ingredients in Egalet-002 have been used in approved drug products in the U.S. market, other than polylactic acid, or PLA, an inactive substance contained in the shell. Oxycodone-based products are the market leader in sales among long-acting opioids in the United States. IMS estimates that U.S. sales of long-acting oxycodone totaled approximately $2.8 billion for the 12 months ended September 30, 2012 on approximately 6.2 million prescriptions. We believe that Egalet-002, if approved, would provide patients and physicians with the following benefits when compared to existing oxycodone-based products: Abuse-deterrent features: Egalet-002 was developed to address the most common methods of abuse, including crushing in order to swallow, snort or smoke, and dissolving in order to inject. Egalet-002 uses our two-component system, which is designed to enhance the deterrence of abuse by crushing and snorting in particular, which is the most common method of manipulating oxycodone-based products for the purpose of abuse. PK profile: We believe that Egalet-002 provides less peak-to-trough concentration variability in drug exposure when compared to OxyContin OP, which we believe will result in Egalet-002 having fewer side effects and providing better and more consistent pain relief, resulting in reduced use of rescue medication to treat breakthrough pain. No alcohol dose dumping: Egalet-002 slows the release of the API in the presence of alcohol, contrary to the effects seen with other oxycodone products. No formulation-related food effect: The PK profile of Egalet-002 is similar to that of other long-acting oxycodone formulations in the presence of food. Consistent relief and convenient dosing: Egalet-002, with its ER profile, is designed to provide consistent relief of moderate to severe chronic pain for a 12-hour period per dose. Egalet-002 permits twice-daily dosing, consistent with currently available oxycodone formulations, to provide around-the-clock pain relief. We intend to make Egalet-002 in 10, 20, 40 and 80 mg doses, which are consistent with currently available oxycodone formulations. We plan to seek approval of Egalet-002 under the Section 505(b)(2) approval pathway, and as a result we believe that Egalet-002 could have an accelerated path to approval. We have conducted Phase 1 trials of Egalet-002 and have completed initial abuse deterrence studies in compliance with the FDA draft guidance. We plan to initiate the first of two Phase 3 safety and efficacy trials of Egalet-002 in the fourth quarter of 2014, as well as an alcohol interaction trial in the second quarter of 2014, which have been designed to demonstrate the safety and efficacy of Egalet-002 and a PK profile that exhibits low peak-to-trough concentration variability in drug exposure. In addition to the safety and efficacy trials, we intend to initiate additional abuse deterrence studies in the first quarter of 2014, in accordance with the FDA draft guidance, with the goal of obtaining abuse-deterrent claims in our product label. Based on the expected timing of our studies and trials, we anticipate submitting an NDA for Egalet-002 in the first half of 2016. Preclinical Programs We have developed prototypes, conducted feasibility studies and are exploring additional applications of our technology, both on our own and in collaboration with major pharmaceutical companies, to develop single-agent and combination products for indications other than pain in which potential for abuse exists. We have completed initial research and development efforts on 13 potential product candidates. In November 2013, we entered into a collaboration and license agreement with Shionogi for the development The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents and potential commercialization of abuse-deterrent hydrocodone-based product candidates using our technology. Based on preclinical development we have performed, we intend to select a third abuse-deterrent, opioid product candidate, to be designated Egalet-003, based on a number of factors, including market opportunity and competitive dynamics. Once selected, we intend to initiate clinical trials in 2014 with this product candidate. We plan to also seek regulatory approval for this product candidate under the Section 505(b)(2) approval pathway. Our Strategy Our goal is to be a leading specialty pharmaceutical company focused on the development, manufacture and commercialization of abuse-deterrent pharmaceutical products. Our strategy for achieving this goal is to: Develop and obtain FDA approval for Egalet-001 as an abuse-deterrent morphine product for the treatment of moderate to severe pain. We are developing Egalet-001 to treat moderate to severe chronic pain in patients requiring around-the-clock opioid therapy. We intend to demonstrate bioequivalence to MS-Contin and plan to submit an NDA in the fourth quarter of 2014. Develop and obtain FDA approval for Egalet-002 as an abuse-deterrent oxycodone product for the treatment of moderate to severe pain. We are developing Egalet-002 to treat moderate to severe chronic pain in patients requiring around-the-clock opioid therapy. We intend to demonstrate safety, efficacy and a PK profile that exhibits low peak-to-trough concentration variability in drug exposure and plan to submit an NDA in the first half of 2016. Commercialize Egalet-001 and Egalet-002. If either of our clinical-stage product candidates achieve regulatory approval, we intend to establish our own specialty sales force to market the product in the United States by targeting physicians specializing in pain management. To supplement our internal U.S. sales force, we intend to contract with third parties to access sales representatives who target primary care and internal medicine physicians in the United States. We will seek to license the development and commercial rights to our products outside the United States to a third-party organization that has an established track record of success in commercializing pain products outside the United States. Leverage our proprietary technology platform to develop additional product candidates and create out-licensing opportunities. We plan to employ our technology to develop additional abuse-deterrent products containing APIs other than morphine and oxycodone. In addition, we will seek to out-license our proprietary technology in areas outside of our current focus, such as for abuse-deterrent combination products, and in therapeutic areas beyond the treatment of pain. For example, we entered into a collaboration and license agreement with Shionogi, wherein we granted Shionogi an exclusive, royalty-bearing, worldwide license to develop, manufacture and commercialize abuse-deterrent hydrocodone-based product candidates using our technology. Risks Related to Our Business Our ability to implement our business strategy is subject to numerous risks and uncertainties. As an early-stage pharmaceutical company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading "Risk Factors," prior to making an investment in our common stock. These risks include, among others, the following: we currently generate no revenue and may never become profitable; Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 23, 2014 PRELIMINARY PROSPECTUS 3,500,000 Shares Common Stock $ per share Table of Contents we may require additional capital to fund our operations, and if we fail to obtain the necessary financing, we may be unable to complete the development and commercialization of our product candidates; our success is primarily dependent on the regulatory approval and commercialization of Egalet-001 and Egalet-002, our lead product candidates, and an abuse-deterrent formulation of hydrocodone under our agreement with Shionogi; we and our collaborator are subject to regulatory approval processes that are lengthy, time-consuming and unpredictable, and we or our collaborator may not obtain approval for any of our product candidates from the FDA; our ability to market and promote any approved products as abuse-deterrent will be determined by the FDA-approved labeling for such products; our product candidates contain controlled substances, the manufacture, use, sale, importation, exportation and distribution of which are subject to significant government regulation; we face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do; we and our collaborator depend on the performance of third parties, including contract research organizations and manufacturers, to conduct our preclinical studies and clinical trials, and if they do not successfully carry out their contractual duties or meet expected deadlines, we or our collaborator may not be able to obtain regulatory approval for or commercialize our product candidates; we currently have no sales or marketing capabilities and, if we are unable to develop our own sales and marketing capabilities or enter into strategic alliances with marketing partners, we may not be successful in commercializing our product candidates; we may be unable to recruit or retain key personnel, including our senior management team; and it is difficult and costly to protect our intellectual property rights. Concurrent Private Placement Shionogi Limited, our collaborator, has agreed to purchase up to $15.0 million of our common stock in a separate private placement concurrent with the completion of this offering at a price per share equal to the initial public offering price. The sale of such shares will not be registered under the Securities Act of 1933, as amended. The closing of this offering is not conditioned upon the closing of such concurrent private placement. However, Shionogi may elect to not purchase shares to the extent it results in Shionogi owning in excess of 19.9% of our outstanding common stock after this offering. Our Corporate Information Egalet US was incorporated in Delaware in August 2013 and prior to this offering had nominal assets and no operations. Egalet UK, formed in July 2010, currently owns all of our assets and operations and acquired them in July 2010 from Egalet A/S, which was founded under the laws of Denmark. Egalet A/S is a shareholder of Egalet UK. In November 2013, all of the issued and outstanding ordinary and preferred shares of Egalet UK were exchanged for an identical number of shares of common stock and preferred stock of Egalet US, which resulted in Egalet UK becoming a wholly owned subsidiary of Egalet US. Following such exchange, we manage our operations through Egalet US, while our research and development activities continue to be conducted by Egalet UK. We refer to this transaction in this prospectus as the Share Exchange. Since Egalet UK is organized as a public limited company under the laws of England and Wales, it is not permitted to directly list its common stock (as opposed to depositary interests) on the Nasdaq Global Market. Under English law, it is not possible to change the place of This is the initial public offering of Egalet Corporation. We are offering 3,500,000 shares of our common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $11.00 and $13.00 per share. We have applied for listing of our common stock on the NASDAQ Global Market under the symbol "EGLT." We are an "emerging growth company" under applicable Securities and Exchange Commission rules and will be eligible for reduced public company reporting requirements. See "Summary Implications of Being an Emerging Growth Company." Table of Contents incorporation of Egalet UK from one jurisdiction to another, so we effected the Share Exchange to migrate Egalet UK to the United States in order to enable us to list our common stock on the Nasdaq Global Market. Our primary executive offices are located at 460 East Swedesford Road, Suite 1050, Wayne, Pennsylvania 19087 and our telephone number is (610) 833-4200. Our website address is www.egalet.com. The information contained in, or that can be accessed through, our website is not part of this prospectus. Implications of Being an Emerging Growth Company 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 Act, or JOBS Act. As such, we are eligible to take advantage of 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; being permitted to present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations; reduced disclosure obligations regarding executive compensation; not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We have taken advantage of some of the reduced reporting burdens in this prospectus and may take advantage of additional exemptions in the future. Accordingly, the information contained herein may be different than the information provided by other public companies. We do not know if some investors will find our shares less attractive as a result of our utilization of these or other exemptions. The result may be a less active trading market for our shares and our share price may be more volatile. In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. 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 have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We will remain an "emerging growth company" until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion, (b) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period or (d) the last day of our fiscal year containing the fifth anniversary of the date on which shares of our common stock become publicly traded in the United States. Investing in our common stock involves risks. See "Risk Factors" beginning on page 13. Table of Contents THE OFFERING Common stock offered by us 3,500,000 shares Over-allotment option to purchase additional shares We have granted the underwriters an option for a period of 30 days to purchase up to 525,000 additional shares of common stock. Common stock to be sold in the concurrent private placement to Shionogi 1,250,000 shares Common stock to be outstanding after this offering and the concurrent private placement 13,902,433 shares Use of proceeds We estimate that the net proceeds from this offering will be approximately $36.7 million, or approximately $42.5 million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will also receive net proceeds of approximately $14.0 million from the sale of 1,250,000 shares of common stock in the concurrent private placement to Shionogi after deducting commissions that may be payable by us. We expect to use the proceeds of this offering and the concurrent private placement to fund the research and development and establish commercial manufacturing capability for Egalet-001, Egalet-002 and our preclinical product candidates, and for working capital and general corporate purposes. See "Use of Proceeds" on page 54. Proposed NASDAQ Global Market symbol EGLT
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001586495_leet_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001586495_leet_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6424b6939b1d422dfb8262b717d87262f1d12a9e
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001586495_leet_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights some information from this prospectus, and it may not contain all the information important to making an investment decision. A potential investor should read the following summary together with the more detailed information regarding the Company and the common stock being sold in this offering, including "Risk Factors" and the financial statements and related notes, included elsewhere in this prospectus. The Company History The Company is a development stage company intending to become an industry leader in the marketing and leasing of ignition interlock devices. The Company was incorporated in the State of Delaware in July 2013, and was formerly known as Jam Run Acquisition Corporation ("Jam Run" or "Jam Run Acquisition"). In February 2014, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company s name from Jam Run Acquisition Corporation to Blow & Drive Interlock Corporation. The Company is located at 137 South Robertson Boulevard, Suite 129, Beverly Hills, California 90211. The Company s main phone number is (818) 299-0653. Business The Company is designed to market and sell (lease) a breath alcohol ignition interlock device (BAIID) which is a mechanism that is installed on the steering column of an automobile and into which a driver exhales. The device in turn provides a blood-alcohol concentration analysis. If the driver s blood-alcohol content is higher than a certain pre-programmed limit, the device prevents the ignition from engaging and the automobile from starting. These devices are often required for use by DUI or DWI ("driving under the influence" or "driving while intoxicated") offenders as part of a mandatory court or motor vehicle department program. The Company paid Well Electric, a Chinese company with experience in design and manufacture of ignition interlock devices, $30,000 to design and manufacture the prototype ignition interlock device for the Company. Well Electric has designed and manufactured such a device for another company which markets and sells the interlock devices in Australia and the United States. The design specifications provide for these prototypes to be equipped with wireless capabilities, GPS, video and infrared technologies. Well Electric will produce six prototype devices for the Company. Additional units can be purchased at a cost of approximately $500 each. The Company expects the delivery of the initial six prototype units in Fall, 2014. After receipt of the prototype devices, the Company will send two of the devices to an independent certified testing laboratory to verify that the devices meet the Model Specification for Breath Alcohol Ignition Interlock Devices guidelines as established by the National Highway Transportation Safety Agency. The Company expects the testing certification process to take approximately five months. After successful certification by the independent laboratory that the device meets the guidelines, the Company will apply for state certification. It anticipates that it will begin its first certification in California. States usually approve any ignition interlock device that meets or exceeds those published guidelines and is certified by an independent laboratory. The state certification process typically takes approximately 90 days. The Company has earned no revenues to date and its operations consist solely of contracting for the initial development of the design specifications for the interlock device and the production of a prototype device. Based upon its limited operations, pursuant to Rule 405 of the Rules and Regulations of the Securities and Exchange Commission, the Company may be considered a shell company. Once the Company obtains certification of its prototype, it anticipates that it will require additional capital to purchase the devices and to hire personnel to market and distribute the devices. Risks and Uncertainties facing the Company The Company has earned no revenues and has had no sales since inception. The Company anticipates that it may experience losses in the future. As of September 30, 2014, the Company has experienced a net loss of $151,551 and an accumulated deficit of $1,900 as of December 31, 2013, $61,136 as of March 31, 2014, $112,605 as of June 30, 2014 and $151,551 as of September 30, 2014. The Company raised approximately $235,000 ($160,000 in the form of a note and $75,000 as additional capital contribution) from Laurence Wainer, its largest shareholder and its sole officer and director. The monthly repayment of such note is $3,205 which repayment Mr. Wainer has agreed to suspend until January 30, 2015. On February 1, 2014, the Company entered a 5-year lease for a storefront location in Los Angeles, California, with monthly rental payments of $4,500 to commence April 1, 2014. The Company has not paid the monthly rents on this location. The Company paid a $18,000 security deposit on execution of the lease which deposit is refundable at the expiration of the lease term. The Company paid Well Electric $30,000 for development and manufacture of its six prototype devices. The Company will pay approximately $35,000 to an independent company for testing for the standards certification of the device. The costs for approval in California are approximately $300. The Company has remaining legal fees of approximately $5,000 (as of September 1, 2014) and accounting fees of approximately $3,500 per quarter (approximately $1,650 monthly). Thus the basic monthly recurring payment obligation of the Company until January 30, 2015 consists of accounting fees of approximately $1,650 per month and the lease rent of $4,500 aggregating $6,160 per month. After January 30, 2015 this amount will increase to $9,355 with the addition of the monthly loan repayment. As of September 1, 2014, the Company had $75,000 in cash. After payment of the remaining legal fee ($5,000) and certification fee ($35,000) the Company will have $35,000 cash on hand with a monthly recurring expense of $6,650 per month until January 30, 2015 and $9,355 thereafter. Without additional funds being raised or borrowed or monthly payments being suspended, the Company will have fewer than five months of available cash for payment of its monthly expenses. This amount does not include any unforeseen expenses or costs involved to open a storefront or to hire an employee. The Company anticipates that after the certification process it will require additional funds to open the storefront, purchase additional ignition interlock units from Well Electric (at $500 each) and to hire personnel. The Company anticipates that including the certification expense, it will need approximately $250,000 in order to accomplish its initial goals i.e. to obtain additional units, to open a storefront, to be placed on the list of available and approved interlock devices, and to hire its initial personnel. Although the Company does not have specific plans currently in place, it anticipates that it may raise capital through an equity offering of its securities or through loans obtained from financial institutions or from its officers, directors or shareholders; however, there can be no assurance the Company will be successful in these efforts or that it will be able to obtain the necessary funds to complete its initial objectives. The Company s continuation after February 2015 as a going concern is dependent on its ability to generate sufficient cash flows from its anticipated operations and /or obtain additional financing from its stockholders and/or other third parties. Trading Market Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001590662_internatio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001590662_internatio_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c10619245a85973fb45f26a673e09bf4849323f7
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001590662_internatio_prospectus_summary.txt
@@ -0,0 +1,858 @@
+SUMMARY COMPENSATION TABLE 
+
+ 
+
+ 
+
+ 
+
+ 
+
+Name and Principal Position
+ 
+
+ 
+
+ Year
+ 
+
+Salary
+ FY 2013
+($)
+ 
+
+ 
+
+ 
+Bonus
+($)
+ 
+
+ 
+
+ 
+
+Stock
+Awards
+($)(1)
+ 
+
+ 
+
+ 
+
+Option
+Awards
+($)(1)
+ 
+
+ 
+
+ 
+
+Non-Equity
+Incentive
+Plan
+Compensation
+($)
+ 
+
+ 
+
+ 
+Change in
+Pension
+Value and
+Nonqualified
+Deferred
+Compensation
+Earnings
+($)
+ 
+
+ 
+
+ 
+
+All
+Other
+Compens-
+ation
+($)
+ 
+
+ 
+
+ 
+
+Total
+($)
+
+ Roger Robertson, President, CEO, 
+Secretary, Treasurer, CFO, Principal Accounting Officer and Director
+ 2013
+ 
+
+ 
+
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+ None
+
+ 
+
+ 
+
+ Stock Option Grants 
+ 
+We have not granted any stock options to the executive officers since our inception. 
+ 
+Employment Agreements 
+ 
+We do not have any employment agreements.
+ 
+ 19 
+
+ 
+
+ 
+
+ Security Ownership of Certain Beneficial Owners and Management
+
+ The following tables set forth the ownership, as of the date of this Prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
+
+The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The mailing address for all persons is Two Allen Center, 1200 Smith Street, Suite 1600, Houston, Texas 77002, United States of America. 
+
+ 
+ Shareholders
+ Number of Shares
+ Percentage
+ 
+
+ Roger Robertson
+ 5,000,000
+ 100%
+ 
+
+ 
+
+ This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 5,000,000 shares of common stock outstanding as of August 31, 2013.
+ 
+ Certain Relationships and Related Transactions
+ 
+
+ On August 28, 2013, we issued a total of 5,000,000 shares of restricted common stock to Roger Robertson sole officer and director. These shares represent 100% of our issued and outstanding shares. 
+ 
+
+ Further, Mr. Robertson has advanced $25,100 to the company for expenses. Mr. Robertson will be repaid from the proceeds of this offering. There is no due date for the repayment of the funds advanced by Mr. Robertson. The obligation to Mr. Robertson does not bear interest. There is no written agreement evidencing the advancement of funds by Mr. Robertson or the repayment of the funds to Mr. Robertson. The entire transaction was oral.
+
+ Disclosure of Commission Position of Indemnification for
+Securities Act Liabilities 
+
+ Our sole officer and our directors are indemnified as provided by the Nevada Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to court of appropriate jurisdiction. We will then be governed by the court's decision. 
+ 
+
+ 20 
+
+ 
+
+ 
+
+ Financial Statements 
+ 
+ INDEX TO FINANCIAL STATEMENTS
+
+ Report of Independent Registered Public Accounting Firm
+ F-1
+
+ 
+ Balance Sheet as of August 31, 2013
+ F-2
+
+ 
+ Statement of Operations for the period from July 29, 2013 (Date of Inception) to August 31, 2013
+ F-3
+
+ 
+ Statement of Stockholders Equity (Deficit) for the period from July 29, 2013 (Date of Inception) to August 31, 2013
+ F-5 
+
+ 
+ Statement of Cash Flows for the period from July 29, 2013 (Date of Inception) to August 31, 2013
+ F-6
+
+ 
+ Notes to Financial Statements
+ F-8
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 21 
+
+ 
+
+ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+ 
+ 
+ To the Board of Directors
+ International Precious Metals, Inc.
+
+(A Development Stage Company)
+ We have audited the accompanying balance sheet of International Precious Metals, Inc. (A Development Stage Company) as of August 31, 2013 and the related statement of operations, changes in stockholders' equity (deficit) and cash flows for the period from inception (July 29, 2013) through August 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
+ We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
+ In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Precious Metals, Inc. (A Development Stage Company) as of August 31, 2013, and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
+ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statement, the Company suffered a net loss from operation and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management s plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 
+ /s/ M&K CPAS, PLLC
+ www.mkacpas.com
+ Houston, Texas
+ November 7, 2013 
+ 
+ 
+ 
+ 
+ F-1 
+
+ 
+
+ 
+
+ 
+ INTERNATIONAL PRECIOUS METALS, INC.
+
+ (A Development Stage Company)
+
+ 
+ 
+ 
+
+ BALANCE SHEET
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ August 31, 2013
+
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ ASSETS
+ 
+ 
+
+ 
+ 
+ 
+
+ CURRENT ASSETS
+ 
+ 
+
+ Cash
+ $
+ 20,067 
+
+ TOTAL ASSETS
+ $
+ 20,067 
+
+ 
+ 
+ 
+
+ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
+ 
+ 
+
+ 
+ 
+ 
+
+ CURRENT LIABILITIES
+ 
+ 
+
+ Accounts payable and accrued liabilities
+ $
+ 1,500 
+
+ Loans from Related Party
+ 
+ 25,100 
+
+ TOTAL CURRENT LIABILITIES
+ $
+ 26,600 
+
+ 
+ 
+ 
+
+ STOCKHOLDERS' EQUITY (DEFICIT)
+ 
+ 
+
+ Authorized 
+ 
+ 
+
+ 75,000,000 shares of common stock, $0.001 par value,
+ 
+ 
+
+ Issued and outstanding 
+ 
+ 
+
+ 5,000,000 common shares at August 31, 2013
+ $
+ 5,000 
+
+ Deficit accumulated during the development stage
+ 
+ (11,533)
+
+ TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
+ $
+ (6,533)
+
+ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
+ $
+ 20,067 
+
+ 
+ 
+
+ The accompanying notes are an integral part of these financial statements.
+ 
+
+ F-2 
+
+ 
+
+ 
+ 
+ INTERNATIONAL PRECIOUS METALS, INC.
+
+ (A Development Stage Company)
+
+ 
+ 
+ 
+
+ STATEMENT OF OPERATIONS
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+
+ 
+ 
+ Cumulative results 
+
+ 
+ 
+ from inception
+
+ 
+ 
+ (July 29, 2013) to
+
+ 
+ 
+ August 31, 2013
+
+ REVENUE
+ 
+ 
+
+ 
+ 
+ 
+
+ Revenues
+ $
+ - 
+
+ Total Revenues
+ $
+ - 
+
+ 
+ 
+ 
+
+ EXPENSES
+ 
+ 
+
+ 
+ 
+ 
+
+ Office and general
+ $
+ 38 
+
+ Professional Fees
+ 
+ 11,495 
+
+ Total Expenses
+ $
+ 11,533 
+
+ 
+ 
+ 
+
+ NET LOSS
+ $
+ (11,533)
+
+ 
+ 
+ 
+
+ BASIC AND DILUTED LOSS PER COMMON SHARE
+ 
+ 
+
+ 
+ (0.00) 
+
+ 
+ 
+ 
+
+ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (Basic and Diluted)
+ 
+ 
+
+ 
+ 
+
+ 
+ 5,000,000 
+
+ 
+ 
+ 
+
+ 
+ 
+
+ The accompanying notes are an integral part of these financial statements.
+ 
+ 
+ F-3 
+
+ 
+
+ 
+
+ 
+
+ 
+ INTERNATIONAL PRECIOUS METALS, INC.
+
+ (A Development Stage Company)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ STATEMENT OF STOCKHOLDERS' DEFICIT
+
+ From inception (July 29, 2013) to August 31, 2013
+
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ Deficit
+ 
+ 
+
+ 
+ Common Stock
+ 
+ 
+ 
+ accumulated
+ 
+ 
+
+ 
+ 
+ 
+ Additional
+ 
+ during the
+ 
+ 
+
+ 
+ Number of 
+ 
+ 
+ 
+ Paid-in
+ 
+ development
+ 
+ 
+
+ 
+ shares
+ 
+ Amount
+ 
+ Capital
+ 
+ stage
+ 
+ Total
+
+ Balance at inception - July 29, 2013
+ 
+ 
+ - 
+ 
+ - 
+ 
+ - 
+ 
+ - 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Founder's stock issued on August 28, 2013
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ for cash, at $0.001 per share
+ 5,000,000 
+ $
+ 5,000 
+ $
+ - 
+ $
+ - 
+ $
+ 5,000 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Net Loss for the period to August 31, 2013
+ 
+ 
+ 
+ 
+ 
+ 
+ (11,533)
+ 
+ (11,533)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ Balance, August 31, 2013
+ 5,000,000 
+ $
+ 5,000 
+ $
+ - 
+ $
+ (11,533)
+ $
+ (6,533)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ The accompanying notes are an integral part of these financial statements.
+ 
+ F-4 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ INTERNATIONAL PRECIOUS METALS, INC.
+
+ (A Development Stage Company)
+
+ 
+
+ STATEMENT OF CASH FLOWS
+
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ July 29, 2013
+
+ 
+ 
+ 
+ (date of inception) to
+
+ 
+ 
+ 
+ August 31, 2013
+
+ 
+ 
+ 
+ 
+
+ OPERATING ACTIVITIES
+ 
+ 
+
+ 
+ Net loss
+ $
+ (11,533)
+
+ 
+ Change in other operating assets & liabilities:
+ 
+ 
+
+ 
+ Increase (decrease) in accrued expenses
+ $
+ 1,500 
+
+ 
+ 
+ 
+ 
+
+ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
+ 
+ 
+
+ $
+ (10,033)
+
+ 
+ 
+ 
+ 
+
+ FINANCING ACTIVITIES
+ 
+ 
+
+ 
+ Proceeds from sale of common stock
+ 
+ 5,000 
+
+ 
+ Loan from related party
+ 
+ 25,100 
+
+ NET CASH PROVIDED BY FINANCING ACTIVITIES
+ 
+ 
+
+ $
+ 30,100 
+
+ 
+ 
+ 
+ 
+
+ NET INCREASE (DECREASE) IN CASH
+ $
+ 20,067 
+
+ 
+ 
+ 
+ 
+
+ CASH, BEGINNING OF PERIOD
+ $
+ - 
+
+ 
+ 
+ 
+ 
+
+ CASH, END OF PERIOD
+ $
+ 20,067 
+
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+
+ Supplemental cash flow information and noncash financing activities:
+ 
+ 
+
+ Cash paid for:
+ 
+ 
+
+ 
+ Interest
+ $
+ - 
+
+ 
+ 
+ 
+ 
+
+ 
+ Income taxes
+ $
+ - 
+
+ 
+ 
+
+ The accompanying notes are an integral part of these financial statements.
+
+ F-5 
+
+ 
+
+ INTERNATIONAL PRECIOUS METALS, INC.
+ (A Development Stage Enterprise)
+ NOTES TO THE AUDITED FINANCIAL STATEMENTS
+ August 31, 2013
+ 
+
+ NOTE 1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
+
+ International Precious Metals, Inc. ( Company ) is in the initial development stage and has incurred losses since inception totaling $11,533. The Company was incorporated on July 29, 2013 in the State of Nevada and established a fiscal year end at August 31. The Company is a development stage company as defined in FASB ASC 915 organized to engage in mineral exploration.
+ 
+
+ NOTE 2
\ No newline at end of file
diff --git a/parsed_sections/prospectus_summary/2014/CIK0001592016_agrofresh_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001592016_agrofresh_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..d75dfa49d8537f4b1ad851512f6ea70255102d48
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001592016_agrofresh_prospectus_summary.txt
@@ -0,0 +1 @@
+This 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 "Risk Factors" and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: "we," "us," "company" or "our company" are to Boulevard Acquisition Corp.; "public shares" are to shares of our common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); "public stockholders" are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder's and member of our management team's status as a "public stockholder" shall only exist with respect to such public shares; "management" or our "management team" are to our executive officers and directors; "sponsor" is to Boulevard Acquisition Sponsor, LLC, a Delaware limited liability company; "founder shares" refer to shares of our common stock initially purchased by our sponsor in a private placement prior to this offering; "private placement warrants" are to the warrants issued to our sponsor in a private placement simultaneously with the closing of this offering; and "initial stockholders" are to holders of our founder shares prior to this offering. Our investors will receive one-half of one warrant for each unit purchased. Each whole warrant entitles the holder thereof to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. A holder of an odd number of units will not be able to exercise any one-half of one warrant unless it is combined with another one-half of one warrant. 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. We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock 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 not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. We may pursue an acquisition opportunity in any business industry or sector. We intend to focus our search on businesses that may provide opportunities for risk-adjusted equity returns, where the potential returns are believed to be appropriate for the risk that equity would be taking in the transaction. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region. In addition, it will include companies that are undergoing some form of transition as a result of a restructuring, a change in their business model or their industry's basis of competition, or a material acquisition, divestiture, recapitalization or other transformative event. We believe that the experience of our management, sponsor and its affiliates in restructuring operating companies and our ability to provide capital to a target business will permit us to pursue a broad range of opportunities. Although we anticipate acquiring a target business that is an Amendment No. 3 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents operating business, we are not obligated to do so and may determine instead to merge with or acquire a company with no operating history if the terms of the transaction are determined by us to be favorable to our public stockholders and the target business has a fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income accrued on the trust account) at the time of the agreement to enter into the initial business combination. In such event, investors would not have the benefit of basing the decision on whether to remain with our company following such transaction on the past operations of such target business. Furthermore, in such a situation, many of the acquisition criteria and guidelines set forth in this prospectus may be rendered irrelevant. We can provide no assurances that our management team's expertise will guarantee a successful initial business combination. In addition, our management team is not required to devote a significant or certain amount of time to our businesses on a monthly basis and our management team is currently devoting time to, and is involved with, other businesses. We will seek to capitalize on the approximately 20 years of private equity investing experience and contacts of our President, Chief Executive Officer and Secretary, Stephen S. Trevor. Our other executive officers do not have similar acquisition experience as Mr. Trevor and we are therefore dependent on Mr. Trevor and the prior experience of Mr. Trevor to select a target company. Although Mr. Trevor has led more than 30 acquisition, merger and divestiture transactions in a variety of industries during the course of his career, our management team has no prior experience identifying potential target businesses in transactions with other blank check companies. Since February 2012, Mr. Trevor has been a portfolio manager of Avenue Capital Management II, L.P., a part of Avenue Capital Group which we refer to as Avenue throughout this prospectus. Mr. Trevor focuses on private debt, private equity and distressed for control investments. Prior to joining Avenue, Mr. Trevor was a Managing Director at Morgan Stanley, a member of Morgan Stanley's Management Committee and Global Co-Head of Morgan Stanley's Merchant Banking Division and Private Equity Group. Mr. Trevor joined Morgan Stanley in 2007 from Goldman Sachs, where he was a Managing Director in the Principal Investment Area, Co-Heading its Industrials Investing effort, and was a member of the Investment and Operating Committees. He originally joined Goldman Sachs' New York office in 1992, working in Energy and Power. In 1994, Mr. Trevor moved to Hong Kong and worked first in Corporate Finance and then in the Real Estate Principal Investment Area. From 1999 to 2004, Mr. Trevor was based in London and led Goldman Sachs Capital Partners' investing activities in Germany. He became a Managing Director at Goldman Sachs in 1999 and a Partner in 2002. Mr. Trevor has a long relationship with certain members of our board of directors. The Chairman of our board of directors is Marc Lasry, the Chairman, Chief Executive Officer and Co-Founder of Avenue. Distressed investing has been the focus of his professional career for over 29 years. Prior to founding Avenue in 1995, Mr. Lasry co-founded Amroc Investments, LLC, or Amroc, and prior to that, managed capital for Amroc Investments, L.P., a distressed debt investment firm organized in association with the Robert M. Bass Group and a predecessor to Amroc. Prior to that, Mr. Lasry served as Co-Director of the Bankruptcy and Corporate Reorganization Department at Cowen & Company and as Director of the Private Debt Department at Smith Vasiliou Management. Mr. Lasry has served and will continue to serve on the board of advisors/directors of both for-profit and not-for-profit public and private companies that are not affiliated with us or Avenue. Avenue is an established global alternative investment firm founded in 1995. Avenue's primary focus is investing in credit and other special situation investments in the United States, Europe and Asia. Avenue has approximately 205 employees worldwide as of December 31, 2013. Avenue maintains an institutional infrastructure with teams in accounting, operations, legal, business development, risk management, compliance and information technology. Avenue had approximately $12.6 billion in assets under management as of December 31, 2013. BOULEVARD ACQUISITION CORP. (Exact name of registrant as specified in its charter) Table of Contents Business Strategy We intend to employ a pro-active acquisition strategy focused on companies where we believe a combination of our relationships, capital and experience can be the catalyst to transform companies and accelerate the target business' growth. Our acquisition selection process will leverage our team's network of industry, private equity sponsor and lending community relationships as well as relationships with management teams of public and private companies, investment bankers, restructuring advisers, attorneys and accountants that we believe should provide us with a number of business combination opportunities. In addition, we intend to utilize the networks and industry experience of Mr. Lasry, Mr. Trevor and Avenue in seeking a business combination. Over the course of their careers, the members of our management team and others at Avenue have developed a broad network of contacts and corporate relationships. We believe that this network has been developed through their: experience in sourcing, acquiring, developing, growing, financing and selling businesses; relationships with sellers, capital providers and target management teams; and experience in executing transactions under varying economic and financial market conditions. This network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and relationships of our management team will provide us with an important source of investment opportunities. In addition, we anticipate that target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with their network of relationships to articulate the parameters for our search for a target company and a potential business combination and begin the process of pursuing and reviewing promising leads. Investment Criteria Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe: are at an inflection point, such as requiring additional management expertise, introducing new products or services, or being on the cusp of improved financial performance, where our capital will help them to achieve growth post-acquisition. We believe that we are well-positioned to evaluate a company's growth prospects and opportunities to create shareholder value following the consummation of a business combination. are underperforming their potential in industries that are otherwise exhibiting stable or improving fundamentals. We intend to evaluate each industry and the target businesses within those industries based on several factors including the potential for competitive advantage, above GDP growth, high returns on invested capital and the sustainability of profit margins. exhibit unrecognized value or other characteristics, such as observable competitive advantages, desirable returns on capital, multiple pathways to growth and a need for capital to achieve the company's growth strategy or business plan, that we believe have been misevaluated by the marketplace based on our company specific analysis and due diligence review. For a potential target company, this process will include, among other things, a review and analysis of the company's capital structure, quality of earnings, potential for operational improvements, corporate governance, customers, material contracts, and industry background and trends. We Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 46-4007249 (I.R.S. Employer Identification Number) 399 Park Avenue, 6th Floor New York, NY 10022 (212) 878-3500 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents intend to leverage the operational experience and financial acumen of our team and those of our affiliates at Avenue, to identify opportunities to unlock value that our experience in complex situations allows us to pursue. will offer risk-adjusted equity return on investment for our shareholders. We will seek to acquire the target on terms and in a manner that leverages our experience in special situations investing. Financial returns will be evaluated based on (i) the potential for organic growth in cash flows, (ii) the opportunity for follow-on acquisitions and (iii) the prospects for creating value through new initiatives. Potential upside from growth in the target business and an improved capital structure will be weighed against any identified downside risks. These criteria are not intended 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 management may deem relevant. In the event that we decide to enter into our 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 stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC. Initial Business Combination 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 the deferred underwriting commissions and taxes payable on the income earned on the trust account) 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, or FINRA, with respect to the satisfaction of such criteria. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the Stephen S. Trevor President and Chief Executive Officer Boulevard Acquisition Corp. 399 Park Avenue, 6th Floor New York, NY 10022 (212) 878-3500 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. Our Investment Process In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We will also utilize our operational and capital planning experience. For more information regarding our management team's experience, please see "Proposed Business" beginning on page 68. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA that our initial business combination is fair to our company from a financial point of view. Members of our management team and our independent directors will directly or indirectly own shares of our common stock and warrants to purchase shares of our common stock following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Neither our executive officers nor our directors presently have any fiduciary or contractual obligations to other entities pursuant to which such officer or director is required to present acquisition opportunities to such entity, although such obligations could arise in the future. Accordingly, in the future, if any of our officers or directors becomes aware of an acquisition opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she may need to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that any fiduciary duties or contractual obligations of our executive officers arising in the future would materially undermine our ability to complete our business combination. In particular, all of our executive officers have fiduciary duties to Avenue or clients of Avenue and may have fiduciary duties to certain companies in which Avenue or its affiliates have invested or for whom an Avenue affiliate acts as investment adviser. However, we do not expect these duties to present a significant actual conflict of interest with our search for an initial business combination because Avenue and the companies in which it or its affiliates hold investments typically invest in debt securities and other debt obligations of these companies. In addition, neither we nor our executive officers have any existing obligations (contractual or otherwise) to prioritize, allocate or first offer business combination opportunities appropriate for us to any Avenue affiliated entities. We may acquire a company in which Avenue owns a debt position, but we will treat any debt that Avenue owns the same as any third-party debt and our independent directors will need to review and approve any proposed business combination with a company in which Avenue owns a debt position before we enter into any definitive agreement to acquire the target company. Our sponsor, executive officers and independent directors have agreed not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the required timeframe. Copies to: Alan I. Annex, Esq. Joseph A. Herz, Esq. Greenberg Traurig, LLP MetLife Building 200 Park Avenue New York, New York 10166 Tel: (212) 801-9200 Fax: (212) 801-6400 Bruce S. Mendelsohn, Esq. Alice Hsu, Esq. Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY 10036 Tel: (212) 872-1000 Fax: (212) 872-1002 Table of Contents Our executive offices are located at 399 Park Avenue, 6th Floor, New York, NY 10022, and our telephone number is (212) 878-3500. 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 $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock 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 during the prior three-year period. References herein to "emerging growth company" shall have the meaning associated with it in the JOBS Act. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Units, each consisting of one share of common stock, $.0001 par value, and one-half of one warrant(2) 20,125,000 Units $10.00 $201,250,000 $25,921 Shares of common stock included as part of the units(3) 20,125,000 Shares (4) Warrants included as part of the units(3) 10,062,500 Warrants (4) Total $201,250,000 $25,921(5) (1)Estimated solely for the purpose of calculating the registration fee. (2)Includes 2,625,000 units, consisting of 2,625,000 shares of common stock and 1,312,500 warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any. (3)Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (4)No fee pursuant to Rule 457(g). (5)$22,218 of this registration fee was previously paid. Table of Contents 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, 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 below entitled "Risk Factors" beginning on page 26 of this prospectus. Securities offered 17,500,000 units, at $10.00 per unit, each unit consisting of: one share of common stock; and one-half of one warrant. NASDAQ symbols Units: "BLVDU" Common Stock: "BLVD" Warrants: "BLVDW" Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component pieces. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of common stock and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant. Separate trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. 1Assumes no exercise of the underwriters' over-allotment option and the forfeiture by our initial stockholders of 656,250 founder shares. 2Includes up to 656,250 shares that are subject to forfeiture by our initial stockholders depending on the extent to which the underwriters' over-allotment option is exercised, and between 1,093,750 and 1,257,813 shares that are subject to forfeiture in the future by our initial stockholders, as described below under " Founder shares" Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 12, 2014 PRELIMINARY PROSPECTUS $175,000,000 Boulevard Acquisition Corp. 17,500,000 Units Table of Contents cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of common stock issuable upon exercise of the warrants at this time. However, we have agreed to use our best efforts to file and have an effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of common stock until the warrants expire or are redeemed; provided, that if our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a "covered security" under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days' prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available Boulevard Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock 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 not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our common stock and one-half of one warrant. Each whole warrant entitles the holder thereof to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. We have also granted the underwriters a 45-day option to purchase up to an additional 2,625,000 units to cover over-allotments, if any. We will provide our stockholders with the opportunity to redeem all or a portion of their shares of our common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding shares of common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 21 months from the closing of this offering, or 24 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 21 months from the closing of this offering but have not completed the initial business combination within such 21-month period, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Our sponsor, Boulevard Acquisition Sponsor, LLC (which we refer to as our sponsor throughout this prospectus) has committed to purchase an aggregate of 5,250,000 warrants (or 5,775,000 warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant ($5,250,000 in the aggregate, or $5,775,000 if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Currently, there is no public market for our units, common stock or warrants. We have been approved to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol "BLVDU" on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Citigroup Global Markets Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the common stock and warrants will be listed on NASDAQ under the symbols "BLVD" and "BLVDW," respectively." Table of Contents throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a "cashless basis." In determining whether to require all holders to exercise their warrants on a "cashless basis," our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled "Description of Securities Warrants Public Stockholders' Warrants" for additional information. None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Founder shares On November 19, 2013, our sponsor purchased an aggregate of 5,031,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.005 per share after giving effect to the stock dividend described below and as adjusted throughout this prospectus. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder We are an "emerging growth company" under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 26 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. 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. Per Unit Total Public offering price $ 10.00 $ 175,000,000 Underwriting discounts and commissions(1) $ 0.55 $ 9,625,000 Proceeds, before expenses, to Boulevard Acquisition Corp. $ 9.45 $ 165,375,000 Table of Contents shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares after this offering. As such, our initial stockholders will collectively own 20% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering). On January 31, 2014, our sponsor transferred 14,375 founder shares to each of our independent director nominees at their original purchase price. On February 11, 2014, in connection with the increase in the size of the offering, we effected a stock dividend of approximately 0.167 for each outstanding share of common stock, resulting in our initial stockholders holding an aggregate of 5,031,250 shares of our common stock. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect another stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering. Up to 656,250 founder shares will be subject to forfeiture by our initial stockholders (or their permitted transferees) on a pro rata basis depending on the extent to which the underwriters' over-allotment option is exercised. In addition, 25% of the founder shares, or 5% of our issued and outstanding shares after this offering and any exercise of the underwriters' over-allotment option, which we refer to as the founder earnout shares, will be subject to forfeiture by our initial stockholders (or their permitted transferees) on the fifth anniversary of our initial business combination unless at any time after our initial business combination and prior to the fifth anniversary of our initial business combination the last sale price of our common stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period or the company completes a liquidation, merger, stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like). The number of founder earnout shares will be between 1,093,750 and 1,257,813, depending on the exercise of the underwriters' over-allotment option. (1)Includes $0.35 per unit, or approximately $6,125,000 (or up to approximately $7,043,750 if the underwriters' over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See "Underwriting" on page 129. Of the $180.3 million in proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, or approximately $207.0 million if the underwriters' over-allotment option is exercised in full, $175.0 million ($10.00 per unit), or approximately $201.3 million if the underwriters' over-allotment option is exercised in full ($10.00 per unit), will be deposited into a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee, and $5.25 million will be used to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income tax obligations, the proceeds from this offering will not be released from the trust account until the earlier of (a) the completion of our initial business combination or (b) the redemption of our public shares if we are unable to complete our business combination within 21 months from the closing of this offering (or 24 months, as applicable), subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2014. Table of Contents The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below, and our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed (i) to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 21 months (or 24 months, as applicable), from the closing of this offering although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Transfer restrictions on founder shares On the date of this prospectus, the founder shares will be placed into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions discussed beginning on page 101 of this prospectus, these shares will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of our initial business combination or earlier if, subsequent to our business combination, (i) the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (ii) we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. We refer to such transfer restrictions throughout this prospectus as the lock-up. Citigroup Table of Contents Private placement warrants Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 5,250,000 private placement warrants (or 5,775,000 if the over-allotment option is exercised in full), each exercisable to purchase one share of our common stock at $11.50 per share, at a price of $1.00 per warrant ($5,250,000 in the aggregate or $5,775,000 in the aggregate if the over-allotment option is exercised) in a private placement that will occur simultaneously with the closing of this offering. Each sponsor warrant is exercisable for one share of our common stock. We determined the purchase price for the private placement warrants by analyzing warrant trading prices of several comparable blank check companies that have not yet announced a business combination, all of which were substantially lower than $1.00 per warrant. We decided to sell the private placement warrants for $1.00 per warrant in order to cause fewer warrants to be issued than if the private placement warrants were issued for less than $1.00 per warrant, thereby resulting in less potential dilution. The purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 21 months from the closing of this offering (or 24 months, as applicable), the proceeds of the sale of the private placement warrants will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will be non-redeemable so long as they are held by their initial purchasers or their permitted transferees (except as described below under "Principal Stockholders Escrow of Founder Shares and Private Placement Warrants and Transfer Restrictions"). If the private placement warrants are held by holders other than their initial purchasers or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Transfer restrictions on private placement warrants The private placement warrants (including the common stock issuable upon exercise of the private placement warrants) will be placed into an escrow account with Continental Stock Transfer & Trust Company and will not be transferable, assignable or saleable until released from escrow on the date that is 30 days after the completion of I-Bankers Securities, Inc. Maxim Group LLC , 2014 Table of Contents our initial business combination. The private placement warrants will be non-redeemable so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Cashless exercise of private placement warrants If holders of private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" (defined below) by (y) the fair market value. The "fair market value" shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by our initial stockholders and permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could sell the shares of common stock freely in the open market, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate. Proceeds to be held in trust account Of the net proceeds of this offering and sale of the private placement warrants, $175,000,000, or $10.00 per unit ($201,250,000, or $10.00 per unit, if the underwriters' over-allotment option is exercised in full) will be placed into a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include approximately up to $6,125,000 (or approximately up to $7,043,750 if the underwriters' over-allotment option is exercised in full) in deferred underwriting commissions. Table of Contents Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income tax obligations, the proceeds from this offering will not be released from the trust account until the earlier of (a) the completion of our initial business combination or (b) the redemption of our public shares if we are unable to complete our business combination within 21 months from the closing of this offering (or 24 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 21 months from the closing of this offering but have not completed the initial business combination within such 21-month period), subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Except as described above, unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use. Based upon current interest rates, we expect the trust account to generate approximately $17,500 of interest annually. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $1,000,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; and any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of a business combination. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. 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 our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the Table of Contents income earned on the trust account) 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 or accounting firm that is a member of FINRA. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such Table of Contents purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Redemption rights for public stockholders upon completion of our initial business combination We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they may acquire during or after this offering in connection with the completion of our business combination. Manner of conducting redemptions We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirements. Asset Table of Contents acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders Table of Contents tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed business combination is not approved and we continue to search for a target company, we will promptly return any certificates delivered, or shares Table of Contents tendered electronically, by public stockholders who elected to redeem their shares. Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding 20% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the shares sold in this offering. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 20% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such Table of Contents holder's shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders' ability to redeem to no more than 20% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders' ability to vote all of their shares (including all shares held by those stockholders that hold more than 20% of the shares sold in this offering) for or against our business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under "Redemption rights for public stockholders upon completion of our initial business combination," to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock 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, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of 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. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsor, executive officers, directors and director nominees have agreed that we will have only 21 months from the closing of this offering to complete our initial business combination (or 24 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 21 months from the Table of Contents closing of this offering but have not completed the initial business combination within such 21-month period). If we are unable to complete our initial business combination within such 21-month period (or 24-month period), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 21-month time period (or 24-month time period, as applicable). Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 21 months from the closing of this offering (or 24 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 21 months from the closing of this offering but have not completed the initial business combination within such 21-month period). However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 21-month (or 24-month, as applicable) time frame. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete Table of Contents underwriters' over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters' over-allotment option. Units: Number outstanding before this offering 0 Number outstanding after this offering 17,500,0001 Common stock: Number outstanding before this offering 5,031,2502 Number outstanding after this offering 21,875,0001 Warrants: Number of private placement warrants to be sold in a private placement simultaneously with this offering 5,250,0001 Number of warrants to be outstanding after this offering and the private placement 14,000,0001 Exercisability Each whole warrant is exercisable to purchase one share of our common stock and only whole warrants are exercisable. A holder of an odd number of units will not be able to exercise any one-half of one warrant unless it is combined with another one-half of one warrant. Exercise price $11.50 per share, subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a Table of Contents our initial business combination within 21 months from the closing of this offering (or 24 months, as applicable) and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 21 months from the closing of this offering (or 24 months, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock" rules). Limited payments to insiders There will be no finder's fees, reimbursements or cash payments made to our sponsor, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination: Repayment of up to an aggregate of $200,000 in loans made to us by our sponsor to cover offering-related and organizational expenses; Payment to an affiliate of our sponsor of $10,000 per month for office space, utilities, secretarial support and administrative services; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended Table of Contents initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Audit Committee We have established and will maintain an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled "Management Committees of the Board of Directors Audit Committee." Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see "Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419." You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 26 of this prospectus. (1)The "as adjusted" calculation equals actual working capital of ($72,000) as of November 20, 2013, plus $175,000,000 in cash held in trust from the proceeds of this offering, plus $1,000,000 in cash held outside the trust account, plus $97,000 to reduce liabilities related to offering costs at November 20, 2013 paid out of the proceeds from this offering, less $6,125,000 of deferred underwriting commissions. (2)The "as adjusted" calculation equals actual total assets of $122,000 as of November 20, 2013 plus $175,000,000 in cash held in trust from the proceeds of this offering, plus $1,000,000 in cash held outside the trust account, less $97,000 of deferred offering costs as of November 20, 2013 reclassified to stockholders' equity upon consummation of this offering. (3)The "as adjusted" calculation equals actual total liabilities of $97,000 as of November 20, 2013 plus $6,125,000 of deferred underwriting commissions in connection with this offering, less payment of accrued offering costs of $97,000 as of November 20, 2013 from available cash and the proceeds of this offering. (4)The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the "as adjusted" stockholders' equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001. (5)Excludes 16,489,999 shares of common stock purchased in the public market which are subject to redemption in connection with our initial business combination. The "as adjusted" calculation equals the "as adjusted" total assets, less the "as adjusted" total liabilities, less the value of common stock that may be redeemed in connection with our initial business combination (approximately $10.00 per share). If no business combination is completed within 21 months from the closing of this offering (or 24 months, as applicable), the proceeds then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within such 21-month time period (or 24-month period, as applicable). Table of Contents
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+S-1/A 1 d631909ds1a.htm S-1/A S-1/A Table of Contents As filed with the Securities and Exchange Commission on January 31, 2014 Registration No. 333-192598 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 PRE-EFFECTIVE AMENDMENT NO. 1 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Clifton Bancorp Inc. and Clifton Savings Bank 401(k) Savings Plan (Exact name of registrant as specified in its charter) Maryland 6035 To be applied for State or other jurisdiction of incorporation or organization (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) 1433 Van Houten Avenue Clifton, New Jersey 07013 (973) 473-2200 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Paul M. Aguggia Chairman, President and Chief Executive Officer Clifton Bancorp Inc. 1433 Van Houten Avenue Clifton, New Jersey 07013 (973) 473-2200 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Sean P. Kehoe, Esq. Aaron M. Kaslow, Esq. Kilpatrick Townsend & Stockton LLP 607 14th Street, NW, Suite 900 Washington, DC 20005 (202) 508-5800 Robert C. Azarow, Esq. Stephanie G. Nygard, Esq. Arnold & Porter LLP 399 Park Avenue New York, New York 10022 (212) 715-1000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Calculation of Registration Fee Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per unit Proposed maximum Aggregate offering price (1) Amount of registration fee Common Stock, $0.01 par value 34,951,683 shares $10.00 $349,516,830 $45,018(2) Participation interests (3) $10.00 $4,701,000 (4) (1) Estimated solely for the purpose of calculating the registration fee pursuant to Regulation 457(o) under the Securities Act. (2) The total registration fee is $45,018. On November 27, 2013, $42,393 was paid upon the initial filing of the Registration Statement on Form S-1. The remaining fee to be paid is $2,625. (3) In addition, pursuant to Rule 416(c) under the Securities Act, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein. (4) The securities of Clifton Bancorp Inc. to be purchased by the Clifton Savings Bank 401(k) Savings Plan are included in the common stock. Accordingly, no separate fee is required for the participation interests pursuant to Rule 457(h)(2) 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 Section 8(a), may determine. Table of Contents Summary This summary highlights material information from this document and may not contain all the information that is important to you. To understand the conversion and offering fully, you should read this entire document carefully. Our Company New Clifton. The shares being offered will be issued by new Clifton, a Maryland corporation. Upon completion of the conversion, new Clifton will become the successor corporation to old Clifton and the parent holding company for Clifton Savings Bank. New Clifton will be a savings and loan holding company subject to regulation and examination by the Board of Governors of the Federal Reserve System, which we refer to herein as the Federal Reserve Board. Old Clifton. Old Clifton is a federally chartered corporation that owns all of the common stock of Clifton Savings Bank. The common stock of old Clifton trades on the Nasdaq Global Select Market under the symbol CSBK. At September 30, 2013, old Clifton had consolidated total assets of $1.1 billion, gross loans of $555.7 million, total deposits of $791.4 million and total stockholders equity of $188.5 million. As of January 22, 2014, old Clifton had 26,477,394 shares of common stock outstanding. After completion of the conversion, old Clifton will cease to exist. Clifton MHC. Clifton MHC is the federally chartered mutual holding company of old Clifton. Clifton MHC s sole business activity is the ownership of 16,791,758 shares of common stock of old Clifton, representing 63.4% of the common stock outstanding as of the date of this prospectus. After completion of the conversion, Clifton MHC will cease to exist. Clifton Savings Bank. Clifton Savings Bank is a federally chartered savings bank headquartered in Clifton, New Jersey. Clifton Savings Bank has provided community banking services to customers since 1928. We currently operate twelve full-service locations in Bergen and Passaic Counties in New Jersey. At September 30, 2013, Clifton Savings Bank exceeded all regulatory capital requirements and was not a participant in any of the U.S. Treasury s capital raising programs for financial institutions. Clifton Savings Bank has one wholly-owned subsidiary, Botany Inc., which is an investment company incorporated under New Jersey law. Clifton Savings Bank is regulated by the Office of the Comptroller of the Currency. Our principal executive offices are located at 1433 Van Houten Avenue, Clifton, New Jersey 07013 and our telephone number is (973) 473-2200. Our web site address is www.cliftonsavings.com. Information on our website should not be considered a part of this prospectus. Our Business Strategy We are a retail-oriented financial institution dedicated to serving the needs of customers in our market area. We deliver personalized service and respond with flexibility to customer needs. We believe our community orientation is attractive to our customers and distinguishes us from many large banks and other financial institutions that operate in our market area. We intend to maintain this focus as we grow. Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution. We seek to accomplish this objective by focusing on strategies designed to enhance and expand our franchise and diversify our product offerings to increase profitability, while maintaining strong asset quality. We plan to manage actively our strong capital position consistent with applicable regulations and our overall business strategy. The following are key elements of our business strategy: Continuing to emphasize residential portfolio lending. Our primary lending focus historically has been the origination of one- to four-family mortgage loans. At September 30, 2013, 90.2% of our total loan portfolio consisted of one- to four-family mortgage loans. We believe there are opportunities to increase our residential mortgage lending in our market area, and beginning in 2013 we made efforts to take advantage of these opportunities by hiring additional lending staff and increasing our origination channels. From March 31, 2013 to September 30, 2013, our one- to four- Table of Contents Questions and Answers You should read this document for more information about the conversion and offering. The application including the plan of conversion described in this document has been conditionally approved by the Federal Reserve Board. The Proxy Vote Q. What am I being asked to approve? A. Old Clifton shareholders as of [RECORD DATE] are asked to vote on the plan of conversion. Under the plan of conversion, Clifton Savings Bank will convert from the mutual holding company form of organization to the stock holding company form, and as part of such conversion, our newly formed stock holding company, also named Clifton will offer for sale, in the form of shares of its common stock, Clifton MHC s 63.4% ownership interest in old Clifton. In addition to the shares of common stock to be issued to those who purchase shares in the offering, public shareholders of old Clifton as of the completion of the conversion and offering will receive shares of new Clifton common stock in exchange for their existing shares of old Clifton common stock. The exchange will be based on an exchange ratio that will result in old Clifton s existing public shareholders owning approximately the same percentage of new Clifton common stock as they owned of old Clifton immediately prior to the conversion and offering. Shareholders also are asked to vote on the following informational proposals with respect to the articles of incorporation of new Clifton: Approval of a provision in new Clifton s articles of incorporation requiring a super-majority vote to approve certain amendments to new Clifton s articles of incorporation; and Approval of a provision in new Clifton s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of new Clifton s outstanding voting stock. The provisions of new Clifton s articles of incorporation, which are summarized as informational proposals were approved as part of the process in which the board of directors of old Clifton approved the plan of conversion. These proposals are informational in nature only, because the Federal Reserve Board s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve any or all of the informational proposals. The provisions of new Clifton s articles of incorporation which are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of new Clifton, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult. YOUR VOTE IS IMPORTANT. WE CANNOT COMPLETE THE CONVERSION AND OFFERING UNLESS THOSE PROPOSALS RECEIVES THE AFFIRMATIVE VOTE OF A MAJORITY OF SHARES HELD BY OUR PUBLIC SHAREHOLDERS. Q. What is the conversion and related stock offering? A. Clifton Savings Bank is converting from a partially-public mutual holding company structure to a fully-public stock holding company ownership structure. Currently, Clifton MHC owns 63.4% of old Clifton s common stock. The remaining 36.6% of old Clifton s common stock is owned by public shareholders. As a result of the conversion, new Clifton will become the parent of Clifton Savings Bank. Shares of common stock of new Clifton, representing the 63.4% ownership interest of Clifton MHC in old Clifton, are being offered for sale to eligible depositors of Clifton Savings Bank and, possibly, to the public. At the completion of the conversion and offering, public shareholders of old Clifton will exchange their shares of old Clifton common stock for shares of common stock of new Clifton. After the conversion and offering are completed, Clifton Savings Bank will be a wholly-owned subsidiary of new Clifton, and 100% of the common stock of new Clifton will be owned by public shareholders. Our organization will have completed the transition from partial to fully-public ownership. As a result of the conversion and offering, old Clifton and Clifton MHC will cease to exist. See Proposal 1 Approval of the Plan of Conversion beginning on page of this proxy statement/prospectus, for more information about the conversion and offering. Table of Contents Summary This summary highlights material information from this document and may not contain all the information that is important to you. To understand the conversion and offering fully, you should read this entire document carefully. Special Meeting of Shareholders Date, Time and Place; Record Date The special meeting of old Clifton shareholders is scheduled to be held at , Clifton, New Jersey at : .m., Eastern time, on [MEETING DATE], 2014. Only old Clifton shareholders of record as of the close of business on [RECORD DATE] are entitled to notice of, and to vote at, the special meeting of shareholders and any adjournments or postponements of the meeting. Purpose of the Meeting Shareholders will be voting on the following proposals at the special meeting: 1. Approval of the plan of conversion; 2. An informational proposal regarding approval of a provision in new Clifton s articles of incorporation requiring a super-majority vote to approve certain amendments to new Clifton s articles of incorporation. 3. An informational proposal regarding approval of a provision in new Clifton s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of new Clifton s outstanding voting stock. 4. The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the plan of conversion. The provisions of new Clifton s articles of incorporation, which are summarized as informational proposals 2 and 3 were approved as part of the process in which the board of directors of old Clifton approved the plan of conversion. These proposals are informational in nature only, because the Federal Reserve Board s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve any or all of the informational proposals. The provisions of new Clifton s articles of incorporation, which are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of new Clifton, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult. Vote Required Proposal 1: Approval of the Plan of Conversion. Approval of the plan of conversion requires the affirmative vote of holders of at least two-thirds of the outstanding shares of old Clifton, including the shares held by Clifton MHC and a majority of the outstanding shares of old Clifton, excluding the shares held by Clifton MHC. Informational Proposals 2 and 3. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if shareholders approve the plan of conversion, regardless of whether shareholders vote to approve any or all of the informational proposals. Proposal 4: Approval of the Adjournment of the Special Meeting. We must obtain the affirmative vote of the majority of the shares represented at the special meeting and entitled to vote to adjourn the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposal to approve the plan of conversion. Table of Contents THE OFFERING Securities Offered The securities offered in connection with this prospectus supplement are participation interests in the 401(k) Plan. At a purchase price of $10.00 per share, the 401(k) Plan trustee may subscribe for up to 470,100 shares of Clifton Bancorp Inc. common stock in the stock offering (the Stock Offering ). The interests offered by means of this prospectus supplement are conditioned on the close of the Stock Offering. Certain subscription rights and purchase limitations also govern your investment in the Clifton Bancorp Stock Fund in connection with the Stock Offering. See The Conversion and Stock Offering Subscription Offering and Subscription Rights and Limitations on Purchases of Shares in the prospectus attached to this prospectus supplement for further discussion of these subscription rights and purchase limitations. This prospectus supplement contains information regarding the 401(k) Plan. The attached prospectus contains information regarding the Stock Offering and the financial condition, results of operations and business of Clifton Savings and its affiliates. The address of the principal executive office of Clifton Savings is 1433 Van Houten Avenue, Clifton, New Jersey 07013. The telephone number of Clifton Savings is (973) 473-2200. Election to Purchase Clifton Bancorp Inc. Common Stock in the Stock Offering If you elect to participate in the Stock Offering using all or a portion of your 401(k) Plan funds (excluding funds currently invested in the Clifton Bancorp Stock Fund) you must complete and submit the blue investment form included with this prospectus supplement ( Investment Form ) to . See Method for Directing Your Investment Election and Time for Directing Your Investment Election for detailed information on how to participate in the Stock Offering using your 401(k) Plan funds. All 401(k) plan participants are eligible to direct the 401(k) Plan trustee to use all or a portion of their 401(k) Plan assets (excluding funds currently invested in the Clifton Bancorp Stock Fund) to invest in the Stock Offering. However, your order for shares of Clifton Bancorp common stock in the Stock Offering will be filled based on your subscription rights. Clifton Bancorp has granted subscription rights to the following persons in the following order of priority: (1) persons with $50 or more on deposit at Clifton Savings as of the close of business on September 30, 2012; (2) persons with $50 or more on deposit at Clifton Savings as of the close of business on December 31, 2013 who are not eligible in Category 1; and (3) Clifton Savings Bank s depositors as of the close of business on who are not eligible in the other categories noted and borrowers as of March 3, 2004 whose loans continue to be outstanding on . If you fall into one of the above subscription offering categories, you have subscription rights to purchase shares of Clifton Bancorp common stock in the Stock Offering and you may use your account balance in the 401(k) Plan to subscribe for shares of Clifton Bancorp common stock. To the extent shares of common stock remain available after filling offers in the subscription offering, shares will be available in a community offering. The limitations on the total amount of Clifton Bancorp common stock that you may purchase in the Stock Offering, as described in the prospectus (see The Conversion and Stock Offering Limitations on Purchases of Shares ), will be calculated based on the aggregate amount that you subscribed for: (a) through your 401(k) Plan account and (b) through your sources of funds outside of the 401(k) Plan. Whether you place an order through the 401(k) Plan, outside the 401(k) Plan, or both, the number of shares of Clifton Bancorp common stock, if any, that you receive will be determined based on the total number of subscriptions, your purchase priority and the allocation priorities described in the prospectus. If, as a result of the calculation, you are allocated insufficient shares to fill all of your orders, available shares will be allocated between orders on a pro rata basis. Table of Contents CLIFTON SAVINGS BANK 401(k) SAVINGS PLAN INVESTMENT FORM Name of Plan Participant: Social Security Number: 1. Instructions. In connection with the Stock Offering, you may direct up to 100% of your current 401(k) Plan account balance (excluding funds currently invested in the Clifton Bancorp Stock Fund) into the Clifton Bancorp Stock Fund (the Employer Stock Fund ). The percentage of your 401(k) Plan account (up to 100%) transferred into the Employer Stock Fund will be used to purchase shares of Clifton Bancorp common stock in the Stock Offering. To direct a transfer of the funds credited to your 401(k) Plan account to the Employer Stock Fund, you must complete, sign and submit this form to Christine Piano by on . Current Clifton Savings employees should return their forms through inter-office mail. Former Clifton Savings employees should return their forms using the business reply envelope that has been provided. A representative for the Plan Administrator will retain a copy of this form and return a copy to you. If you need any assistance in completing this form, please contact Christine Piano at (973) 473-2200 ext. 103. If you do not complete and return this form to Christine Piano by on , the funds credited to your account under the 401(k) Plan will continue to be invested in accordance with your prior investment directions, or in accordance with the terms of the Plan if no investment directions have been provided. 2. Investment Directions. I hereby authorize the Plan Administrator to direct the Trustee to invest the following percentages (in multiples of not less than 1%) of my 401(k) Plan account balance in the Employer Stock Fund: Fund Name TD Ameritrade Sunrise Retirement Diversified Income Fund % TD Ameritrade Sunrise Retirement Balanced Fund % TD Ameritrade Sunrise Retirement Balanced Equity Fund % TD Ameritrade Sunrise Retirement Diversified Equity Fund % Wells Fargo Stable Value Fund % American Beacon Large Cap Value Fund Plan Ahead % Columbia Funds Series Trust Columbia Midcap Index Fund Investor A % American Europacific Growth Fund R4 % Neuberger Berman Genesis Fund Trust % T Rowe Price Blue Chip Growth Fund Advisor % SSgA S&P 500 Index Fund % American Century Government Bond Fund IV % I understand that my election to transfer funds to the Employer Stock Fund to purchase shares of Clifton Bancorp stock in the Stock Offering is irrevocable. I understand that the funds transferred to the Employer Stock Fund will be divisible by $10.00, the per share price for the common stock offering in the Stock Offering. Table of Contents PROSPECTUS (Proposed new holding company for Clifton Savings Bank) Up to 22,425,000 Shares of Common Stock $10.00 per Share Clifton Bancorp Inc., a newly formed Maryland corporation that is referred to as new Clifton throughout this prospectus, is offering common stock for sale in connection with the conversion of Clifton MHC from the mutual holding company form of organization to the stock form of organization. We are offering up to 22,425,000 shares of common stock for sale, subject to certain conditions, at a price of $10.00 per share. We must sell a minimum of 16,575,000 shares to complete the offering. Purchasers will not pay a commission to purchase shares of common stock in the offering. The amount of capital being raised is based on an independent appraisal of new Clifton. Most of the terms of this offering are required by regulations of the Board of Governors of the Federal Reserve System. The shares we are offering represent the 64.2% adjusted ownership interest in Clifton Savings Bancorp, Inc., a federal corporation that is referred to as old Clifton throughout this prospectus, now owned by Clifton MHC. The remaining 35.8% adjusted interest in old Clifton currently owned by the public will be exchanged for shares of common stock of new Clifton. The shares of old Clifton currently owned by the public will be exchanged for between 9,258,853 shares and 12,526,683 shares of common stock of new Clifton so that old Clifton s existing public shareholders will own approximately the same adjusted percentage of new Clifton common stock as they owned of old Clifton s common stock immediately before the conversion. Old Clifton and Clifton MHC will cease to exist upon completion of the conversion and offering. We are offering the shares of common stock in a subscription offering to eligible depositors and borrowers of Clifton Savings Bank and Clifton Savings Bank s tax-qualified employee stock ownership plan. Shares of common stock not purchased in the subscription offering may be offered for sale in a community offering, with a preference given to natural persons residing in Bergen, Passaic, Essex, Morris, Hudson and Union Counties, New Jersey, then to shareholders of old Clifton and then to other members of the general public. To the extent any shares offered for sale are not purchased in the subscription or community offerings, they may be sold in a separate syndicated offering or in a firm commitment underwritten public offering. With respect to the subscription offering, the community offering and any syndicated offering, Sandler O Neill & Partners, L.P. will use its best efforts to assist us in our selling efforts but is not required to purchase any shares of common stock that are being offered for sale in such offerings. Funds received before the completion of the subscription and community offerings will be held in a segregated account at Clifton Savings Bank and will earn interest at Clifton Savings Bank s passbook savings rate, which is currently %. The minimum order is 25 shares. The subscription offering will end at : p.m., Eastern time, on [DATE1], 2014. The community offering, if held, may terminate at the same time, although it may continue without notice to you until [DATE2], 2014 or longer if the Federal Reserve Board approves a later date. No single extension may exceed 90 days and the offering must be completed by [DATE3], 2015. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [DATE2], 2014, or the number of shares of common stock to be sold is increased to more than 22,425,000 shares or decreased to less than 16,575,000 shares. If we extend the offering beyond [DATE2], 2014, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest calculated at Clifton Savings Bank s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 16,575,000 shares or more than 22,425,000 shares, we will promptly return all funds and set a new offering range. All subscribers will be notified and given the opportunity to place a new order. Old Clifton s common stock currently trades on the Nasdaq Global Select Market under the symbol CSBK and we expect the common stock of new Clifton will also trade on the Nasdaq Global Select Market under the symbol CSBK. This investment involves a high degree of risk, including the possible loss of principal. Please read Risk Factors beginning on page 15. OFFERING SUMMARY Price Per Share: $10.00 Minimum Midpoint Maximum Number of shares 16,575,000 19,500,000 22,425,000 Gross offering proceeds $ 165,750,000 $ 195,000,000 $ 224,250,000 Estimated offering expenses, excluding selling agent fees and expenses $ 1,213,000 $ 1,213,000 $ 1,213,000 Estimated selling agent fees and expenses(1)(2) $ 1,673,150 $ 1,948,100 $ 2,223,050 Estimated net proceeds $ 162,863,850 $ 191,838,900 $ 220,813,950 Estimated net proceeds per share $ 9.83 $ 9.84 $ 9.85 (1) Assumes all shares are sold in the subscription and community offerings and excludes reimbursable expenses and conversion agent fees. For information regarding compensation to be received by Sandler O Neill & Partners, L.P., see Pro Forma Data and The Conversion and Offering Marketing Arrangements. (2) If all shares of common stock are sold in a syndicated offering or firm commitment underwritten offering, excluding shares purchased by the employee stock ownership plan and shares purchased by insiders of old Clifton, for which no selling agent commissions would be paid, the maximum selling agent fees and commissions would be $7.9 million at the minimum and $10.6 million at the maximum. See The Conversion and Offering Syndicated Offering or Firm Commitment Offering for a discussion of the fees to be paid to Sandler O Neill & Partners, L.P. and other Financial Industry Regulatory Authority member firms in the event that all shares are sold in a syndicated offering or firm commitment underwritten offering. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. SANDLER O NEILL + PARTNERS, L.P. For assistance, please contact the Stock Information Center at . The date of this prospectus is , 2014 Table of Contents family real estate loan portfolio has increased $82.0 million, or 19.6%. We utilize conservative underwriting strategies for all of our lending products. We originate loans solely for our own portfolio, rather than for sale, and we currently service all of the loans we originate. To further supplement our loan originations, we also have increased our purchased loans, which we underwrite using the same conservative underwriting procedures we use when originating loans. We also service most of our purchased loans. Purchased loans have increased from $1.8 million in fiscal 2011 to $47.3 million in fiscal 2013 and $49.6 million in the six months ended September 30, 2013. Increasing our multi-family and commercial real estate lending. In late 2012, we established a commercial loan department to expand our multi-family and commercial real estate lending activities and diversify our loan portfolio beyond residential mortgage loans. Since March 31, 2013, our multi-family and commercial real estate loan portfolio has increased $13.4 million, or 46.7%, and at September 30, 2013 was 7.6% of our total loan portfolio. We believe the expansion of our multi-family and commercial real estate lending will help diversify our balance sheet, improve our interest rate risk exposure and increase our presence in our market area. After the offering, we intend to continue these efforts and plan to hire additional commercial lending personnel and add appropriate infrastructure in order to implement our strategy. Further, with the additional capital raised in the offering, we expect to continue to pursue larger lending relationships. Continuing conservative underwriting practices in order to maintain a high quality loan portfolio. We believe that strong asset quality is a key to long-term financial success. We have sought to maintain a high level of asset quality and mitigate credit risk by using conservative underwriting standards and by diligent monitoring and collection efforts. At September 30, 2013, nonperforming loans were 0.9% of the total loan portfolio and 0.4% of total assets. Although we intend to increase our multi-family and commercial real estate lending, we will do so consistent with our loan underwriting and credit administration standards. Stockholder-focused management of capital coupled with opportunistic acquisitions. We believe that maintaining a strong capital base is critical to support our long-range business plan; however, we recognize that we will have a historically high level of capital following completion of the offering. Consequently, we intend to manage our capital position, using appropriate capital management tools, to return excess capital to our stockholders, consistent with applicable regulations and policies. We have repurchased a total of $52.9 million of our common stock since 2005, however, our repurchase levels have slowed significantly since we initially determined to conduct a second-step conversion offering in fiscal 2011. We expect to continue stock repurchases after completion of the conversion subject to market conditions and regulatory restrictions. Under current federal regulations, subject to limited exceptions, we may not repurchase shares of our common stock during the first year following the completion of the conversion. See Use of Proceeds. In addition, following the completion of the conversion, we intend to continue the payment of regular quarterly dividends. Initially, we expect the quarterly dividends to be $0.05 per share, which equals $0.20 per share on an annualized basis and an annual yield of 2.0% based on a price of $10.00 per share. See Our Dividend Policy. Organic growth has been, and will continue to be, our primary focus. However, following the offering we intend to review acquisition opportunities that we believe will enhance our franchise, further our business strategy and yield long-term financial benefits for our stockholders. The conversion into a stock holding company structure will better position us to participate in consolidation activity by providing a more flexible corporate structure and additional capital resources. Currently, we do not have any specific plans or arrangements to acquire any financial institutions. Enhancing core earnings by increasing lower cost transaction and savings accounts and continuing our emphasis on operational efficiencies. Checking, savings and money market accounts are a lower cost source of funds than time deposits, and we have made a concerted effort to increase lower-cost transaction and savings deposit accounts and reduce our dependence on traditionally higher cost certificates of deposit. Our ratio of certificates of deposit to total deposits has decreased from 78.1% at March 31, 2011 to 70.4% at September 30, 2013. We intend to market our core transaction accounts and savings accounts, emphasizing additional product offerings and our high quality service. We also recognize that controlling operating expenses is essential to our long-term profitability. While we anticipate that our efficiency ratio may be negatively impacted in future periods as a result of our expansion of our lending efforts, technology enhancements, the hiring of additional personnel and the implementation of benefit plans, we intend to continue to focus on operational efficiencies. Our annualized efficiency ratio for the six months ended September 30, 2013 was 57.6%. Table of Contents Q. What are reasons for the conversion and offering? A. The primary reasons for the conversion and offering are to eliminate the uncertainties associated with the mutual holding company structure under financial reform legislation, transition us to a more familiar and flexible organizational structure, facilitate future mergers and acquisitions and improve the liquidity of our shares of common stock. Q. Why should I vote? A. You are not required to vote, but your vote is very important. For us to implement the plan of conversion, we must receive the affirmative vote of (1) the holders of at least two-thirds of the outstanding shares of old Clifton common stock, including shares held by Clifton MHC and (2) the holders of a majority of the outstanding shares of old Clifton common stock entitled to vote at the special meeting, excluding shares held by Clifton MHC. Your board of directors recommends that you vote FOR the plan of conversion. Q. What happens if I don t vote? A. Your prompt vote is very important. Not voting will have the same effect as voting Against the plan of conversion. Without sufficient favorable votes FOR the plan of conversion, we cannot complete the conversion and offering. Q. How do I vote? A. You should mark your vote, sign your proxy card and return it in the enclosed proxy reply envelope. Alternatively, you may vote by telephone or via the Internet, by following instructions on your proxy card. PLEASE VOTE PROMPTLY. NOT VOTING HAS THE SAME EFFECT AS VOTING AGAINST THE PLAN OF CONVERSION. Q. If my shares are held in street name, will my broker automatically vote on my behalf? A. No. Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares, using the directions that your broker provides to you. Q. What if I do not give voting instructions to my broker? A. Your vote is important. If you do not instruct your broker to vote your shares, the unvoted proxy will have the same effect as a vote against the plan of conversion. Q. How can I revoke my proxy? A. You may revoke your proxy at any time before the vote is taken at the meeting. To revoke your proxy, you must either advise the Corporate Secretary of old Clifton in writing before your common stock has been voted at the special meeting, deliver a later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy. The Exchange Q. I currently own shares of old Clifton common stock. What will happen to my shares as a result of the conversion? A. At the completion of the conversion, your shares of old Clifton common stock will be canceled and exchanged for shares of common stock of new Clifton, a newly formed Maryland corporation. The number of shares you will receive will be based on an exchange ratio, determined as of the completion of the conversion and offering, that is intended to result in old Clifton s existing public shareholders owning approximately 35.8% of new Clifton s common stock, which is the same percentage of old Clifton common stock currently owned by existing public shareholders as adjusted to reflect the assets of Clifton MHC. Table of Contents As of the record date, there were shares of old Clifton common stock outstanding, of which Clifton MHC owned 16,791,758. The directors and executive officers of old Clifton (and their affiliates), as a group, beneficially owned shares of old Clifton common stock, representing % of the outstanding shares of old Clifton common stock and % of the shares held by persons other than Clifton MHC as of such date. Clifton MHC and our directors and executive officers intend to vote their shares in favor of the plan of conversion. Our Company Old Clifton is, and new Clifton following the completion of the conversion and offering will be, the unitary savings and loan holding company for Clifton Savings Bank, a federally chartered savings bank. Clifton Savings Bank is headquartered in Clifton, New Jersey and has provided community banking services to its customers since 1928. We currently operate twelve full-service locations Passaic and Bergen Counties in New Jersey. Clifton Savings Bank has one wholly-owned subsidiary, Botany Inc., which is an investment company incorporated under New Jersey law. Botany Inc. primarily holds investments and mortgage-backed securities in an effort to minimize Clifton Savings Bank s New Jersey state tax liability. Our common stock trades on the Nasdaq Global Select Market under the symbol CSBK. At September 30, 2013, old Clifton had consolidated total assets of $1.1 billion, gross loans of $555.7 million, total deposits of $791.4 million and total stockholders equity of $188.5 million. At September 30, 2013, Clifton Savings Bank exceeded all regulatory capital requirements and was not a participant in any of the U.S. Treasury s capital raising programs for financial institutions. Our principal executive offices are located at 1433 Van Houten Avenue, Clifton, New Jersey and our telephone number is (973) 473-2200. Our web site address is www.cliftonsavings.com. Information on our website should not be considered a part of this proxy statement/prospectus. The Conversion Description of the Conversion [SAME AS OFFERING PROSPECTUS] Reasons for the Conversion and Offering [SAME AS OFFERING PROSPECTUS] Conditions to Completing the Conversion and Offering [SAME AS OFFERING PROSPECTUS] The Exchange of Existing Shares of Old Clifton Common Stock [SAME AS OFFERING PROSPECTUS] Table of Contents Value of Participation Interests As of September 30, 2013, the market value of the 401(k) Plan assets equaled approximately $4,701,000 (excluding funds invested in the Clifton Bancorp Stock Fund). All 401(k) Plan participants have received a benefit statement reflecting the value of his or her beneficial interest in the 401(k) Plan as of September 30, 2013. The value of the 401(k) Plan assets represents past contributions made to the 401(k) Plan on your behalf, plus or minus earnings or losses on the contributions, less previous withdrawals. Method of Directing Your Investment Election If you wish to use your 401(k) Plan funds to participate in the Stock Offering please complete, sign the enclosed blue Investment Form and submit it to Christine Piano before the investment deadline noted below. The blue Investment Form allows you to liquidate a percentage of your beneficial interest in the assets of the 401(k) Plan (in multiples not less than 1%) and use those funds to invest in Clifton Bancorp common stock in the Stock Offering. Prior to purchasing Clifton Bancorp common stock in the Stock Offering, your liquidated funds will be held in a money market fund earning market rates of interest until the 401(k) Plan trustees can use the cash to purchase shares of Clifton Bancorp in the Stock Offering. Only funds divisible by $10.00, the per share price of Clifton Bancorp common stock in the Stock Offering, will be used to purchase shares of common stock in the Stock Offering. Time for Directing Your Investment Election The deadline for submitting your Investment Form to Christine Piano is , . Irrevocability of Your Investment Election and Restrictions on Transferability Once you submit your Investment Form to Clifton Savings Bank, you cannot change your election to subscribe for shares in the Stock Offering. You may be able to change your investments in other investment funds under the 401(k) Plan, subject, however, to the terms of the 401(k) Plan and any blackout notices to the contrary that you receive from the Plan Administrator. If you are an officer of Clifton Savings Bank or Clifton Bancorp the shares of Clifton Bancorp common stock you purchase in the Stock Offering may not be sold for a period of one year following the close of the Stock Offering, except in the event of your death or unless approved by the Federal Deposit Insurance Corporation. Shares purchased through the Clifton Bancorp Stock Fund after the close of the stock offering will be free of this restriction. Purchase Price of Clifton Bancorp Inc. Common Stock The 401(k) Plan trustee will use the funds transferred to the Clifton Bancorp Stock Fund to purchase shares of Clifton Bancorp common stock in the Stock Offering. The 401(k) Plan trustee will pay the same price for shares of Clifton Bancorp common stock as all other persons who purchase shares of Clifton Bancorp common stock in the Stock Offering. If there is not enough common stock available in the Stock Offering to fill all subscriptions, the common stock will be apportioned and the trustee may not be able to purchase all of the common stock you requested. If the Stock Offering is oversubscribed and your order is cut back, your 401(k) Plan funds that are not invested in the Clifton Bancorp common stock as a result of the cut-back will be reinvested in accordance with the investment elections you have in place for your elective deferrals. Table of Contents 3. Purchaser Information. The ability of a 401(k) Plan participant to purchase Clifton Bancorp stock in the Stock Offering is based upon the participant s subscription rights in the Stock Offering. Please indicate your status (check one): Check here if you had $50.00 or more on deposit at Clifton Savings as of the close of business on September 30, 2012. Check here if you had $50 or more on deposit at Clifton Savings as of the close of business on December 31, 2013 and are not eligible in Category 1. Check here if you are Clifton Savings Bank s depositor as of the close of business on who are not eligible in the other categories noted, and borrower as of March 3, 2004 whose loan continue to be outstanding on . 4. Acknowledgment of Participant. I understand that this Investment Form shall be subject to all of the terms and conditions of the 401(k) Plan. I acknowledge that I have received a copy of the Prospectus and the Prospectus Supplement. I acknowledge further that my investment election on this form is irrevocable. Signature of Participant Date Acknowledgment of Receipt by Administrator. This Investment Form was received by the Plan Administrator and will become effective on the date noted below. By: Date THE PARTICIPATION INTERESTS REPRESENTED BY THE COMMON STOCK OFFERED HEREBY ARE NOT DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY CLIFTON BANCORP OR CLIFTON SAVINGS. THE COMMON STOCK IS SUBJECT TO AN INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED. PLEASE COMPLETE AND RETURN TO CHRISTINE PIANO AT CLIFTON SAVINGS BY ON . Table of Contents Table of Contents Leveraging our competitive strengths to attract and retain customers. We believe that our competitive strengths are personalized, superior customer service, extensive knowledge of our markets and borrowers, and participation in community activities. We believe that we can leverage these strengths to attract and retain customers. We also believe that there is an increasing population of potential customers dislocated as a result of larger bank consolidations in our market area who seek the personalized service of a community bank. We plan to update existing technologies and implement new technologies to enhance the customer experience and ultimately increase the efficiency of our operations. Description of the Conversion In 2004, we reorganized Clifton Savings Bank into the partially public mutual holding company structure. As a part of that reorganization, we formed old Clifton as the mid-tier stock holding company for Clifton Savings Bank and sold a minority interest in old Clifton common stock to our depositors and borrowers and our employee stock ownership plan in a subscription offering. The majority of old Clifton s shares were issued to Clifton MHC, a mutual holding company we organized in connection with the reorganization. As a mutual holding company, Clifton MHC does not have any shareholders, does not hold any significant assets other than the common stock of old Clifton, and does not engage in any significant business activity. Our current ownership structure is as follows: The second-step conversion process that we are now undertaking involves a series of transactions by which we will convert our organization from the partially public mutual holding company form to the fully public stock holding company structure. In the stock holding company structure, all of Clifton Savings Bank s common stock will be owned by new Clifton, and all of new Clifton s common stock will be owned by the public. We are conducting the conversion and offering under the terms of our amended and restated plan of conversion and reorganization (which is referred to as the plan of conversion ). Upon completion of the conversion and offering, old Clifton and Clifton MHC will cease to exist. After the conversion and offering, our ownership structure will be as follows: As part of the conversion, we are offering for sale common stock representing the ownership interest of old Clifton that is currently held by Clifton MHC. At the conclusion of the conversion and offering, existing public shareholders of old Clifton will receive shares of common stock in new Clifton in exchange for their existing shares of common stock of old Clifton, based upon an exchange ratio of 0.9559 to 1.2933 at the minimum and maximum of the Table of Contents Q. Does the exchange ratio depend on the market price of old Clifton common stock? A. No, the exchange ratio will not be based on the market price of old Clifton common stock. Therefore, changes in the price of old Clifton common stock between now and the completion of the conversion and offering will not affect the calculation of the exchange ratio. Q. How will the actual exchange ratio be determined? A. Because the purpose of the exchange ratio is to maintain the ownership percentage of the existing public shareholders of old Clifton, the actual exchange ratio will depend on the number of shares of new Clifton s common stock sold in the offering and, therefore, cannot be determined until the completion of the conversion and offering. Q. How many shares will I receive in the exchange? A. You will receive between 0.9559 and 1.2933 shares of new Clifton common stock for each share of old Clifton common stock you own on the date of the completion of the conversion and offering. For example, if you own 100 shares of old Clifton common stock, and the exchange ratio is 1.1246 (at the midpoint of the offering range), you will receive 112 shares of new Clifton common stock and $4.60 in cash, the value of the fractional share, based on the $10.00 per share purchase price in the offering. Shareholders who hold shares in street name at a brokerage firm or are held in book-entry form by our transfer agent will receive these funds in their accounts. Shareholders who hold stock certificates will receive a check in the mail. Q. Should I submit my stock certificates now? A. No. If you hold a stock certificate for old Clifton common stock, instructions for exchanging your certificate will be sent to you after completion of the conversion and offering. Until you submit the transmittal form and certificate, you will not receive your new certificate and check for cash in lieu of fractional shares, if any. If your shares are held in street name at a brokerage firm, the share exchange will occur automatically upon completion of the conversion and offering, without any action on your part. Please do not send in your stock certificate until you receive a transmittal form and instructions. Q. Do I have dissenters and appraisal rights? A. No. Shareholders of old Clifton do not have dissenters rights in connection with the conversion and offering. Stock Offering Q. May I place an order to purchase shares in the offering, in addition to the shares that I will receive in the exchange? A. Eligible depositors and certain borrowers of Clifton Savings Bank have priority subscription rights allowing them to purchase common stock in the subscription offering. Shares not purchased in the subscription offering may be made available for sale to the public in a community offering. Old Clifton shareholders have a preference in the community offering after orders submitted by residents of our communities. If you would like to receive a prospectus and stock order form, please call our Stock Information Center at ( ) from : a.m. to : p.m., Eastern time, Monday through Friday. The Stock Information Center will be closed weekends and bank holidays. Order forms, along with full payment, must be received (not postmarked) no later than : p.m., Eastern time on [DATE 1], 2014. Other Questions? For answers to questions about the conversion or voting, please read this proxy statement/prospectus. Questions about voting may be directed to our proxy information agent, AST Phoenix Advisors, by calling ( ) - , Monday through Friday, from : a.m. to : p.m., Eastern time. For answers to questions about the stock offering, you may call our Stock Information Center, toll-free, at ( ) from : a.m. to : p.m., Eastern time, Monday through Friday. A copy of the plan of conversion is available from Clifton Savings Bank upon written request to the Corporate Secretary and is available for inspection at the offices of Clifton Savings Bank and at the Federal Reserve Board. Table of Contents Effect of the Conversion on Shareholders of Old Clifton The following table compares historical information for new Clifton with similar information on a pro forma and per equivalent old Clifton share basis. The information listed as per equivalent new Clifton share was obtained by multiplying the pro forma amounts by the exchange ratio indicated in the table. Old Clifton Historical Pro Forma Exchange Ratio Per Equivalent New Clifton Share Book value per share at September 30, 2013: Sale of 16,575,000 shares $ 7.18 $ 13.20 0.9559 x $ 12.62 Sale of 19,500,000 shares 7.18 12.08 1.1246 13.59 Sale of 22,425,000 shares 7.18 11.25 1.2933 14.55 Earnings per share for the six months ended September 30, 2013: Sale of 16,575,000 shares 0.12 0.12 0.9559 0.11 Sale of 19,500,000 shares 0.12 0.10 1.1246 0.11 Sale of 22,425,000 shares 0.12 0.09 1.2933 0.12 Price per share (1): Sale of 16,575,000 shares 12.70 10.00 0.9559 9.56 Sale of 19,500,000 shares 12.70 10.00 1.1246 11.25 Sale of 22,425,000 shares 12.70 10.00 1.2933 12.93 (1) At November 20, 2013, which was the day of the adoption of the plan of conversion. How We Determined the Offering Range and Exchange Ratio [SAME AS OFFERING PROSPECTUS] How We Intend to Use the Proceeds of this Offering [SAME AS OFFERING PROSPECTUS] Benefits of the Conversion to Management [SAME AS OFFERING PROSPECTUS] Purchases by Directors and Executive Officers [SAME AS OFFERING PROSPECTUS] Market for New Clifton s Common Stock [SAME AS OFFERING PROSPECTUS] Our Dividend Policy [SAME AS OFFERING PROSPECTUS] Dissenters Rights Shareholders of old Clifton do not have dissenters rights in connection with the conversion and offering. Differences in Shareholder Rights As a result of the conversion, existing shareholders of old Clifton will become shareholders of new Clifton. The rights of shareholders of new Clifton will be less than the rights shareholders currently have. The decrease in Table of Contents Nature of a Participant s Interest in Clifton Bancorp Inc. Common Stock The 401(k) Plan trustee will hold Clifton Bancorp common stock in the name of the 401(k) Plan. The 401(k) Plan trustee will credit shares of Clifton Bancorp common stock acquired at your direction to your account under the 401(k) Plan. Your interest in the Clifton Bancorp Stock Fund will be credited in units. Immediately after the close of the Stock Offering each unit will equal one share of Clifton Bancorp common stock. Once the Clifton Bancorp Stock Fund begins to have open market purchases, each unit will consist of a portion of cash and common stock. For liquidity purposes, the Clifton Bancorp Stock Fund will be % in cash. Voting and Tender Rights of Clifton Bancorp Inc. Common Stock The 401(k) Plan trustee will exercise voting and tender rights attributable to all Clifton Bancorp common stock held in the Clifton Bancorp Stock Fund, as directed by participants with interests in the Clifton Bancorp Stock Fund. With respect to each matter as to which holders of Clifton Bancorp common stock have a right to vote, you will have voting instruction rights that reflect your proportionate interest in the Clifton Bancorp Stock Fund. The number of shares of Clifton Bancorp common stock held in the Clifton Bancorp Stock Fund voted for and against each matter will be proportionate to the number of voting instruction rights exercised. If there is a tender offer for Clifton Bancorp common stock, the 401(k) Plan allots each participant a number of tender instruction rights reflecting each participant s proportionate interest in the Clifton Bancorp Stock Fund. The percentage of shares of Clifton Bancorp common stock held in the Clifton Bancorp Stock Fund that will be tendered will be the same as the percentage of the total number of tender instruction rights exercised in favor of the tender offer. The remaining shares of Clifton Bancorp common stock held in the Clifton Bancorp Stock Fund will not be tendered. The 401(k) Plan provides that participants will exercise their voting instruction rights and tender instruction rights on a confidential basis. Future Direction to Purchase Common Stock You will be able to invest in the Clifton Bancorp Stock Fund after the Stock Offering by accessing your account via the Internet and directing the trustee to invest your future contributions or your account balance in the 401(k) Plan into the Clifton Bancorp Stock Fund. After the Stock Offering, to the extent that shares of common stock are available, Pentegra Trust Company will acquire Clifton Bancorp common stock at your election in open market transactions at the prevailing market price. Special restrictions may apply to transfers directed to and from the Clifton Bancorp Stock Fund by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal shareholders of Clifton Bancorp. DESCRIPTION OF THE 401(k) PLAN Introduction Clifton Savings adopted the amended and restated 401(k) Plan effective . Clifton Savings intends for the 401(k) Plan to comply, in form and in operation, with all applicable provisions of the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). Clifton Savings may amend the 401(k) Plan from time to time in the future to ensure continued compliance with these laws. Clifton Savings may also amend the 401(k) Plan from time to Table of Contents offering range, respectively. The actual exchange ratio will be determined at the conclusion of the conversion and the offering based on the total number of shares sold in the offering, and is intended to result in new Clifton s existing public shareholders owning 35.8% of new Clifton common stock, which is based on the 36.6% ownership interest that existing public shareholders currently own of old Clifton common stock adjusted to reflect the assets of Clifton MHC, without giving effect to cash paid in lieu of issuing fractional shares or shares that existing shareholders may purchase in the offering. If the conversion and offering is canceled, orders for common stock already submitted will be canceled, subscribers funds will be promptly returned with interest calculated at Clifton Savings Bank s passbook savings rate and all deposit account withdrawal authorizations will be canceled. The normal business operations of Clifton Savings Bank will continue without interruption during the conversion and offering, and the same officers and directors who serve Clifton Savings Bank at the completion of the conversion and offering will serve new Clifton and Clifton Savings Bank in the fully converted stock form. Reasons for the Conversion and Offering Our primary reasons for the conversion and offering are the following: Eliminate the uncertainties associated with the mutual holding company structure under financial reform legislation. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, the Federal Reserve Board became the federal regulator of all savings and loan holding companies and mutual holding companies, which has resulted in changes in regulations applicable to Clifton MHC and old Clifton. Among other things, these changes have adversely affected our ability to pay cash dividends to our stockholders, including the ability of Clifton MHC to waive any dividends declared by old Clifton. The conversion will eliminate our mutual holding company structure and will enable us to pay dividends to our stockholders, subject to the customary legal, regulatory and financial considerations applicable to all financial institutions. See Our Dividend Policy. It also will eliminate the risk that the Federal Reserve Board will amend existing regulations applicable to the conversion process in a manner disadvantageous to our public stockholders or depositors. Transition us to a more familiar and flexible organizational structure. The stock holding company structure is a more familiar form of organization, which we believe will make our common stock more appealing to investors. The stock holding company structure will also give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans or arrangements for any such offerings. Facilitate future mergers and acquisitions. Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit the acquisition of new Clifton for three years following completion of the conversion. Improve the liquidity of our shares of common stock. The larger number of shares that will be outstanding after completion of the conversion and offering is expected to result in a more liquid and active market for new Clifton common stock. A more liquid and active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies. Terms of the Offering We are offering between 16,575,000 and 22,425,000 shares of common stock in a subscription offering to eligible depositors and certain borrowers of Clifton Savings Bank and to our employee stock ownership plan. To the extent shares remain available, we will offer shares in a community offering to natural persons residing in Bergen, Passaic, Table of Contents shareholder rights results from differences between the articles of incorporation and bylaws of new Clifton and the charter and bylaws of old Clifton and from distinctions between Maryland and federal law. The differences in shareholder rights under the articles of incorporation and bylaws of new Clifton are not mandated by Maryland law but have been chosen by management as being in the best interests of the corporation and all of its shareholders. However, the provisions in new Clifton s articles of incorporation and bylaws may make it more difficult to pursue a takeover attempt that management opposes. These provisions will also make the removal of the board of directors or management, or the appointment of new directors, more difficult. The differences in shareholder rights include the following: supermajority voting requirements for certain business combinations and changes to some provisions of the articles of incorporation and bylaws; limitation on the right to vote shares; a majority of shareholders required to call special meetings of shareholders; and greater lead time required for shareholders to submit business proposals or director nominations. Tax Consequences [SAME AS OFFERING PROSPECTUS] Table of Contents time in the future to add, modify, or eliminate certain features of the plan, as it sees fit. Federal law provides you with various rights and protections as a participant in the 401(k) Plan, which is governed by ERISA. However, the Pension Benefit Guaranty Corporation does not guarantee your benefits under the 401(k) Plan. Reference to Full Text of the Plan. The following portions of this prospectus supplement summarize the material provisions of the 401(k) Plan. Clifton Savings qualifies this summary in its entirety by reference to the full text of the 401(k) Plan. You may obtain copies of the 401(k) Plan document, including any amendments to the plan and a summary plan description, by contacting Christine Piano at (973) 473-2200 ext. 103. You should carefully read the 401(k) Plan documents to understand your rights and obligations under the 401(k) Plan. Eligibility and Participation Clifton Savings employees must attain age 21 and complete at least one (1) year of eligibility service in order to participate in the 401(k) Plan. As of September 30, 2013, 85 of the 92 eligible employees of Clifton Savings participated in the 401(k) Plan. Contributions Under the 401(k) Plan Employee Pre-Tax Contributions. As a 401(k) Plan participant, you may defer a percentage of your salary (1% to 25%) into the 401(k) Plan, however, the most you may contribute on a before tax basis in any Plan Year is $17,500 for 2013 (this amount may be adjusted annually by law). For purposes of the Plan, salary is defined as the wages paid to you by Clifton Savings Bank. It includes, among other things, overtime, commissions and bonuses. The maximum amount of your salary that may be used for purposes of the 401(k) Plan is $255,000 for the 2013 Plan Year. In addition to pre-tax salary deferrals, you may make catch up contributions if you are currently age 50 or will be 50 before the end of the calendar year. The catch up contribution limit for 2013 is $5,500. You are always 100% vested in your elective deferrals. Clifton Savings Matching Contributions. The 401(k) Plan currently provides that Clifton Savings will make matching contributions on behalf of each eligible participant with respect to each eligible participant s elective deferrals. If you elect to defer funds into the 401(k) Plan, Clifton Savings currently matches 50% of the first 4.5% of salary you defer into the 401(k) Plan. Clifton Savings makes matching contributions only to those participants who actively defer a percentage of their compensation into the 401(k) Plan. Rollover Contributions. Clifton Savings allows employees who receive a distribution from a previous employer s tax-qualified employee benefit plan to deposit that distribution into a Rollover Contribution account under the 401(k) Plan, provided the rollover contribution satisfies IRS requirements. For additional information on Rollover Contributions see the Summary Plan Description for the 401(k) Plan. Table of Contents Essex, Morris, Hudson and Union Counties in New Jersey, to our existing public shareholders and to the general public. If necessary, we will also offer shares to the general public in a syndicated offering or a firm commitment underwritten offering. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [DATE2], 2014, or the number of shares of common stock to be sold is increased to more than 22,425,000 shares or decreased to less than 16,575,000 shares. If we extend the offering beyond [DATE2], 2014, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If no response is received, we will promptly return your funds with interest calculated at Clifton Savings Bank s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 16,575,000 shares or more than 22,425,000 shares, we will promptly return all funds and set a new offering range. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated offering or firm commitment underwritten offering. The purchase price is $10.00 per share. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, the community offering or a syndicated offering or firm commitment underwritten offering. Sandler O Neill & Partners, L.P., our marketing agent in the subscription and community offerings, will use its best efforts to assist us in selling shares of our common stock in the subscription and community offerings. Sandler O Neill & Partners, L.P. is not obligated to purchase any shares of common stock in the subscription and community offerings. How We Determined the Offering Range and Exchange Ratio Federal regulations require that the aggregate purchase price of the securities sold in the offering be based upon our estimated pro forma market value after the conversion (i.e., taking into account the expected receipt of proceeds from the sale of securities in the offering) as determined by an independent appraisal. In accordance with the regulations of the Federal Reserve Board, a valuation range is established which ranges from 15% below to 15% above this pro forma market value. We have retained RP Financial, LC., which is experienced in the evaluation and appraisal of financial institutions, to prepare the appraisal. RP Financial has indicated that, as of January 17, 2014, the full market value of new Clifton s common stock s was $303.9 million, resulting in a valuation range of $258.3 million at the minimum to $349.5 million at the maximum. This results in an offering range of $165.8 million to $224.3 million, with a midpoint of $195.0 million. RP Financial, LC. will receive a fee of $110,000 for its appraisal report, plus $10,000 for any appraisal updates (of which there will be at least one) and reimbursement of out-of-pocket expenses. In preparing its appraisal, RP Financial considered the information in this prospectus, including our financial statements. RP Financial also considered the following factors, among others: our historical and projected operating results and financial condition, including, but not limited to, net interest income, the amount and volatility of interest income and interest expense relative to changes in market conditions and interest rates, asset quality, levels of loan loss provisions, the amount and sources of non-interest income, and the amount of noninterest expense; the economic, demographic and competitive characteristics of our market area, including, but not limited to: employment by industry type, unemployment trends, size and growth of the population, trends in household and per capita income, and deposit market share; a comparative evaluation of our operating and financial statistics with those of other similarly-situated, publicly-traded savings associations and savings association holding companies, including a comparative analysis of balance sheet composition, income statement and balance sheet ratios, and credit and interest rate risk exposure; the effect of the capital raised in this offering on our net worth and earnings potential, including, but not limited to, the increase in consolidated equity resulting from the offering, the estimated increase in earnings resulting from the investment of the net proceeds of the offering, and the estimated impact on consolidated equity and earnings resulting from adoption of the proposed employee stock benefit plans; and the trading market for old Clifton common stock and securities of comparable institutions and general conditions in the market for such securities. 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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information that you should consider before investing in the common stock of Digital Caddies, Inc. (referred to herein as the "Company," "we," "our," and "us"). You should carefully read the entire Prospectus, including "Risk Factors," "Management s Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying financial statements and notes before making an investment decision. Corporate History Digital Caddies, Inc. ("Digital Caddies," "CADY" or the "Company") is a corporation which was incorporated under the laws of the State of Oklahoma on September 7, 2011. The shares of stock and warrants of the Company were previously held in the name of DNA Beverage Corp., a Nevada Corporation, prior to the Company completing a holding company formation pursuant to Section 1081(a) of the Oklahoma General Corporation Laws. The Company s fiscal year end is October 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings. Prior to its merger with the Company in 2011, Digital Caddies was a private company that was founded in 2003. From 2003 to June 2013, Digital Caddies was initially the Canadian distributer of Golf GPS technology owned by GolfLogix and later obtained worldwide rights to distribute GolfLogix technology for use in business to business applications. In 2007, in order to reflect this new relationship with GolfLogix as GolfLogix worldwide distributor, the Company briefly changed its name to GolfLogix (US), Inc., but reverted to the name Digital Caddies, Inc. on March 27, 2008. When the Company made the transition to the new business model focused on launching the new advertising platform, the agreement between Digital Caddies and GolfLogix was allowed to expire and there is no longer any current relationship between Digital Caddies, Inc. and GolfLogix. Beginning in June 2013, the Company shifted its business focus so that, instead of generating revenue through sales of tablets, revenue generation was expected to occur through sales of advertising on the newly launched "Digital Caddies platform," which is expected to enable the Company to generate revenues from a source that is different from its prior business model. Business Overview Digital Caddies, Inc. is a golf-centric technology and information-dissemination company that uses tablet technology and wireless connectivity to create The Players Network, an informational medium that enables advertisers to directly market to golfers through multifunctional web-enabled interactive tablets (currently manufactured by Samsung) installed on golf cars owned by the Company s customer golf course businesses. These Internet-connected interactive tablets are designed to provide services to both golfers and golf courses alike. Once interactive tablets are installed, players are provided with a number of interactive services and applications, such as GPS-based hole/course information, scoring applications, messaging platforms (for cart-to-cart and cart-to-course communications), the ability to wirelessly call for the beverage cart, plus news, weather, sports, and entertainment. In addition, our platform provides a broad portfolio of course management tools designed to enable golf course managers to improve player pace of play via GPS-based cart tracking and communications, potentially increase merchandise and concession sales via real-time on-tablet promotions, and access to additional revenue streams (e.g., sale of local advertising.) All of these services are currently provided to our customer golf courses free of charge, although we may elect to charge for these services in the future. We launched the beta version of the Digital Caddies platform in June 2013, then formally launched the platform in November 2013, and have signed contracts with several golf course management firms, Troon and OB Sports. To date, we have installations at approximately 170 golf courses, and have entered into several partnerships with third party ad networks, such as Nexage, Millenial Media, LiveRail, MoPub, Inc. and Access Sports Media, to help monetize The Players Network. The majority of our initial revenue will come from the sale of advertising and from sponsorship revenue. Our ability to attract advertisers, generate revenues and obtain premium advertising rates will be highly dependent upon a number of key factors including: (i) the attractiveness and density of our primary demographic; (ii) the amount of reach and/or viewership; (iii) the dwell time (that is, how long a viewer looks at a particular screen); and (iv) data (that is, what is known about a viewer and what information can be collected for the advertiser). Impressions opportunities equal the number of times we can potentially place an advertisement in front of that golfer. The average round of golf takes 4.5 hours to play. Currently, our ad locations can provide up to 2 advertisements every minute. Therefore, 4.5 hours equals 270 minutes times 2 ad opportunities per minute, equals 540 ad opportunities per round. We currently have 3 ad locations integrated into our service therefore every round of golf provides up to 1620 ad opportunities. Based on our current estimated viewership of approximately 500,000 rounds per month, we generate up to 400 million impression opportunities. In addition, advertisers buy ad space based on the number of impressions they buy multiplied by the price. The pricing is usually based on the price for 1000 impressions, referred to as "CPM" (Cost per thousand). In order to calculate the revenue possibility, we take the number of impressions available and divide it by 1000 and multiply it by the CPM and multiply it by the "fill rate," which is defined as the number of impressions actually sold. We believe that advertisers will be very interested in presenting their message on our Digital Caddies because of our ability to generate impressions and connect such advertisers with golfers during play. SUMMARY OF THIS OFFERING The Issuer Digital Caddies, Inc. Securities being offered Up to 10,000,000 units are being offered for sale by the Company, comprised of: (i) 20,000,000 shares of Common Stock; and (ii) 10,000,000 shares issuable pursuant to the exercise of warrants to purchase shares of Common Stock. Each Unit shall be comprised of two (2) common stock shares and one (1) Offering Warrant. Each Offering Warrant shall be immediately exercisable to purchase one (1) share of common stock at an exercise price of $0.40 and have an expiry date of five (5) years after the date of issuance. This collectively represents approximately 33% of the currently issued and outstanding shares of the Company's Common Stock. Our Common Stock is described in further detail in the section of this prospectus titled "DESCRIPTION OF SECURITIES." Per Unit Price $0.40 Duration of Offering The shares and warrants are offered for a period not to exceed 180 days, unless extended by our Board of Directors for an additional 90 days. Number of shares Outstanding before the Offering There are 89,734,973 shares of Common Stock issued and outstanding as of December 17, 2014. Net Proceeds to the Company The Company is offering a maximum of 10,000,000 Units, at an offering price of $0.40 per Unit, comprised of: (i) 20,000,000 shares of Common Stock, $0.001 par value; and (ii) 10,000,000 shares issuable pursuant to the exercise of warrants to purchase Common Stock, $0.001 par value. Each Unit shall be comprised of two (2) common stock shares and one (1) Offering Warrant. Each Offering Warrant shall be immediately exercisable to purchase one (1) share of common stock at an exercise price of $0.40 and have an expiry date of five (5) years after the date of issuance. The Company shall receive net proceeds of $4,000,000.00 if all of the Units being offered are sold. The full subscription price will be payable at the time of subscription and accordingly, funds received from subscribers in this Offering will be released to the Company when subscriptions are received and accepted. The Company shall receive additional net proceeds of $4,000,000 if all of the Offering Warrants underlying the Units are exercised. The exercise price will be payable at any time after the date of issuance and prior to the expiry date of such warrants and, accordingly, funds received from subscribers in this Offering will be released to the Company when the warrants are exercised. No assurance can be given that the net proceeds from the total number of Units offered hereby or any lesser net amount will be sufficient to accomplish our goals. If proceeds from this offering are insufficient, we may be required to seek additional capital. No assurance can be given that we will be able to obtain such additional capital. Use of Proceeds We will use the proceeds to build infrastructure for our the network, install golf courses with equipment, pay for wireless connectivity, pay for increased sales and marketing, administrative expenses, operating expenses, and working capital. Risk factors An investment in our Common Stock involves a high degree of risk. You should carefully consider the risk factors set forth under "Risk Factors" section hereunder and the other information contained in this prospectus before making an investment decision regarding our Common Stock. Trading Symbol Our common stock is currently quoted on the OTC Pink marketplace under the symbol "CADY". RISK FACTORS You should carefully consider the risks described below together with all of the other information included in this Prospectus before making an investment decision with regard to our securities. The statements contained in or incorporated into this Prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. RISKS RELATED TO THE OFFERING As there is no minimum for our offering, subscribers may lose their investment if only a few persons purchase Units. Since there is no minimum with respect to the number of securities to be sold directly by the Company in this Offering, if only a few securities are sold, we may not have enough capital to sustain our business. In such an event, it is highly likely that any investment would be lost. As such, proceeds from this Offering may not be sufficient to meet the objectives we state in this Prospectus, other corporate milestones that we may set, or to avoid a "going concern" modification in future reports of our auditors as to uncertainty with respect to our ability to continue as a going concern. If we fail to raise sufficient capital, we would expect to have to significantly decrease operating expenses, which will curtail the growth of our business. Investing in the Company is a highly speculative investment and could result in the loss of your entire investment. A purchase of the offered securities is significantly speculative and involves significant risks. The offered securities should not be purchased by any person who cannot afford the loss of his or her entire purchase price. The business objectives of the Company are also speculative, and we may be unable to satisfy those objectives. The stockholders of the Company may be unable to realize a substantial return on their purchase of the offered securities, or any return whatsoever, and may lose their entire investment in the Company. For this reason, each prospective purchaser of the offered securities should read this prospectus and all of its exhibits carefully and consult with their attorney, business advisor and/or investment advisor. Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment. The offering price of our Common Stock is substantially higher than the net tangible book value per share of our outstanding Common Stock immediately after this Offering. Therefore, if you purchase our Common Stock in this offering, you will incur immediate dilution of $0.1520 in net tangible book value per share from the price you paid. Purchasers of shares in this offering may not be able to resell their shares, and the shares could be without value, if the Company does not maintain an updated and effective registration statement for the shares being offered. The shares sold pursuant to this offering will be "restricted securities," as that term is defined in Rule 144 promulgated under the Securities Act, if the Company does not maintain an updated and effective registration statement for the shares being offered. Accordingly, such shares must be held indefinitely, and may not be resold, unless the Company maintains an updated and effective registration statement for such shares or unless an exemption from such registration is available. Purchasers of warrants in this offering may not be able to resell their warrants, or resell the shares received upon exercise of such warrants, and the warrants could expire without value if the Company does not maintain an updated and effective registration statement for the the warrants being offered. The warrant sold pursuant to this offering, and the common stock shares issuable upon exercise of such warrants, will be "restricted securities," as that term is defined in Rule 144 promulgated under the Securities Act, if the Company does not maintain an updated and effective registration statement for the warrants being offered. Accordingly, such warrants, and any common stock shares issued upon exercise of such warrants, must be held indefinitely, and may not be resold, unless the Company maintains an updated and effective registration statement for the warrants being offered or unless an exemption from such registration is available. As a result of the concurrent offering by the Company and the Selling Shareholders, we may not be able to sell the Units being offered by us which will reduce the amount of capital available for our operations. The Company and Selling Shareholders will be offering securities of the Company at the same time. The Selling Shareholders are not officers or directors of the Company and will not be selling shares on behalf of the Company under the Offering. The sale of shares by the Selling Shareholders is not contingent upon the Company selling a minimum number of its Units. Due to the concurrent offering, the Company and Selling Shareholders may be competing for potential investors. Further, the Company is selling its shares underlying the Units at a fixed price while the Selling Shareholders may be offering twice as many shares of the common stock of the Company at a price that may be less than that fixed price. In this regard, the Company is offering 20,000,000 shares underlying the 10,000,000 Units offered for sale at a fixed price of $0.40 per Unit, but the price at which the Selling Shareholders are offering 45,973,868 shares can be any amount, including at market price. While we do not believe we will be approaching the same potential investors, we may inadvertently do so and if there is a conflict, it is possible that we may not be able to fully subscribe our offering. In that event, the overall proceeds to the Company from our offering may be decreased which would decrease the amount of capital available for our business operations. Further, sales of a substantial number of shares of our common stock by the Selling Shareholders could impair our ability to raise capital through the sale of additional equity securities. As a result of the concurrent offering by the Company and the Selling Shareholders, the market price of our common stock could be adversely affected. The combined offerings of up to approximately 55,973,868 shares of our common stock by the Company and the Selling Shareholders could adversely affect the market price of our common stock. Moreover, the perception in the public market that our existing shareholders might sell shares of common stock or that the Company might issue additional shares of common stock could depress the market for our common stock. RISKS ASSOCIATED WITH OUR COMPANY S BUSINESS We are an "Emerging Growth Company" and we cannot be certain if the reduced disclosure requirements applicable to Emerging Growth Companies will make our Common Stock less attractive to Investors. We are an "emerging growth company," as defined in the Jumpstart our Business Startups Act of 2012 ("JOBS Act"), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. Under the JOBS Act, "emerging growth companies" can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to "opt out" of such extended transition period and, therefore, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We will remain an emerging growth company until the earliest of: (A) the last day of the fiscal year following the fifth anniversary of our first sale of common equity securities pursuant to an effective Registration Statement, (B) the last day of the fiscal year in which we have total annual gross revenue of $1.0 billion or more, (C) the date that we are deemed to be 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 (D) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. Rule 12b-2 of the Securities Exchange Act of 1934, as amended, defines a "smaller reporting company" as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: Had a public float of less than $ 75 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or In the case of an initial Registration Statement under the Securities Act or Exchange Act for shares of its common equity, had a public float of less than $75 million as of a date within 30 days of the date of the filing of the Registration Statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act Registration Statement, the number of such shares included in the Registration Statement by the estimated public offering price of the shares; or In the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $50 million during the most recently completed fiscal year for which audited financial statements are available. We qualify as a smaller reporting company, and so long as we remain a smaller reporting company, we benefit from the same exemptions and exclusions as an emerging growth company. In the event that we cease to be an emerging growth company as a result of a lapse of the five year period, but continue to be a smaller reporting company, we would continue to be subject to the exemptions available to emerging growth companies until such time as we were no longer a smaller reporting company. After, and if ever, we are no longer an "emerging growth company," we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not "emerging growth companies," including Section 404 of the Sarbanes-Oxley Act. We are in the early stages of implementing our network. While our company has generated revenues in the past from a GPS product for golfers, in November 2013 we launched the new Digital Caddies platform, which is a significant departure from our prior business. Consequently, our business has many of the characteristics, and faces many of the challenges, of a new company. There is no assurance that we will be able to generate significant or sufficient revenue from our new operations to reach or sustain profitability. New or emerging companies frequently face cash flow and other problems as they grow. Frequently such companies require substantial additional capital to reach a point where cash flow becomes positive. Therefore we may be faced with problems in the future that we have not yet encountered. Our future success will depend on our ability to attract and retain golf course management companies and course operators to deploy our networked tablet-based services and applications and to attract advertisers. We have only just started this new venture and have not yet tested out ability to sustain operations through advertising; therefore, we cannot guarantee that we will be successful. We have a limited operating history, which may make it more difficult for investors to evaluate our business. Although our founders have been working on the concepts underpinning our recently launched network since 2003, our new business model, which is an advertising-based revenue stream, was only implemented in November 2013. Our platform has only been installed in 170 courses to date, and, although we earned $992,538 in revenue for the fiscal year ending October 31, 2013 primarily from sponsor revenue, our operating history is limited. Therefore, our Company has a limited operating history on which to base an evaluation of our new business and future prospects. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and evolving markets such as ours. The risks include, but are not limited to, unproven ability to attract advertisers willing to pay rates we deem adequate and the management of growth. To address these risks, we must, among other things, implement and successfully execute our business and marketing strategy, develop our marketing capabilities, provide high quality dependable products and service, develop and implement financial and other business systems, respond to competitive developments and attract, retain and motivate qualified personnel. We cannot assure you that we will be successful in addressing the risks we may encounter, and our failure to do so could have a material adverse effect on our business, prospects, financial condition and results of operations. We may not be able to achieve or subsequently maintain profitability. We have earned $992,538 in total revenue during the fiscal year ended October 31, 2013, primarily from sponsorship from the Company s partners, and $195,484 in total revenue for the nine months ending July 31, 2014. However, we incurred net losses of $1,903,006 for the fiscal year ending October 31, 2013 and net losses of $4,630,669 for the nine months ending July 31, 2014. Our ability to generate revenue and profitability will first require us to install a meaningful and sustainable number of tablets on golf cars in order to convince advertisers to spend their dollars to reach our users. To date, we have implemented our Digital Caddies tablets on cars at 170 courses. Until we reach a significantly greater critical mass that is also proven to be sustainable, it will be difficult to attract advertisers and command the advertising rates we feel is warranted and that we will need to achieve and maintain profitability. We may never reach that critical mass point, and even if we do, there is no assurance that we will be able to maintain profitability. If we are unable to maintain and promote our brand, our business and operating results may be harmed. We believe that maintaining and promoting our brand is critical to expanding our base of users and advertisers. Maintaining and promoting our brand will depend largely on our ability to provide useful, interesting and/or entertaining information and services for golfers and course operators on a platform that works reliably and delivers as promised. We may introduce new features, products or services that golfers, golf course managers or advertisers do not like, or our network may not function as it should, either of which could negatively impact our brand. Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not achieve the desired goals. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business and operating results could be adversely affected. If Digital Caddies users do not have a positive experience, it will be more difficult to market our offerings, which will, in turn, impact our ability to increase revenues through quality advertising. Our growth will depend on our ability to develop and maintain our reputation. Although our revenues will be derived primarily from advertising placed on wireless tablets installed on golf cars, our success will depend in large part on satisfying golf course management and operators and their golf patrons by providing the applications and services on Digital Caddies that they want or need, and by a delivering high quality products and service. If we provide a platform that does not function as promised, our reputation could be damaged and it may become difficult to attract users for Digital Caddies and advertisers willing to spend their advertising dollars to place ads on our network. This, in turn, could have a negative effect on our operations and results, and it could be difficult to recover once our reputation is damaged. We expect to need additional financing, there is no certainty that we will have access to capital when needed, and such additional financings may result in dilution to our stockholders. Even if the Offering is fully subscribed, of which there is no assurance, we may need to raise additional capital in order to fully implement our plan. In order to fully implement our business plan, we expect to need a total of $10,000,000. Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets and other factors, and we cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our Common Stock, and our existing stockholders may experience dilution. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation or growth of our business could be significantly impaired and our operating results may be harmed. If we fail to grow our user base, we may have difficulty attracting advertisers, which could stifle revenue growth and could impact our ability to achieve profitability. Under our current business plan, we provide the Digital Caddies platform to golf course operators at no cost. While our wireless tablet-based platform makes available a broad portfolio of applications and data of interest to both golfers and golf course operators, our revenue is generated from digital advertisers eager to engage the highly sought after golfer demographic by means of targeted advertising on the wireless-enabled tablet. Therefore, our future financial performance will be significantly determined by our success in growing the number of golfers who sit in golf cars equipped with the Digital Caddies tablet platform. We expect to generate a substantial portion of our revenue based upon engagement by golfers with the ads that are displayed on the tablets. Therefore, it is critically important that we be able to demonstrate to golf course operators the value we can bring to their operations, in terms of improved player turnover and increased revenue from merchandise and concession sales, as well as to create a more exciting, interactive and satisfying golf experience for their patrons. If golf course operators do not perceive meaningful benefits from using our platform, it will be much more difficult to grow our user base and consequently, our revenues. There is no assurance that we will be successful in these efforts. We expect to generate the majority of our revenue from advertising. The failure to attract advertisers and the loss of advertising revenue if we are not able to maintain our relationships with advertisers could harm our business. The substantial majority of our revenue will be generated from third parties advertising on the Digital Caddies platform. Our advertisers do not have long-term advertising commitments with us, and there are numerous outlets for these companies to spend their advertising dollars. Advertising agencies and potential new advertisers may perceive the Digital Caddies platform as experimental and unproven, and we may need to devote additional time and resources to educate them about our products and services. Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads in an effective manner or if they do not believe that their investment in advertising with us will generate a competitive return relative to alternatives. An inability to generate advertising interest in the Digital Caddies platform or a reduction in demand for advertising space on our platform, either of which could reduce the prices we command for our ads, could negatively affect our revenue and operating results. If we are unable to compete effectively for advertisers, our business and operating results could be harmed. Although we have developed a platform that provides a broad array of applications and data we believe will be highly sought after by golfers and golf course operators, we face intense competition for advertising dollars in the golf space. We compete against many companies and businesses for advertising dollars, including companies with far greater financial resources and substantially larger user bases, such as online and mobile businesses, and traditional media outlets such as television, radio and print. In order to grow our revenue and improve our operating results, we must develop a sound marketing strategy and allocate any funds devoted to growing our marketing base in a profitable manner. There is no assurance that we will be successful. Our business could be harmed if we lose a member of our management team. Our future performance will be substantially dependent on the continued services of our management team and our ability to retain and motivate them. The loss of the services of any of our executive officers could harm our business. We may not be able to hire and retain a sufficient number of qualified employees. In part, our future success will depend on our ability to attract, train, retain and motivate other highly skilled technical, managerial, marketing and customer support personnel as necessary. Competition for these personnel can be intense, and we may be unable to successfully attract sufficiently qualified personnel. Our Company currently is operated by the members of our management team, most of whom who have been with our Company since its inception, and independent contractors. We expect that our rate of hiring will proceed at a rapid pace after completion of this Offering. To manage the expected growth of our operations, we will need to integrate new employees into our business operations. Our inability to hire, integrate and retain qualified personnel as necessary may reduce the quality of our programs, products and services and could harm our business. We would be harmed if security measures fail. We rely on systems and security to protect our trade secrets and other proprietary information. Although strict non-disclosure agreements are in place, if the security measures that we use to protect trade secret information and our engineering and databases are ineffective, our business would be harmed. We cannot predict whether new technological developments could allow these security measures to be circumvented. In addition, our software, databases and servers may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions. We may need to spend resources to protect against security breaches or to alleviate problems caused by any breaches. We cannot assure that we can prevent all security breaches. Our operating results may fluctuate from period to period, which makes them difficult to predict. Our limited operating history and the rapid evolution of the market for our products and services make it difficult for us to predict our future performance. Additionally, although our prior business model was golf-centric, it bears little resemblance to our current business. Therefore, our past quarterly operating results cannot be used as an indicator of future performance. Our operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: Our ability to grow our user base and user engagement; Our ability to attract and retain advertisers; Fluctuations in spending by our advertisers, including as a result of seasonality and extraordinary events; The pricing of our ads; Our ability to maintain or increase revenue, improve gross margins and operating margins; Seasonality, Increases in research and development, marketing and sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive; System failures resulting in the inaccessibility of our products and services; Breaches of securities or privacy, and the costs associated with remediating any such breaches; and Changes in global business or macroeconomic conditions. Investors should not rely on our operating results for any prior periods as an indication of our future operating performance. Fluctuations in our revenue can lead to even greater fluctuations in our operating results. Our budgeted expense levels depend in part on our expectations of long-term future revenue. Given relatively fixed operating costs related to our personnel and facilities, any substantial adjustment to our expenses to account for lower than expected levels of revenue will be difficult and take time. Consequently, if our revenue does not meet projected levels, our operating expenses would be high relative to our revenue, which would negatively affect our operating performance. If our revenue or operating results do not meet or exceed the expectations of investors or securities analysts or fall below any guidance we may in the future provide to the market, the price of our common stock may decline. Our business depends on continued and unimpeded access to our Digital Caddies platform through the Internet by our users and advertisers. If we or our users experience disruptions in Internet service, we could incur additional expenses and the loss of users and advertisers. We depend on the ability of our users and advertisers to access the Internet. Currently, this access is provided under a contract with Sprint Solutions, Inc. and is completely out of our control. Players will be accessing the Digital Caddies platform during their time on the golf course and therefore, disruptions in Internet access during their golf games will render our product and services unworkable for the intended purposes. If access problems become commonplace so that our users are unable to access the applications and data precisely at the time they want access, we will find it more difficult to retain users and advertisers and to attract new users and advertisers. In such circumstances, our operating results could be adversely affected. If we are unable to maintain a high level of product quality, customer satisfaction and demand for our products and services could suffer, which could, in turn, cause a decline in advertising revenue. Advertising revenue is a function of a number of factors, including, among others, the targeted demographic group, the number of eyeballs, the likelihood of engagement and the amount of likely time spent engaging. We believe the Digital Caddies platform offers advertisers compelling reasons to choose to advertise on our platform, given the highly sought after demographic that typically plays golf and the amount of time spent playing each round. However, in order to attract and retain advertisers and to be able to generate the advertising price we believe is warranted, we must provide customers (the golf course operators and their patrons) with quality applications and information that our users will find valuable, interesting or entertaining. If we are unable to provide customers with quality products and customer support, we could face customer dissatisfaction, decreased overall demand for our platform and loss of revenue. In addition, our inability to meet customer service expectations may damage our reputation and could consequently limit our ability to retain existing customers and attract new customers, which would adversely affect our ability to generate advertising revenue and negatively impact our operating results. We may not be able to continue to add new customers and increase sales to our existing customers, which could adversely affect our operating results. Our growth is dependent on our ability to continue to attract new customers while retaining and expanding our service offerings to existing customers. Growth in the demand for our services may be inhibited, and we may be unable to sustain growth in our customer base, for a number of reasons, such as: Our inability to market our services in a cost-effective manner to new customers; The inability of our customers to differentiate our services from those of our competitors or our inability to effectively communicate such distinctions; Our inability to successfully communicate to businesses the benefits of outsourcing their hosting needs; Our inability to penetrate international markets; Our inability to expand our sales to existing customers; Our inability to strengthen awareness of our brand; and Reliability, quality or compatibility problems with our network. Our costs associated with increasing revenue from existing customers are generally lower than costs associated with generating revenue from new customers. Therefore, a reduction in the rate of revenue increase from our existing customers, even if offset by an increase in revenue from new customers, could reduce our operating margins. Any failure by us to continue attracting new customers or grow our revenue from existing customers could have a material adverse effect on our operating results. If we fail to effectively manage our growth, our business and operating results could be harmed. Providing the Digital Caddies platform to our users is costly, and we expect our expenses to continue to increase in the future as we broaden our user base and increase user engagement, and as we develop and implement new features, products and services that could require more infrastructure. In addition, our operating expenses, such as our research and development expenses and sales and marketing expenses, are expected to grow rapidly as we have expand our business. We expect to continue to invest in our infrastructure in order to enable us to provide our products and services rapidly and reliably to users around the country and eventually, internationally, including in countries where we do not expect significant near-term monetization. Continued growth could also strain our ability to maintain reliable service levels for our users and advertisers, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. Our expenses may grow faster than our revenue, and our expenses may be greater than we anticipate. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition would be harmed. We expect to experience growth in our headcount and operations following this Offering, which will place significant demands on our management, operational and financial infrastructure. We expect to make substantial investments to expand our operations, research and development, sales and marketing and general and administrative organizations. We face significant competition for employees, and we may not be able to hire employees quickly enough to meet our needs. To attract highly skilled personnel, we have to offer highly competitive compensation packages. As we continue to grow, we could become subject to the risks of over-hiring, over-compensating our employees and over-expanding our operating infrastructure, and to the challenges of integrating, developing and motivating a rapidly growing employee base in dispersed geographic locations, including, eventually, various countries around the world. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer and our business and operating results could be adversely affected. If we are unable to adapt to evolving industry standards and customer demands in a timely and cost-effective manner, our ability to sustain and grow our business may suffer. Our market is characterized by evolving industry standards, and frequent new product announcements, all of which impact the way in which the market may potentially receive our products. These characteristics are magnified by the intense competition in our industry. To be successful, we must adapt to our rapidly changing market by continually improving the performance, features, and quality of our products and marketing and modifying our business strategies accordingly. Our ability to sustain and grow our business would suffer if we fail to respond to these changes in a timely and cost-effective manner. Our failure to provide services to compete with new products could lead us to lose current and potential customers or could cause us to incur substantial costs, which would harm our operating results and financial condition. We may not be able to compete successfully against competitors in our industry who provide similar information as our tablets through applications on smart phones and other mobile devices. Although the Company primarily focuses its business model on distributing its tablets to businesses, such as golf courses, and not directly to consumers, we expect that we will face additional competition from competitors in our industry who provide similar information as our tablets through applications on smart phones and other mobile devices. The use of applications on smart phones and other mobile devices from such competitors may lead to a reduction in the usage of our products. Reductions in the use of our products, in turn, may cause a reduction in our ability to increase, maintain or even generate revenues. We may not be able to compete successfully against current and future competitors. Our industry is highly competitive. We expect that we will face additional competition from our existing competitors as well as new market entrants in the future. Many of our current and potential competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater brand recognition, and more established relationships in the industry than we do. As a result, some of these competitors may be able to: Develop superior products or services, gain greater market acceptance, and expand their service offerings more efficiently or more rapidly; Adapt to new or emerging technologies and changes in customer requirements more quickly; Take advantage of acquisition and other opportunities more readily; Adopt more aggressive pricing policies and devote greater resources to the promotion, marketing, and sales of their services; and Devote greater resources to the research and development of their products and services. If our security measures are breached, or if our products and services are subject to attacks that degrade or deny the ability of users to access our products and services, our products and services may be perceived as not being secure, users and advertisers may curtail or stop using our products and services and our business and operating results could be harmed. Our products and services involve the storage and transmission of users and advertisers information, and security breaches expose us to a risk of loss of this information, litigation and potential liability. We could experience cyber-attacks of varying degrees, and as a result, unauthorized parties could obtain access to our data or our users or advertisers data. Additionally, outside parties may attempt to fraudulently induce employees, users or advertisers to disclose sensitive information in order to gain access to our data or our users or advertisers data or accounts, or may otherwise obtain access to such data or accounts. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation and a loss of confidence in the security of our products and services that could have an adverse effect on our business and operating results. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose users and advertisers and we may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation and operating results. We may be accused of infringing the proprietary rights of others, which could subject us to costly and time-consuming litigation and require us to discontinue services that infringe the rights of others. There may be intellectual property rights held by others, including issued or pending patents, trademarks, and service marks that cover significant aspects of our products, branding or business methods, including intellectual property that we own or have licensed from third parties. Companies in our industry, and other patent and trademark holders seeking to profit from royalties in connection with grants of licenses, own large numbers of patents, copyrights, trademarks, service marks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. These or other parties could claim that we have misappropriated or misused intellectual property rights and any such intellectual property claim against us, regardless of merit, could be time consuming and expensive to settle or litigate and could divert the attention of our technical and management personnel. An adverse determination also could prevent us from offering our services to our customers and may require that we procure or develop substitute services that do not infringe. For any intellectual property rights claim against us or our customers, we may have to pay damages, indemnify our customers against damages or stop using intellectual property found to be in violation of a third party s rights. We may be unable to replace that intellectual property with intellectual property that have the same features or functionality and that are of equal quality and performance standards on commercially reasonable terms or at all. Obtaining replacement intellectual property may significantly increase our operating expenses or may require us to restrict our business activities in one or more respects. We may also be required to develop alternative non-infringing intellectual property, which could require significant effort, time, and expense. We may not be successful in protecting and enforcing our intellectual property rights, which could adversely affect our financial condition and operating results. We primarily rely on copyright, trademark, service mark, and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We rely on copyright, patent and trademark laws to protect our proprietary rights. We cannot assure you that any future copyright, trademark or service mark registrations will be issued for pending or future applications or that any registered or unregistered copyrights, trademarks or service marks will be enforceable or provide adequate protection of our proprietary rights. We endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit access to and disclosure of our proprietary information. The steps we have taken, however, may not prevent unauthorized use or the reverse engineering of our products. Moreover, others may independently develop products that are substantially equivalent, superior to, or otherwise competitive to our products or that infringe our intellectual property. Moreover, we may be unable to prevent competitors from acquiring trademarks or service marks and other proprietary rights that are similar to, infringe upon, or diminish the value of our trademarks and service marks and our other proprietary rights. Enforcement of our intellectual property rights also depends on successful legal actions against infringers and parties who misappropriate our proprietary information and trade secrets, but these actions may not be successful, even when our rights have been infringed. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S. Despite the measures taken by us, it may be possible for a third party to copy or otherwise obtain and use our technology and information without authorization. Policing unauthorized use of our proprietary technologies and other intellectual property and our services is difficult, and litigation could become necessary in the future to enforce our intellectual property rights. Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and harm our business, financial condition, and results of operations. Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision. Because our auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our company. We have earned limited revenue since our inception, which makes it difficult to evaluate whether we will operate profitably. We have not attained profitable operations and are dependent upon obtaining financing or generating revenue from operations to continue operations for the immediate future. As of October 31, 2013, we had cash in the amount of $199,114. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We are currently seeking equity financing through this offering. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern. As a result, there is an increased risk that you could lose the entire amount of your investment in our company. We depend on our suppliers, some of which are the sole source for specific components, and our production would be seriously harmed if these suppliers are not able to meet our demand and alternative sources are not available, or if the costs of components rise. We currently install Samsung Android tablets as the user tool to access the Digital Caddies platform. However, supplies for such tablets may become unavailable. Alternative sources may not be available for these tablets. If there are shortages in supply of tablets or our existing agreements are terminated or otherwise not honored, additional costs for tablets may rise. If suppliers are unable to meet our demand for tablets on a timely basis and if we are unable to obtain an alternative source or if the price of the alternative source is prohibitive, or if the costs of tablets rise, our ability to maintain timely and cost-effective production of our products would be seriously harmed. We depend on third party licensors for the digital map data, and our business and/or gross margins could be harmed if we become unable to continue licensing such mapping data or if the royalty costs for such data rise. We license digital mapping data for use in our products from various sources. There are only a limited number of suppliers of mapping data for each geographical region. Although we do not foresee difficulty in continuing to license data at favorable pricing, if we are unable to continue licensing such mapping data and are unable to obtain an alternative source our ability to supply mapping data for use in our products would be seriously harmed. Our products rely on the Global Positioning System. The Global Positioning System is a satellite-based navigation and positioning system consisting of a constellation of orbiting satellites. The satellites and their ground control and monitoring stations are maintained and operated by the United States Department of Defense. The Department of Defense does not currently charge users for access to the satellite signals. These satellites and their ground support systems are complex electronic systems subject to electronic and mechanical failures and possible sabotage. The satellites were originally designed to have lives of 7.5 years and are subject to damage by the hostile space environment in which they operate. However, of the current deployment of satellites in place, some have been operating for more than 12 years. If a significant number of satellites were to become inoperable, unavailable or are not replaced, it would impair the current utility of our Global Positioning System products and would have a material negative effect on our business. In addition, there can be no assurance that the U.S. government will remain committed to the operation and maintenance of Global Positioning System satellites over a long period, or that the policies of the U.S. government that provide for the use of the Global Positioning System without charge and without accuracy degradation will remain unchanged. Because of the increasing commercial applications of the Global Positioning System, other U.S. government agencies may become involved in the administration or the regulation of the use of Global Positioning System signals. However, in a presidential policy statement issued on June 28, 2010, the Obama administration indicated that the U.S. is committed to supporting and improving the Global Positioning System and will continue providing it without assessing direct user fees. However, there is no guarantee that future governmental administrations will continue this policy. Any of the foregoing factors could affect the willingness of buyers of our products to select Global Positioning System-based products instead of products based on competing technologies. Any reallocation of radio frequency spectrum could cause interference with the reception of Global Positioning System signals. This interference could harm our business. Our Global Positioning System technology is dependent on the use of the Standard Positioning Service (SPS) provided by the U.S. Government s Global Positioning System satellites. The Global Positioning System operates in radio frequency bands that are globally allocated for radio navigation satellite services. The assignment of spectrum is controlled by an international organization known as the International Telecommunications Union (, ' ': , ' ': ITU ). The Federal Communications Commission (, ' ': , ' ': FCC ) is responsible for the assignment of spectrum for non-government use in the United States in accordance with ITU regulations. Any ITU or FCC reallocation of radio frequency spectrum, including frequency band segmentation or sharing of spectrum, could cause interference with the reception of Global Positioning System signals and may materially and adversely affect the utility and reliability of our products, which would, in turn, have a material adverse effect on our operating results. In addition, emissions from mobile satellite service and other equipment operating in adjacent frequency bands or in-band may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results. The FCC continually receives proposals for new technologies and services, such as ultra-wideband technologies, which may seek to operate in, or across, the radio frequency bands currently used by the GPS SPS. Adverse decisions by the FCC that result in harmful interference to the delivery of the GPS SPS may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our business and financial condition. RISKS ASSOCIATED WITH OUR COMMON STOCK The Company s stock price may be volatile. The market price of the Company s common stock is likely to be highly volatile and could fluctuate widely in price in response to various potential factors, many of which will be beyond the Company s control, including the following: Competition; Additions or departures of key personnel; The Company s ability to execute its business plan; Operating results that fall below expectations; Loss of any strategic relationship; Industry developments; Economic and other external factors; and Period-to-period fluctuations in the Company s financial results. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Company s common stock. We do not expect to pay dividends in the foreseeable future. We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock. We may in the future issue additional shares of our common stock which would reduce investors ownership interests in the Company and which may dilute our share value. Our Articles of Incorporation and amendments thereto authorize the issuance of 225,000,000 shares of common stock, par value $0.001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. The exercise or conversion of our outstanding warrants, options and convertible preferred stock would reduce investors ownership interests in the Company and may dilute our share value. As of July 31, 2014, we had 17,576,204 warrants, 5,100,000 options, 2,354 shares of Series A convertible preferred stock, and 710 shares of Series B convertible preferred stock outstanding, pursuant to which a maximum total of 25,765,819 shares of our common stock are issuable upon exercise or conversion. The future exercise or conversion of our outstanding warrants, options and convertible preferred stock would result in substantial dilution in the percentage of our common stock held by our then existing stockholders, and might have an adverse effect on any trading market for our common stock. An active trading market for our common stock may never develop or be sustained. Our common stock is traded on the OTC Pink marketplace, which is generally not considered to be an active trading market. We cannot assure you that an active trading market for our Common Stock will develop in the future or, if developed, that any market will be sustained. Accordingly, you may be required to hold your Shares indefinitely or to sell them at a price that does not meet your expectations, if at all. The Company s common stock is currently deemed to be "penny stock", which makes it more difficult for investors to sell their shares. The Company s common stock is currently subject to the "penny stock" rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for the Company s securities. If the Company s securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Company s securities. FINRA sales practice requirements may limit a stockholder s ability to buy and sell our stock. The Financial Industry Regulatory Authority ("FINRA") has adopted rules that relate to the application of the SEC s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. FINRA s requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder s ability to resell shares of our common stock. DETERMINATION OF OFFERING PRICE The offering price and other terms and conditions relative to our shares have been arbitrarily determined by the Company and do not bear any relationship to assets, earnings, book value, or any other objective criteria of value. In addition, no investment banker, appraiser, or other independent third-party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares. USE OF PROCEEDS Our offering is being made in a direct public offering, without the involvement of underwriters or broker-dealers. Digital Caddies, Inc. expects to disburse the proceeds from this offering in the priority set forth below within the first 12 months after successful completion of this offering. Not taking into account any possible additional funding or revenues, Digital Caddies, Inc. intends to use the proceeds from this offering as follows. The following chart indicates the amount of funds that we will allocate to each item, but does not indicate the total fee/cost of each item. The amount of proceeds we allocate to each item is dependent upon the amount of proceeds we receive from this offering: Application of Proceeds 100% of Units Sold 50% of Units Sold 25% of Units Sold $ Amount % of Total $ Amount % of Total $ Amount % of Total Total Offering Proceeds(1) 4,000,000 100.00 2,000,000 100.00 1,000,000 100.00 Offering Expenses Legal Fees and Expenses 20,000 0.50 20,000 1.00 20,000 2.00 Audit Fees and Expenses (2) 40,000 1.00 40,000 2.00 40,000 4.00 SEC Registration Fee 2047.79 0.05 2047.79 0.10 2047.79 0.20 Transfer Agent & Registration Fees & Expenses 4,000 0.10 4,000 0.20 4,000 0.40 Miscellaneous Expenses 20,000 0.50 20,000 1.00 20,000 2.00 Total Offering Expenses 86,048* 02.15 86,048* 4.30 86,048* 8.60 Net Proceeds from Offering 3,913,952 97.85 1,913,952 95.70 913,952 91.40 Use of Net Proceeds Legal and Accounting Fees 50,000 1.25 25,000 1.25 12,500 1.25 Inventory/Equipment 1,250,000 31.25 625,000 31.25 312,500 31.25 Marketing and Advertising 450,000 11.25 225,000 11.25 112,500 11.25 Working Capital 2,163,952 54.10 1,038,952 51.95 476,452 47.65 Total Use of Net Proceeds 3,913,952 97.85 1,913,952 95.70 913,952 91.40 Total Use of Proceeds 4,000,000 100.00 2,000,000 100.00 1,000,000 100.00 *Notes: Offering expenses have been rounded to $86,048. (1) Total estimated use of offering proceeds as set forth above does not reflect any proceeds that may be received by us upon the exercise of any Offering Warrants underlying the Units. To the extent we may realize proceeds from the exercise of the Offering Warrants, we intend to use such proceeds, if any, for general working capital purposes and the Company's other capital needs. (2) Audit fees are strictly related to the amount of work performed by our auditor, and the percentage of shares sold in this offering has no impact on our audit fees. If we do not raise sufficient funds from this offering to cover audit related fees, we will have to seek additional outside financing to cover such expenses. We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from the sale of the maximum amount of shares being offered hereunder will only be sufficient to meet our anticipated cash needs for the next 18-24 months. Our directors have determined that the maximum amount of funds received from this offering would be sufficient to cover our intended plan of operations contemplated hereby. The Company will use any proceeds received to file reports with the Securities and Exchange Commission, as well as to proceed with the Company s intended business. However, there can be no assurance that the Company will raise any funds through its direct participation offering. If we are able to sell only 50%, 25% or 10% of our offered shares, we anticipate that we will only be able to meet our anticipated cash needs for the next 12-18 months, 6-9 months, or 0-3 months, respectively. If the Company is able to raise fifty percent (50%) of the maximum amount of funds available under this offering, we intend to use such funds to continue with our business strategy and plan of operations, but in a scaled down fashion. For instance, we estimate that we would spend up to $625,000 on inventory and equipment and up to $225,000 on marketing and advertising. These amounts would be sufficient in order to continue operations and to promote the Company, but in a more limited fashion relative to if we were able to raise 100% of the maximum amount. If we raise nominal amounts under the offering (25% or less of the offered Units), we intend to use such funds to continue with our business strategy and plan of operations, but in a dramatically scaled down fashion. For instance, we estimate that we would spend up to $312,500 on inventory and equipment and up to $112,500 on marketing and advertising. These amounts would be sufficient in order to continue operations and to promote the Company, but in a more limited fashion relative to if we were able to raise 100% of the maximum amount. Depending on our financial condition, we may have to seek out additional capital from alternate sources. As with any form of financing, there are uncertainties concerning the availability of such funds and the likelihood that such funds will be available to the Company shall be determined on a case-by-case basis depending on the totality of the facts and circumstances. PLAN OF DISTRIBUTION; TERMS OF THE OFFERING Digital Caddies, Inc. has issued and outstanding as of the date of this prospectus 89,734,973 shares of Common Stock. The Company is registering an additional 10,000,000 Units for sale at the price of $0.40 per Unit, which are comprised of (i) 20,000,000 shares of its Common Stock; and (ii) 10,000,000 Offering Warrants that are each exercisable to purchase one (1) share of the Company s Common Stock at an exercise price of $0.40 per share with an expiry date of five (5) years from the date of issuance. There is no arrangement to address the possible effect of the Offering on the price of the stock. In connection with the Company s selling efforts in the Offering, our officers and directors will not register as broker-dealers pursuant to Section 15 of the Exchange Act, but rather will rely upon the "safe harbor" provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer s securities. None of our officers or directors are subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Our officers and directors will not be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Brad Nightingale, our Chief Executive Officer, is not now and has not been within the past 12 months, a broker or dealer, and has not been within the past 12 months an associated person of a broker or dealer. At the end of the Offering, Mr. Nightingale will continue to perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. Mr. Nightingale will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii). In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those states only if they have been registered or qualified for sale; an exemption from such registration or if qualification requirement is available and with which the Company has complied. In addition, and without limiting the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective. Offering Period and Expiration Date This Offering will start on the date of this prospectus and continue for a period of up to 180 days, unless extended by our Board of Directors for an additional 90 days Procedures for Subscribing If you decide to subscribe for any securities in this Offering, you must: 1. Execute and deliver a subscription agreement (a form of which is attached hereto as Exhibit 4.1); and 2. Deliver a check, certified funds or cash by wire transfer of immediately available funds directly to the Company for acceptance or rejection (or to any such applicable broker-dealer or underwriter that may be engaged by the Company in connection with the offering in the future). The subscription agreement requires you to disclose your name, address, social security number, telephone number, number of units you are purchasing, and the price you are paying for your units. All checks for subscriptions must be made payable to Digital Caddies, Inc. Acceptance of Subscriptions Upon the Company s acceptance of a Subscription Agreement and receipt of full payment, the Company shall countersign the Subscription Agreement and issue a stock certificate along with a copy of the Subscription Agreement. Right to Reject Subscriptions We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them. Penny Stock Regulation The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, that: Contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; Contains a description of the broker s or dealer s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties; Contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price; Contains a toll-free telephone number for inquiries on disciplinary actions; Defines significant terms in the disclosure document or in the conduct of trading penny stocks; and, Contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation. The broker-dealer also must provide the customer with the following, prior to proceeding with any transaction in a penny stock: Bid and offer quotations for the penny stock; Details of the compensation of the broker-dealer and its salesperson in the transaction; The number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and, Monthly account statements showing the market value of each penny stock held in the customer s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written acknowledgment of the receipt of a risk disclosure statement, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. Registration Rights We have not granted registration rights to any persons in connection with the direct public offering. DILUTION Net tangible book value per share represents the amount of the Company s tangible assets less total liabilities, divided by the 89,734,973 shares of Common Stock outstanding as of July 31, 2014. Net tangible book value dilution per share represents the difference between the amount per share paid by purchasers of the Shares in this Offering assuming the offering price of $0.20 per share of Common Stock and the pro forma net tangible book value per share of Common Stock immediately after completion of the offering. After giving effect to the sale of the 20,000,000 shares of common stock underlying the Units at an offering price of $0.20 per share, the pro forma net tangible book value of the Company would have been $0.048 per share, representing an immediate increase in tangible book value of $0.0338 per share to existing shareholders and an immediate dilution of $0.1520 per share to purchasers of the Shares. The following table illustrates the foregoing information with respect to new investors on a per share basis: 20,000,000 Shares (100%) 10,000,000 Shares (50%) 5,000,000 Shares (25%) 2,000,000 Shares (10%) Offering price per share $ 0.20 0.20 0.20 0.20 Net tangible book value per share before Offering $ 0.0142 0.0142 0.0142 0.0142 Increase per share attributable to new investors $ 0.0338 0.0186 0.0092 0.0040 Pro forma net tangible book value per share after Offering $ 0.0480 0.0328 0.0234 0.0182 Dilution per share to new investors $ 0.1520 0.1672 0.1766 0.1818 DESCRIPTION OF PROPERTY Our principal executive office is located at 15210 N. Scottsdale Rd., Suite 280, Scottsdale, AZ 85254. We currently rent this space for approximately $5,500 USD a month. Currently, this space is sufficient to meet our needs; however, once we expand our business to a significant degree, we will have to find a larger space. We do not foresee any significant difficulties in obtaining any required additional space. We do not currently own any real estate. DESCRIPTION OF SECURITIES Common Stock Pursuant to the Company s Certificate of Incorporation and amendment(s) thereto, the aggregate number of shares which the Company shall have authority to issue is Two Hundred Twenty Five Million 225,000,000 shares of common stock, par value $0.001 per share. As of December 17, 2014, we had 89,734,973 shares of common stock issued and outstanding. Preferred Stock Pursuant to the Company s Certificate of Incorporation and amendment(s) thereto, the aggregate number of shares which the Company shall have authority to issue is Five Million Four Hundred and Forty Four Thousand Four Hundred and Forty Five (5,444,445) shares of preferred stock, par value $0.001 per share. As of December 17, 2014, we had 2,354 shares of Series A Preferred Stock issued and outstanding, and 710 shares of Series B Convertible Preferred stock issued and outstanding. The minimum number of shares of common stock into which the Series A Preferred Stock is convertible is 2,354 shares of common stock, which is based on a conversion ratio of 1 share of Series A Preferred Stock for 1 share of common stock. The maximum number of shares of common stock into which the Series A Preferred Stock is convertible is approximately 3,139 shares of common stock (after rounding up for fractional shares), which is based on a conversion ratio of 1 share of Series A Preferred Stock for 1.3334 shares of common stock. See "Exhibit 3.3 - Series A Preferred Stock Designation and Series B Preferred Stock Designation." The minimum number of shares of common stock into which the Series B Preferred Stock is convertible is 710 shares of common stock, which is based on a conversion ratio calculated by dividing $532.50, the aggregate subscription price paid by the holders of the Series B Convertible Preferred Stock, by $0.75, the maximum conversion price stated in the Certificate of Designation for the Series B Convertible Preferred Stock.. The maximum number of shares of common stock into which the Series B Preferred Stock is convertible is approximately 1332 shares of common stock (after rounding up for fractional shares), which is based on a conversion ratio calculated by dividing $532.50, the aggregate subscription price paid by the holders of the Series B Convertible Preferred Stock, by $0.40, the minimum conversion price stated in the Certificate of Designation for the Series B Convertible Preferred Stock. See "Exhibit 3.3 - Series A Preferred Stock Designation and Series B Preferred Stock Designation." Each share of Series A Preferred Stock and each share of Series B Preferred Stock votes pari passu with each share of Common Stock, meaning that each share of Series A Preferred Stock and each share of Series B Preferred Stock votes on all shareholder matters on a one-to-one basis with each share of Common Stock. A brief summary of the rights, preferences, privileges and restrictions of the Series A and Series B Preferred Stock is as follows: Series "A" Convertible Preferred Stock The number of authorized shares of Series "A" Convertible Preferred Stock is 2,777,778, $0.001 par value per share. The stated value of each share of Series "A" Convertible Preferred Stock is $0.90 per share. The holders of outstanding Series A Convertible Preferred Shares are entitled to receive, if declared, noncumulative dividends in the total amount of $0.09 per share, before any dividend is paid on Common Shares, payable in cash or stock at the sole discretion of the Board of Directors. In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series A Convertible Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made in respect of the Company s Common Shares or junior stock, an amount equal to ninety cents ($0.90) per share. The holders of the Preferred Shares and the holders of the Common Shares issued and outstanding shall have and possess equal rights to notice of shareholders meetings, and identical voting rights and powers to vote upon the election of directors or upon any other matter. The holder of record of any share or shares of Series A Convertible Preferred Stock have the right to convert one (1) share of Series A Convertible Preferred Stock into one fully paid and non-assessable share of Common Stock of the Company so long as the average bid price of the Company's Common Stock over the thirty (30) day period prior to the holder's election to convert is $1.00 or greater. In the event the average bid price of the Company's Common Stock is less than $1.00 over the thirty (30) day period prior to the holder's election to convert, then each share of Series A Convertible Preferred Stock of the Company shall be converted into 1.3334 fully paid and non-assessable shares of the Common Stock of the Company. In the event that the Company shall at any time pay to the holders of Common Stock a dividend in Common Stock, the number of shares of Common Stock issuable upon conversion of the Series A Convertible Preferred Stock shall be proportionately increased, effective at the close of business on the record date for determination of the holders of Common Stock entitled to such dividend. The Corporation has the right, at its option, to cause all or a portion of the outstanding shares of Series A Convertible Preferred Stock to be redeemed, subject to the legal availability of funds therefore, at ninety cents ($.90) per Series A Convertible Preferred Share (the Redemption Price"). On and after the date of redemption, provided that the Redemption Price has been paid, dividends will no longer be payable on the shares of Series A Convertible Preferred Stock called for redemption. These shares will no longer be deemed to be outstanding, and the holders of these shares will have no rights as stockholders, except the right to receive the Redemption Price, without interest, upon surrender of the certificates evidencing the shares of Series A Convertible Preferred Stock to be redeemed. Series "B" Convertible Preferred Stock The authorized number of shares of the Series B Convertible Preferred Stock is 2,666,667 shares, $0.001 par value per share. The stated value of the Series B Convertible Preferred Stock is $0.75 per share. The Series B Convertible Preferred Stock shall, with respect to dividend distributions and distributions of assets and rights upon the liquidation, winding up and dissolution of the Corporation, rank junior to the Company's Series A Convertible Preferred Stock, and shall, with respect to dividend distributions and distributions of assets and rights upon the liquidation, winding up and dissolution of the Company, rank senior to all other series of Preferred Shares which may be subsequently issued except to the extent that any such other subsequently issued series provided that it shall rank senior to the Series B Convertible Preferred Stock. Subject to the prior and superior rights of any holders of the Series A Convertible Preferred Stock with respect to dividends, the holders of outstanding Series B Convertible Preferred Shares, in preference to the shares of Common Stock and any other stock of the Company junior to the Series B Convertible Preferred Stock, are entitled to receive, when, as and if declared out of the funds at the time legally available therefor, annual noncumulative dividends on each share of the Series B Convertible Preferred Stock equal to ten percent (10%) of the Series B Convertible Preferred Stock stated value payable in cash or stock at the sole discretion of the Board of Directors. Subject to the prior and superior rights of any holders of the Series A Convertible Preferred Stock with respect to preference on liquidation, in the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series B Convertible Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made in respect of the Company s Common Shares or junior stock, an amount equal to seventy five cents ($0.75) per share. The holders of the Preferred Shares and the holders of the Common Shares issued and outstanding shall have and possess equal rights to notice of shareholders meetings, and identical voting rights and powers to vote upon the election of directors or upon any other matter. The holder of record of any share or shares of Series B Convertible Preferred Stock shall have the right to convert one (1) share of Series B Convertible Preferred Stock into fully paid and non-assessable shares of Common Stock of the Company. The number of shares of Common Stock to which a holder of Series B Convertible Preferred Stock shall be entitled upon conversion shall be equal to the aggregate subscription price paid by the holder for the Series B Convertible Preferred Stock divided by eighty percent (80%) of the average of the bid and asked price of the Company's Common Stock over the thirty (30) day period prior to the holder's tender of notice to the Company of his election to convert. However, in any event, the maximum conversion price of the Series B Convertible Preferred Stock shall not exceed $.75 per share and the minimum conversion price of the Series B Convertible Preferred Stock shall not be lower than $.40 per share, unless such minimum conversion price is lowered by the Board of Directors at its sole discretion. Fractional shares shall be rounded to the nearest whole number. In the event that the Company shall at any time pay to the holders of Common Stock a dividend in Common Stock, the number of shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock shall be proportionately increased, effective at the close of business on the record date for determination of the holders of Common Stock entitled to such dividend. The Company has the right, at its option, to use all or a portion of the outstanding shares of Series B Convertible Preferred Stock to be redeemed, subject to the legal availability of funds therefor, at seventy five cents ($. 75) per Series B Convertible Preferred Share (the "Redemption Price"). If fewer than all of the outstanding shares of Series B Convertible Preferred Stock are to be redeemed, the Company will select those to be redeemed pro rata, or by lot, or in any other manner as the Board of Directors may determine. If a partial redemption of the Series B Convertible Preferred Stock would result in the delisting of the Series B Convertible Preferred Stock from any national securities exchange on which the shares of Series B Convertible Preferred Stock are then listed, the Company may only redeem the Series B Convertible Preferred Stock in whole. On and after the Redemption Date, provided that the Redemption Price has been paid, dividends will no longer be payable on the shares of Series B Convertible Preferred Stock called for redemption, These shares will no longer be deemed to be outstanding, and the holders of these shares will have no rights as stockholders, except the right to receive the Redemption Price, without interest, upon surrender of the certificates evidencing the shares of Series B Convertible Preferred Stock to be redeemed. Voting Rights Except as otherwise required by law or as may be provided by the resolutions of the Board of Directors, as hereinabove provided, all rights to vote and all voting power shall be vested in the holders of common stock and holders of Series A and Series B preferred stock. Each share of common stock and each share of Series A and Series B preferred stock shall entitle the holder thereof to one vote. No Cumulative Voting Except as may be provided by the resolutions of the Board of Directors, cumulative voting by any shareholder is not permitted. Conversion, Preemption, Preferential Rights, Redemption, Sinking Fund Provisions Conversion The minimum number of shares of common stock into which the Series A Preferred Stock is convertible is 2,354 shares of common stock, which is based on a conversion ratio of 1 share of Series A Preferred Stock for 1 share of common stock. The maximum number of shares of common stock into which the Series A Preferred Stock is convertible is approximately 3,139 shares of common stock (after rounding up for fractional shares), which is based on a conversion ratio of 1 share of Series A Preferred Stock for 1.3334 shares of common stock. The minimum number of shares of common stock into which the Series B Preferred Stock is convertible is 710 shares of common stock, which is based on a conversion ratio calculated by dividing $532.50, the aggregate subscription price paid by the holders of the Series B Convertible Preferred Stock, by $0.75, the maximum conversion price stated in the Certificate of Designation for the Series B Convertible Preferred Stock.. The maximum number of shares of common stock into which the Series B Preferred Stock is convertible is approximately 1332 shares of common stock (after rounding up for fractional shares), which is based on a conversion ratio calculated by dividing $532.50, the aggregate subscription price paid by the holders of the Series B Convertible Preferred Stock, by $0.40, the minimum conversion price stated in the Certificate of Designation for the Series B Convertible Preferred Stock. See "Exhibit 3.3 - Series A Preferred Stock Designation and Series B Preferred Stock Designation." Redemption The Corporation has the right, at its option, to cause all or a portion of the outstanding shares of Series A Preferred Stock to be redeemed, subject to the legal availability of funds therefore, at ninety cents ($.90) per Series A Preferred Share. The Company has the right, at its option, to use all or a portion of the outstanding shares of Series B Preferred Stock to be redeemed, subject to the legal availability of funds therefor, at seventy five cents ($.75) per Series B Preferred Share. See "Exhibit 3.3 - Series A Preferred Stock Designation and Series B Preferred Stock Designation." Other than as stated above, no shareholder of the Company has, by reason of its holding shares of any class or series of stock of the Company, any conversion, preemptive or preferential rights to purchase or subscribe for any other shares of any class or series of the Company now or hereafter authorized, and any other equity securities, or any notes, debentures, warrants, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, now or hereafter authorized whether or not the issuance of any such shares, or such notes, debentures, or bonds or other securities, would adversely affect the dividend or voting rights of such shareholder. Other than as stated above, there are no redemption or sinking fund provisions applicable to the common stock. Dividends The holders of common stock shall be entitled to receive when, as and if declared by the Board of Directors, out of funds legally available therefore, dividends payable in cash, stock or otherwise. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Oklahoma General Corporation Act, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 1. we would not be able to pay our debts as they become due in the usual course of business; or 2. our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. The holders of outstanding Series A Convertible Preferred Shares are entitled to receive, if declared, noncumulative dividends in the total amount of $0.09 per share, before any dividend is paid on Common Shares, payable in cash or stock at the sole discretion of the Board of Directors. Subject to the prior and superior rights of any holders of the Series A Convertible Preferred Stock with respect to dividends, the holders of outstanding Series B Convertible Preferred Shares, in preference to the shares of Common Stock and any other stock of the Company junior to the Series B Convertible Preferred Stock, are entitled to receive, when, as and if declared out of the funds at the time legally available therefor, annual noncumulative dividends on each share of the Series B Convertible Preferred Stock equal to ten percent (10%) of the Series B Convertible Preferred Stock stated value payable in cash or stock at the sole discretion of the Board of Directors. We have not declared any dividends. We do not plan to declare any dividends in the foreseeable future. Rights upon Liquidation, Dissolution or Winding-Up of the Company In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series A Convertible Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made in respect of the Company s Common Shares or junior stock, an amount equal to ninety cents ($0.90) per share. Subject to the prior and superior rights of any holders of the Series A Convertible Preferred Stock with respect to preference on liquidation, in the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series B Convertible Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made in respect of the Company s Common Shares or junior stock, an amount equal to seventy five cents ($0.75) per share. Other than as stated above, upon any liquidation, dissolution or winding-up of the corporation, whether voluntary or involuntary, the remaining net assets of the Company shall be distributed pro rata to the holders of the common stock. We refer you to our Articles of Incorporation, any amendments thereto, Bylaws, and the applicable provisions of the Oklahoma General Corporations Law for a more complete description of the rights and liabilities of holders of our securities. Equity Compensation Plans We have no equity compensation program, including no stock option plan, and none are planned for the foreseeable future. Warrants, Options and Convertible Securities There are up to 1,575,000 shares issuable upon exercise of 3,150,000 previously issued warrants, with an expiration date of December 19, 2014, at a conversion rate whereby two (2) warrants plus $0.20 will convert into one (1) common share upon exercise. There are up to 5,665,000 shares issuable upon exercise of 11,330,000 previously issued warrants, with an expiration date of December 19, 2014, at a conversion rate whereby two (2) warrants plus $0.20 will convert into one (1) common share upon exercise. There are up to 10,283,815 shares issuable upon exercise of 10,283,815 previously issued warrants, with an expiration date of April 17, 2019, at a conversion rate whereby one (1) warrant plus $0.40 will convert into one (1) common share upon exercise. There are up to 3,085,144 shares issuable upon exercise of 3,085,144 previously issued warrants, with an expiration date of February 1, 2019, at a conversion rate whereby one (1) warrant plus $0.40 will convert into one (1) common share upon exercise. There are a minimum of 2,857,144 shares issuable upon exercise of previously issued warrants, with an expiration date of February 1, 2025, at a conversion rate whereby one (1) warrant plus $0.21 will convert into one (1) common share upon exercise. There are a minimum of 190,402 shares issuable upon exercise of previously issued warrants, with an expiration date of February 1, 2025, at a conversion rate whereby one (1) warrant plus $0.21 will convert into one (1) common share upon exercise. There are up to approximately 4,471 shares issuable upon conversion of outstanding Series A and Series B Preferred Stock. There are 5,100,000 shares issuable upon exercise of 5,100,000 options, each with an expiry date of April 25, 2023 at a strike price of $0.10 per share. There are up to 22,375 shares issuable upon exercise of 22,375 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $1.50 will convert into one (1) common share upon exercise. There are up to 5,897 shares issuable upon exercise of 5,897 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $1.75 will convert into one (1) common share upon exercise. There are up to 24,117 shares issuable upon exercise of 24,117 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $2.50 will convert into one (1) common share upon exercise. Other than the foregoing, there are no other outstanding warrants or options to purchase our securities. Certain Provisions of Oklahoma Law and Our Charter Articles of Incorporation. There are no provisions in our charter or Bylaws that would delay, defer or prevent a change in our control. However, there exists such provisions in our charter that may make changes of control more difficult. Such provisions include the ability of our Board of Directors to issue a series of preferred stock and the limited ability of stockholders to call a special meeting. Special meetings of the stockholders may be called at any time by the Chairman of the Board, the President, or the Secretary, by resolution of the Board of Directors, or at the request in writing of one or more stockholders owning shares in the aggregate entitled to cast at least a majority of the votes at the meeting, with such written request to state the purpose or purposes of the meeting and to be delivered to the President or the Secretary. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Oklahoma Control Share Act. If we have 1,000 or more stockholders and meet other conditions, we will be subject to Oklahoma's control share act. With exceptions, this act prevents holders of 20% or more of the voting power of our stock from voting their shares for a period of three years unless the acquisition has been approved by our shareholders in accordance with the act. This provision may delay the time it takes anyone to gain control of us. INFORMATION WITH RESPECT TO REGISTRANT THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF DIGITAL CADDIES, INC. AND THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT ON FORM S-1. THIS DISCUSSION SUMMARIZES THE SIGNIFICANT FACTORS AFFECTING OUR OPERATING RESULTS, FINANCIAL CONDITIONS AND LIQUIDITY AND CASH-FLOW SINCE INCEPTION. DESCRIPTION OF OUR BUSINESS Description of Our Business Digital Caddies, Inc. ("CADY" or the "Company") is a corporation which was incorporated under the laws of the State of Oklahoma on September 7, 2011. The shares of stock and warrants of the Company were previously held in the name of DNA Beverage Corp., a Nevada Corporation, prior to the Company completing a holding company formation pursuant to Section 1081(a) of the Oklahoma General Corporation Law. Our mailing address is 15210 N Scottsdale Rd., Suite 280, Scottsdale, AZ 85254, and our telephone number is 480-626-2423. Prior to its merger with the Company in 2011, Digital Caddies was a private company that was founded in 2003. From 2003 to June 2013, Digital Caddies was initially the Canadian distributer of Golf GPS technology owned by GolfLogix and later obtained worldwide rights to distribute GolfLogix technology for use in business to business applications. In 2007, in order to reflect this new relationship with GolfLogix as GolfLogix worldwide distributor, the Company briefly changed its name to GolfLogix (US), Inc., but reverted to the name Digital Caddies, Inc. on March 27, 2008. When the Company made the transition to the new business model focused on launching the new advertising platform, the agreement between Digital Caddies and GolfLogix was allowed to expire and there is no longer any current relationship between Digital Caddies, Inc. and GolfLogix. Beginning in June 2013, the Company shifted its business focus so that, instead of generating revenue through sales of tablets, revenue generation was expected to occur through sales of advertising on the newly launched "Digital Caddies platform," which is expected to enable the Company to generate revenues from a source that is different from its prior business model. The Company s fiscal year end is October 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings. Corporate History On August 10, 2007, the Company incorporated Imagine Media Ltd., a Delaware corporation as a wholly owned subsidiary to serve as the holding company for the Company s historical operations, which included Imagine Operations, Inc., a Colorado publishing company. On August 23, 2007, the Company spun-off Imagine Media Ltd. On August 29, 2007, Imagine acquired Grass Roots Beverage Company, a Florida corporation, as a wholly owned subsidiary. On September 9, 2007, the Company filed an Amendment to its Articles of Incorporation to implement a name change to "DNA Beverage Corp." On July 6, 2010, DNA Beverage Corp spun-off the respective subsidiary to Famous Products, Inc., a Colorado corporation. On July 6, 2010, DNA Beverage Corp completed the acquisition of New Vision Technologies, Inc., a Colorado corporation, as a wholly owned subsidiary. On August 30, 2011, DNA Beverage Corp., of Nevada created DNA Beverage Corporation, an Oklahoma corporation for the purpose of implementing a domicile change from Nevada to Oklahoma. On August 30, 2011, DNA Beverage Corp. completed the domicile change from Nevada to Oklahoma by filing a Certificate of Merger with the Oklahoma Secretary of State and Nevada Secretary of State. On September 7, 2011, the Company underwent a Statutory A Reorganization pursuant to Section 1081(a) of the Oklahoma General Corporation Law, as a tax-free organization. Pursuant to the reorganization, on September 7, 2011, DNA Beverage Corp., caused Digital Caddies, Inc., to be incorporated in the State of Oklahoma, as a direct, wholly-owned subsidiary. Concurrently, Digital Caddies, Inc. caused DNA Beverage Merger Sub., Inc., to be incorporated as a direct, wholly-owned subsidiary. Under the terms of the Reorganization, DNA Beverages Corp. was merged with and into DNA Beverage Merger Sub., Inc. pursuant to Section 1081(g) of the General Corporation Law of the State of Oklahoma. Upon consummation of the Reorganization, each issued and outstanding equity of DNA Beverage Corp. was converted into and exchanged for an equivalent equity of Digital Caddies (on a one-for-one basis) having the same designations, rights, powers and preferences, and qualifications, limitations and restrictions as the equities of DNA Beverage Corp. being converted. There was no spin-off and DNA Beverage Corp. corporate existence ceased. Under the Reorganization, DNA Beverage Corp. became equity holders of Digital Caddies, Inc., in the same proportion. On September 7, 2011, the Company entered into an Agreement to Exchange 100% of the issued common shares of Digital Caddies, Inc., a Nevada corporation, for 17,500,000 restricted shares of Digital Caddies, Inc. Oklahoma Series C Convertible Preferred Shares ("Series C Preferred Share"). Each Series C Preferred Share is convertible into 170 common shares. On September 7, 2011, the Company entered into a Stock Cancellation Agreement with James B. Frack ("Mr. Frack"). Pursuant to the Stock Cancellation Agreement, Mr. Frack agreed to cancel 135,000,000 shares of common stock of the Company, which he owned, in exchange for the sum of One Hundred Sixty Thousand Dollars ($160,000.00) (the "Cancellation Price"). In the event of default, Mr. Frack was given an option to convert payment into 150,000,000 restricted common shares of the company (the "Default Payment"). The Company paid to Mr. Frack $65,000 during the year ended October 31, 2011 and an additional $40,000 during the November and December of 2012. The outstanding balance of $55,000 of the Cancellation Price was released and the right to the Default Payment was waived under an Addendum to the Stock Cancellation dated March 13, 2013 pursuant to which Mr. Frack was allowed to keep title to the shares which were originally to be cancelled under the Stock Cancellation Agreement. On September 7, 2011, the Company filed an Amendment to its Articles of Incorporation to implement an 85 for 1 reverse stock split. Evolutionary Technology for Golf Courses Digital Caddies, Inc. is a golf-centric technology and information-dissemination company that uses tablet technology and wireless connectivity to create The Players Network, an informational medium that enables advertisers to directly market to golfers through multifunctional web-enabled interactive tablets (currently manufactured by Samsung) installed on golf cars owned by the Company s customer golf course businesses. These Internet-connected interactive tablets are designed to provide services to both golfers and golf courses alike. Once interactive tablets are installed, players are provided with a number of interactive services and applications, such as GPS-based hole/course information, scoring applications, messaging platforms (for cart-to-cart and cart-to-course communications), the ability to wirelessly call for the beverage cart, plus news, weather, sports, and entertainment. In addition, our platform provides a broad portfolio of course management tools designed to enable golf course managers to improve player pace of play via GPS-based cart tracking and communications, potentially increase merchandise and concession sales via real-time on-tablet promotions, and access to additional revenue streams (e.g., sale of local advertising.) All of these services are currently provided to our customer golf courses free of charge, although we may elect to charge for these services in the future. Fig. 1: Screenshots of Digital Caddies Technology Platform Interface We launched the beta version of the Digital Caddies platform in June 2013, then formally launched the platform in November 2013, and have signed contracts with several golf course management firms, Troon and OB Sports. To date, we have installations at approximately 170 golf courses, and have entered into several partnerships with third party ad networks, such as Nexage, Millenial Media, LiveRail, MoPub, Inc. and Access Sports Media, to help monetize The Players Network. The majority of our initial revenue will come from the sale of advertising and from sponsorship revenue. Our ability to attract advertisers, generate revenues and obtain premium advertising rates will be highly dependent upon a number of key factors including: (i) the attractiveness and density of our primary demographic; (ii) the amount of reach and/or viewership; (iii) the dwell time (that is, how long a viewer looks at a particular screen); and (iv) data (that is, what is known about a viewer and what information can be collected for the advertiser). Solutions for Golfers Digital Caddies connects golfers to advertisers by installing multifunctional web-enabled interactive tablets (currently manufactured by Samsung) in golf cars that operate on our customer golf courses. These Internet-connected interactive tablets are designed to provide a host of services to both golfers and golf courses alike. For example, once interactive tablets are installed on a golf course, players can be provided with a number of services and applications, such as GPS-based hole/course information, scoring applications, messaging platforms (for cart-to-cart and cart-to-course communications), the ability to wirelessly call for the beverage cart, plus news, weather, sports, entertainment and more. Since we believe that repeat play is vital to the continued success of many golf courses, the features available via Digital Caddies are intended to enhance appeal and to promote our customer golf courses. With the full course accessible through our tablets, golfers can evaluate details about every hole during play. Score keeping is planned to be built right into the interactive tablets, and the system is capable of sending to each golfer s their score card by email. This enables a communication channel between our customer courses and their patron golfers. Our customer courses are able to market themselves through our devices by sending email reminders and advertising promotions via email. Solutions for Golf Courses Our platform provides a broad portfolio of course management tools designed to enable course managers to improve player pace of play via GPS-based cart tracking and communications, which we believe would potentially increase merchandise and concession sales via real-time on-tablet promotions, and enable access to additional revenue streams (e.g., sale of local advertising). All of these services are currently provided to our customer golf course free of charge. By utilizing our services, our customer golf courses have the opportunity to reduce operating expenses in a variety of ways from setting geo-boundaries to protect sensitive parts of their courses, knowing where every golf cart is in real time, seeing where all of their cars have traveled and identifying common usage patterns that allow Digital Caddies-enabled courses to plan maintenance more effectively. Golf courses that implement the Digital Caddies platform will have the opportunity to increase revenue through the functionality enabled on our tablets. Golfers will be able to request food and beverage service directly from their car, allowing for more efficient service. Further, customer courses can send direct messages to golf cars at key moments of play, such as delivering refreshment options when players reach the 9th tee. In addition, customer courses can advertise on the platform promoting sales and services available at the golf course, enhancing their ability to boost revenue through targeted sales. Sources of Revenue and Targeted Demographics We focus on golfers as our targeted demographic. The Digital Caddies platform potentially puts our advertisers in direct contact with active golfers during play. Since we believe that buying decisions are often made on the golf course, we believe that this is a valuable to communicate advertising to golfers, which would be attractive to our advertisers who will have access to these potential customers for hours at a time over the course of a round. The majority of our initial revenue will come from the sale of advertising and from sponsorship revenue. Our ability to attract advertisers, generate revenues and obtain premium advertising rates will be highly dependent upon a number of key factors including: (i) the attractiveness and density of our primary demographic; (ii) the amount of reach and/or viewership; (iii) the dwell time (that is, how long a viewer looks at a particular screen); and (iv) data (that is, what is known about a viewer and what information can be collected for the advertiser). Impressions opportunities equal the number of times we can potentially place an advertisement in front of that golfer. The average round of golf takes 4.5 hours to play. Currently, our ad locations can provide up to 2 advertisements every minute. Therefore, 4.5 hours equals 270 minutes times 2 ad opportunities per minute, equals 540 ad opportunities per round. We currently have 3 ad locations integrated into our service therefore every round of golf provides up to 1620 ad opportunities. Based on our current estimated viewership of approximately 500,000 rounds per month, we generate up to 400 million impression opportunities. In addition, advertisers buy ad space based on the number of impressions they buy multiplied by the price. The pricing is usually based on the price for 1000 impressions, referred to as "CPM" (Cost per thousand). In order to calculate the revenue possibility, we take the number of impressions available and divide it by 1000 and multiply it by the CPM and multiply it by the "fill rate," which is defined as the number of impressions actually sold. We believe that advertisers will be very interested in presenting their message on our Digital Caddies because of our ability to generate impressions and connect such advertisers with golfers during play. Data Collection We collect data from three main sources, our golfer email database; advertising impression requests; and geolocation and utilization, as follows: Golfer Email Database Information. We have a form embedded into the homepage of our software application allows golfers to register their email address with the Company. We collect this data and store it in our email database marketing platform. Advertising Impression Requests. We are using Google's DoubleClick for Publishers (DFP) and Facebook's Live Rail ad serving technologies to track our entire paid, in-house and 3rd Party advertisements. These platforms allow us to keep track of many key performance indicators such as advertisement requests, filled impressions, click-throughs and revenue. Geolocation and Utilization. Our CADY Server records geolocation of our installed devices on 15 second intervals. From this data, we are able to calculate golf car usage at individual accounts. Installations of Products Installations, as used in this Registration Statement, refers to the process of mounting the Company s tablets on the golf carts owned by businesses that elect to utilize the Digital Caddies GPS System. In order to install the Company s tablet, a mounting system must first be attached to a golf cart s stanchion. Then, the tablet is attached to the mounting system and a power converter is connected to the battery and to the tablet. The tablet is charged by the cart battery as the golf cart is running. Installations are completed by a third party company called National Service Cooperative ("NSC"). Our agreement with NSC is filed hereto as Exhibit 10.10 and incorporated herein by reference. Costs for installing Digital Caddies tablets per golf cart are as follows (includes shipping and taxes): Manufactures Products (Electric) Cost Amount Needed for each Installation Case Case $12.20 1 Best Skinz Best Skinz $5.80 1 Pillowman Converter 48V $20.08 1 Voltaic USB Harness $9.68 1 RAM U-Bolts $5.55 1 RAM Arm $4.93 1 RAM Ball Mount $2.75 1 Tie Wrap Zip Ties $0.34 10 NSC install $29.13 1 Digital Caddies Labor $10.31 1 Shipping install $5.64 1 Cost per Cart: $106.41 Distribution Methods of the Products or Services The Company s products are distributed nationwide through direct sales representatives and third party distribution companies for full scale implementation at golf courses, resorts and country clubs. Competitive Business Conditions, the Issuer s Competitive Position in the Industry, and Methods of Competition; The Golf GPS Market is competitive and is primarily composed of two segments: (i) companies that offer golf GPS systems directly to consumers; and (ii) companies that offer golf GPS systems directly to businesses. Our business focus is to offer our Digital Caddies golf GPS system directly to businesses, and not to individual consumers. We believe that our business model, which is based primarily on generating revenue from advertising displayed though the Digital Caddies platform, is better suited towards offering golf GPS systems to businesses rather than to individual consumers because golf courses offer a more reliable revenue stream. We consider our biggest competitors to be other companies that currently offer golf GPS systems directly to golf courses because businesses, such as resorts, country clubs, etc., have different needs than individual golfers and these systems feature many of the same functions we provide. Currently, we have no direct competitors executing the same business model, namely generating revenues through advertising on Golf GPS systems distributed directly to businesses. However, there are three other companies of which we are aware that provide GPS services to directly to golf courses in a manner which is similar relative to the product we provide, but their business model is to charge the golf courses for installations of their products. Our largest potential competitor in this space is "GPS Industries," a Florida based company formed in 2009. Because GPS Industries is a private company, specific details regarding that Company are not available, but we believe their total customer base is about 400 courses out of a total of 15,000 golf courses in the US. Another competitor is called "DSG TAG SYSTEMS." This company provides similar GPS services called DSG touch, which was launched last year and which we estimate has a customer base of less than 50 golf courses. Another such competitor in this particular market segment is "Cart Golf GPS," a Utah company that installs tablets on golf courses offering Golf GPS. It does not appear that such competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater brand recognition, or more established relationships in the industry than we do. Because there are over 15,000 golf courses in the United States, we believe that the market has not yet reached saturation and that there is room for growth in this market segment. Further, because our tablets are currently being offered free of charge to golf courses, we believe that our business model differs from other competitors who may offer similar services or products directly to businesses since such competitors are likely to charge a fee to provide such services and products. In addition, we believe that our platform differs from our competitors because we expect that the content on our platform will contain more than data regarding golf courses, they will be enriched by content provided by advertisers who join our network. We may also face competition from other competitors who may provide golfers with similar applications as our tablets directly through such golfers smart phones and other mobile devices and through separate Golf GPS products. Such competitors include Garmin, Bushnell Golf, SkyHawke Technologies, LLC, and GST Solutions, Inc. dba Voice Caddie, SkyDroid, and Field Logix. Many of these current and potential competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater brand recognition, and more established relationships in the industry than we do. However, because golf courses have different needs than individual golfers, such as the need for course management functionality, cart tracking, food and beverage service options, and mechanisms to promote golfer retention, we do not believe that competition from competitors who provide golfers with Golf GPS directly to such golfers, and not through the golf courses themselves, will adversely affect our business because they lack features that are specially customized to meet the needs of golf courses and golf course operators. Sources and Availability of Raw Materials and the Names of Principal Suppliers Although most components essential to the Company s business are generally available from multiple sources, certain key components, including, but not limited to, microprocessors, power units, certain liquid crystal displays ("LCDs"), and certain application-specific integrated circuits ("ASICs") are currently obtained by the Company from single or limited sources, which subjects the Company to supply and pricing risks. Many of these and other key components that are available from multiple sources, including, but not limited to, NAND flash memory, dynamic random access memory ("DRAM"), GPS chipsets and certain LCDs, are subject at times to industry-wide shortages and commodity pricing fluctuations. Dependence on One or a Few Major Customers The Company does not depend on any one or on a few major customers/prospective customers as there are over 15,000 golf courses in the United States. In addition, advertising revenue is expected to come from multiple sources and with millions of available advertisers the company does not expect to be dependent on any one advertiser. However during the year ended October 31, 2013, approximately 98% or $973,300 of sponsor revenue was recognized from Level Eighteen Consulting, Inc. ("Level 18"). Level 18 is a third party vendor that assists Digital Caddies with our wireless relationships. Level 18 is a Certified Business Dealer authorized by Sprint Wireless ("Sprint") that receives compensation from Sprint for line activations. Pursuant to a Compensation Sharing Agreement by and between the Company and Level 18, the Company had agreed to initiate line activations for the benefit of Level 18 in exchange for the payment of a certain percentage of compensation to be received by Level 18 from Sprint (either 75% or 50% depending on whether a golf course in which a line is activated qualifies as "Exempt" or "Non-Exempt" within the meaning of the agreement) as a result of any line activations initiated by the Company. Level 18 provided Digital Caddies with sponsorship income to assist with the launch of the Digital Caddies platform. The revenue recorded for the year ending October 31, 2013, related to the number of devices the company activated on the Sprint network. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts Although the scope and design of our software and its features were all designed by Digital Caddies and the development of the software was outsourced to highly qualified 3rd party developers, the Company does not currently hold any specific patents, trademarks, franchises, concessions, royalty agreements or labor contracts in connection our products and services other than as described above. However, the Company has applied for a trademark in connection with the "Players Network." We have signed contracts with the golf course management firms Troon Golf LLC ("Troon") and OB Sports LLC ("OB"). In addition, we have a signed contract with National Service Cooperative ("NSC") to perform installations of our tablets at our customer golf courses and an agreement with Level Eighteen Consulting ("Level 18") pursuant to which the Company receives sponsorship revenue from Level 18 in connection with line activations that the Company causes during the process of installing its tablets. Troon Agreement Under our Agreement with Troon dated October 1, 2013, which is filed herewith as Exhibit 10.8 and incorporated herein by reference (the "Troon Agreement"), the Company agreed to grant to Troon a non-exclusive, non-transferable license to use the Company s GPS systems at participating Troon facilities that elect to use the Company s GPS systems ("Troon Participating Facilities"). Further the Company agreed to supply to and install at Troon Participating Facilities its GPS systems at no cost to Troon or the Troon Participating Facilities. The Company agreed to provide to Troon, at no cost to Troon or Troon Participating Facilities, with training on how to use its GPS systems and provide help and support as needed by Troon. The Company agreed to pay Troon base fees as set forth in the following schedule: (a) For 2014, DCI will pay Troon $2,916.67 for each month there are at least ten (10) Troon Participating Facilities at the end of each given month. Payments are to be paid on March 30, June 30, September 30 and December 31, 2014. In any case. DCI shall not pay more than a Thirty-Five Thousand Dollars ($35,000) Base Fee in 2014. (b) For 2015 DCI will pay Troon $2,916.67 for each month there are at least twenty (20) Troon Participating Facilities at the end of each given month. Payments are to be paid on March 30, June 30, September 30 and December 31 , 2015. In any case, DCI shall not pay more than a Thirty-Five Thousand Dollars ($35,000) Base Fee in 2015. In addition to base fees, the Company agreed to pay Troon incentive fees in accordance with the following schedule: (a) For each Troon Participating Facility that installs the GPS Systems within twelve (12) months from the date this Agreement is executed, DCI shall pay Troon an annual Incentive Fee (the "Incentive Fee") equal to: (i) $5,000 for each 18-hole facility; (ii) $6,500 for each 27-hole facility; (iii) $8,000 for each 36-hole facility; and (iv) $10,500 for each facility with more than 36 holes. (b) For each Troon Participating Facility that installs the GPS Systems after twelve (12) months from the date this Agreement is executed, DCI shall pay Troon an annual Incentive Fee equal to: (i) $2,500 for each 18-hole facility; (ii) $3,750 for each 27 -hole facility; (iii) $5,000 for each 36-hole facility; and (iv) $7,500 for each facility with more than 36 holes. In exchange, Troon agreed to use commercially reasonable efforts to encourage Troon facilities to utilize the Company s GPS systems and become a Troon Participating Facility, permit the Company access, upon reasonable advance notice, to each Troon Participating Facility, allow the Company to install and maintain the GPS systems on Troon Participating Facility golf carts, permit the Company to take prospective customers to Troon Participating Facilities to demonstrate its GPS systems and cooperate and participate with the Company on joint press releases and media opportunities so that the Company can market and advertise its GPS systems. The Troon Agreement has an effective date of January 1, 2014, an initial term of two years and is automatically renewable for subsequent two (2) year terms unless earlier terminated. Please see Exhibit 10.8 which is filed herewith and incorporated herein by reference. OB Sports Agreement Under our Agreement with OB dated May 31, 2013, which is filed herewith as Exhibit 10.9 and incorporated herein by reference (the "OB Agreement"), the Company is permitted to install and configure its GPS systems at OB golf facilities in exchange for fees to be paid to OB in accordance with the following schedule: (a) Sign Up Fee. Upon installation, the Company shall provide to OB $1,500 for each eighteen hole equivalent golf course signing a standard 36 month DCI Services Agreement. SignUp Fee shall be payable as follows, $500 upon system installation at each golf course, $500 on the one year anniversary of the installation, and $500 in the two year anniversary. Should a golf course terminate its agreement with the Company prior to the one year anniversary date of the OB Agreement for any reason whatsoever, OB will remit back to the Company said $500 payment. (b) Stock Options. The Company shall provide OB an Option to purchase 1,000 shares of the Company s Common Stock for each eighteen hole equivalent golf course signing a standard 36 month Services Agreement. The Options will have a strike price of $0.30/per share and a vesting schedule of 30%/30%/40% on the first, second and third anniversary of each individual golf course installation date. (c) Advertising. OB will retain the right to opt out of advertising categories and/or specific advertisers. Additionally OB will own the rights to 20% of the impressions created on the system at each one of their managed courses. OB will have the right to provide those impressions to whatever advertiser OB so chooses, subject to the approval of the Company. The OB Agreement has an effective date of May 31, 2013, and an initial term of three years. Please see Exhibit 10.9 which is filed herewith and incorporated herein by reference. National Service Cooperative Agreement Installations are completed by a third party company called National Service Cooperative ("NSC"). Under our agreement with NSC, the costs to be paid by the Company to NSC for installing Digital Caddies tablets ranges from $27.50 to $29.00 per cart installation, depending on the geographical location of NSC s service providers. Please see Exhibit 10.10 which is filed herewith and incorporated herein by reference. Level Eighteen Agreement Level 18 is a Certified Business Dealer authorized by Sprint Wireless ("Sprint") that receives compensation from Sprint for line activations. Pursuant to a Compensation Sharing Agreement by and between the Company and Level 18, the Company had agreed to initiate line activations for the benefit of Level 18 in exchange for the payment of a certain percentage of compensation to be received by Level 18 from Sprint (either 75% or 50% depending on whether a golf course in which a line is activated qualifies as "Exempt" or "Non-Exempt" within the meaning of the agreement) as a result of any line activations initiated by the Company. Please see Exhibit 10.7 which is filed herewith and incorporated herein by reference. The Need for any Government Approval of Principal Products or Services and the Status of any Requested Government Approvals The telecommunications industry is highly regulated, and the regulatory environment in which the Company operates is subject to change. In accordance with Federal Communications Commission ("FCC") rules and regulations, wireless transceiver and cellular handset products are required to be certified by the FCC and comparable authorities in foreign countries where they are sold. Any of the Company s products that might be sold in Europe will be required to comply with relevant directives of the European Commission. A delay in receiving required certifications for new products, or enhancements to the Company s products, or losing certification for the Company s existing products could adversely affect our business. The Effect of Existing or Probable Governmental Regulations on the Business The telecommunications industry is highly regulated, and the regulatory environment in which the Company operates is subject to change. In accordance with Federal Communications Commission ("FCC") rules and regulations, wireless transceiver and cellular handset products are required to be certified by the FCC and comparable authorities in foreign countries where they are sold. A delay in receiving required certifications for new products, or enhancements to the Company s products, or losing certification for the Company s existing products could adversely affect the business. Time Spent on Research and Development Activities The Company s product innovations are often outsourced to engineering and manufacturing teams. These engineering and development companies create the Company s products. Digital Caddies, Inc. believes the design of its products has played an important role in the Company s success and that utilizing outsourcing methods can keep overhead low and maintain good relationships with suppliers. The Costs and Effects of Compliance with Environmental Laws (federal, state, and local) The Company s operations themselves are not subject to various environmental laws, including laws addressing air and water pollution and management of hazardous substances and wastes, because we outsource most of our product development. The Number of Total Employees and Number of Full-time Employees The Company currently has 14 full-time employees/consultants, not including independent sales consultants. Specifically, our employees do all the pre-assembly and programing needed for installation. They are also responsible for all shipping, packaging, processes and storing of inventory. They are responsible for any returns from faulty product at the course, as well as the testing, reporting and reconfiguration needed. Some tasks include: programming tablets with DCI app, casing tablets, applying screen protector, testing power converters, keeping inventory, processing sales orders, processing returns, packaging and shipping. National Service Cooperative, along with a few independent contractors, is responsible for our tablet installation at each golf course location. Our tablet installation process is described above. They are also responsible for setting a date and time for the installation, insure that all procedures are followed and to provide a professional presence at our customer golf courses. Recent Developments in Products or Services and Their Markets On January 22, 2014, the Company announced that it signed a definitive agreement with the PGA National Golf Resort located in Palm Beach Gardens, Florida, to install the Company s proprietary golf information system, at all five of the resorts golf facilities. On February 25, 2014, the Company announced that they installed Digital Caddies on both golf courses at The Boulders, a Waldorf Astoria Resort, located in Carefree, Arizona. Golf Magazine rates the Boulders among the "Top 100 Courses in the U.S.". On March 17, 2014, the Company announced that they have entered into an agreement with Rhythm New Media to serve rich media and video advertising onto the Digital Caddies platform. On March 20, 2014, the Company announced that they have entered into an agreement with Nexage to help maximize inventory fill rates by efficiently delivering rich media advertising onto the Digital Caddies platform and maximize CPM through the delivery of highly targeted premium location based ads. On March 25, 2014, the Company announced that they have entered into an agreement with Millennial Media to serve ads from the world's top brands to the Digital Caddies platform and provide advertisers full service, custom creative, to help advertisers connect with our users of the Digital Caddies platform. On April 29, 2014, the Company announced that they have added full screen video ad network LiveRail to its advertising platform. On May 13, 2014, the Company announced that they have entered into an agreement with MoPub, Inc. to fill in-app mobile ads on the Digital Caddies tablet network. On June 24, 2014, the Company announced that it has joined the DOmedia platform to simplify the process for agencies and advertisers to find, plan and buy Digital Caddies' ad inventory directly. On July 24, 2014, the Company announced that they had joined the Digital Placed Based Advertising Association that will provide them valuable access to many digital out of home advertisers. On August 5, 2014, the Company announced that they had entered into an exclusive, multi-year sales partnership with Access Sports Media ("ASM") to provide new digital advertising and sponsorship opportunities for ASM's current and future clients. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information In December 2011, we obtained quotation for our common stock on the Over-The-Counter Pink marketplace ("OTC Pink") under the symbol CADY. We originally obtained quotation for our common stock on the OTC Pink marketplace on February 26, 2007 when our Company was named Imagine Holding Corp. On September 17, 2011, the Company s trading symbol on the OTC Pink Sheets changed to DNAB, when our Company was named DNA Beverage Corp., and on December 22, 2011, the Company s symbol on the OTC Pink changed to CADY, when our Company assumed its current name of Digital Caddies, Inc. OTC Pink securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Pink securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Pink issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange. The Company's common stock is considered a "penny stock" as defined in the Commission's rules promulgated under the Exchange Act. The Commission's rules regarding penny stocks impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally persons with net worth in excess of $1,000,000 (excluding their principal residence) or an annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rules, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Thus the Rules affect the ability of broker-dealers to sell the Company's shares should they wish to do so because of the adverse effect that the Rules have upon liquidity of penny stocks. Unless the transaction is exempt under the Rules, under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer transactions in penny stocks are required to provide their customers with (i) a risk disclosure document; (ii) disclosure of current bid and ask quotations if any; (iii) disclosure of the compensation of the broker-dealer and its sales personnel in the transaction; and (iv) monthly account statements showing the market value of each penny stock held in the customer's account. As a result of the penny stock rules, the market liquidity for the Company's securities may be severely adversely affected by limiting the ability of broker-dealers to sell the Company's securities and the ability of purchasers of the securities to resell them. The following table summarizes the high and low historical closing prices reported by the OTC for the periods indicated. OTC quotations reflect inter-dealer prices, without retail mark-up, mark down or commissions, so those quotes may not represent actual transactions. High Low 2012 First Quarter 2012 $ 1.5000 $ 0.0180 Second Quarter 2012 $ 0.6000 $ 0.1100 Third Quarter 2012 $ 0.1800 $ 0.0410 Fourth Quarter 2012 $ 0.1800 $ 0.0560 2013 First Quarter 2013 $ 0.2000 $ 0.0700 Second Quarter 2013 $ 0.2000 $ 0.0800 Third Quarter 2013 $ 0.5400 $ 0.1450 Fourth Quarter 2013 $ 0.4200 $ 0.1500 2014 First Quarter 2014 $ 0.3250 $ 0.1470 Second Quarter 2014 $ 0.4050 $ 0.1600 Third Quarter 2014 $ 0.5000 $ 0.1600 Fourth Quarter 2014 (Through August 14, 2014) $ 0.2500 $ 0.1610 2015 First Quarter 2015 (through December 17, 2014) $ 0.1980 $ 0.1420 Warrants, Options and Other Rights to Acquire Shares There are up to 1,575,000 shares issuable upon exercise of 3,150,000 previously issued warrants, with an expiration date of December 19, 2014, at a conversion rate whereby two (2) warrants plus $0.20 will convert into one (1) common share upon exercise. There are up to 5,665,000 shares issuable upon exercise of 11,330,000 previously issued warrants, with an expiration date of December 19, 2014, at a conversion rate whereby two (2) warrants plus $0.20 will convert into one (1) common share upon exercise. There are up to 10,283,815 shares issuable upon exercise of 10,283,815 previously issued warrants, with an expiration date of April 17, 2019, at a conversion rate whereby one (1) warrant plus $0.40 will convert into one (1) common share upon exercise. There are up to 3,085,144 shares issuable upon exercise of 3,085,144 previously issued warrants, with an expiration date of February 1, 2019, at a conversion rate whereby one (1) warrant plus $0.40 will convert into one (1) common share upon exercise. There are a minimum of 2,857,144 shares issuable upon exercise of previously issued warrants, with an expiration date of February 1, 2025, at a conversion rate whereby one (1) warrant plus $0.21 will convert into one (1) common share upon exercise. There are a minimum of 190,402 shares issuable upon exercise of previously issued warrants, with an expiration date of February 1, 2025, at a conversion rate whereby one (1) warrant plus $0.21 will convert into one (1) common share upon exercise. There are up to 4,129 shares issuable upon conversion of outstanding Series A and Series B Preferred Stock. There are 5,100,000 shares issuable upon exercise of 5,100,000 options, each with an expiry date of April 25, 2023 at a strike price of $0.10 per share. There are up to 22,375 shares issuable upon exercise of 22,375 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $1.50 will convert into one (1) common share upon exercise. There are up to 5,897 shares issuable upon exercise of 5,897 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $1.75 will convert into one (1) common share upon exercise. There are up to 24,117 shares issuable upon exercise of 24,117 previously issued warrants, with an expiration date of December 16, 2016, at a conversion rate whereby one (1) warrant plus $2.50 will convert into one (1) common share upon exercise. Other than the foregoing, there are no other outstanding warrants or options to purchase our securities. Holders We had approximately 379 record holders of our common stock as of December 17, 2014, according to the records of our transfer agent. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed. Dividends We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future. Securities Authorized for Issuance Under Equity Compensation Plans None. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this Registration Statement. Some of the statements under "Management s Discussion and Analysis," "Description of Business" and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the golf car GPS and golf car GPS advertising industry in general. Statements which include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will," and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph. Plan of Operations Digital Caddies, Inc. is a golf-centric technology and information-dissemination company that uses tablet technology and wireless connectivity to create The Players Network, an informational medium that enables advertisers to directly market to golfers through multifunctional web-enabled interactive tablets (currently manufactured by Samsung) installed on golf cars owned by the Company s customer golf course businesses. These Internet-connected interactive tablets are designed to provide services to both golfers and golf courses alike. Once interactive tablets are installed, players are provided with a number of interactive services and applications, such as GPS-based hole/course information, scoring applications, messaging platforms (for cart-to-cart and cart-to-course communications), the ability to wirelessly call for the beverage cart, plus news, weather, sports, and entertainment. In addition, our platform provides a broad portfolio of course management tools designed to enable golf course managers to improve player pace of play via GPS-based cart tracking and communications, potentially increase merchandise and concession sales via real-time on-tablet promotions, and access to additional revenue streams (e.g., sale of local advertising.) All of these services are currently provided to our customer golf courses free of charge, although we may elect to charge for these services in the future. We launched the beta version of the Digital Caddies platform in June 2013, then formally launched the platform in November 2013, and have signed contracts with several golf course management firms, Troon and OB Sports. To date, we have installations at approximately 170 golf courses, and have entered into several partnerships with third party ad networks, such as Nexage, Millenial Media, LiveRail, MoPub, Inc. and Access Sports Media, to help monetize The Players Network. The majority of our initial revenue will come from the sale of advertising and from sponsorship revenue. Our ability to attract advertisers, generate revenues and obtain premium advertising rates will be highly dependent upon a number of key factors including: (i) the attractiveness and density of our primary demographic; (ii) the amount of reach and/or viewership; (iii) the dwell time (that is, how long a viewer looks at a particular screen); and (iv) data (that is, what is known about a viewer and what information can be collected for the advertiser). Impressions opportunities equal the number of times we can potentially place an advertisement in front of that golfer. The average round of golf takes 4.5 hours to play. Currently, our ad locations can provide up to 2 advertisements every minute. Therefore, 4.5 hours equals 270 minutes times 2 ad opportunities per minute, equals 540 ad opportunities per round. We currently have 3 ad locations integrated into our service therefore every round of golf provides up to 1620 ad opportunities. Based on our current estimated viewership of approximately 500,000 rounds per month, we generate up to 400 million impression opportunities. In addition, advertisers buy ad space based on the number of impressions they buy multiplied by the price. The pricing is usually based on the price for 1000 impressions, referred to as "CPM" (Cost per thousand). In order to calculate the revenue possibility, we take the number of impressions available and divide it by 1000 and multiply it by the CPM and multiply it by the "fill rate," which is defined as the number of impressions actually sold. We believe that advertisers will be very interested in presenting their message on our Digital Caddies because of our ability to generate impressions and connect such advertisers with golfers during play. Company Strategy The Company utilizes rigorous due diligence, conservative assumptions and careful assessment of downside scenarios before pitching its products to a specific golf course. The Company seeks to identify highly trafficked revenue-producing golf courses to initiate its programs and install its products, thus appealing to a broad range of advertisers. The Company s twelve-month operational schedule entails a plan of action focusing on direct sales and implementing their system at high revenue golf facilities as well as generating marketing and advertising through, traditional, and online web/social networking channels. The Company s sales strategy entails disciplined criteria that will provide new direct sales and implementations of their services to more golf courses than ever before. The Company s employee expansion will be directly related to the acquisition and management of our assets. We are unable to estimate or forecast that expansion at this time, as only the market will dictate our growth. Results of Operations For the twelve months ended October 31, 2013 Total revenue for the twelve months ended October 31, 2013 was $992,538 as compared to $477,795 for the twelve months ended October 31, 2012. The source of revenues for fiscal year 2012 and most of 2013 was from rental income from the legacy business of renting Garmin G8 devices to golf courses. However, Digital Caddies does not expect to have any significant revenue from this legacy business going forward. The increase in revenue from Fiscal Year 2013 to Fiscal Year 2012 can be attributed primarily to the Company securing new sponsorship revenue from Level 18 for the new service that was launched earlier in 2013. Of the revenue recorded for the year ended October 31, 2013, approximately 98% or $973,300, related mainly to the number of devices the company activated on the Sprint network as a result of a Compensation Sharing Agreement with its sponsor Level 18, a Certified Business Dealer authorized by Sprint Wireless ("Sprint") that receives compensation from Sprint for line activations. Pursuant to the Compensation Sharing Agreement, the Company received revenue from Level 18 for each line activation it caused. The amount of revenue generated from activations was primarily related to the launch of the network and it is expected that future revenue from Level 18 will be less than this initial recognition. The total operating expenses, including expenses for research and development, sales, general expenses and administrative and other miscellaneous expenses, for the twelve month period ended October 31, 2013 was $2,367,824, which was comprised of $100,697 in research and development expenses, $2,117,573 in sales, general and administrative costs, and $149,554 in other expenses costs, as compared to $481,658 for the twelve month period ended October 31, 2012, which was comprised of $444,716 in sales, general and administrative costs and $36,942 in other expenses. The overall increase in operating expenses can be attributed to increased spending and infrastructure required to support the launch and installation of the Digital Caddies platform at golf courses around the country. The net loss for the twelve months ended October 31, 2013 was $1,903,006 as compared to $37,910 for the twelve months ending October 31, 2012. For the nine months ended July 31, 2014 Total revenue for the nine months ended July 31, 2014 was $195,484, as compared to $495,921 for the nine months ended July 31, 2013. The decrease in revenue can be attributed primarily to the decrease in sponsorship revenue received from Level 18. The amount of advertising revenue from operations apart from sponsorship income for the nine month period ended July 31, 2014 is $17,821 of the total $195,485 revenue reported, which constitutes a percentage of 9.12%. Total operating expenses, including expenses for research and development, sales, general expenses and administrative and other expenses, for the nine month period ended July 31, 2014 were $2,059,485, which was comprised of $0 in research and development expenses and $2,005,510 in sales, general and administrative costs and $53,975 in other expenses, as compared to $1,814,769 for the nine month period ended July 31, 2013, which was comprised of $63,163 in research and development expenses and $1,618,305 in sales, general and administrative costs and $133,301 in other expenses. The overall increase in operating expenses can be attributed to expenses incurred from the Company s capital raising efforts, costs relating to the formal launch and installation of the Players Network across the country and write-offs. Specifically, when we made the transition to the new platform, the nature of our cost of revenue also changed. Total costs of revenue for the nine month period ended July 31, 2014 were $2,766,668, as compared to $435,951 for the nine month period ended July 31, 2013. Our cost of revenue increased because it now consists of our data charges which accounts for a majority of the cost of revenue. In addition to data charges we have the cost for installation and shipping of the tablets. We reasonably expect to increase the cost of revenue as we continue to install the tablets in golf courses across the US. This will have a favorable impact on revenue as the more tablets we have installed the more advertising dollars we can attract. The net loss for the nine months ended July 31, 2014 was $4,630,669 as compared to $1,754,799 for the nine month period ended July 31, 2013. Liquidity and Capital Resources For the twelve months ended October 31, 2013 Our balance sheet as at October 31, 2013 reflects $572,133 in total current assets, as compared to $64,305 in total current assets as of October 31, 2012. For the nine months ended July 31, 2014 Our balance sheet as at July 31, 2014 reflects $1,341,289 in total current assets, as compared to $572,133 in total current assets as of October 31, 2013. The increase in total current assets was a result of the Company s private placement offering. Cash Flow from Operating Activities For the twelve months ended October 31, 2013, and 2012 During the year ended October 31, 2013, the net cash flows used in the Company s operating activities was $1,060,375, as compared to the net cash flows provided by the Company s operating activities for the twelve month period ending October 31, 2012 was $27,397. For the nine months ended July 31, 2014, and 2013 During the period ended July 31, 2014, the net cash flows used in the Company s operating activities was $3,170,892. In comparison, the cash flows used in the Company s operating activities during the nine months ended July 31, 2013 was $790,653. Cash Flow from Investing Activities For the twelve months ended October 31, 2013, and 2012 During the period ended October 31, 2013, the net cash used in investing activities by the Company was $167,082. The net cash used in investing activities by the Company for the twelve month period ending October 31, 2012 was $0. For the nine months ended July 31, 2014, and 2013 During the nine month period ended July 31, 2014, the net cash used in investing activities by the Company was $1,479,601. The net cash used in investing activities by the Company for the nine months ended July 31, 2013 was $85,594. Cash Flow from Financing Activities For the twelve months ended October 31, 2013, and 2012 During the twelve month period ended October 31, 2013, the net cash provided by financing activities by Company was $1,379,542, in comparison, the net cash used in financing activities for the year ended October 31, 2012 was $13,742. For the nine months ended July 31, 2014, and 2013 During the nine month period ended July 31, 2014, the net cash provided by financing activities by Company was $5,415,615. In comparison, the net cash provided by financing activities for the nine months ended July 31, 2013 was $1,140,375. Going Concern We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. However, the Company has been building their network over the last 18 months and thus has been investing heavily in the infrastructure required to reach certain economies of scale in order to begin monetizing the network. Now that those initial economies of scale have been reached, the Company, through continued management of expenses, the increase of advertising and software upgrade revenue is expected to move the Company towards profitability. Contractual Obligations We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. Future Financings We will continue to rely on equity sales of our common shares and debt proceeds in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders. Disagreements with Accountants on Accounting and Financial Disclosure Other than the disclosure of uncertainty regarding the ability for us to continue as a going concern which was included in our accountant s report on the financial statements for the years ended October 31, 2013 and 2012, MaloneBailey LLP s reports on the financial statements of the Company for the years ended October 31, 2013 and 2012 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audit and review of the financial statements of the Company through October 31, 2013, there were no disagreements on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with MaloneBailey's opinion to the subject matter of the disagreement. In connection with the audited financial statements of the Company for the years ended October 31, 2013 and 2012 and interim unaudited financial statements through April 30, 2014, there have been no reportable events with the Company as set forth in Item 304(a)(1)(v) of Regulation S-K. The Company provided a copy of the foregoing disclosures to MaloneBailey LLP prior to the date of filing of this Registration Statement on Form S-1, and requested that MaloneBailey LLP furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agreed with the statements in this Registration Statement on Form S-1. A copy of the letter furnished in response to that request is filed as Exhibit 16 herewith. Critical Accounting Policies Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. Revenue recognition & Major Customers Revenue is recognized in accordance with SEC Staff Accounting Topic 13, "Revenue Recognition in Financial Statements". The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, or service have been rendered, the price to the buyer is fixed or determinable and collectability of the resulting receivable is reasonable assured. The majority of our initial revenue will come from the sale of advertising and from sponsorship revenue. Our ability to attract advertisers, generate revenues and obtain premium advertising rates will be highly dependent upon a number of key factors including: (i) the attractiveness and density of our primary demographic; (ii) the amount of reach and/or viewership; (iii) the dwell time (that is, how long a viewer looks at a particular screen); and (iv) data (that is, what is known about a viewer and what information can be collected for the advertiser). Impressions opportunities equal the number of times we can potentially place an advertisement in front of that golfer. The average round of golf takes 4.5 hours to play. Currently, our ad locations can provide up to 2 advertisements every minute. Therefore, 4.5 hours equals 270 minutes times 2 ad opportunities per minute, equals 540 ad opportunities per round. We currently have 3 ad locations integrated into our service therefore every round of golf provides up to 1620 ad opportunities. Based on our current estimated viewership of approximately 500,000 rounds per month, we generate up to 400 million impression opportunities. In addition, advertisers buy ad space based on the number of impressions they buy multiplied by the price. The pricing is usually based on the price for 1000 impressions, referred to as "CPM" (Cost per thousand). In order to calculate the revenue possibility, we take the number of impressions available and divide it by 1000 and multiply it by the CPM and multiply it by the "fill rate," which is defined as the number of impressions actually sold. We believe that advertisers will be very interested in presenting their message on our Digital Caddies because of our ability to generate impressions and connect such advertisers with golfers during play. Level Eighteen Consulting, Inc. ("Level 18") is a third party vendor that assisted Digital Caddies with our wireless relationships. Level 18 is a Certified Business Dealer authorized by Sprint Wireless ("Sprint") that receives compensation from Sprint for line activations. Pursuant to a Compensation Sharing Agreement by and between the Company and Level 18, the Company had agreed to initiate line activations for the benefit of Level 18 in exchange for the payment of a certain percentage of compensation to be received by Level 18 from Sprint (either 75% or 50% depending on whether a golf course in which a line is activated qualifies as "Exempt" or "Non-Exempt" within the meaning of the agreement) as a result of any line activations initiated by the Company. Level 18 provided Digital Caddies with sponsorship income to assist with the launch of the Digital Caddies platform. The revenue recorded for the year ending October 31, 2013, related to the number of devices the company activated on the Sprint network. During the year ended October 31, 2013, approximately 98% or $973,300 of sponsor revenue was recognized from Level 18. The Company also generated rental income from the legacy business of renting Garmin G8 devices to the golf course to provide simple distance messaging. Each customer golf course paid a monthly rental fee for the devices. After the fiscal year ended October 31, 2013, the Company will not receive any significant revenue from their legacy business. Stock based compensation ASC 718, "Accounting for Stock-Based Compensation" established financial accounting and reporting standards for stock-based employee compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for share based payments to employees in accordance with ASC 718 and share based payments to non-employees in accordance with ASC 505-50 "Accounting for Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services". Recently Issued Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Identification of Directors and Executive Officers The following table sets forth the name, age and position of our Directors and executive officers. Our Directors and any additional Directors we may appoint in the future are elected annually and will hold office until our next annual meeting of the shareholders and until their successors are elected and qualified. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement. Our officers and Directors may receive compensation as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options. Directors may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors. Vacancies in the Board are filled by majority vote of the remaining Directors. There are no other persons who can be classified as a promoter or controlling person of us. Our executive officers and Directors are as follows: Name Age Position Brad Nightingale 44 Chief Executive Officer, Chairman of the Board, Chief Financial Officer, Director Mike Loustalot 52 President and Director Theodore Konyi 59 Secretary, Treasurer and Director Ted Bradley 39 Vice President of Advertising & Marketing Tim Greenwell 56 Vice President of Golf Course Sales Mike Carney 38 Director Business Experience The biographies of our directors and officers are as follows: Brad Nightingale Chief Executive Officer, Chief Financial Officer, Chairman of the Board and Director Mr. Nightingale (44 years old) is a business developer, consultant and manager. Mr. Nightingale founded Digital Caddies as a private company in 2003 and has served as Chief Executive Officer, Chairman of the Board, Chief Financial Officer, and a Director of Digital Caddies since January 2003. As an officer and director of the Company, he continues to be instrumental in managing the overall direction for the company. Mike Loustalot President and Director Mr. Loustalot (52 years old) joined Digital Caddies as our President and a director in March 2013. Prior to joining the Company, Mr. Loustalot was Vice President of Sales & Strategic Partnerships for GolfNow, a subsidiary of Golf Channel, from April 2008 to March 2013. GolfNow is an online reservations and revenue management platform where Mr. Loustalot was responsible for growing the company from a handful of participating golf courses in 2008 to more than 4,000 today. Prior to GolfNow, Mr. Loustalot was Executive Vice President of Sales for Cypress Golf Solutions (the founding company to GolfNow), which provides management and marketing services to course owners and operators, marketing partners and affiliates, golfers and advertisers. Previously, Mr. Loustalot was founder and president of Spectrum Golf, a service bureau that provided private label, inbound call-center services for golf courses, hotels and golf vacation businesses. Mr. Loustalot received a Bachelor of Science degree in General Business Administration from Arizona State University in 1979. Theodore Konyi Secretary, Treasurer and Director Mr. Konyi (59 years old) has served as a Director, and our Secretary and Treasurer since January 2007. He also has served as the President and Chief Executive Officer of Maxwell Mercantile Inc., a merchant bank specializing in small public investments, since October 1988. As founder of the Maxwell, he has been involved in the start-up and growth phases of corporations primarily in the energy and technology industries. He founded Magnum Energy Inc. and served as a Director and its President and Chief Executive Officer from October 1, 2003 to January 31, 2009. He served as Vice President, Business Development of Smartcool Systems Inc. since September 1, 2004. He served as the President of StonePoint Global Brands Inc. (formerly Stonepoint Group Inc.) from 2001 to February 14, 2003. He was also a Director of Edge Resources Inc. and Chartwell Technology Inc. both publicly traded companies. He served as Founding Director of First Coal Corporation, a private company, which was recently purchased by Xstrata Coal. Mr. Konyi attended the University of British Columbia in 1973. Ted Bradley Vice President of Advertising & Marketing Ted Bradley (39 years old) serves as Vice President of Advertising & Marketing and works to develop and execute on all aspects of the revenue generation part of our business. Mr. Bradley joined the Company in June 2013. Over the last decade, Mr. Bradley has been instrumental in building several Digital Out of Home Networks from the ground up, including sales strategy, planning and execution. From February 2004 to March 2009, Mr. Bradley was the Chief Sales Officer for Telephoto Technologies Inc. where he was responsible for sales and business development. From April 2006 to June 2011, Mr. Bradley served on an advisory committee to the Thoroughbred Racing Association ("TRA") which oversees technical and policy guidelines for the TRA. From April 2009 to July 2011, Mr. Bradley served as Vice President of Media, Sales and Operations for OnTrack Media. From October 2011 to May 2013, Mr. Bradley was the Vice President of Sales and Marketing for Roberts Media Network. From 2009 to the present, Mr. Bradley has served as a board member for the Digital Place Based Advertising Association (DPAA). From February 2009 to the present, Mr. Bradley has served as a member of the Executive Committee of the Canadian Out-of-Home Digital Association (CODACAN), a non-profit trade association representing industry leaders from across Canada. Mr. Bradley received his Bachelor of Arts in History at the University of British Columbia in 1996. Tim Greenwell Vice President of Golf Course Sales Tim Greenwell (56 years old), a golf industry veteran with 25-plus years of experience, is experienced in driving rapid sales growth and building market share. Mr. Greenwell joined the Company in November 2013. From April 2013 to December 2013, Mr. Greenwell served as Senior Regional Director for the Golf Channel. From April 1997 to April 2013, Mr. Greenwell served as the Senior Vice President of Global Marketing and Branding at Troon. While at Troon, the world s largest golf course management company with nearly 200 golf courses located in 26 states and 30 countries, he was the Senior Vice President of Global Branding & Marketing and was responsible for building and leading Troon s sales and marketing departments. Mr. Greenwell received his degree in Business Administration and Management from Arizona State University in 1979. Mike Carney Director Mike Carney (38 years old) has 17 years of experience working within executive teams and with CEOs, board directors and professional investors in transformation initiatives. Mr. Carney joined the Company in August 2014. He is experienced in strategy execution, M&A, functional process design, FP&A and market/economic analysis. Mr. Carney has experience directly managing the majority of business functions, as well as, high level project management involving cross-department collaboration. During his career, Mr. Carney was involved in a number of sectors, including technology, business services, industrial, consumer and financial. He participated in numerous capital raisings and M&A transactions. In addition, as an analyst, Mr. Carney has covered hundreds of companies throughout his career, developed a strong institutional investor following, and was widely quoted in the financial and business press. Mr. Carney has worked with a number of publicly traded and privately held companies as an executive, strategy consultant and restructuring advisor. He has been with AGC Networks Inc., the North American operations of the global technology integrator AGC Networks Ltd., as its co-founder since its inception in early 2012. He is responsible for finance and administration, strategy, corporate development and vendor alliances. Mr. Carney was also a strategic advisory board member to Sagenet, a managed network services provider with customers across the U.S. Previously, Mr. Carney headed Development & Strategy for XETA Technologies (now a part of Windstream Communications), a publicly-traded enterprise communications integrator. There he was in charge of corporate development, marketing & product development, vendor partnerships and planning & analysis during the rebuilding of XETA and sale of the company during its last 2 years. Before XETA, Mr. Carney was a Principal of JACK Consulting and Three Part Advisors where he held interim roles and advised companies in a number of industries and practice focuses, including strategy setting, M&A, financial and business restructuring, competitive intelligence, KPI formation, market/macro-economic analysis and portfolio management. Mr. Carney participated as an initial member of the Enhanced Business Reporting Consortium/Gartner Key Performance Indicator Initiative along with financial executives from Microsoft, Cisco, SAP and Oracle, leaders from the AICPA and CFA Institute. Mr. Carney received a MBA from TCU with emphasis in investments and business law. He was the first recipient of the Communications Excellence Certification from the M.J. Neeley Center for Productive Communication. He also holds a BA in economics and completed the Business Economics Program with a specialization in money and banking from UT Austin. Mr. Carney is a CFA charter holder and member of the CFA Institute. Term of Office Each director serves for a term of one year and until his successor is elected at the Annual Shareholders Meeting and is qualified, subject to removal by the shareholders. Each officer serves for a term of one year and until his successor is elected at a meeting of the Board of Directors and is qualified. Limitation of Liability and Indemnification Matters Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. Family Relationships There are no family relationships among our Directors or executive officers. Identification of Significant Employees The Company currently has 14 full-time employees/consultants, not including independent sales consultants. Involvement in Certain Legal Proceedings None of our directors or executive officers has, during the past ten years: Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; Been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any Registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Except as set forth in our discussion below in "Certain Relationships and Related Transactions, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. Independence of Directors We have on independent director, Mike Carney. However, Brad Nightingale, Mike Loustalot and Theodore Konyi are not independent directors because they are also officers of the Company. Committees of the Board Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our Directors believe that it is not necessary to have such committees, at this time, because the Board of Directors can adequately perform the functions of such committees. Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment. A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President and Director, at the address appearing on the first page of this filing. Risk Oversight Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors approach to risk oversight includes understanding the critical risks in the Company s business and strategy, evaluating the Company s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities. Corporate Governance The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company s employees, officers and Directors as the Company is not required to do so. In lieu of an Audit Committee, the Company s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company's financial statements and other services provided by the Company s independent public accountants. The Board of Directors reviews the Company's internal accounting controls, practices and policies. Code of Ethics We have not adopted a Code of Ethics (the "Code") that applies to our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer. EXECUTIVE COMPENSATION The following table sets forth all compensation paid by the Company for the fiscal years of 2013 and 2012. Summary Executive Compensation Table: Name and principal position (a) Year ended October 31 (b) Salary ($) (c) Bonus ($) (d) Stock Awards ($) (e) Option (6) Awards ($) (f) Non-Equity Incentive Plan Compensation ($) (g) Nonqualified Deferred Compensation Earnings ($) (h) All Other Compensation ($) (i) Total ($) (j) Brad Nightingale (1) 2012 144,000 — — — — — — $144,000 2013 144,000 — 600,000 289,450 — — — $1,033,450 Theodore Konyi (2) 2012 120,000 — — — — — — 120,000 2013 120,000 — — 248,100 — — — 368,100 Mike Loustalot, (3) 2012 — — — — — — — — 2013 158,333 45,000 — 206,823 — — 100,938 511,094 Ted Bradley, (4) 2012 — — — — — — — — 2013 $65,000 — — — — — — $65,000 Tim Greenwell, (5) 2012 — — — — — — — — 2013 — — — — — — — — The table above does not include prerequisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation. There have been no changes in the Company s compensation policy since the end of the Company s last fiscal year, October 31, 2013. (1) Brad Nightingale is the Company s CEO, CFO, Chairman and a Director. The shares were authorized by the Company s Board of Directors on April 12, 2013, but were actually issued by the Company s transfer agent on May 8, 2013, as compensation for services rendered to the Company between May 2012 and July 2012 in the amount of $352,410. The shares were valued at the market price on the respective date of issuance and the fair value of the shares was determined to be $600,000, resulting in a loss of $247,590. (2) Theodore Konyi is the Company s Secretary and Treasurer and a Director. (3) Mr. Loustalot was appointed as President and Director of Digital Caddies on March 26, 2013. (4) Ted Bradley was appointed as Vice President of Advertising and Marketing in June 2013. (5) Tim Greenwell was appointed as Vice President of Sales in November 2013. (6) On April 25, 2013 (the "Grant Date") Brad Nightingale, Ted Konyi and Mike Loustalot were granted 1,750,000, 1,500,000 and 1,250,000 options to purchase shares of common stock, respectively. The options are exercisable at $.10 per share of common stock over a ten year term and vested immediately. The Company has calculated the estimated fair market value of the options granted using the Black-Scholes Option Pricing model and the following assumptions: stock price at valuation, $.1655 (April 25, 2013 stock price), expected term of 5-7 years, exercise price of $0.10, a risk free interest rate of 0.71% -1.15%, a dividend yield of 0% and a volatility of 300%. Narrative Disclosure to Summary Compensation Table Other than as disclosed below, there are no current employment agreements between the Company and its executive officers. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers. There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described below. Brad Nightingale Employment Agreement Brad Nightingale, the Company s CEO, CFO, and Chairman, has an employment agreement with the Company, which is filed herewith, dated June 1, 2007. The agreement was entered into when Digital Caddies, Inc. was a private company named Golf Logix (US), Inc. (prior to its name change to Digital Caddies, Inc. on March 27, 2008 and prior to the merger with the public company on September 7, 2011). The agreement has an indefinite term, but may be terminated by either the Company or Mr. Nightingale, with or without "Cause" or "Good Reason," in accordance with the terms of the agreement. Under the agreement, Mr. Nightingale receives a base salary as set forth by the following schedule: 1. For the period from June 1, 2007 to December 31, 2007, Mr. Nightingale received a base salary of USD $70,000; 2. For the period from January 1, 2008 to December 31, 2008, Mr. Nightingale received a base salary of USD $120,000; 3. For the period from January 1, 2009 to December 31, 2009, Mr. Nightingale received a base salary of USD $144,000; and 4. For the period starting January 1, 2010 and for each subsequent twelve (12) month period thereafter, Mr. Nightingale received a Base Salary of $144,000 plus increases equal to the increase in the Cost of Living Index, which is defined as percentage change increases of the Consumer Price Index ("CPI"), compiled by the United States Department of Labor, Bureau of Labor Statistics. Washington, D.C. In addition to the base salary, Mr. Nightingale is eligible to receive an annual incentive bonus based on full achievement of certain goals and objectives which are approved by the Company in its sole discretion. The employment agreement with Brad Nightingale is filed as Exhibit 10.5 on the Company s Registration Statement on Form S-1 originally filed with the Commission on August 19, 2014. Mike Loustalot Employment Agreement Mike Loustalot, the Company s President, has an employment agreement with the Company, which is filed herewith, dated March 13, 2013. The agreement has an initial term of three (3) years and is automatically renewable for subsequent three (3) year terms. The agreement may be terminated by either the Company or Mr. Loustalot, with "Cause" or "Good Reason" and may be terminated by the Company without "Cause," in accordance with the terms of the agreement. Under the agreement, Mr. Loustalot receives a base salary of $200,000 per year, subject to increases on a basis consistent with that applicable to other employees commensurate with Mr. Loustalot s position duties and performance. Options On April 25, 2013 (the "Grant Date") Brad Nightingale, Ted Konyi and Mike Loustalot were granted 1,750,000, 1,500,000 and 1,250,000 options to purchase shares of common stock, respectively. The options are exercisable at $.10 per share of common stock over a ten year term and vested immediately. The Company has calculated the estimated fair market value of the options granted using the Black-Scholes Option Pricing model and the following assumptions: stock price at valuation, $.1655 (April 25, 2013 stock price), expected term of 5-7 years, exercise price of $0.10, a risk free interest rate of 0.71% -1.15%, a dividend yield of 0% and a volatility of 300%. Outstanding Equity Awards at Fiscal Year-End As of October 31, 2013, Brad Nightingale held 1,750,000 options to purchase the common stock of the Company at an exercise price per share of $0.10, Theodore Konyi held 1,500,000 options to purchase the common stock of the Company at an exercise price per share of $0.10, and Mike Loustalot 1,250,000 options to purchase the common stock of the Company at an exercise price per share of $0.10. Other than as described above, there are no other current outstanding equity awards to our executive officers as of October 31, 2013. Committees of the Board Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our Directors believe that it is not necessary to have such committees, at this time, because the Board of Directors can adequately perform the functions of such committees. Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment. A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President and Director, at the address appearing on the first page of this filing. Risk Oversight Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors approach to risk oversight includes understanding the critical risks in the Company s business and strategy, evaluating the Company s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities. Corporate Governance The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company s employees, officers and Directors as the Company is not required to do so. In lieu of an Audit Committee, the Company s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company's financial statements and other services provided by the Company s independent public accountants. The Board of Directors reviews the Company's internal accounting controls, practices and policies. Code of Ethics Our Board of Directors has not adopted a code of ethics due to the fact that we presently only have three Directors and four employees. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees. Section 16(a) Beneficial Ownership Reporting Compliance Not applicable. Director Compensation Our Board of Directors does not currently receive any consideration for their services as members of the Board of Directors. However, the Company is currently in negotiations with Mike Carney, an independent director of the Company, with regards to compensation for his services to the Company. The Board of Directors reserves the right in the future to award the members of the Board of Directors cash or stock based consideration for their services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors. Pursuant to a resolution of the Board of Directors, the Company has been authorized to compensate independent directors of the Company in an amount equal to cash compensation of $1,500 per quarter and stock option compensation equivalent to $20,000 per term. Executive Compensation Philosophy Our Board of Directors determines the compensation given to our executive officers in their sole determination. Our Board of Directors also reserves the right to pay our executives a salary, and/or issue them shares of common stock issued in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer s performance. This package may also include long-term stock based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, the Board of Directors reserves the right to grant stock options in the future, if the Board in its sole determination believes such grants would be in the best interests of the Company. Incentive Bonus The Board of Directors may grant incentive bonuses to our executive officers in its sole discretion, if the Board of Directors believes such bonuses are in the Company s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives. Long-term, Stock Based Compensation In order to attract, retain and motivate executive talent necessary to support the Company s long-term business strategy we may award certain executives with long-term, stock-based compensation in the future, in the sole discretion of our Board of Directors, which we do not currently have any immediate plans to award. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of the date of this Prospectus, the number and percentage of outstanding shares of our common stock owned by: (a) each person who is known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; and (b) all current directors and executive officers, as a group. As of the date of this Prospectus, and including the securities described above, there were 89,734,973 shares of common stock issued and outstanding, 2,354 shares of Series A Preferred Stock issued and outstanding and 710 shares of Series B Preferred Stock issued and outstanding. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person s actual voting power at any particular date. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Security Ownership of Officers and Directors Name and Address of Beneficial Owner Title of class Amount and Nature of Beneficial Ownership Percentage of Class Brad Nightingale (1) (2) Common Stock 4,996,051 5.57% Series A Preferred Stock 0 0% Series B Preferred Stock 0 0% Theodore Konyi (1) (3) Common Stock 6,367,229 7.10% Series A Preferred Stock 0 0% Series B Preferred Stock 0 0% Mike Loustalot (4) Common Stock 0 0% Series A Preferred Stock 0 0% Series B Preferred Stock 0 0% (1) The address of the Company s Officers and Directors is 15210 N Scottsdale Rd, Suite 280, Scottsdale, AZ 85254. (2) Brad Nightingale is the Company s Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Director. The shares were issued on May 8, 2013. Additionally, 996,051 of the subject shares are held by Mr. Nightingale s wife, Josee Nightingale. (3) Theodore Konyi is the Company s Secretary, Treasurer and Director. He also holds voting dispositive control of the 6,367,229 shares beneficially owned by Kirkton Holdings Ltd. and Maxwell Mercantile, Inc. as set forth below. (4) Mr. Loustalot was appointed as President and Director of Digital Caddies March 26, 2013. Security Ownership of Certain Beneficial Owners Name and Address of Beneficial Owner Title of class Amount and Nature of Beneficial Ownership Percentage of Class (1) Kirkton Holdings Ltd (2) 2551 Eddington Drive Vancouver, BC V6L 2G2 Common Stock 3,304,470 3.68% Maxwell Mercantile Inc. (3) 2551 Eddington Drive Vancouver, BC V6L 2G2 Common Stock 3,062,759 3.41% Golf North America LLC (4) 5080 N. 40th Street, Suite 245 Phoenix, AZ 85018 Common Stock 3,250,000 3.62% Common Stock Issuable upon exercise of warrants 1,625,000 1.81% (1) Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. (2) The Konyi Family Trust, 2551 Eddington Dr. Vancouver, B.C. V6L 2G2. Theodore Konyi, our secretary, Treasurer and a Director, holds voting dispositive control of the shares beneficially owned by Kirkton Holdings Ltd. (3) Theodore Konyi, our Secretary, Treasurer and a Director, holds voting dispositive control of the shares beneficially owned by Maxwell Mercantile Inc. (4) J. Russell Perlich (Manager) has voting and dispositive control over the common shares beneficially owned by Golf North America LLC. Golf North America purchased 3,250,000 shares of common stock in a private placement in April 2014, along with the 1,625,000 common stock purchase warrants which are exercisable at a price of $0.40 per share. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons Authorized on April 12, 2013 but issued on May 8, 2013, Brad Nightingale, an officer and director of the Company, received 4,000,000 shares of common stock as payment for expenses and compensation for past services as an officer and director. A total amount of 996,251 shares were issued to Mr. Nightingale s wife, Josee Nightingale, in connection with a stock purchase agreement dated 2007. On April 12, 2013, Carl Clift, who was deemed to be a related party because of his beneficial ownership at the time of issuance, received 1,000,000 shares of common stock as payment for consulting services rendered to the Company related to business development. On April 25, 2013, Brad Nightingale, Ted Konyi and Mike Loustalot were granted 1,750,000, 1,500,000 and 1,250,000 options to purchase shares of common stock, respectively. The options are exercisable at $0.10 per share of common stock over a ten year term and vested immediately. The Company and Brad Nightingale also have an agreement pursuant to which the Company is entitled to full access for separate living quarters at Mr. Nightingale s home for guests, directors, clients, etc. visiting the Company s offices in Arizona. The rental amount of $1,500 per month is all inclusive, including care of the facilities, cleaning, etc. Other than the foregoing, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company s outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company. Review, Approval and Ratification of Related Party Transactions Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, Directors and significant stockholders. However, all of the transactions described above were approved and ratified by our Board of Directors. In connection with the approval of the transactions described above, our Board of Directors, took into account several factors, including their fiduciary duties to the Company; the relationships of the related parties described above to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third party. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner: Disclosing such transactions in reports where required; Disclosing in any and all filings with the SEC, where required; Obtaining disinterested directors consent; and Obtaining shareholder consent where required. Director Independence Quotations for the Company s common stock are entered on the Over-the-Counter Pink inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, the Company applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. As a result, the Company does not have any independent directors other than Mike Carney. Our directors, Brad Nightingale, Theodore Konyi and Mike Loustalot, are also the executive officers of the Company. LEGAL MATTERS The validity of the shares sold by us under this prospectus will be passed upon for us by Zouvas Law Group, PC in San Diego, California. EXPERTS MaloneBailey, LLP, our independent registered public accountant, has audited our financial statements included in this prospectus and Registration Statement to the extent and for the periods set forth in their audit report. MaloneBailey, LLP has presented its report with respect to our audited financial statements. COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our Articles of Incorporation and Oklahoma law provide that none of our officers or directors will be personally liable to the Company or its stockholders for any damages as a result of any act or failure to act in his or her capacity as an officer or director unless it is proven that: The officer s or director s act or failure to act constituted a breach of his or her fiduciary duties as an officer or director; and The breach of those duties involved intentional misconduct, fraud or a knowing violation of law. These provisions eliminate our rights and those of our stockholders to recover damages from an officer or director for his or her breach of a fiduciary duty unless such breach involved intentional misconduct, fraud or a knowing violation of law. The limitations summarized above, however, do not affect our ability or that of our stockholders to seek non-monetary remedies, such as an injunction or rescission, against an officer or director for his or her acts or failure to act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and other persons pursuant to the foregoing provisions, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. WHERE YOU CAN FIND MORE INFORMATION This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits thereto. Statements contained in this prospectus as to the contents of any contract or other document that is filed as an exhibit to the registration statement are not necessarily complete and each such statement is qualified in all respects by reference to the full text of such contract or document. For further information with respect to us and the common stock, reference is hereby made to the registration statement and the exhibits thereto, which may be inspected and copied at the principal office of the SEC, 100 F Street NE, Washington, D.C. 20549, and copies of all or any part thereof may be obtained at prescribed rates from the Commission s Public Reference Section at such addresses. Also, the SEC maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC. We also make available free of charge our annual, quarterly and current reports, and other information upon request. To request such materials, please contact Mr. Brad Nightingale, our Chief Executive Officer. INDEX TO FINANCIAL STATEMENTS DIGITAL CADDIES, INC. TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm F-1 Balance Sheets (Audited) as of October 31, 2013 and October 31, 2012 and (Unaudited) as of July 31, 2014 F-2 Statements of Operations (Audited) for the years ended October 31, 2013 and 2012; and (Unaudited) for the nine months ended July 31, 2014 and 2013 F-3 Statement of Stockholders Equity (Audited) for years ended October 31, 2013 and October 31, 2012 and (Unaudited) nine months ended July 31, 2014 F-4 Statements of Cash Flows (Audited) for the years ended October 31, 2013 and 2012; and (Unaudited) for the nine months ended July 31, 2014 and 2013 F-5 Notes to the Financial Statements F-6 PROSPECTUS DIGITAL CADDIES, INC. 15210 N Scottsdale Rd., Suite 280 Scottsdale, AZ 85254 10,000,000 Units DEALER PROSPECTUS DELIVERY OBLIGATION Until _______________, 2014, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. ____________________, 2014 [RESALE PROSPECTUS ALTERNATIVE PAGE] DIGITAL CADDIES, INC. 15210 N Scottsdale Rd., Suite 280 Scottsdale, AZ 85254 Tel: 480-626-2423 PRELIMINARY PROSPECTUS THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. 45,973,868 shares of common stock This prospectus covers the resale by our Selling Shareholders named in this prospectus of an aggregate of 45,973,868 shares of common stock of the Company. The shares of common stock covered by this prospectus were issued by us to the selling shareholders in a private placement that closed April 17, 2014, in a private placement that closed on October 28, 2013, a private placement that closed on October 28, 2013, in an engagement agreement dated November 7, 2013, an engagement agreement dated May 1, 2014, a loan and security agreement dated May 30, 2014, in a private placement that closed in January 2013 or in a private placement that closed in June 2013. The common stock offered by the Selling Shareholders in this prospectus is being registered to permit the Selling Shareholders to sell the offered common stock from time to time. The Selling Shareholders may offer and sell the offered common stock at fixed prices, prevailing market price, at the time of sale prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated prices. The shares of our common stock offered by this prospectus and any prospectus supplement may be offered by the Selling Shareholders directly to investors or to or through underwriters, dealers or other agents. We do not know when or in what amounts the Selling Shareholders may offer these shares of common stock for sale. The Selling Shareholders may sell all, some or none of the shares of common stock offered by this prospectus. The Company will not receive any proceeds from the sale of the shares of common stock covered by this prospectus. All of the net proceeds from the sale of the shares of common stock covered by this prospectus will go to the Selling Shareholders. Any proceeds received from the exercise of any warrants held by the Selling Shareholders will be used for general working capital and other corporate purposes. The Selling Shareholders may sell the common stock from time to time at prices established on the Over the Counter Pink marketplace ("OTC Pink") or as negotiated in private transactions, or as otherwise described under the heading "Plan of Distribution." The common stock may be sold directly or through agents or broker-dealers acting as agents on behalf of the Selling Shareholders. The Selling Shareholders may engage brokers, dealers or agents who may receive commissions or discounts from the Selling Shareholders. The Company will pay all the expenses incident to the registration of the shares being offered for resale; however, we will not pay for sales commissions or other expenses applicable to the sale of our common stock registered hereunder. Our common stock is currently quoted on the OTC Pink marketplace under the symbol "CADY". On December 17, 2014, the closing price of our common stock was $0.1501 per share. This prospectus covers the resale offering by the Selling Shareholders of 45,973,868 shares of common stock. The Company is concurrently conducting a primary offering for 20,000,000 shares and 10,000,000 warrants to purchase shares of common stock, which is covered in a separate public offering prospectus. THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE SECTION OF THIS PROSPECTUS ENTITLED "RISK FACTORS" BEGINNING ON PAGE 13 BEFORE BUYING ANY SHARES OF DIGITAL CADDIES, INC. COMMON STOCK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this prospectus and in any prospectus supplement we may file after the date of this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our securities. [RESALE PROSPECTUS ALTERNATIVE PAGE] TABLE OF CONTENTS Page Implications Of Being An Emerging Growth Company 9 Forward Looking Statements 9 Prospectus Summary 10
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that 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 "Worlds Mall," "Company," "we," "us" and "our" refer to Worlds Mall, Inc. Overview Worlds Mall, Inc. (the "Company") was incorporated on March 10, 2011 under the laws of the State of Nevada. The Company plans to develop an e-commerce website that will connect retail stores with customers around the world. The Company was formed to develop an e-commerce website that will connect retail stores with customers around the world. We believe that companies tend to market their e-commerce websites within the country or region that they are from and only to customers that speak the language of their country. Our goal is to globalize the retail market by eliminating language barriers along and providing better exposure to such companies. Worlds Mall wants to be a portal for retail sellers to connect to the world. Where You Can Find Us Our office is located at 5841 East Charleston Blvd. #230 Las Vegas, NV 89123. Our telephone number is: (208) 371 8802. 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 to use the extended transition period provided above and therefore our financial statements may not be comparable to companies that comply with public company effective dates. 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. For more details regarding this exemption, see "Management s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies." CALCULATION OF REGISTRATION FEE Title of Each Class Of Securities to be Registered Amount to be Registered Proposed Maximum Aggregate Offering Price per share Proposed Maximum Aggregate Offering Price Amount of Registration Fee (3) Common Stock, $0.001 par value per share 3,900,000 $0.01 $39,000 $5.03 (1) This Registration Statement covers the resale by our selling shareholders of up to 3,900,000 shares of common stock previously issued to such selling shareholders. (2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price of the shares that were sold to our shareholders in a private placement memorandum. The price of $0.01 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Markets at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved. (3) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. 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 U.S. Securities and Exchange Commission ("SEC") is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. THE OFFERING Common stock offered by selling security holders 3,900,000 shares of common stock. This number represents 17.81% of our current outstanding common stock (1). Common stock outstanding before the offering 21,900,000 Common stock outstanding after the offering 21,900,000 Terms of the Offering The selling security holders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering 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, or any other rule of similar effect. Trading Market There is currently no trading market for our common stock. We intend to apply soon for quotation on the OTC Bulletin Board. 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. Risk Factors The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See "Risk Factors" beginning on page 4. (1) Based on 21,900,000 shares of common stock outstanding as of the date of this registration statement. Summary of Financial Information The following summary financial data should be read in conjunction with "Management s Discussion and Analysis," "Plan of Operation" and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The data set forth below should be read in conjunction with "Management s Discussion and Analysis of Financial Condition and Results of Operations," our financial statements and the related notes included in this prospectus. For the Nine Months For the Nine Months Ended Ended September 30, 2014 September 30, 2013 (Unaudited) (Unaudited) Revenue $ - $ - Total operating expenses 20,653 762 Net loss $ (20,653 ) $ (762 ) PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION ON NOVEMBER__, 2014 WORLDS MALL, INC. 3,900,000 SHARES OF COMMON STOCK The selling security holders 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 $0.01 per share until our common stock is quoted on the OTC Markets and thereafter at a prevailing market prices or privately negotiated prices or in transactions that are not in the public market. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ("FINRA"), which operates the OTC Markets, 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. We are currently considered a "shell company" within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in that we currently have nominal operations and nominal assets other than cash. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. Specifically, the securities sold through this offering can only be resold through registration under the Securities Act of 1933, pursuant to Section 4(1) of the Securities Act or by meeting the conditions of Rule 144(i). Until we cease to be a "shell company", we will not meet the requirements under Rule 144(i) under the Securities Act and our shareholders will not be able to rely on Rule 144 order to sell their securities. Our auditors have raised substantial doubt about the Company s ability to continue as a going concern. We have not yet generated revenues, have an accumulated deficit of $45,181 at September 30, 2014 and have a net loss of $20,653 for the reporting period then ended. Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 4 to read about factors you should consider before buying shares of our common stock. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of This Prospectus is: November __, 2014 Balance Sheets September 30, 2014 December 31, 2013 (Unaudited) Total Assets $ 36,467 $ 47,120 Total current liabilities 1,648 1,648 RISK FACTORS The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our common stock. Risks Related to Our Business OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN. The audited financial statements included in the registration statement have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern. We have incurred significant losses since our inception. We have funded these losses primarily through the sale of securities. Based on our financial history since inception, in their report of independent registered public accounting firm on the financial statements for the period from March 10, 2011 (inception) to December 31, 2013, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has generated no revenue. There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern. WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANY. We are a development stage company, and to date, our development efforts have been focused primarily on the development of our business model. We are in the process of developing and implementing our 3D website. We have not completed the development of our 3D website and have limited operating history for investors to evaluate the potential of our business development. We have not built our customer base and our brand name. In addition, we also face many of the risks and difficulties inherent in gaining market share as a new company: Develop effective business plan; Meet customer standards; Attain customer loyalty; Develop and upgrade our services; Our future will depend on our ability to bring our services to the market place, which requires careful planning of providing a product that meets customer standards without incurring unnecessary cost and expense. IF WE ARE UNABLE TO SECURE ADDITIONAL CAPITAL, WE MAY BE UNABLE TO CONTINUE OPERATING AND DEVELOPING OUR WEBSITE AND MAY BE FORCED TO CEASE OPERATING. The development of our intellectual property, websites and services will require the commitment of substantial resources to implement our business plan. We expect that we would need a minimum of approximately an additional $474,000 in order to be in a position to fund our operations for a period of one year. Based on our current cash on hand, we estimate that we have sufficient cash to allow us to operate our business for a period of eighteen (18) months. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely. Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners. We have no current plans for additional financing. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. Additionally, if we are successful in obtaining additional funding, the terms of that additional financing may be disadvantageous to investors in the current offering. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations. Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. You should rely only on information contained in this prospectus. We have not authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date. WE HAVE NOT YET FULLY DEVELOPED OUR 3D WEBSITE. The Company s business plan is dependent on the development of a 3D website. We are still developing the website and it is not available for use by the public. The website is dependent on the Company raising additional capita land can provide no assurance that we will meet this goal. The There can be no assurance that the website will be completed as anticipated, nor, if successfully developed, will be successfully introduced into the public market. If the Company does not complete the development of the 3D website or if the website is not accepted by the market, then the Company may not generate revenues to cover our costs and allow us to become profitable or even continue to operate. WE HAVE NOT GENERATED ANY REVENUE AND OUR BUSINESS IS NOT YET OPERATIONAL, IF OUR WEBSITE DOES NOT BECOME OPERATIONAL OR IF THEY FAIL TO GAIN MARKET ACCEPTANCE, WE MAY NOT HAVE SUFFICIENT CAPITAL TO PAY OUR EXPENSES AND TO CONTINUE TO OPERATE. Our ultimate success will depend on generating revenues from our -commerce website that will connect retail stores with customers around the world. We have not generated any revenue and have not completed our website, as a result, if we never become operational or if we do not generate enough users, once we are operational, we may be unable to generate sufficient revenues from our pay-per click advertising. We may not achieve and sustain market acceptance sufficient to generate revenues or to attract advertising revenue sufficient to cover our costs and allow us to become profitable or even continue to operate. WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH U.S. CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS. We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect these costs to be approximately $25,000 per year. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, we may not be able to absorb these costs of being a public company which will negatively affect our business operations. WE ARE AN "EMERGING GROWTH COMPANY," AND ANY DECISION ON OUR PART TO COMPLY ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO "EMERGING GROWTH COMPANIES" COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. We are an "emerging growth company," as defined in the JOBS Act, and, for as long as we continue to be an "emerging growth company," we expect and fully intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "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, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be 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. 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 have elected to opt in to the extended transition period for complying with the revised accounting standards. We have elected to rely on these exemptions and reduced disclosure requirements applicable to "emerging growth companies" and expect to continue to do so. THE JOBS ACT ALLOWS US TO DELAY THE ADOPTION OF NEW OR REVISED ACCOUNTING STANDARDS THAT HAVE DIFFERENT EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES. Since, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, this election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. OUR COMMON SHARES WILL NOT BE REGISTERED UNDER THE EXCHANGE ACT AND AS A RESULT WE WILL HAVE LIMITED REPORTING DUTIES WHICH COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. Our common shares are not registered under the Exchange Act. As a result, we will not be subject to the federal proxy rules and our directors, executive officers and 10% beneficial holders will not be subject to Section 16 of the Exchange Act. Our common shares are not registered under the Securities Exchange Act of 1934, as amended. We intend to register our securities under the Exchange Act as soon as practicable. Notwithstanding the foregoing, in the event we have not registered our securities under the Exchange Act, we will be required to register our common shares under the Exchange Act if we have, after the last day of our fiscal year, $10,000,000 in total assets and either more than (i) 2,000 persons; or (ii) 500 shareholders of record who are not accredited investors, in accordance with Section 12(g) of the Exchange Act. As a result, unless and until we register under the Exchange Act, upon the effectiveness of the registration statement of which this prospectus forms a part, we will be required to file annual, quarterly, and current reports pursuant to Section 15(d) of the Exchange Act, as long as our common shares are not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the Securities and Exchange Commission a proxy statement and form of proxy complying with the proxy rules. In addition, so long as our common shares are not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common shares will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directs, and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4 and 5, respectively. Such information about our directors, executive officers, and beneficial holders will only be available through this (and any subsequent) registration statement, and periodic reports we file thereunder. Furthermore, so long as our common shares are not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. Unless we are required to register our securities under Section 12(g) of the Securities Exchange Act, we do not intend to voluntarily comply with the registration requirements of Section 12(g) of the Securities Exchange Act. OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE THOMAS WIKSTROM, OUR PRESIDENT, TREASURER AND DIRECTOR. We are presently dependent to a great extent upon the experience, abilities and continued services of our President, Treasurer, and Director, Thomas Wikstrom. We are fully dependent on Mr. Wikstrom for all our operations and managing the process of completing and executing our business plan. If Mr. Wikstrom is unable to continue as our President and Treasurer we may not be successful in successfully implementing our business plan. The loss of services of any of the management staff could have a material adverse effect on our business, financial condition or results of operation. Mr. Wikstrom currently does not have any employment agreement, post-employment agreement, non-competition agreement or a confidentiality agreement with us. OUR MANAGEMENT TEAM DOES NOT HAVE EXPERIENCE MANAGING THE TYPE OF BUSINESS IN WHICH WE INTEND TO ENGAGE OR IN THE OPERATION OF A PUBLIC COMPANY. Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements of SEC. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may be unable to implement programs and policies in an effective and timely manner that adequately respond to the increased legal, regulatory and reporting requirements associated with being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties distract our management from attending to the management and growth of our business, result in a loss of investor confidence in our financial reports and have an adverse effect on our business and stock price. IT IS POSSIBLE THAT OUR PRESIDENT MAY NOT PROVIDE MORE THAN THIRTY HOURS OF TIME PER WEEK TO OUR BUSINESS, WHICH MAY CAUSE OUR BUSINESS TO FAIL. Our future ability to execute our business plan depends upon the continued service of our President, Treasurer, and Sole Director, Thomas Wikstrom. Mr. Wikstrom will be required to spend less than full-time with this venture and may be limited in the amount of time he can devote to the Company. However, he plans on devoting a minimum of thirty hours per week to the Company. Horst Helmrich, our Secretary, will be providing a minimum of two hours per week to our business operations. OUR LACK OF PATENT AND/OR COPYRIGHT PROTECTION AND ANY UNAUTHORIZED USE OF PROPRIETARY TECHNOLOGIES BY THIRD PARTIES MAY HARM OUR BUSINESS. We have not filed any patent and/or copyright protection for our planned proprietary technologies and/or planned products as of the date of this filing. Despite certain precautions taken by us, it may be possible for third parties to obtain and use our intellectual property without authorization. This risk may be increased due to the lack of any patent and/or copyright protection. If any of our proprietary rights are misappropriated or we are forced to defend our intellectual property rights, we will have to incur substantial costs. Such litigation could result in substantial costs and diversion of our resources, including diverting the time and effort of our senior management, and could disrupt our business, as well as have a material adverse effect on our business, prospects, financial condition and results of operations. Management will from time to time determine whether applying for patent and copyright protection is appropriate for us. We have no guarantee that, if filed, any applications will be granted or, if awarded, whether they will offer us any meaningful protection from other companies in our business. Furthermore, any patent or copyrights that we may be granted may be held by a court to infringe on the intellectual property rights of others and subject us to awards for damages. WE MAY BE SUBJECT TO CLAIMS WITH RESPECT TO THE INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHT OF OTHERS, WHICH COULD RESULT IN SUBSTANTIAL COSTS AND DIVERSION OF OUR FINANCIAL AND MANAGEMENT RESOURCES TO DEFEND SUCH CLAIMS AND/OR LAWSUITS AGAINST US AND COULD HARM OUR BUSINESS. We cannot be certain that our proprietary technologies will not infringe upon patents, copyrights or other intellectual property rights held by third parties. While we know of no basis for any claims of this type, the existence of and ownership of intellectual property can be difficult to verify and we have not made an exhaustive search of all patent filings. Additionally, most patent applications are kept confidential for twelve to eighteen months, or longer, and we would not be able to be aware of potentially conflicting claims that they make. We may become subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. If we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, and we may incur licensing fees or be forced to develop alternative technology or obtain other licenses. In addition, we may incur substantial expenses in defending against these third party infringement claims and be diverted from devoting time to our business and operational issues, regardless of the merits of any such claim. Successful infringement or licensing claims against us may result in substantial monetary damages, which may materially disrupt the conduct of our business and have a material adverse effect on our reputation, business, financial condition and results of operations. WE MAY INCUR SUBSTANTIAL DEBT WHICH COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION. It is possible that we may incur substantial debt in order to expand our business, which could adversely affect our financial condition. Incurring a substantial amount of debt may require us to use a significant portion of our cash flow to pay principal and interest on such debt, which will reduce the amount available to fund working capital, capital expenditures and general corporate purposes. Our indebtedness may negatively impact our ability to operate our business and limit our ability to borrow additional funds by increasing our borrowing costs, and impact the terms, conditions and restrictions contained in possible future debt agreements, including the addition of more restrictive covenants; impact our flexibility in planning for and reacting to changes in our business as covenants and restrictions contained in possible future debt arrangements may require that we meet certain financial tests; and place restrictions on the incurrence of additional indebtedness and place us at a disadvantage compared to similar companies in our industry that have less debt. REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT AND COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE INTERNAL CONTROLS OVER FINANCIAL REPORTING, ARE COSTLY AND MAY INCREASE SUBSTANTIALLY. The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price. As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company." The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; personnel, such as a chief financial officer familiar with the obligations of public company reporting; consultants to design and implement internal controls; and financial printing alone will be a few hundred thousand dollars per year and could be several hundred thousand dollars per year. In addition, if and when we retain independent directors and/or additional members of senior management, we may incur additional expenses related to director compensation and/or premiums for directors and officers liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these additional expenses individually, or in the aggregate, may also be material. In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors and officers liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. The increased costs associated with operating as a public company may decrease our net income or increase our net loss, and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. IF WE ARE NOT ABLE TO IMPLEMENT THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY ACT IN A TIMELY MANNER OR WITH ADEQUATE COMPLIANCE, WE MAY BE SUBJECT TO SANCTIONS BY REGULATORY AUTHORITIES. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and, beginning with our annual report for fiscal year 2013, provide a management report on the internal control over financial reporting. We are in the preliminary stages of seeking consultants to assist us with a review of our existing internal controls and the design and implementation of additional internal controls that we may determine are appropriate. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will be evaluating our internal controls systems to allow management to report on, and eventually allow our independent auditors to attest to, our internal controls. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or a stock exchange on which our securities may be listed in the future. Any such action could adversely affect our financial results or investors confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by the SEC, any stock exchange on which our securities may be listed in the future, or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect our stock price. Inferior internal controls could also cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, which could have a negative effect on our stock price. To date, we have not evaluated the effectiveness of our internal controls over financial reporting, or the effectiveness of our disclosure controls and procedures, and we will not be required to evaluate our internal controls over financial reporting or disclose the results of such evaluation until the filing of our second annual report. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event an investor could lose his entire investment in our company. WE ARE AN "EMERGING GROWTH COMPANY" UNDER THE RECENTLY ENACTED JOBS ACT AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. We qualify as an "emerging growth company" under the recently enacted JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, among other things, we will not be required to: have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency"; obtain shareholder approval of any golden parachute payments not previously approved; and disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive s compensation to median employee compensation. 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 have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We will 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 total annual gross revenues exceed $1 billion; (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares 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. Until such time, however, because the JOBS Act has only recently been enacted, we cannot predict whether investors will find our stock less attractive because of the more limited disclosure requirements that we may be entitled to follow and other exemptions on which we are relying while we are an "emerging growth company". If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. OUR STATUS AS AN "EMERGING GROWTH COMPANY" UNDER THE JOBS ACT MAY MAKE IT MORE DIFFICULT TO RAISE CAPITAL AS AND WHEN WE NEED IT. Because of the exemptions from various reporting requirements provided to us as an "emerging growth company" and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected. EVEN AFTER WE ARE NO LONGER AN "EMERGING GROWTH COMPANY", WE MAY STILL HAVE EXEMPTIONS AVAILABLE AND REDUCED DISCLOSURE REQUIREMENTS AS A SMALLER REPORTING COMPANY WHICH COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS. After we are no longer an "emerging growth company", we may still qualify as a smaller reporting company which would allow us to take advantage of certain exemptions and reduced disclosure requirements. For instance, as a smaller reporting company we would not be required to obtain an auditor attestation with respect to management s conclusion about the effectiveness of internal controls over financial reporting. This reduced disclosure could make our common stock less attractive to investors. We may also continue to provide reduced executive compensation disclosure as a smaller reporting Company in the event that we cease to be an emerging growth company. S-1/A 1 v394862_s1a.htm FORM S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A Amendment No. 3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WORLDS MALL, INC. (Exact Name of Registrant in its Charter) Nevada 5961 35-2508740 (State or other Jurisdiction of Incorporation) (Primary Standard Industrial Classification Code) (IRS Employer Identification No.) WORLDS MALL, INC. 5841 East Charleston Blvd. #230 Las Vegas, NV 89123 (208) 371 8802 (Address and Telephone Number of Registrant s Principal Executive Offices and Principal Place of Business) Copies of communications to: Gregg E. Jaclin, Esq. Szaferman, Lakind, Blumstein & Blader, P.C. 101 Grovers Mill Road Suite 200 Lawrenceville, NJ 08648 Tel. No.: (609) 275-0400 Fax No.: (609) 557-0969 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, 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 of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Risk Related To Our Capital Stock BECAUSE WE ARE CURRENTLY CONSIDERED A "SHELL COMPANY" WITHIN THE MEANING OF RULE 12B-2 UNDER THE EXCHANGE ACT, THE ABILITY OF HOLDERS OF OUR COMMON STOCK TO RE-SELL THEIR SHARES MAY BE LIMITED BY APPLICABLE REGULATIONS. We are currently considered a "shell company" within the meaning of Rule 12b-2 under the Exchange Act, in that we currently have nominal operations and nominal assets other than cash. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. Specifically, the securities sold through this offering can only be resold through registration under the Securities Act of 1933, pursuant to Section 4(1) of the Securities Act or by meeting the conditions of Rule 144(i). Furthermore, we are restricted from filing a registration statement on Form S-8 until and unless we cease to be a "shell company" and may have difficulty raising additional funds unless we are able to rely on Rule 144 for resale. Rule 144 under the Securities Act creates a safe harbor whereby a person satisfying the applicable conditions of the Rule 144 safe harbor is deemed not to be engaged in a distribution of the securities and therefore not an underwriter of the securities. Upon the consummation of an acquisition, we will also be be required to file a Form 8-K containing From 10-type information to reflect that we are no longer a "shell company." Because we are currently a "shell company," the special provisions of Rule 144(i), in addition to the other requirements of the Rule, must be satisfied. Under Rule 144(i): If an issuer has ceased to be a "shell company," has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports, and has filed current "Form 10 information" with the Commission reflecting its status as an entity that is no longer a shell company, then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed "Form 10 information" with the Commission. Unless or until we are able to satisfy the special requirements of Rule 144(i), the "safe harbors" provided under Rule 144 will be inapplicable in connection with any re-sale of the securities offered under this Prospectus. Without the availability of Rule 144, any investment in our common stock may remain relatively illiquid. WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS. We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors (which currently only consists of Thomas Wikstrom), and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY WHICH MAY RESULT IN A MAJOR COST TO US AND HURT THE INTERESTS OF OUR SHAREHOLDERS BECAUSE CORPORATE RESOURCES MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS. Our articles of incorporation 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 written promise to repay us 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 recoup. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops. THE OFFERING PRICE OF THE COMMON STOCK WAS DETERMINED BASED ON THE PRICE OF OUR PRIVATE OFFERING, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO OUR ACTUAL VALUE, AND MAY MAKE OUR SHARES DIFFICULT TO SELL. Since our shares are not listed or quoted on any exchange or quotation system, the offering price of $0.01 per share for the shares of common stock was determined based on the price of our private offering. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationship to the book value, assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities. YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK. In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 1,000,000,000 shares of capital stock consisting of 500,000,000 shares of common stock, par value $0.001 per share, and 500,000,000 shares of preferred stock, par value $0.001 per share. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock will be quoted on the OTC Markets. OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH MAY BE SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES. If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock. THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT OUR COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK. There is no established public trading market for our common stock. Our shares have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The information contained in this report, including in the documents incorporated by reference into this report, includes some statement that are not purely historical and that are "forward-looking statements." Such forward-looking statements include, but are not limited to, statements regarding our and their management s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "might," "plans," "possible," "potential," "predicts," "projects," "seeks," "should," "would" and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, involve a number of risks, uncertainties (some of which are beyond the parties control) or other assumptions. USE OF PROCEEDS We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled "Selling Security Holders" and "Plan of Distribution". We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders. DETERMINATION OF OFFERING PRICE Since our common stock is not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was determined by the price of the common stock that was sold to our security holders pursuant to an exemption under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated under the Securities Act of 1933. The offering price of the shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTC Markets concurrently with the filing of this prospectus. In order to be quoted on the OTC Markets, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved. In addition, there is no assurance that our common stock will trade at market prices in excess of the initial offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity. DILUTION The common stock to be sold by the selling shareholders as provided in the "Selling Security Holders" section is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders. SELLING SECURITY HOLDERS The common shares being offered for resale by the 39 selling stockholders consist of 3,900,000 shares of common stock previously issued to such shareholders. The following table sets forth the names of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of the date of our registration statement, of which this prospectus is a part, and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders. Name Shares Beneficially Owned Prior to Offering Shares to be Offered Amount Beneficially Owned After Offering Percent Beneficially Owned After Offering(1) Peter Banysch 100,000 100,000 0 0.00% Richard Banysch 100,000 100,000 0 0.00% Wright W Broughton 100,000 100,000 0 0.00% PJ & KM Bills Partnership 100,000 100,000 0 0.00% Kim Mary Bills 100,000 100,000 0 0.00% Chris Sayer Builders ltd. 100,000 100,000 0 0.00% James Chaffey 100,000 100,000 0 0.00% Susan Chaffey 100,000 100,000 0 0.00% Roskilda Autos Ltd 100,000 100,000 0 0.00% Frances W Christensens 100,000 100,000 0 0.00% RJ Christensen Family Trust 100,000 100,000 0 0.00% Robyn M Christensen 100,000 100,000 0 0.00% Rodney J Christensen 100,000 100,000 0 0.00% JI Clark 100,000 100,000 0 0.00% David C Cowan 100,000 100,000 0 0.00% Christine Margaret Finnigan 100,000 100,000 0 0.00% Craig T. Fitzgerald 100,000 100,000 0 0.00% Sharon Havre 100,000 100,000 0 0.00% Brandon Lemon 100,000 100,000 0 0.00% Erin Maher 100,000 100,000 0 0.00% Shirley Maher 100,000 100,000 0 0.00% Arnulfo Obcena 100,000 100,000 0 0.00% Dennis Obcena 100,000 100,000 0 0.00% Sunhill Partnership 100,000 100,000 0 0.00% Pongaroa Akitio Mail & Freight 100,000 100,000 0 0.00% Pongaroa Farm Centre 100,000 100,000 0 0.00% Potaka Contracting Ltd 100,000 100,000 0 0.00% Hamish D Raleigh 100,000 100,000 0 0.00% Ian Scott Raleigh 100,000 100,000 0 0.00% Margo A Raleigh 100,000 100,000 0 0.00% Michael S Raleigh 100,000 100,000 0 0.00% Simon Raleigh 100,000 100,000 0 0.00% Stephen Guy Raleigh 100,000 100,000 0 0.00% Adoracion Salgado 100,000 100,000 0 0.00% Mark Salgado 100,000 100,000 0 0.00% Linda Mary Sorensen 100,000 100,000 0 0.00% Crosshills Station Ltd 100,000 100,000 0 0.00% Elhora Tibayan 100,000 100,000 0 0.00% Cathryn Walker 100,000 100,000 0 0.00% TOTAL 3,900,000 3,900,000 0 0.00% (1) Based on 21,900,000 shares outstanding as of the date of this Registration Statement. There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued. None of the selling shareholders or their beneficial owners: - has had a material relationship with us other than as a shareholder at any time within the past three years; or - has ever been one of our officers or directors or an officer or director of our predecessors or affiliates - are broker-dealers or affiliated with broker-dealers. PLAN OF DISTRIBUTION The selling security holders may sell some or all of their shares at a fixed price of $0.01 per share until our shares are quoted on the OTC Markets and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Markets, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a quotation on the OTC Markets concurrently with the filing of this prospectus. In order to be quoted on the OTC Markets, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Markets, nor can there be any assurance that such an application for quotation will be approved. However, sales by selling security holder must be made at the fixed price of $0.01 until a market develops for the stock. We are currently considered a "shell company" within the meaning of Rule 12b-2 under the Exchange Act, in that we currently have nominal operations and nominal assets other than cash. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. Specifically, the securities sold through this offering can only be resold through registration under the Securities Act of 1933, pursuant to Section 4(1) of the Securities Act, or by meeting the conditions of Rule 144(i) under the Securities Act. Rule 144 under the Securities Act creates a safe harbor whereby a person satisfying the applicable conditions of the Rule 144 safe harbor is deemed not to be engaged in a distribution of the securities and therefore not an underwriter of the securities. Because we are currently a "shell company," the special provisions of Rule 144(i), in addition to the other requirements of the Rule, must be satisfied. Under Rule 144(i): If an issuer has ceased to be a "shell company," has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports, and has filed current "Form 10 information" with the Commission reflecting its status as an entity that is no longer a shell company, then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed "Form 10 information" with the Commission. Unless or until we are able to satisfy the special requirements of Rule 144(i), the "safe harbors" provided under Rule 144 will be inapplicable in connection with any re-sale of the securities offered under this Prospectus. Once a market has developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters, directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: ordinary brokers transactions, which may include long or short sales, transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading, through direct sales to purchasers or sales effected through agents, through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or any combination of the foregoing. In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. None of the selling security holders are broker-dealers or affiliates of broker dealers. We will advise the selling security holders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $30,000. Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering. DESCRIPTION OF SECURITIES TO BE REGISTERED General We are authorized to issue an aggregate number of 1,000,000,000 shares of capital stock, of which 500,000,000 shares are common stock, $0.001 par value per share, and 500,000,000 shares of preferred stock, $0.001 par value per share authorized. Common Stock We are authorized to issue 500,000,000 shares of common stock, $0.001 par value per share. Currently we have 21,900,000 shares of common stock issued and outstanding. Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of Board of Directors. Preferred Stock We are authorized to issue 500,000,000 shares of preferred stock, $0.001 par value per share. Currently, no shares of our preferred stock have been designated any rights and we have no shares of preferred stock issued and outstanding. Dividends We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors (which currently consists of solely Thomas Wikstrom) and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Rule 144 Restrictions on Resale We are currently considered a "shell company" within the meaning of Rule 12b-2 under the Exchange Act, in that we currently have nominal operations and nominal assets other than cash. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. Specifically, the securities sold through this offering can only be resold through registration under the Securities Act, pursuant to Section 4(1) of the Securities Act, or by meeting the conditions of Rule 144(i) under the Securities Act Warrants There are no outstanding warrants to purchase our securities. Options There are no outstanding options to purchase our securities. Transfer Agent and Registrar The transfer agent for our common stock is Vstock Transfer, LLC at 77 Spruce Street, Suite 201, Cedarhurst, NY 11516, and its telephone number is (212) 828-8436. Interests of Named Experts and Counsel No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee. Szaferman, Lakind, Blumstein & Blader, PC located at 101 Grovers Mill Road, Second Floor, Lawrenceville, NJ 08648, will pass on the validity of the common stock being offered pursuant to this registration statement. The financial statements as of December 31, 2013 and 2012, for the years then ended and for the period from March 10, 2011 (inception) to December 31, 2013 included in this prospectus and the registration statement have been audited by Li and Company, PC, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting. DESCRIPTION OF BUSINESS Overview Worlds Mall, Inc. (the "Company") was incorporated on March 10, 2011 under the laws of the State of Nevada. The Company plans to develop an e-commerce website that will connect retail stores with customers around the world. The Company was formed to develop an e-commerce website that will connect retail stores with customers around the world. We believe that companies tend to market their e-commerce websites within the country or region that they are from and only to customers that speak the language of their country. Our goal is to globalize the retail market by eliminating language barriers along and providing better exposure to such companies. Worlds Mall wants to be a portal for retail sellers to connect to the world. We are a development stage company, and to date, we have limited operating history for investors to evaluate the potential of our business development. As such, we have not built our customer base or our brand name. In addition, our sources of cash are only adequate to maintain operations for the next 18 months. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely. Our Business Worlds Mall Inc. is a new company that has no revenue. The Company has no track record and may never have any revenues. An investment in Worlds Mall Inc. should be considered extremely risky as an investor could lose all of their investment if the Company fails to meet their goals and projections. Worlds Mall Inc. is planning on designing and building a virtual 3D website that will allow customers to navigate through a virtual mall of a country of their choice. If a customer in the United States chooses to visit a mall in Italy they will click on or do a search for Italy which will take them to a virtual mall that will display stores based in Italy. The site will translate the language based on the customer s country of origin. Worlds Mall Inc. will help the smaller retailers with e-commerce sites reach a much larger customer base. Worlds Mall Inc. plans to purchase a license to use language translation software from a software company that has already developed it and that is ready to use. Many companies offer translation software at an annual cost of $5,000 per language. Technical support by the development company is included in the price. Worlds Mall Inc. plans to initially translate nine different languages (English, French, Spanish, Italian, Mandarin, Cantonese, Hindi, German and Japanese. The Company has plans to create a website that a customer will navigate a virtual person through a 3D mall. This kind of technology is already used by many gaming companies for use in 3D video games. Therefore, the Company will not have to pay to have a programmer invent this technology as it already exists and is used in many different applications by many companies. Worlds Mall Inc. plans to purchase a license to use 3D gaming software from a gaming software company that has already been developed and in use. The cost to license this software on an annual basis is $$65,000. Technical support by the development company is included in the price. Worlds Mall's website will be designed to be user friendly to a person who speaks any of the nine languages that the company will translate. Each store that advertises on our website will be responsible for the e-commerce transaction and shipping the product(s) between them and their customer. Worlds Mall Inc. will only charge retailers a small monthly fee of US$29.00 to have a link on their site but estimates that it will generate the majority of its revenue from 'pay per click' advertising. As discussed in more detail under our "Management s Discussion and Analysis", our budget for the 12 months following a sufficient raise in capital is $517,000, including $125,000 for website creation and $1,200 for website hosting. We anticipate completing our website in four to five months with sufficient capital. We have not yet determined when we will begin to generate revenues. Competition We currently seem to have very little competition in the segment of the market that we are aiming for. When doing 'Google' searches for things like: e-commerce language translation websites, retail language translation websites, shopping on e-commerce websites, shopping on e-commerce websites in Italy etc. we could only find a hand full of retail stores that provide an e-commerce website of their own offering language translation. The companies that we did find appear to be larger stores that would have a large marketing budget. Worlds Mall Inc. will focus on attracting smaller retailers that would not normally market their website to the rest of the world in different languages. Marketing Strategy The Company plans to market its retail e-commerce website (www.shopworldsmall.com) on most search engines. The Company intends to use 'pay per click' on search engines initially until its website can get a good ranking generically. The Company also will use 'pay per click' advertising on other websites that it feels will reach the correct customers. The Company intends to search for and contact retailers to advertise on its website. The Company will use many means to acquire customers such as doing web searches and visiting retailers in person. The Company will initially offer retailers to advertise their company on its website free of charge so they can establish a base of retailers on its site. The Company feels that this will make their website appear more viable to retailers that might be willing to pay to advertise in the future. On May 4, 2012, the Company purchased the www.shopworldsmall.com through godaddy.com for a term of 9 years for $119. Government Regulation We do not expect any governmental regulations to have an impact on any of our planned business operations. The Company is aware of and will be responsible for its corporate taxes, payroll taxes, SEC filings, and business licenses. New laws or regulations may impact our ability to market our website in the future. However, we are not aware of any pending laws or regulations that would presently have an impact on our business. Employees As of the date of this Registration Statement, the Company has 2 part-time employees, consisting of our President and Treasurer, Thomas Wikstrom, and our Secretary, Horst Helmrich. DESCRIPTION OF PROPERTY Our principal executive office is located at 5841 East Charleston Blvd. #230 Las Vegas, NV 89123, and our telephone number is (208) 371 8802. The President and Treasurer, (Thomas Wikstrom) operates out of his home office. As of October 7, 2013, the Company leased its corporate mailing address for an annual fee of $441. LEGAL PROCEEDINGS From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is presently no public market for our shares of common stock. We anticipate applying for quoting of our common stock on the OTC Markets upon the effectiveness of the registration statement of which this prospectus forms apart. However, we can provide no assurance that our shares of common stock will be quoted on the OTC Markets or, if quoted, that a public market will materialize. Holders of Capital Stock As of the date of this registration statement, we had 40 holders of our common stock. Rule 144 Shares As of the date of this registration statement, we do not have any shares of our common stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. Stock Option Grants We do not have a stock option plan in place and have not granted any stock options at this time. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions. Plan of Operations Worlds Mall, Inc. was incorporated on March 10, 2011 under the laws of the State of Nevada. The Company plans to develop an e-commerce website that will connect retail stores with customers around the world. The Company was formed to develop an e-commerce website that will connect retail stores with customers around the world. We believe that companies tend to market their e-commerce websites within the country or region that they are from and only to customers that speak the language of their country. Our goal is to globalize the retail market by eliminating language barriers along and providing better exposure to such companies. Worlds Mall wants to be a portal for retail sellers to connect to the world. We are a development stage company, and to date, our development efforts have been focused primarily on the development and marketing of our business model. In addition, to date we have limited operating history for investors to evaluate the potential of our business development. As such, we have not built our customer base or our brand name. In addition, our sources of cash are only adequate to maintain operations for the next 18 months. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely. As discussed in more detail under "Liquidity and Capital Resources" below, our budget for the 12 months following a sufficient raise in capital is $517,000, including $125,000 for website creation and $1,200 for website hosting. We anticipate completing our website in four to five months with sufficient capital. We have not yet determined when we will begin to generate revenues. Results of Operations Comparison of the three months ended September 30, 2014 and 2013. We are still in our development stage and had no revenues to date. Our operating expenses for the three months ended September 30, 2014 were $13,165 compared to operating expenses of $702 for the three months ended September 30, 2013. The Company s net loss for the three months ended September 30, 2014 was $13,165 compared to $702 for the period ended September 30, 2013. Comparison of the nine months ended September 30, 2014 and 2013. We are still in our development stage and had no revenues to date. Our operating expenses for the nine months ended September 30, 2014 were $20,653 compared to operating expenses of $762 for the nine months ended September 30, 2013. The increase was a result of an increase in professional fees from $675 for the nine months ended September 30, 2013 to $20,412for the same period in 2014. The Company s net loss for the nine months ended September 30, 2014 was $20,653 compared to $762 for the period ended September 30, 2013. Comparison of the year ended December 31, 2013 and 2012 We are still in our development stage and had no revenues to date. Our operating expenses for the year ended December 31, 2013 were $6,464 compared to an operating expenses of $64 for the year ended December 31, 2012. The Company s net loss for the year ended December 31, 2013 was $6,464 compared to $64 for the year ended December 31, 2012. Liquidity and Capital Resources From the nine months ended September 30, 2014, the cash flow from operating activities was $(20,653), the net cash flow from financing activities was $11,000, resulting in a total cash balance of $36,467 as of September 30, 2014. World s Mall needs $18,050, annually, at our current burn rate. In the Company s present state, we currently have enough cash to continue our operations for 18 months. However, without a successful capital raise, as discussed below, we will not be able to expand our operations pursuant to our business plan. The current budget for the 12 months following a sufficient raise in capital is $517,000. Over the twelve month period starting upon the effective date of this registration statement, we must raise $474,000 in additional capital for site development, server management, one new programmer and marketing. Our estimated expenses consist of the following: Expected lease of 1,500 sq. ft. of office space: $18,000 ($1,500 monthly) Phone bill including long distance calling: $4,800 ($400 per month) Website creation: $125,000 Web hosting: $1,200 Bookkeeping/Accounting: $15,000 Marketing: $80,000 Computers/printers/furniture etc: $10,000 Travel expenses: $60,000 Employee payroll: $65,000 Attorney fees: $20,000 Electronic filing fees: $3,000 Miscellaneous fees: $5,000 Licensing of 3D gaming software: $65,000 (annually) Language translation software: $45,000 (annually for the translation of 9 languages) Based on our financial history since inception, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. Our independent registered public accounting firm raised the issue that the Company had a deficit accumulated during the development stage at December 31, 2013 and a net loss and net cash used in operating activities for the reporting period then ended. Limited Operating History We have generated no independent financial history and have not previously demonstrated that we will be able to expand our business. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our business model and/or sales methods. Critical Accounting Policies and Estimates While our significant accounting policies are more fully described in Note 2 to our financial statements for the reporting period ended September 30, 2014, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis. Recent Accounting Pronouncements Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting or financial disclosure matters. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth the name and age of officers and director as of the date of our registration statement, of which this prospectus is a part. Our executive officers are elected annually by our Board of Directors (which currently consists solely of Thomas Wikstrom). Our executive officers hold their offices until they resign, are removed by the Board, or his successor is elected and qualified. Name Age Position Thomas Wikstrom 67 President, Treasurer and Director Horst Helmrich 46 Secretary Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years. Thomas Wikstrom, President, Treasurer and Director Thomas Wikstrom is the founder of Worlds Mall, Inc., and has served as the Company s President, Treasurer and Director since inception. Mr. Wikstrom also holds a number of other officers in Luxembourg. He has served as the President of F&B Europe Invest from 2005 to present day, as President of Simachev Group from 2004 to present day, and as President of Inglenook Consulting from 1994 through Present Day. Prior to that, from 1991 to 1994 he served as the Financial director of PC Power Ltd, in Luxembourg. Mr. Wikstrom received his Bachelor of Arts from the University of Oregon in 1971 and is fluent in Finnish, Swedish, English, German and French. Mr. Wikstrom is qualified to serve on our Board of Directors because of his executive and consulting experience around the world. Horst Helmrich, Secretary Mr. Helmrich is 46 years old and is a German citizen. Mr. Helmrich obtained a bachelor of economics degree from Leipzig University in Saxony, Germany. He has been with Siemens AG of Germany for fifteen years and is presently working in production in their energy division in the assembly of six megawatt wind turbines. He was formerly working in their automation and industrial plant-related products division. Mr. Helmrich previously owned and operated a retail clothing store in Berlin, Germany with his wife. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us: SUMMARY COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Totals ($) Thomas Wikstrom, President and Treasurer (1) 2013 $0 0 0 0 0 0 $0 $0 2012 $0 0 0 0 0 0 $0 $0 Horst Helmrich, Secretary 2013 $0 0 0 0 0 0 $0 $0 2012 $0 0 0 0 0 0 $0 $0 (1)On March 10, 2011, Mr. Wikstrom received 18,000,000 founders common shares valued at $0.001, par value per share or $18,000. Option Grants There are no stock option plans or common shares set aside for any stock option plan. Long-Term Incentive Plan ("LTIP") Awards Table There were no awards made to a named executive officers in the last completed fiscal year under any LTIP TABLE OF CONTENTS PAGE Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including Risk Factors beginning on page 7, Management s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements, before making an investment decision. Corporate Information Our Company Overview We are a corporate governance, risk and compliance management ( GRC or Risk Mitigation ) business services and technology solutions ( GRC Solutions ) firm. Our GRC Solutions bring people, process and software tools to help clients more effectively and cost efficiently handle their Risk Mitigation efforts. Our business services include staffing search and placement and contract consulting. Our technology solutions represent, what we believe, are the most effective software tools a client can use based upon their unique Risk Mitigation needs. Our practice areas and GRC Solutions are industry and position specific. We believe that our position specific and industry specialization will enable us to better understand our clients culture, operations, business strategies and industries. We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. Following this offering, we will continue to be an emerging growth company until the earliest to occur of (1) the last day of the fiscal year during which we had total annual gross revenues of at least $1 billion (as indexed for inflation), (2) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering under this prospectus, (3) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt and (4) the date on which we are deemed to be a large accelerated filer, as defined under the Securities Exchange Act of 1934, as amended (which we refer to as the Exchange Act ). We also qualify as a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of which are similar to those of an emerging growth company including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Under U.S. federal securities legislation, our common stock will be "penny stock". Penny stock is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor's account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Our initial industry focus is on the financial services and money management industries (collectively, the Managed Money Group ). We believe that the increasing attention being given to the need for GRC will lead to a significant opportunity to help both small and large organizations build and support effective and cost efficient Risk Mitigation frameworks. Our initial targeted clients within the Managed Money Group are; FINRA broker dealers, registered investment advisory firms, hedge funds, private equity firms, non-profits and family offices. Our industry specific GRC solutions are designed and delivered based upon what we believe are the biggest Risk Mitigation challenges facing our targeted customer base. We believe the top three business challenges facing the Money Managed Group today include; (1) managing regulatory, compliance and tax uncertainties, (2) identifying operation efficiencies to combat cost pressure, and (3) pursing new growth opportunities. We believe these challenges will support multiple new entrants and create significant opportunity to grow our business. Initially, we will focus on meeting challenges described under (1) and (2) above. Although we have already signed consulting agreements with two clients, our initial business efforts will focus on building our organizational and GRC Solutions delivery structure (collectively, Business Infrastructure ). This includes; (i) building our network of search professionals ( Recruiters ), (ii) building our database of placement candidates ( Candidates ) and contract consultants ( Consultants ), (iii) developing our services delivery process and supporting documentation, (iv) developing our database of recommended, third party, GRC technology solutions, and (v) building out our key-performance-indicator reporting and management system ( KPI Reporting ). As of the date of this prospectus, the Company has not entered in any contractual arrangements with Recruiters, Candidates or Consultants. Consulting services related to our two current clients will be delivered by either our chief executive officer or under our consulting agreement with Ocean Cross Business Solutions Group (which is not deemed a Consultant Contract referred to above). See Certain Relationships and Related Transactions. The GRC technology solutions database represents a listing of recommended, third party GRC technology solutions to be used by our clients. The recommendations will be based on both internal company market research and through feedback from clients, although we may never enter into reseller agreements or acquire separate GRC technology. Currently we are prepared to recommend the following GRC technologies to clients: (i) certain software relatd to annual compliance meetings; (ii) technology solutions for email storage and (iii) continuing education tracking. Recruiters and Consultants will not receive fixed compensation. Recruiters will be paid a commission based upon fees earned from the placement of Candidates. Consultants will be paid an hourly rate as part of the total hourly rate paid by a client for consulting services. Recruiters and Consutants will be independent contractors and will only be paid as we engage a new client. Therefore, we will not have any costs associated with having recruiters or consultants on payroll. Our Business Infrastructure will be designed to provide both project-based and recurring high quality, GRC Solutions. Our Recruiters and Consultants will be dedicated to specific industries. We believe that a high-level of communication and process transparency with our clients will be important factors in their level of satisfaction and to the ultimate success of our services. We plan to establish a company culture that is built on a continuous improvement, milestone-driven delivery approach supported by data-driven KPI Reporting. For our search and placement services, such KPI Reporting will include; (i) placement success rate, (ii) average days to placement; and (iii) stick rate. For our contract consulting services we will calculate; (i) % chargeability rate, (ii) % realization rate, and (iii) % utilization rate. Our KPI Reporting is discussed further in our business description section entitled Our Financial Management Reporting and Measurement System. Upon completion of our Business Infrastructure we will launch a sales and marketing campaign aimed at the Managed Money Group. We then plan to explore providing our GRC Solutions to; (i) other financial services businesses including insurance and banking organizations, and (ii) other regulated industries, that may include; Healthcare, Energy, Pharmaceutical, Environmental, Gaming, Telecommunication. To support our industry-focused GRC Solutions model, we will have separate websites dedicated to our targeted client base. The Managed Money Group website is www.compliancemoves.com. We will deliver our staffing and placement services either on a (i) retained, or (ii) contingent basis. We deliver our contract consulting services either on a (i) project basis, or (ii) through a recurring monthly fee. We deliver our technology solutions either on a (i) project basis, or (ii) through a reseller relationship ( Reseller ) with third party technology providers. Under a Reseller relationship we will earn fees from the third party technology provider and not directly from the client. As of the date of this prospectus we have no Reseller relationships. We plan to manage Candidate and Consultant recruiting through our website at www.clrcareers.com and a still to be developed internal Contact Communication System (CCS). The CCS will be utilized by our Recruiters in prospecting and managing Candidates and Consultants. The CCS will allow Recruiters or Consultants to communicate in real-teim as they work on customer engagements. The CCS will be used by Recruiters to record all communications with placement candidates. The information on, or that may be, accessed from our websites is not part of this Prospectus. Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered1 Proposed Maximum Offering Price Per Unit2 Proposed Maximum Aggregate Offering Price3 Amount of Registration Fee Common Stock, par value $0.0001 per share 1,508,000 $ 0.12 $ 180,960 $ 25 4 (1) Includes 508,000 shares being offered by our current shareholders (the Selling Shareholders ) and 1,000,000 shares being offered by the Company (the Company Shares ) (2) The offering price has been arbitrarily determined by the Company and bears no relationship to assets, earnings, or any other valuation criteria. Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price shares were sold to our shareholders in the initial founding private placement. The price of $0.12 is a fixed price at which the Selling Shareholders may sell their shares until our common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices. The fixed price of $0.12 has been determined as the selling price based upon the original purchase price paid by certain selling shareholders of $0.05 plus an increase based on the fact the shares will be registered and due to our increased operations since our last private placement, including the engagement of new clients. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, nor can there be any assurance that such an application for quotation will be approved. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment. The Company Shares may only be sold after this registration statement is declared effective. (3) Estimated solely for the purpose of calculating the registration fee based on Rule 457 (o). (4) Previously paid. The Registrant hereby amends this Registration Statement on such date as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that the 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. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED January 16, 2014 Risks That We Face Our business is subject to numerous risks, as discussed more fully in the section entitled Risk Factors immediately following this prospectus summary. If we cannot attract and retain qualified Recruiters, Candidates or Consultants, our business, financial condition and results of operation would suffer. To the extent our clients delay or reduce hiring or engaging consulting services due to an economic downturn or economic uncertainty our results of operations will be adversely affected. If we lose the services of one or more members of our senior management team or if we fail to limit departing Recruiters or Consultants from moving business to another employer, our business could be negatively impacted. Demand for our services could decline if we fail to maintain our professional reputation and brand name. Our Corporate and Other Information We were incorporated in the State of Delaware in July 2013 as Compliance & Risk Management Solutions Inc. with a fiscal year end of September 30. Our principal office address is 49 Main Street, New Egypt NJ 08533 and our telephone is 203-456-8088. As of December 3, 2013, we had one employee, our president and chief executive officer Mr. Christopher Neuert. We are not a blank check corporation. Section 7(b)(3) of the Securities Act of 1933, as amended defines the term blank check company to mean, any development stage company that is issuing a penny stock that, (A) has no specific plan or purpose, or (B) has indicated that its business plan is to merge with an unidentified company or companies. We have a specific plan and purpose. Our business purpose and our specific plans are to provide industry and position focused Risk Mitigation services. We have commenced operations, began to develop standard procedures for our delivery system, designed and launched our websites and signed contracts with two (2) clients as of the date of this Prospectus. In Securities Act Release No. 6932 which adopted rules relating to blank check offerings, the Securities and Exchange Commission stated in II DISCUSSION OF THE RULES, A. Scope of Rule 419, that, Rule 419 does not apply to . . . start-up companies with specific business plans . . . even if operations have not commenced at the time of the offering. We have no present plans to be acquired or to merge with another company nor do we, nor any of our shareholders, have any plans to enter into a change of control or similar transaction. We may look to acquire complementary service providers and software product companies in the future to grow our operations. Summary of the Offering by the Company Common Stock offered by the Company 1,000,000 shares (the Company Shares ) Common Stock offered by selling shareholders 508,000 shares (the Selling Shareholders ) Total Common Stock offered 1,508,000 per share of Common Stock. Number of shares outstanding before the offering 4,230,000 shares of Common Stock. Number of shares outstanding assuming all shares are sold 5,230,000 shares of Common Stock will be issued and outstanding after this offering is completed. Minimum number of Company Shares to be sold None. Market for the common shares There is no public market for the common shares. The price per share of Common Stock is $0.12. We may not be able to meet the requirement for a public listing or quotation of its common stock. Further, even if our common stock is quoted or granted listing, a market for the common shares may not develop. Use of proceeds The Company will receive all proceeds from the sale of the Company Shares. If all 1,000,000 Company Shares being offered are sold, the total gross proceeds to the Company would be $120,000. Counsel to the Company has agreed to defer a portion of its costs for services rendered through the effective date of the registration statement, which fees are currently estimated at $25,000. The first proceeds raised will be used to pay any outstanding legal fees relating to this prospectus. The Company intends to use the remaining proceeds from this offering, as follows: (i) continue to develop our websites www.compliancemoves.com and www.clrcareers.com (the Websites ) and marketing collateral, estimated at $10,000 (ii) to pay post-offering legal, accounting and expenses estimated at $20,000, (iii) marketing and advertising, estimated at $40,000, and (iv) rent, phone, administrative & operating support expenses, estimated at $20,000. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, estimated at approximately $30,000 are being paid for by us from cash on hand. The Company will receive no proceeds from the sale of our common stock by the Selling Shareholders. COMPLIANCE & RISK MANAGEMENT SOLUTIONS INC UP TO 1,508,000 SHARES OF COMMON STOCK Compliance & Risk Management Solutions Inc. ( CRM , we , us , our , the Company ) is offering for sale a maximum of up to 1,000,000 shares of its common stock (the Company Shares ) and the selling shareholders are offering 508,000 shares of our common stock held by them. The selling shareholders may be deemed underwriters of the shares of common stock, which they are offering. The selling stockholders will receive all proceeds from the sale of stock in held by them in this offering. We are an emerging growth company under the applicable Securities and Exchange Commission rules and will be subject to reduced public reporting company requirements. Our common stock is presently not traded on any market or securities exchange. The 508,000 shares of our common stock can be sold by selling shareholders at a fixed price of $0.12 per share until our shares are quoted on the Over-The-Counter Bulletin Board ( OTCBB ) and thereafter at prevailing market prices or privately negotiated prices. Upon completion of this offering, we will attempt to have our common stock quoted on the OTCBB. However, 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 under this prospectus. There is no assurance that an active trading market for our shares will develop, or, if developed, that it will be sustained. In the absence of a trading market or an active trading market, investors may be unable to liquidate their investment or make any profit from the investment. The Company Shares are being offered at a fixed price of $0.12 per share. There is no minimum number of shares that must be sold by us for the offering to close, and we will retain the proceeds from the sale of any of the offered Company Shares that are sold by us. Our common stock is subject to the penny stock rules of the SEC. If all of the Company Shares being offered are not sold, there is the possibility that the amount raised may be minimal and might not even cover the cost of this offering, which the Company estimates at $30,000. The offering for our Company Shares is being conducted on a self-underwritten, best efforts basis, which means our President Christopher Neuert will attempt to sell the Company Shares in reliance on the safe harbor from broker-dealer registration under Rule 3a4-1 of the Securities Exchange of 1934, as amended. This prospectus will permit our President to sell the Company Shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. There is no minimum offering and the primary offering for our Company Shares will conclude when upon the earlier of (i) the date on which all 1,000,000 Company Shares have been sold, or (ii) 180 days after this registration statement becomes effective with the Securities and Exchange Commission. The Company may at its discretion extend the offering of Company Shares for an additional 90 days. All subscription agreements and checks for payment of shares are irrevocable (except as to any states that require a statutory cooling-off or rescission right). We have not made any arrangements to place funds received from subscriptions in a escrow, trust or similar account. The proceeds from the sale of Company Shares will be placed directly into the Company s account; any investor who purchases Company Shares will have no assurance that any monies besides themselves will be subscribed to the prospectus. Accordingly, if we file for bankruptcy protection or a petition for insolvency bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws. For more information, see the section of this prospectus entitled Plan of Distribution. The Company Shares are being offered on a self-underwritten basis: no minimum number of shares must be sold in order for the offering to proceed. The offering price per share is $0.12. We have agreed to pay all offering costs relating to the both the Company Shares and shares sold by the selling shareholders pursuant to this prospectus, which are currently estimated at $30,000. The following table sets forth net proceeds to both the Company and the Selling Shareholders assuming the sale of 25%, 50%, 75% and 100%, respectively, of the 1,000,000 shares being offered by us and the 508,000 shares being offered by the selling shareholders. We will retain all proceeds for the shares offered by us and the selling shareholders will retain all proceeds from shares offered by them. If 25% of Shares Sold If 50% of Shares Sold If 75% of Shares Sold If 100% of Shares Sold Net Proceeds to the Company (1) $ 0 $ 30,000 $ 60,000 $ 90,000 Net Proceeds to Selling Shareholders (2) $ 15,240 $ 30,480 $ 45,720 $ 60,960 (1) Based on sale of 1,000,000 shares offered by the Company at a price of $0.12 per share and after deducting net offering expenses. (2) Based on the sale of 508,000 shares offered by the Selling Shareholders at a price of $0.12 per share INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. The Date of This Prospectus Is: _____________, 2014 Termination of the offering The offering for Company Shares will conclude upon the earlier of (i) the date on which all 1,000,000 shares of Company Shares have been sold, or (ii) 180 days after the date on which the registration statement filed with the Securities and Exchange Commission is effective. The Company at its discretion may extend the offering for an additional 90 days. Terms of the offering The Company s President will sell the Company Shares at a price of $0.12 per share upon effectiveness of this Registration Statement on a best-efforts basis. The selling security holders will determine when and how they will sell the common stock offered in this prospectus. The 508,000 shares of our common stock can be sold by selling security holders at a fixed price of $0.12 per share until our shares are quoted on the OTCBB and thereafter at prevailing market prices or privately negotiated prices. 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. You should rely only upon the information contained in this prospectus. We have not authorized anyone to provide you with information different from which is contained in this prospectus. The Company is offering to sell shares of common stock and seeking offers only in jurisdictions where offers and sales are permitted. The information contained in here is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Summary of Financial Information The following summary financial information for the periods stated summarizes certain information from our financial statements included elsewhere in this prospectus. You should read this information in conjunction with Management's Plan of Operations, the financial statements and the related notes thereto included elsewhere in this prospectus. Balance Sheet As of December 31, 2013 As of September 30, 2013 Total Assets $ 16,470 $ 22,660 Total Liabilities $ 25,640 $ 3,507 Stockholder s Equity (Deficit) $ (9,170 ) $ 19,153 Operating Data July 29, 2013 (Date of Inception) to December 31, 2013 July 29, 2013 (Date of Inception) to September 30, 2013 Revenue 8,750 2,000 Net Loss $ (80,670 ) $ (22,897 ) Net Loss Per Share (0.01 ) (0.01 )
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001592910_exmar_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001592910_exmar_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..6fd1b31a26ec10bc1fd1e216e073634da63e7929
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001592910_exmar_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001593204_huaizhong_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001593204_huaizhong_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3930f596a0f2927d87223c6ec520c5330c7e02cd
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001593204_huaizhong_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, WE, US, OUR, AND ADAIAH DISTRIBUTION INC. REFERS TO ADAIAH DISTRIBUTION INC. THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. ADAIAH DISTRIBUTION INC. We are a development stage company and our business is the distribution of neck, head, donut, lumbar, decorative, throw and orthopedic pillows. Adaiah Distribution Inc. was incorporated in Nevada on September 12, 2013. We intend to use the net proceeds from this offering to develop our business operations (See Description of Business and Use of Proceeds ). To implement our plan of operations we require a minimum of $40,000 for the next twelve months as described in our Plan of Operations. It is our goal to do business in the U.S., Russia and the European Union. Being a development stage company, we have a limited operating history but have meaningfully commenced business operations based upon the amount of revenue we have been able to generate. Our principal executive offices are located at Poruka iela 3 Madona, LV-4801 Latvia. Our phone number is (775)375-5240. We currently have one employee, our sole officer and director who contributes approximately 20 hours per week to the development of our business. From inception until the date of this filing, we have had limited operating activities but have meaningfully commenced business operations based upon the amount of revenue we have been able to generate. Our independent registered public accounting firm has issued an audit opinion for Adaiah Distribution Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our financial statements from inception (September 12, 2013) through July 31, 2014, reports gains of $12,683. We have developed our business plan, and executed contracts with Ningbo Hounuo Plastic Co., LTD, Hangzhou Yintex Co., Ltd, Suemon Furniture Co., Ltd, Vision Industry Co., Ltd and E&O International Trade Co., Ltd, where we engaged these companies as independent manufacturers for the specific purpose of developing, manufacturing and supplying products for us. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. THE OFFERING The Issuer: ADAIAH DISTRIBUTION INC. Securities Being Offered: 2,000,000 shares of common stock. Price Per Share: $0.04 Duration of the Offering: The shares will be offered for a period of two hundred and forty (240) days from the effective date of this prospectus. Our offering will terminate as of the earlier of that date, when all the shares have been sold. The Company will deliver stock certificates attributable to shares of common stock purchased directly to the purchasers within ninety (90) days of the close of the offering. Gross Proceeds $80,000 Securities Issued and Outstanding: There are 4,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our officer, Nikolay Titov. Subscriptions All subscriptions once accepted by us are irrevocable. Registration Costs We estimate our total offering registration costs to be approximately $9,000.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001593875_mercury_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001593875_mercury_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001593875_mercury_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001594109_grubhub_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001594109_grubhub_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..c22ec3fc8f5791967822f4c03677061d12d98800
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001594109_grubhub_prospectus_summary.txt
@@ -0,0 +1 @@
+presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001594114_zhrh-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001594114_zhrh-corp_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..0d3de8210d5ab81a6f9d02e3858af1de038f3502
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001594114_zhrh-corp_prospectus_summary.txt
@@ -0,0 +1 @@
+SUMMARY PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY. OUR BUSINESS We are a development stage company. We have $500 in revenues and we have incurred $8,413 in operating expenses during the period from inception to December 31, 2013. We are in the business of wholesale of bedding products. The company will sell bedding goods or merchandise to retailers, to industrial, commercial, institutional, and other professional business users, or to other wholesalers and related subordinated services. Our products will also be available directly to the consumer via our online shopping catalogue . We are currently developing a website (www.HeavenlyBeddingDirect.com) which will include our contact info, pricing and detailed description of our services. The website will allow our clients to review our products and place product orders. To date, we have developed our business plan, registered a domain name for our new website and executed contract for a bulk order of bedding products with ANDRIY CHORNYY FOP based in Dnepropetrovsk, Ukraine. Our principal address is located at 2360 CORPORATE CIRCLE STE 400, HENDERSON, Nevada, 89074. Our telephone number is 702-879-4761, and our registered agent for service of process is the INCORP SERVICES, INC, located at 2360 CORPORATE CIRCLE STE 400, HENDERSON, Nevada, 89074-7722. We were incorporated in the State of Nevada on July 13, 2011. Our fiscal year end is June 30. THE OFFERING: Securities Being Offered Up to 1,540,000 shares of common stock. Offering Price The selling shareholders will sell our shares at $0.03 per share until our shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. We determined this offering price arbitrarily by adding a $0.02 premium to the last sale price of our common stock to investors. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus. Termination of the Offering The offering will conclude when all of the 1,540,000 shares of common stock have been sold, the shares no longer need to be registered or to be sold due to the operation of Rule 144 or we decide at any time to terminate the registration of the shares at our sole discretion. Securities Issued and Outstanding Prior to the Offering 3,740,000 shares of our common stock Securities Issued and Outstanding After to the Offering 3,740,000 shares of our common stock Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Market for the common stock There has been no market for our securities. Our common stock is not traded on any exchange or on the Over-the-Counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with FINRA for our common stock to become eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so. Going Concern Considerations As reflected in the accompanying financial statements, the Company is in the development stage and has a net loss of $8,413 for the period from July 13, 2011 (inception) to December 31, 2013. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan Summary Risk Factors Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties as described under "Risk Factors," the other information contained in this prospectus and our financial statements and the related notes before you decide whether to invest in our common stock. SUMMARY FINANCIAL INFORMATION The following financial information summarizes the more complete historical financial information at the end of this prospectus. As of December 31, 2013 ----------------- (Unaudited) BALANCE SHEET Total Assets $ 17,979 Total Liabilities $ 7,620 Stockholders' Equity $ 10,359 Period from July 13, 2011 (date of inception) to December 31, 2013 ----------------- (Unaudited) INCOME STATEMENT Revenue $ 500 Total Expenses $ 8,913 Net Loss $ (8,413)
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001594328_gates_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001594328_gates_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001594328_gates_prospectus_summary.txt
@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001594337_corium_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001594337_corium_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..60acbb62e7320b6b0d85159265910b0d5c245faa
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001594337_corium_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our financial statements and the related notes and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. CORIUM INTERNATIONAL, INC. Overview We are a commercial stage biopharmaceutical company focused on the development, manufacture and commercialization of specialty pharmaceutical products that leverage our broad experience in transdermal and transmucosal delivery systems. Together with our partners, we have successfully developed six marketed products in the prescription drug and consumer markets, and we are the sole commercial supplier of each of those products for our marketing partners. These marketed products are Clonidine Transdermal Delivery System, or TDS, Fentanyl TDS and four Crest Advanced Seal Whitestrips products. We use our novel transdermal and transmucosal approaches to bring new products to markets with significant opportunities. Our development platforms enable transdermal delivery of large molecules, or biologics, including vaccines, peptides and proteins, as well as small molecules that are otherwise difficult to deliver in a transdermal dosage form. Our pipeline includes three partnered products that are the subject of pending drug marketing applications to the U.S. Food and Drug Administration, or FDA. In addition, we have 12 partner- or self-funded programs at earlier stages. Since 1999, we have built significant know-how and experience in the development, scale-up and manufacture of complex specialty products and have formed relationships with our partners that include both the development of new product formulations and our manufacture of the resulting products. Our partners include The Procter & Gamble Company, or P&G, Par Pharmaceutical, Inc., Teva Pharmaceuticals USA, Inc. and Agile Therapeutics, Inc., as well as several other multinational pharmaceutical companies. We have the capability to develop and manufacture our own product candidates and are one of only a few independent companies that develops and manufactures transdermal products for other parties. We believe our proprietary manufacturing processes, know-how and custom equipment give us a distinct competitive advantage over other pharmaceutical, consumer products and manufacturing companies. Transdermal drug delivery is the transport of drugs through the skin for absorption into the body. We have developed two proprietary technology platforms, Corplex and MicroCor, that we believe offer significant competitive advantages over existing transdermal approaches. Corplex and MicroCor are designed to be adapted broadly for use in multiple drug categories and indications. We use our Corplex technology to create advanced transdermal and transmucosal systems for small molecules that utilize less of the active ingredient while achieving the same or better therapeutic effect, that can adhere well to either wet or dry surfaces, and that can hold additional ingredients required to aid the diffusion of low-solubility molecules through the skin without losing adhesion. Our MicroCor technology is a biodegradable microstructure system currently in development that enables the painless and convenient delivery of biologics that otherwise must be delivered via injection. Biodegradable microstructures integrate drug molecules and a biocompatible polymer. With slight external pressure, the microstructures penetrate the outer layers of the skin and dissolve to release the drug for local or systemic absorption. MicroCor is designed to expand the market for transdermal delivery of biologics, which cannot currently be delivered by other FDA-approved transdermal technologies. Three Months Ended December 31, 2012 to 2013 2012 2013 $ Change % Change (Dollars in thousands) General and administrative expenses $ 1,792 $ 1,810 $ 18 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents In addition to commercialized products, we have a number of products in late stages of development. The most advanced clinical stage product in our pipeline is AG200-15, which is in Phase 3 development by our exclusive marketing partner, Agile. AG200-15 is a combined hormonal contraceptive patch designed to deliver two hormones, ethinyl estradiol and levonorgestrel, through the skin at levels comparable to low-dose oral contraceptives, in an easy-to-use format over seven days. Agile has filed a New Drug Application, or NDA, for approval of this product by the FDA, which is required before marketing a new drug in the United States. The FDA has indicated that Agile's NDA was not sufficient for approval as originally submitted. Agile is preparing to conduct an additional Phase 3 clinical trial based on this guidance and intends to supplement the NDA with the results of the additional Phase 3 clinical trial. Based on market research conducted by Agile, AG200-15 has the potential to reach a peak market share of 9% of hormonal contraceptive prescriptions in the United States. Based upon IMS data, Agile estimates that each percentage point of market share of hormonal contraceptive prescriptions in the United States currently represents approximately $108 million of annual gross sales. We are developing two additional products utilizing our proprietary technologies that we plan to advance into Phase 2 trials in 2014 and 2015. MicroCor hPTH(1-34) utilizes our MicroCor technology to deliver parathyroid hormone, a peptide for treating osteoporosis that is currently available only in a refrigerated injectable form. Corplex Tamsulosin is a patch being developed to deliver tamsulosin to patients with benign prostatic hyperplasia, or enlarged prostate. Tamsulosin is a drug that relaxes smooth muscle cells in the prostate and bladder neck, thereby decreasing the blockage of urine flow that occurs with an enlarged prostate. It is designed to deliver a controlled dose over several days and to reduce side effects compared to currently marketed products. We are not aware of any FDA-approved transdermal systems for delivering either hPTH(1-34) or tamsulosin. Transdermal Drug Delivery Industry Transdermal delivery and transmucosal delivery, or delivery through mucous membranes, offer patients more convenient, non-invasive and comfortable methods of drug delivery. The benefits of transdermal and transmucosal delivery systems over other dosage forms generally include enhancing the efficacy and reducing the side effects of a drug by controlling the rate of delivery and absorption, avoiding the undesirable breakdown of drugs in the liver associated with gastrointestinal absorption, and improving patient compliance and long-term adherence to therapy. According to Datamonitor, the global value of the market for systemic transdermal products, including patches, was approximately $20 billion in 2010 and is expected to grow to approximately $30 billion by 2015. We believe this growth is driven by the increasing availability of transdermal systems for important therapeutic applications and changing disease demographics. Despite the benefits of current transdermal delivery products, many key challenges prevent broader use and applicability: Skin Irritation and Adhesion: A number of patches cause skin irritation and sensitization, often brought on by the inclusion of skin-permeating ingredients necessary to overcome the limitations of traditional patch technologies. Some patches also experience adhesion failure resulting from excess moisture or heat while worn by the patient, for example when swimming, bathing or during other normal daily activities. Safety and Drug Loading: In order to enable effective diffusion of sufficient amounts of drug through the skin, many transdermal delivery systems must incorporate large amounts of drug in the patch. After use, a large residual amount of the drug remains and must be disposed of carefully, especially if the drug is potent or toxic. In some cases, only a small amount of the total drug loaded in a patch is actually delivered into the bloodstream. Delivery Limitation: The pharmaceutical industry has been unable to formulate certain drugs, especially biologics, for transdermal drug delivery, given the size and complexity of the molecules. These drugs generally are delivered by injection, which causes pain and often requires administration by a medical professional. In addition, these drugs generally must be refrigerated, require biohazard disposal and present the risk of accidental needle sticks. Many small molecules are also difficult to deliver transdermally, especially those that are not soluble in water or are unstable in the presence of air or water. Year Ended September 30, 2012 to 2013 2012 2013 $ Change % Change (Dollars in thousands) Cost of product revenues $ 24,360 $ 24,828 $ 468 CORIUM INTERNATIONAL, INC. Statements of Changes in Convertible Preferred Stock, Redeemable Common Stock and Stockholders' Deficit (In thousands, except share and per share data) Convertible Preferred Stock Redeemable Common Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders' Deficit Shares Amount Shares Amount Shares Amount Balance October 1, 2011 36,034,900 $ 57,261 363,383 $ 3,367 1,793,189 $ 2 $ (27,990 ) $ (73,103 ) $ (101,091 ) Repayment of founder note with common stock (15,438 ) (143 ) Issuance of common stock warrants in connection with debt 110 110 Issuance of common stock upon exercise of stock options 61,799 12 12 Stock-based compensation expense 66 66 Net loss and comprehensive loss (5,443 ) (5,443 ) Balance September 30, 2012 36,034,900 57,261 347,945 $ 3,224 1,854,988 2 (27,802 ) (78,546 ) (106,346 ) Issuance of common stock warrants in connection with debt and capital lease financing 38 38 Issuance of common stock upon exercise of stock options 26,189 13 13 Stock-based compensation expense 330 330 Modification of warrants issued in connection with debt 742 742 Net loss and comprehensive loss (13,877 ) (13,877 ) Balance September 30, 2013 36,034,900 $ 57,261 347,945 $ 3,224 1,881,177 $ CORIUM INTERNATIONAL, INC. Condensed Statements of Convertible Preferred Stock, Redeemable Common Stock and Stockholders' Deficit (Unaudited) (In thousands, except share and per share data) Convertible Preferred Stock Redeemable Common Stock Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders' Deficit Shares Amount Shares Amount Shares Amount Balance September 30, 2013 36,034,900 $ 57,261 347,945 $ 3,224 1,881,177 $ 2 $ (26,679 ) $ (92,423 ) $ (119,100 ) Decrease in equity associated with modification of subordinated debt (3,485 ) (3,485 ) Issuance of common stock upon exercise of stock options 3,193 7 7 Stock-based compensation expense 56 56 Net loss and comprehensive loss (2,098 ) (2,098 ) Balance December 31, 2013 36,034,900 $ 57,261 347,945 $ 3,224 1,884,370 $ Corium International, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 38-3230774 (I.R.S. Employer Identification Number) Corium International, Inc. 235 Constitution Drive Menlo Park, California 94025 (650) 298-8255 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Table of Contents One of the greatest opportunities in transdermal drug delivery is the ability to deliver biologics including vaccines, peptides and proteins, without the use of an injection. A number of companies have attempted to develop technologies to address this challenge, but many have experienced commercial and development failures due to the formulation, scale-up and manufacturing complexities. Some of these systems have relied upon large, complex and costly devices, usually with external power sources, which adversely impact their usability and reproducibility. Our Solution We are developing and commercializing advanced transdermal drug delivery products that are intended to expand the number and types of drugs that can be delivered transdermally. We believe our technologies can be applied to improve the therapeutic value of many drugs by controlling the levels of drug delivered over a longer period time. They are also designed to eliminate the need for injections of certain drugs and to improve adhesion and skin irritation profiles. Our technologies also allow us to create cost-effective products, especially by eliminating the need for complex devices and refrigeration throughout the supply chain. Our two proprietary platforms, Corplex and MicroCor, separately address some of the primary shortcomings of traditional transdermal drug delivery. We believe our track record within the industry demonstrates our ability to develop commercially successful products. Corplex Technology Corplex is a novel technology incorporating combinations of materials that utilize the properties of both traditional pressure-sensitive adhesives, or PSAs, as well as bioadhesives, to enable the transdermal delivery of small molecules. Pressure-sensitive adhesives provide adhesion to dry surfaces, such as skin, and reduced or no adhesion to wet surfaces, while bioadhesives adhere to wet surfaces, including the oral mucosa, with little or no adhesion to dry surfaces. Corplex encompasses combinations and blends of polymers to provide a range of properties that improve adhesion in wet or dry conditions and delivery of active ingredients that may otherwise be difficult to formulate for transdermal delivery. We use our Corplex technology in the Crest Whitestrips line of products and in our clinical stage Corplex Tamsulosin, as well as in other products in development. Additionally, we have one product utilizing Corplex technology for which an Abbreviated New Drug Application, or ANDA, has been filed. An ANDA is a less burdensome application process that allows for an approval by the FDA of a generic drug product by demonstrating bioequivalence to the innovator drug product containing the same active ingredient. Our Corplex transdermal delivery systems provide advanced custom solutions for small molecules and feature the following benefits: Flexibility: Corplex is adaptable and provides the ability to formulate adhesives to complement a drug's unique properties, enabling new drug dosage forms and delivery options. Ease-of-Use: Our Corplex systems are designed to improve patient compliance by being easy to use, self-administered and discreet. In addition, Corplex products are suitable for long-term skin contact and are designed to be easily removed with minimal damage to skin and without leaving a residue. Compatibility: Corplex can incorporate liquid-based components that improve stability and diffusion of the drug without compromising adhesion. Efficient and Controlled Drug Delivery: Because Corplex enables drugs to diffuse more easily through the skin, we can design Corplex products to require less drug to achieve the desired therapeutic result. Improved Therapeutic Profile: By achieving a steady dosage level, Corplex systems are designed to minimize side effects that otherwise result from peak concentrations of the drug when delivered with oral or other dosage forms. We believe the combination of these benefits make Corplex well-suited for the development of a variety of healthcare products that require adhesive properties, including prescription transdermal drug products and personal care, oral care, wound care, medical device and diagnostics products. Peter D. Staple Chief Executive Officer Corium International, Inc. 235 Constitution Drive Menlo Park, California 94025 (650) 298-8255 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents MicroCor Technology MicroCor is a biodegradable microstructure patch technology that we are developing to enable transdermal delivery of biologics, in a disruptive platform that reduces the need for needles and syringes and enables global distribution of biologics without requiring refrigeration. Because biologics cannot diffuse through the skin due to their size, some mechanism is required to introduce these molecules beyond the outer layer of the skin, or stratum corneum, where they can be absorbed into the body. The further a delivery system penetrates beyond the stratum corneum, the more likely it is to cause pain, bleeding and bruising. By integrating active ingredients directly into arrays of biodegradable microstructures, our MicroCor technology is designed to penetrate only the stratum corneum to release the drug for local or systemic absorption, while eliminating the pain, bleeding and bruising that can be caused by needles and other active delivery devices. We believe MicroCor will offer the following advantages over other delivery technologies in development for biologics: Minimal Discomfort: Our MicroCor systems feature an array of microstructures that penetrate the stratum corneum to only a few hundred microns in depth, deep enough for effective delivery without causing pain, bruising or bleeding. Dose Sparing: MicroCor needles are biodegradable and dissolve in the skin once the system is applied. In our clinical studies to date, we determined that over 90% of the drug contained in a single use of a MicroCor system was delivered into the skin each time the system was administered. We expect our MicroCor systems to reduce drug waste and the costs associated with the excess drug that may be required in less efficient delivery technologies. Thermally Stable: Our MicroCor systems do not contain moisture, and therefore are designed to be room temperature stable, enabling both stockpiling and worldwide delivery without refrigeration, thereby minimizing drug or product spoilage. No Biohazard Disposal: Because MicroCor needles completely dissolve in the skin, no sharps remain after use. We believe this feature will allow disposal of the system in a traditional trash receptacle without risk of accidental needle sticks or abuse associated with residual drug left in the delivery system. Ease-of-Use: MicroCor products are designed to be self-administered, fully-integrated, single-use systems that are worn for only a few minutes. Unlike other delivery systems, MicroCor requires no additional parts, electrical power or complex external enabling devices to effectively deliver the drug or product. Cost-Effective: In addition to the cost savings associated with dose sparing and thermal stability, MicroCor's fundamental design and our proprietary molding process also minimize costs associated with manufacturing MicroCor systems. Please send copies of all communications to: Cynthia Clarfield Hess Robert A. Freedman Effie Toshav Fenwick & West LLP 801 California Street Mountain View, California 94041 (650) 988-8500 Robert S. Breuil Chief Financial Officer Corium International, Inc. 235 Constitution Drive Menlo Park, California 94025 (650) 298-8255 B. Shayne Kennedy Daniel E. Rees Latham & Watkins LLP 650 Town Center Drive, 20th Floor Costa Mesa, California 92626 (714) 540-1234 Table of Contents Our Products and Partners The following table identifies the products we have developed that are marketed by our partners, products in our advanced pipeline and products currently awaiting FDA approval. We currently have six marketed products. Clonidine TDS is a treatment for hypertension that we developed as a generic version of the branded drug known as Catapres TTS. Clonidine TDS was launched in 2010 and is marketed by Teva and manufactured by us exclusively for Teva. Fentanyl TDS is a treatment for management of chronic pain, including cancer-related pain, under specified conditions. We developed this product as a generic version of the branded product known as Duragesic. Fentanyl TDS was approved in 2007 and is currently marketed by Par and manufactured by us exclusively for Par. Crest Whitestrips are a series of four products for oral care that we co-developed with P&G. These products utilize our Corplex polymer technology and are sold under the brands Advanced Vivid, Professional Effects, One Hour Express and Flex-Fit. We are the sole supplier of this oral care system for P&G. There are three products in our advanced pipeline. The Agile AG200-15 product is a combination hormonal contraceptive patch that contains the active ingredients ethinyl estradiol (an estrogen) and levonorgestrel (a progestrin), both of which have an established history of efficacy and safety in currently marketed combination oral contraceptives. AG200-15 is designed to deliver both hormones at levels comparable to low-dose oral contraceptives. By delivering these active ingredients over seven days, this product is designed to promote enhanced compliance by patients with a convenient, easy-to-use format. If approved, the patch will be applied once weekly for three weeks, followed by a week without a patch. Agile designed AG200-15, we performed the process development and manufacturing, and we are currently working with Agile to prepare for an additional Phase 3 clinical trial. MicroCor hPTH(1-34) is a transdermal system designed to use our MicroCor technology to provide simplified delivery of parathyroid hormone, the active ingredient of Forteo, an injectable product for the treatment of severe osteoporosis. With a simple one-step application process, short wear time and a favorable pharmacokinetic profile, MicroCor hPTH(1-34) represents, if approved, an opportunity to effectively deliver an improved anabolic therapy and increase patient compliance in the osteoporosis market. We believe MicroCor hPTH(1-34) is the only integrated, single step application PTH transdermal product currently in clinical development. We have self-funded this program since inception, and are planning to advance it into Phase 2 clinical trials with proceeds from this offering. We expect to partner with a company active in bone health, women's health or endocrinology to distribute and sell the product, if approved. Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents Corplex Tamsulosin is a transdermal patch designed to use our Corplex technology to provide controlled delivery of tamsulosin, the active ingredient in the leading once-daily capsule product for treatment of benign prostatic hyperplasia, or BPH, marketed under the brand name Flomax. By providing a controlled and relatively steady level of drug over an extended time, Corplex Tamsulosin is intended to alleviate the side effects associated with peak blood concentrations of the drug in its current oral formulation and to provide a consistent level of efficacy. Our completed Phase 1 pharmacokinetic study in healthy subjects demonstrated that Corplex Tamsulosin enabled delivery of the drug at blood concentration levels equivalent to the effective levels provided with the oral dosage form, but with an extended and controlled release profile. If successfully commercialized, Corplex Tamsulosin could be the only patch available for tamsulosin. We have self-funded this program since inception, and are planning to advance it into Phase 2 clinical studies with proceeds from this offering in the first half of 2015. We expect to partner this product with a company with marketing experience and capability in the urology field. Moreover, we have developed two additional generic products that we have partnered with Teva. One is a three-day generic transdermal product for the prevention of nausea and vomiting associated with motion sickness, for which the ANDA is currently pending approval with the FDA. We have completed all of the development, scale-up and clinical activities for submission of the ANDA and expect this product to launch in 2015, if approved. The second is a three-to-four-day generic transdermal product for treatment of a urologic condition, which was approved in March 2014. Teva is currently reviewing the strategy and potential timing for launch of this product. Our Strategy We believe our balanced portfolio strategy enables us to capitalize on our proven strengths and technological advantages while diversifying risk and limiting our financial exposure. The key components of our strategy are to: Expand our existing revenue base by commercializing our advanced pipeline. We intend to work with our existing partners to gain regulatory approval and commercially launch the AG200-15 contraceptive patch with Agile and a motion sickness patch and a urology patch with Teva. We also plan to develop, launch and manufacture new oral care products and certain other new products outside of oral care, through our partnership with P&G. Advance the development of proprietary products already in development. We plan to advance the development of MicroCor hPTH(1-34) and Corplex Tamsulosin, and selectively work with new partners to advance certain products in our earlier stage pipeline. We intend to focus primarily on products that incorporate FDA-approved drugs, thereby allowing us to take advantage of the 505(b)(2) regulatory pathway. Enter into co-development and commercialization agreements with new and existing partners for new products. We are actively evaluating potential new product candidates that leverage our proprietary technologies. Additionally, we plan to transition our MicroCor technology feasibility programs with leading pharmaceutical partners into co-development partnerships to develop and commercialize transdermal system-based vaccines and proprietary biologic products. Expand our MicroCor manufacturing capabilities. We intend to further develop MicroCor manufacturing capabilities to commercial scale, enabling late-stage development, launch and commercial production of multiple new high-margin biologic products. Further leverage our core competencies and proprietary technologies. We intend to apply our technologies to create and develop a portfolio of new transdermal products in areas of significant unmet need in particular, chronic, degenerative and progressive conditions affecting the brain and central nervous system, such as Alzheimer's and Parkinson's diseases. We are focusing our self-funded new product efforts on products that we could commercialize with a relatively small specialty sales force. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Unit(2) Proposed Maximum Aggregate Offering Price(1)(2) Amount of Registration Fee(3) Common Stock, $0.001 par value 6,325,000 $12.00 $75,900,000 $9,776 (1)Includes 825,000 additional shares that the underwriters have the option to purchase. (2)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)The Registrant previously paid $6,440 of the total registration fee in connection with the prior filing of this Registration Statement. In accordance with Rule 457(a), an additional registration fee of $3,336 is being paid in connection with this amendment to the Registration Statement. Table of Contents Risks Related to Our Business Our ability to implement our business strategy is subject to numerous risks and uncertainties, some of which are inherent in our business of developing, manufacturing and commercializing pharmaceutical products. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading "Risk Factors," prior to making an investment in our common stock. These risks include, among others, the following: We have limited operating revenues, a history of operational losses and an accumulated deficit of $94.5 million as of December 31, 2013, and we may not achieve or sustain profitability; We are dependent on the commercial success of our Clonidine TDS, Fentanyl TDS and Crest Whitestrips, and although we are generating revenues from sales of our products, we expect a decline in revenues generated by our Clonidine TDS and Fentanyl TDS products; We depend on a few partners for a significant amount of our revenues; in fiscal 2013 and the three months ended December 31, 2013, three of our partners accounted for 90% and 94% of our total revenues, respectively; We have had significant and increasing operating expenses and may require additional funding; We or our partners may choose not to continue developing or commercialize a product or product candidate at any time during development or after approval, which would reduce or eliminate our potential return on investment for that product or product candidate; Our near-term product revenue growth heavily relies on the success of the AG200-15 contraceptive patch, which has not yet been approved by the FDA, and for which the FDA has issued a complete response letter identifying certain issues to be addressed before approval can be granted; We may not be able to obtain and enforce patent rights or other intellectual property rights that cover our drug delivery systems and technologies with sufficient breadth; We are dependent on numerous third parties in our supply chain for the commercial supply of our products; Our current and future products will be subject to ongoing and continued regulatory review, which may result in significant expense and limit the commercialization of such products; for example, the FDA has inspected our manufacturing facilities multiple times over the last five years and has issued five Forms 483 that describe deficiencies in our manufacturing and quality systems, and we have made significant investments in addressing these issues; We may encounter manufacturing failures that could impede or delay commercial production of our products or product candidates, or the preclinical and clinical development or regulatory approval of our product candidates; We face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate; to date we have settled 18 product liability claims, and we currently have one suit pending; We have been subject to product recalls in the past, including recalls of Fentanyl TDS in 2008 and 2010, and may be subject to additional product recalls in the future; We face intense competition, in both our delivery systems and products, including from generic drug products; If we or our partners are unable to achieve and maintain adequate levels of coverage and reimbursement for our products, or any future products we may seek to commercialize, their commercial success may be severely hindered; The report of our independent registered public accounting firm on our 2013 financial statements contains a going concern modification, and we will need additional financing to execute our business plan, to fund our operations and to continue as a going concern; and Our principal stockholder has the ability to control our business, which may be disadvantageous. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Our Corporate Information We were incorporated in Michigan in 1995 as Corium Corporation and in 1996 as Converting Systems, Inc. In 2002, these companies were merged and re-named Corium International, Inc. and our place of incorporation changed to Delaware. Our principal executive offices are located at 235 Constitution Drive, Menlo Park, CA 94025, and our telephone number is (650) 298-8255. We have research and development operations and corporate offices in Menlo Park, California and pilot-scale and commercial-scale manufacturing facilities in Grand Rapids, Michigan. Our website address is www.coriumgroup.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. Investors should not rely on any such information in deciding whether to purchase our common stock. We have included our website address in this prospectus solely as an inactive textual reference. Unless the context indicates otherwise, as used in this prospectus, the terms "Corium," "we," "us" and "our" refer to Corium International, Inc., a Delaware corporation. We registered the trademarks "Corplex" and "MicroCor" in the United States, European Union, Canada, Australia and Japan as well as the Russian Federation and Madrid Protocol. The "Corium" logo and certain product names contained in this prospectus are our common law trademarks. This prospectus also includes references to trade names, trademarks and service marks of other entities, and those trade names, trademarks and service marks are the property of their respective owners. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Our fiscal year ends on September 30. Throughout this prospectus, references to "fiscal" refer to the years ended September 30. Emerging Growth Company We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the 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 revenues of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeded $700.0 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 during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 in this prospectus as the "JOBS Act" and references to "emerging growth company" shall have the meaning associated with it in the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's Discussion and Analysis of Financial Conditions and Results of Operations" disclosure; reduced disclosure about our executive compensation arrangements; no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 24, 2014 PRELIMINARY PROSPECTUS 5,500,000 Shares Corium International, Inc. Common Stock We are offering 5,500,000 shares of our common stock. This is our initial public offering of our common stock and no public market currently exists for our common stock. We expect the initial public offering price to be between $10.00 and $12.00 per share. We have applied to list our common stock on the NASDAQ Global Market under the symbol "CORI." We are an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public reporting requirements for this prospectus and future filings. Investing in our common stock involves risks. See "Risk Factors" beginning on page 13 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Table of Contents THE OFFERING Common stock offered by us 5,500,000 shares Common stock to be outstanding after our initial public offering 16,707,765 shares Option to purchase additional shares of common stock offered by us 825,000 shares Use of proceeds We expect that our net proceeds from the sale of the common stock that we are offering will be approximately $53.7 million, assuming an initial public offering price of $11.00 per share, which is the midpoint of the price range on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The principal purpose of this offering is to create a public market for our common stock. We intend to use the net proceeds to us from our initial public offering for Phase 2 clinical trials for MicroCor hPTH(1-34) and Corplex Tamsulosin; scale up of production capability for our MicroCor products; formulation and development of our proprietary Corplex products; advancement of our MicroCor technology; the repurchase of shares of common stock pursuant to the recapitalization described below; and working capital and other general corporate purposes. See "Use of Proceeds."
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+PROSPECTUS SUMMARY The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information you should consider before investing in the Shares. Before making any investment decision, you should read the entire Prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements. Royal Bakery and its Business Royal Bakery Holdings, Inc. ( we , us , Royal Bakery , or the Company ) is a bakery and caf franchisor and wholesaler of bakery and bistro products. We were incorporated in the State of Delaware on June 7, 2011. We incorporated a wholly owned California subsidiary corporation, Royal Bakery Sourcing and Trading Corp. ( RBSTC ), on August 20, 2013, as the operating company. Both Royal Bakery and RBSTC are currently located and operated at 405 Old County Road, Belmont, California. We earned $21,811 and $-0- revenues for the years ended December 31, 2013 and 2012, respectively, incurred net losses of $120,433 and $85,006 for the years ended December 31, 2013 and 2012, respectively, and had a cumulative deficit during the development stage of $220,493 at December 31, 2013. We earned $164,887 revenues, incurred net losses of $114,792 for the six months ended June 30, 2014, and had a cumulative deficit during the development stage of $335,285 at June 30, 2014. There are uncertain conditions we face relative to our ability to obtain capital, generate revenue, and generate profits and cash flows from operations. As a result of these conditions, our independent registered public accountants have raised substantial doubt about our ability to continue as a going concern. As of July 31, 2014, we had approximately, $70,690 of cash on hand. As we currently use approximately $20,000 more to operate our business than we derive in revenue monthly, this means that we will use all of our cash on hand in approximately four months unless we are able to decrease our expenses, increase our revenue or obtain additional debt or equity investments. Our franchisor business focuses on franchising bakeries and cafes serving Hong Kong style cuisine under the OVO brand. Since Royal Bakery was incorporated in 2011, we have spent $32,325 on applying for and obtaining a franchise registration in California. On October 3, 2012, we signed a sub-franchisor agreement with Egg Tart Caf United Holdings, LLC ( Egg Tart Caf ), a Delaware limited liability company that beneficially owns about 18% of our common stock. The Sub-Franchisor Agreement, which has a term of ten years, grants Egg Tart Caf an exclusive license to franchise bakeries and cafes under the OVO brand in North America and South America in exchange for payments totaling $50,000, a monthly royalty equal to thirty percent of all royalty proceeds Sub-franchisor receives from its unit franchises and one-time sub-franchise sign up fees ranging from $5,000 to $14,500, depending on the type of OVO brand business sub-franchised. We do not receive any sub-franchisee sign up fees until the aggregate of such fees exceeds the $50,000 sub-franchisor fee received from Egg Tart Caf . In January 2014, the first OVO branded food truck was opened as an Egg Tart Caf s sub-franchisee. In February 2014, the first OVO branded restaurant was opened as the Egg Tart Caf s sub-franchisee. As a result of these two openings, the $20,000 franchise fee that had been received from Egg Tart Caf in connection with the sub-franchise agreement and that we had previously deemed to be unearned income is now deemed to be earned income as well as the $30,000 which is to be received over the next two years, for a total of $50,000 to be recorded as income in January 2014. We have spent $55,333 to bring experienced Hong Kong Style cuisine chefs from Hong Kong to advise and share their recipes with Egg Tart Caf , our sub-franchisor and the parent company of our food supplier, so that Egg Tart Cafe can develop and provide Hong Kong style cuisine food to our brand specifications. We also generate revenues through the resale of the bakery and bistro products through RBSTC. We buy these products from Majestic Productions of Peninsula LLC, ( Majestic Production ), a food producer located in Belmont, California. Majestic Production is wholly-owned by Egg Tart Caf . Majestic Production produces the food products under the direct supervision of Egg Tart Caf . On September 1, 2013, we entered into a non-binding agreement with Majestic Production under which we agree to buy and Majestic Production agrees to sell us products at a 5% discount off the regular sales price at which Majestic Production would sell to other third parties. In the year ended December 31, 2013, we generated $21,811 of revenue through the resale of the bakery and bistro products, the cost of which was $23,229, of which $20,786 was purchased from Majestic Production. During the six months ended June 30, 2014, we generated $111,276 of revenue through the resale of the bakery and bistro products. We purchased these products from our affiliate Majestic Production at a cost $88,396 and from other unaffiliated vendors at a cost of $15,213. Potential Conflicts of Interest We have entered into agreements with different affiliates. We have no agreements or arrangements under which any conflict of interest arising between us and our affiliates will be resolved in the favor of one party or the other. Nevertheless, those members of management and shareholders who influence our affiliates could resolve any such conflicts or influence the terms of our arrangements and contracts in a way that favors their other interests at our expense. The agreements where conflicts of interest could arise involve : Egg Tart Caf . We entered into a sub-franchisor agreement with Egg Tart Caf , which owns about 18% of our common stock. As of July 31, 2014, there were 16 members of Egg Tart Caf . George Ma and Alvin Li are two of the four (4) managing members of Egg Tart Cafe. Alvin Li is the husband of Winnie Sze Wing Cheung. Winnie Sze Wing Cheung is one of the three members of the Board of our Company and is also the Chief Financial Officer of the Company. Alvin Li owns an 11.3% interest of Egg Tart Caf . At this time, George Ma has directly invested in our Company. George Ma owns 1% of our Company. Majestic Production. Majestic Production is a wholly-owned subsidiary of Egg Tart Caf . We have entered into a contract with Majestic Production, to produce and provide the foods, beverages and pastries to Egg Tart Caf s sub-franchisees and affiliates and for resale to third parties. The above mentioned members of management and shareholders could influence the terms of our arrangements and contracts with Egg Tart Caf and Majestic Production in a way that favors their interests at our expense. Hongry Kong. In the year ended December 31, 2013 and as of December 31, 2013, we had sales of food products of $21,811 at a 6.1% markdown to the cost of such food products to, and a receivable of $532 for, Aw2gether LLC (d/b/a Hongry Kong), which is majority-owned by Nikki Ma, our Secretary, COO and a Director. In the six months ended June 30, 2014 and as of June 30, 2014, we had sales of food products of $29,357 at a 5.0% markup to the cost of such food products, and a receivable of $8,048 for, Hongry Kong. We intend to continue selling food products to Hongry Kong. Eunik Investment. We engaged Eunik Investment, an entity that is majority-owned by Nikki Ma, our Secretary, COO and a Director, to provide consultant services of $30,000 during the year ended December 31, 2012 and had a payable of $9,000 to this entity as of December 31, 2012. The Company does not currently have a consultancy arrangement with Eunik Investment. Ovo Caf , Inc. entered into an agreement with our sub-franchisor, Egg Tart Caf , to open its own Ovo food truck which was subsequently opened in mid January 2014. Ovo Caf , Inc. entered into another agreement with our sub-franchisor to open an OVO restaurant which was subsequently opened in February 2014. Both agreements were signed by Ms. Winnie Sze Wing Cheung on behalf of Ovo Caf , Inc. Ovo Caf , Inc. is 9.4% owned by Winnie Sze Wing Cheung, one of our directors and our Chief Financial Officer, 9.4% by Tommy Cheung, one of our directors and our Chief Executive Officer, and 18.8% owned by Yam Ming Chong and Yue Kwan Chong, two individual major shareholders of the Company. In the six months ended June 30, 2014 and as of June 30, 2014, we had sales of food products of $81,918 at a 8.2% markup to the cost of such food products, and a receivable of $39,926 for, Ovo Caf , Inc. 1186 Limited. We entered a consulting agreement with 1186 Limited, a Hong Kong entity that is owned by Yam Ming Chong and Yue Kwan Chong, on March 18, 2014. 1186 Limited will advise the Company on operating a Hong Kong style food and beverage business whenever the Company requests such services in exchange for a fee of $100 per hour (with a minimum of 8 hours per training session). This agreement terminates on December 31, 2015. Yam Ming Chong and Yue Kwan Chong together own 36.7% of the Company s common stock. Yam Ming Chong and Yue Kwan Chong are father and son. Management We have three officers. Tommy Yu Yan Cheung, is our Chief Executive Officer and the Chairman of our Board of Directors. Mr. Cheung has been in the food and beverage industry for over 30 years and is currently a member of the Legislative Council of Hong Kong representing the catering industry in functional constituencies seats. Mr. Cheung currently intends to dedicate approximately 10 hours a week to our business. Ms. Winnie Sze Wing Cheung is our Chief Financial Officer. Ms. Cheung graduated at the University of South Australia majoring in Business Computing. Ms. Cheung holds several directorships in several private companies in the United States, Hong Kong, and China engaged primarily in production and marketing. Ms. Cheung currently intends to dedicate approximately 15 hours a week to our business. Ms. Nikki Ma is our Secretary. Ms. Ma holds a Bachelor's Degree in Marketing from San Francisco State University. In January 2012, Ms. Ma started Aw2gether LLC, specializing in the mobile food catering industry. Ms. Ma currently intends to dedicate approximately 35 hours a week to our business. Both Mr. Tommy Yu Yan Cheung and Ms. Winnie Sze Wing Cheung currently reside in Hong Kong. They telecommunicate with Ms. Nikki Ma on a weekly basis. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT No. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ROYAL BAKERY HOLDINGS, INC. (Name of Issuer in Its Charter) Delaware (State or other jurisdiction of incorporation) 5812 45-2509555 (Primary Standard Industrial Classification Code Number) (IRS Employer Identification No.) Royal Bakery Holdings, Inc. 405 Old County Rd. Belmont, CA 94002 (650) 530-0368 (Address including zip code, and telephone number, including area code, of registrant s principal executive offices) Paracorp Inc. 2804 Gateway Oaks Drive Suite 200 Sacramento, CA 95833 (800) 533-7272 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: William S. Rosenstadt Sanders Ortoli Vaughn-Flam Rosenstadt LLP 501 Madison Avenue 14th Floor New York, NY 10022 Telephone: 212-588-0022 Fax: 212-826-9307 As soon as practicable after this registration statement becomes effective. Approximate date of commencement of proposed sale to the public If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x
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+PROSPECTUS SUMMARY 1
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+Prospectus Summary 5
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001595065_autovative_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001595065_autovative_prospectus_summary.txt
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+PROSPECTUS SUMMARY Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. You should read the following summary together with the more detailed information about our company and the common stock being registered in this offering and our financial statements and the notes to those statements included elsewhere in this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account References in this prospectus to "we," "our," "us", "Autovative" and the "Company" refer to AUTOVATIVE TECHNOLOGIES, INC. Organizational History Autovative Technologies, Inc. ("ATI") was incorporated under the laws of the State of Nevada on December 10, 2012. Autovative Technologies was a wholly owned subsidiary of Autovative Products, Inc. ("API"), a publicly traded Nevada corporation. On December 31, 2012, the Company created a wholly owned subsidiary, Autovative Products, Inc., in the State of Montana. A transaction closed on July 30, 2013 in which David Funderburk acquired 100,000 restricted shares of Autovative Technologies, Inc. from it's Predecessor, Autovative Products, Inc. At that time the shares acquired by David Funderburk constituted all of the issued and outstanding shares of Autovative Products, Inc's subsidiary, Autovative Technologies, Inc. On August 14, 2013 a total of 135,798 restricted shares of stock of Autovative Technologies, Inc., the Registrant in these S-1 and S-1/A filings were issued to 33 shareholders of its Predecessor, Autovative Products, Inc. on a pro rata basis, based upon the number of shares of Autovative Products, Inc.(the Predeccessor) at the time of closing. ATI was formed to develop businesses, assets and opportunities, some acquired and contributed from third parties and our founding shareholders, in the trucking/automobile special parts production and distribution industry and some related fields. ATI is a specialty distribution company of fleet truck products. Currently the Company has exclusive distribution rights with both FedEx (Federal Express) and UPS (United Postal Service) for its Portable Tow Truck Units. The audited financial statements of Autovative Products, Inc., (our former parent "Predecessor") as of December 31, 2012 are included to present the operations for the Predecessor periods. Introduction Autovative Technologies, Inc. is a distributor of automotive specialty parts. We have developed and produced two products for both automobile and fleet uses. We are resellers of OTW Enterprises LLC's Portable Tow Truck pursuant to a marketing/sales agreement, a traction aid which has been successful in helping drivers get their vehicles unstuck from snow, ice, mud and sand; and the Overhead Door Saver, a heavy-duty spring device for use in fleets of trucks with overhead doors. It cushions the shock of constant door openings which we believe will reduce overhead door repairs. Currently the majority of our products sold are to FedEx (Federal Express) and UPS (United Postal Service) for use with their trucking fleets. Our products do not have patent protection nor do we have any trademarks or copyrights on our products. Company Assets The Company's principal assets ("Assets") consist of cash. All of the Company's income to date has been generated from sales of its Portable Tow Truck product to FedEx and UPS for use with their trucking fleets. It is management's opinion that based on the assets it has, including cash, contracts, future revenue streams, rights and certain business concepts it may not be able to adequately capitalize the Company for the next twelve (12) months. Based on current cash, without additional cash the Company would run out of funds in 10 months. (See "Company Cash Flow" Page 5). There is no guarantee that we will be able to increase our revenue streams. Currently only commissions have been paid and are currently being paid for sales made. However it is also of the opinion of management that without additional funding to the Company we may not be able to pay the additional expenses necessary to continue as a going concern or to pay the expenses of being a public Company which by themselves are and could be substantial. There are no plans in place for additional funding. Our President, David Funderburk, has indicated that although he has no obligation to pay any expenses of the Company, he would pay for any and all expenses incurred by the Company until such time that the Company is able to generate sufficient revenues to repay any loans he might make to the Company and to pay ongoing expenses. However there is no guarantee that David Funderburk would continue to pay for expenses for the company in the future. At this time no loans have been made by David Funderburk and there is no loan agreement in place between the Company and its President, David Funderburk. In addition our auditor has stated in his audit of the Company's financial statements that we have not generated significant revenues or profits to date which raises substantial doubt as to our ability to continue as a going concern. Company Cash Flow The Company has cash assets derived from its distribution of its products and a private placement of its stock. Assuming the Company does not generate any income from its products it believes it may have sufficient cash to operate for the next 10 months based on current cash; however with the added expense of being a public company it is likely that we will not be able to pay additional expenses without additional funding. Currently there are no plans in place for additional funding. The Company's overhead is currently paid for by its President, David Funderburk. In the future without his capital infusion it is possible that the Company would have no money with which to operate and there is no guarantee that David Funderburk would continue to pay for expenses for the company in the future. As of September 30, 2013 the Company had cash of $81,362. As of December 31, 2013 the Company had cash of $40,080. The Company has elected to pay its President $2,500 per month in salary beginning in September 2013. Based on $8,000 in advertising expenses for the year end and the $2,689 in office expenses and projected salary of $2,500 and projected professional expenses of $6,000 within the next 5 months the Company's average burn rate equates to $3,991 per month (annualized) (excludes commissions which are only paid after revenue is received from sales; and, depreciation and professional fees which to date have been associated with the preparation of the S-1 filing). Without additional cash the Company would run out of funds in approximately 10 months. From its inception the Company's primary business activity was to aid in the manufacturing process of its products and to create sales in the larger trucking fleets, complete a private placement of some of its common shares, establish its web site, progress sales of its products and conduct an audit and assist legal counsel and others in the preparation and drafting of this Registration Statement. Losses The Company had a net loss of $6,328 from inception (December 10, 2012) through year end September 30, 2013 and net income of $7,669 for the period ended December 31, 2013. Aggregate Market Price of Common Stock The balance of total stockholders' equity at the most recent balance sheet date was $50,440. The aggregate market price of our common stock based on the proposed offering price of $1.00 using the most recent balance sheet date is $6,789,298 Future Assets and Growth We will continue to generate limited future income from our assets; however, we cannot provide absolute assurances or estimates of these revenues. The Company had net losses in its initial nine months, and the Company anticipates it may operate at a deficit for its next fiscal year and may expend most of its available capital. The Company's current cash on hand is, primarily, budgeted to cover the anticipated costs of its administrative overhead and costs associated with developing and operating the businesses going forward including costs for legal, accounting and transfer agent services. We believe that the Company will have sufficient capital to operate its business over the next ten months based on its current cash. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from our existing assets will be adequate to maintain our businesses. The automotive industry as a whole is an extremely competitive industry dominated by many very large, fully integrated conglomerates. The Company is building its business model cognizant of these market realities and management will be attempting to use and capitalize upon the internet and website development to deliver and market its products. Our business model is predicated on the assumption that we can continue to generate revenue from the Portable Tow Truck and that we will generate revenue from Overhead Door Saver and from additional products we hope to distribute in the future. There are no additional products currently that we anticipate adding to our product lines and currently there is no specific timeline to add such products. There is no guarantee that we will continue to generate revenue from the Portable Tow Truck and that we will generate revenue from Overhead Door Saver and from products we might distribute over the next fiscal year; or, that we can successfully manage our costs by capitalizing on business developments and our management. There is no guarantee that we will be able to increase our revenue streams. Although we generated losses for the last year of operation and anticipate we may lose money in the current fiscal year we believe that our Business Strategy combined with raising additional capital will place us in a position to increase our revenue streams. Based on the assumption that we will be able to raise additional capital we have projected that we would need a minimum of $41,000 to reach the goals of our Business Strategy and an optimum of $166,000. (See "Business Strategy" page 17). At this time there is no plan in place to raise additional capital nor is their any assurance that we will be able to raise additional capital. The Company's primary manager, its President, Mr. Funderburk, has operated the Company for the last year. Mr. Funderburk operated its previous parent Company, Autovative Products, Inc. (a Nevada corporation) since its inception in 2005; and operated its previous parent Company, Autovative Products, Inc. (a Nevada Corporation) as a public entity since January 12, 2012 when its S-1 Registration statement became effective. Outside of the operations of the previous parent Company, Mr. Funderburk has no experience or expertise in operating a public company. Until such time as the Company is more established and capitalized, we will not be able to employ any personnel on a full time basis. FOUNDING SHAREHOLDERS The following individuals and entities are considered founding shareholders of our Company. Class Name Shares Percentage Common David Funderburk (1) 6,320,000 93% (1) Mr. David Funderburk, our sole officer and a director and hereafter referred to as "President" where applicable, is the operating manager of Autovative Technologies, Inc. Terms of the Offering The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. The offering price of $1.00 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be liquid and registered. $1.00 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001595217_greenscape_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001595217_greenscape_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this Prospectus and does not contain all of the information you should consider in making your investment decision. Before investing in the securities offered hereby, you should read the entire Prospectus, including our consolidated financial statements and related notes included in this Prospectus and the information set forth under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. As used in this prospectus, references to the Company, we, our, us, Greenscape Laboratories, or GL refer to Greenscape Laboratories, Inc., a Wyoming Corporation, unless the context otherwise indicates. You should carefully read all information in the prospectus, including the financial statements and their explanatory notes beginning at page F-1 prior to making an investment decision. Summary of the Company Organization Greenscape Laboratories was incorporated in Wyoming in December 2012 by James R.J. Scheltema and Alexander Scheltema for the purpose of providing advanced assistance in associated organic vegetable and other consumable produce testing. In connection with the organization of the Company, Mr. James Scheltema, the incorporator, issued 100,000 shares of the Company s common stock to himself for services rendered in connection with the organization and incorporation of the Company. On October 30, 2012, Mr. James Scheltema, acting as the incorporator of the Company, appointed himself, Alexander Scheltema, and Loretta Moss as directors of the Company. On December 15, 2013, the Board of Directors appointed the following officers of the Company to the following positions: James R.J. Scheltema as President, Chief Financial Officer and Chief Executive Officer; and; Alexander Scheltema as Chief Operating Officer. On December 17, 2013, the Company issued thirty-nine million nine hundred thousand (39,900,000) shares of common stock to James R. J. Scheltema, ten million (10,000,000) shares of common stock to Alexander M. Scheltema, ten million (10,000,000) shares of common stock to Cynthia A. Scheltema, two million (2,000,000) shares of common stock to Loretta Moss and two hundred fifty thousand shares (250,000) to a third party contractor in connection with the incorporation of the Company and for services provided to the Company since its incorporation. Subsequently on December 19, 2013, the Company issued 36,152,718 shares of the Company s restricted common stock to HD Retail Solutions, Inc. ( HDRE ), in exchange for 1,000,000 shares of HDRE Series A Preferred Stock. This transaction is discussed in more detail below in the section Structure of the Distribution Transaction. Our Website is at: http://GreenscapeLaboratories.com. The URL of our website is included herein as an inactive textual reference. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this Prospectus or the registration statement of which it is a part. Business of the Company The purpose of the Company will be to test, sample, and analyze organic products to test for the presence of pesticides, chemical pollutants and other non-soil contaminants in such organic products and compile a proprietary database for expected results within the United States. Management seeks to operate the Company using its testing equipment. The Company will seek to acquire additional assets in a manner that permits the business to grow. The Company plans to charge for its testing services, both on a per-test basis, and as bundled tests, at rates that are competitive in the industry for similar testing services. Management anticipates that the Company will begin providing testing services in the second quarter of 2014. Greenscape previously acquired the equipment necessary to begin offering its testing services, described in more detail below. As noted below, Management is working to commence operations. Management recognizes that marketing Greenscape s testing abilities will be crucial, especially at the initial stages of Greenscape s development. Greenscape s initial marketing will be directed towards smaller and mid-level producers which may not be getting the individualized attention that they desire from larger market participants. Management intends initially to focus on internet marketing, and as of the date of this Prospectus was in negotiations with an internet marketing consultant about the most efficient way to connect with potential clients and customers in the organic growing industry. Greenscape also plans to solicit business from members and associated businesses involved with various trade organizations and other national organizations, where Greenscape can be exposed to large numbers of participants in the organic industry. It is Greenscape s hope that becoming involved in key organizations at the grass-roots level, and word of mouth and strategic advertising in newsletters will specifically target the intended market. Management believes that participation with these types of organizations will assist the Company in gaining visibility within the market and with smaller growers and producers. The company also plans to market at the state and local level, initially in Washington State and the Pacific Northwest. Accomplished Objectives As of the date of this Prospectus, the Company had completed and accomplished the following objectives: Incorporated as Greenscape Laboratories, Inc. in Wyoming on December 18, 2012. Appointed officers and directors and negotiated compensation. Acquisition of laboratory equipment appropriate to our proposed procedures of organic testing. Retained professional advisors to assist in going public to position the Company to be better able to raise adequate capital for company operations. Future Objectives As of the date of this Prospectus, Management of the Company had set initial objectives and strategic plans relating to the initial business operations of the Company. These objectives include the following: To develop reliable consumable organics testing services for individuals and businesses to better inform the Company s customers about the contents of their produce and consummable goods. To promote high quality standards and consistency in the agricultural setting, and to encourage and incentivize producers to use natural alternatives to chemical pollutants (insecticides, pesticides, etc.). To develop better safety regulation and transparency in the food the public eats and the goods they consume, through the active promotion of the organic growing style and pesticide testing. The Company will work to accomplish these objectives and strategies, but there can be no guarantee as to when the Company will be able to meet these objectives. Future Plans and Strategies Once Greenscape has established a stable client base within the initial product and service offerings discussed above, the Company plans to expand into the following areas: GL Research & Analytics Management anticipates that the Company will provide comprehensive and innovative research and analytics products and services to all industry participants, related industries and governments. The Company plans to produce and provide information to the Company s clients through the Company s compiling of various results in a proprietary database, which can be sorted by a variety of factors, e.g., type of plant, annual precipitation, etc. and is keyed to the region in which the materials tested were grown. GL Consulting Services Management also anticipates that the Company will provide potential organic alternative solutions to issues relating to problems associated with pest control, fungus and diseases. As of the date of this Prospectus, Management had not entered into any definitive agreements relating to the expansion into the areas of research and analytics or consulting services. Management intends to explore these new business areas as the Company s financial position allows, as determined by Management. Business As noted above, James R.J. Scheltema and Alexander Scheltema founded the Company for the purpose of providing advanced assistance in associated organic vegetable and other consumable produce testing. Management believes that organic vegetable testing is extremely important both in governmental standards and safety of consumable products. Management believes that the Company will be able to bridge the gap in the scientific field to identify with greater particularity chemical pollutants, and other non-organic soil contaminants, thereby better insuring safe products for consumption. Greenscape Laboratories plans to accomplish this by testing for contaminants listed by the FDA and USDA in their guidelines as to the definition of what makes a consumable good organic. The Company s controlled testing facilities will provide results, marketed by the Company under the label Certified Testing Solutions to establish and maintain higher regulation and safety in food and consumable products. Because the Company does not have a USDA organic license, it cannot certify any products tested as USDA Organic. However, the Company will be able to determine, and will certify to its clients and customers, whether products tested would pass the test for USDA Organic certification. Management believes that the distinguishing characteristics of our business will be the combination of unique and specific scientific experience along with knowledge of both the science and industry behind plant sciences, agriculture, and laboratory prowess. The Company intends to pursue the development of a fixed customer base providing a reliable revenue stream from which it will expand. If the Company is unable to secure these opportunities, or if the Company is not able to secure funding to implement its business plans and strategies, the Company may be forced to scale back or cease operations. Company Assets As of the date of this prospectus, the Company s assets included equipment which will be used for comprehensive collection of prerequisite gas chromatography required to provide analysis and results for testing organic products for the presence of toxins and non-organic materials. Such equipment includes GBC/Spectra-Physics HPLC System, and a Pharmacia GeneQuant Pro Spectrophotometer and associated disposable laboratory supplies necessary for conducting tests. The Company s assets are discussed in greater detail below in the section Description of the Business. Mission Management anticipates that Greenscape Laboratories will fill a necessary niche by providing precision testing and organic determination for consumable goods.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001596126_dance_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001596126_dance_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001596448_maxima_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001596448_maxima_prospectus_summary.txt
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+PROSPECTUS SUMMARY AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US," "OUR," AND "MAXIMA GROUP INC." REFERS TO MAXIMA GROUP INC. BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. GENERAL INFORMATION ABOUT THE COMPANY We were incorporated in Nevada on May 24, 2013. We are a development stage company that was formed to offer personal fitness training via our web cite. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business" and "Use of Proceeds" elsewhere in this Prospectus). Our principal executive offices are located at 2360 Corporate Circle, Suite 400, Henderson NV 89074. Our phone number is (775) 461-5052 From inception until the date of this filing, we have had very limited operating activities. Our financial statements from inception (May 24, 2013) through November 30, 2013, reports no revenues and a net loss of $644. Our independent registered public accounting firm has issued an audit opinion for Maxima Group Inc. which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our President, Germans Salihovs, will offer shares of our common stock to his friends, family members and business associates. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY As a company with less than $1.0 billion in revenue during its last fiscal year, we qualify as an "emerging growth company" as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. These provisions include: * a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis included in an initial public offering registration statement; * an exemption to provide less than five years of selected financial data in an initial public offering registration statement; * an exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal controls over financial reporting; * an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; * an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; and * reduced disclosure about the emerging growth company's executive compensation arrangements. An emerging growth company is also exempt from Section 404(b) of Sarbanes Oxley which requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. Similarly, as a Smaller Reporting Company we are exempt from Section 404(b) of the Sarbanes-Oxley Act and our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until such time as we cease being a Smaller Reporting Company. As an emerging growth company, we are exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. Section 107 of the JOBS Act 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 have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We would cease to be an emerging growth company upon the earliest of: * the first fiscal year following the fifth anniversary of this offering; * the first fiscal year after our annual gross revenues are $1 billion or more; * the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or * as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. THE OFFERING The Issuer: Maxima Group Inc. Securities Being Offered: 5,000,000 shares of common stock. Price Per Share: $0.02 Duration of the Offering: The offering shall terminate on the earlier of (i) the date when the sale of all 5,000,000 common shares is completed; (ii) one year from the date of this prospectus; or (iii) prior to one year at the sole determination of our director Mr.Salihovs. Gross Proceeds $100,000 Securities Issued and Outstanding: There are 5,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held solely by our President and Secretary, Germans Salihovs. Subscriptions: All subscriptions once accepted by us are irrevocable. Registration Costs: We estimate our total offering registration costs to be approximately $9,700. Risk Factors: See "Risk Factors" and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from May 24, 2013 (Inception) to November 30, 2013. FINANCIAL SUMMARY As of November 30, 2013 ($) --------------------- Cash and Deposits 5,055 Total Assets 5,055 Total Liabilities 699 Total Stockholder's Equity 4,356 STATEMENT OF OPERATIONS Accumulated From May 24, 2013 (Inception) to November 30, 2013 ($) --------------------- Total Expenses 644 Net Loss for the Period (644) Net Loss per Share --
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001596856_leju_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001596856_leju_prospectus_summary.txt
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+PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to buy our ADSs. Our Business We are a leading online-to-offline, or O2O, real estate services provider in China. We offer real estate e-commerce, online advertising and online listing services through our online platform, which comprises local websites covering over 250 cities and various mobile applications. We integrate our online platform with complementary offline services to facilitate residential property transactions. In addition to our own websites, we also operate various real estate and home furnishing websites of SINA Corporation, or SINA, and Baidu Inc., or Baidu. E-Commerce. We offer e-commerce services primarily in connection with new residential property sales. Our O2O services for new residential properties include selling discount coupons and facilitating online property viewing, physical property visits and pre-sale customer support. We earn revenue primarily from the sale of discount coupons used for property purchases. Online Advertising. We sell advertising primarily on the SINA and Baidu new residential properties and home furnishing websites, each of which is operated by us. In addition, we are the exclusive advertising agent for the SINA home page and non-real estate websites with respect to advertising sold to real estate and home furnishing advertisers. We also have the exclusive right to sell Baidu's Brand-Link product for real estate related advertising. Listing. We offer fee-based online property listing services to real estate agents and free services to individual property sellers. We operate the SINA and Baidu real estate websites for listings of existing residential properties for sale or lease. We have experienced substantial growth in recent years. Our total revenues have increased from $137.1 million in 2011 to $171.3 million in 2012 and to $335.4 million in 2013. We incurred net losses of $438.3 million in 2011 and $43.8 million in 2012 and generated net income of $42.7 million in 2013. We had adjusted net income of $11.6 million in 2011, adjusted net loss of $9.6 million in 2012 and adjusted net income of $63.4 million in 2013. Substantially all of our operations are in China. For information regarding adjusted net income (loss), see " Summary Consolidated Financial Data Non-GAAP Financial Measures." Our Industry Real estate developers in China increasingly rely on online advertising to gain exposure to consumers. According to iResearch Consulting Group, or iResearch, a third-party market research firm, online advertising spending in China related to the real estate industry grew from approximately RMB0.8 billion in 2009 to RMB3.0 billion in 2012, representing a compound annual growth rate, or CAGR, of 53.6%. Historically, there were limited sources of comprehensive information on China's real estate market conveniently accessible by buyers, developers and other principal industry participants. However, technology is changing the way that consumers search for homes and real estate developers market new projects. Real estate information websites attract developers and sellers to list their properties online to gain maximum exposure to buyers, while buyers and agents are attracted to search for properties on these websites due to the vast amounts of information and services available, complemented by the ability to tailor search preferences. Amendment No. 6 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents As internet access and functionality improve, more and more consumers in China are purchasing products and services online. The growing population of paying users and greater spending per paying user in China is expected to drive growth in the e-commerce sector in China from RMB1.9 trillion in 2013 to RMB3.6 trillion in 2016, representing a projected CAGR of 24.8%, according to iResearch. Total online retail gross merchandise value, or GMV, in China as a percentage of total consumer spending in China is estimated to reach 10.8% in 2016 from 7.7% in 2013. In today's market, an effective combination of online information and marketing with strong offline services and transaction support is crucial to a successful e-commerce platform. O2O real estate services integrate online information and marketing with offline promotion and transaction support. On the online side, O2O real estate services offer a vast amount of internet user information and marketing tools to real estate industry players, while potential buyers have access to accurate property purchasing information and services, benefits such as discounts, and a reliable transaction platform. On the offline side, O2O real estate services include sales of discount coupons to potential property purchasers, co-ordination of property and showroom visits, property inspections and ratings issued by reliable third parties, as well as on-site transaction support. Competitive Strengths Our key competitive strengths include the following: pioneer in China's O2O real estate services industry; comprehensive online real estate platform attracting customers from major internet entry points in China; scalable business model with high operating efficiency; nationwide geographic coverage with strong local presence, coupled with extensive membership base; and experienced and motivated management team. Our Strategies We seek to maintain and strengthen our position as a leading O2O real estate services provider in China by pursuing the following strategies: continue to innovate through new service offerings; expand strategic partnerships with leading internet companies; further enhance our mobile applications; strategically strengthen our geographic coverage; and continue to attract and retain talent. Our Challenges Our ability to execute our strategies is subject to risks and uncertainties, including: fluctuations in China's real estate market; the highly regulated nature of, and government measures affecting, the real estate and internet industries in China; our ability to compete successfully against current and future competitors; Leju Holdings Limited (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Cayman Islands (State or other jurisdiction of incorporation or organization) 7380 (Primary Standard Industrial Classification Code Number) Not Applicable (I.R.S. Employer Identification Number) 15/F Floor, Shoudong International Plaza, No. 5 Building, Guangqu Home Dongcheng District, Beijing 100022 People's Republic of China +86 10 5895 1000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Law Debenture Corporate Services Inc. 400 Madison Avenue, 4th Floor New York, New York 10017 +1 (212) 750-6474 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents our ability to continue to develop and expand our content, service offerings and features, and to develop or incorporate the technologies that support them; our limited operating history and lack of experience as a stand-alone public company, given our recent carve-out from our parent company E-House and prior reliance on E-House for various corporate services; our reliance on SINA, Baidu and others with which we have developed, or may develop in the future, strategic partnerships; substantial revenue contribution from a limited number of real estate markets, including Beijing, Shanghai, Guangzhou and Tianjin; complexities resulting from our ongoing relationships with E-House, such as potential conflicts of interest, less favorable terms in agreements with related parties and lack of control of the outcomes of shareholder actions, due to E-House's controlling ownership in our company; effectiveness of our contractual arrangements in providing operational control over our consolidated VIEs in China; and our ability to receive distributions from, and to make loans to, and direct investments in, our operating entities in China. Please see "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face. Corporate History and Structure Leju Holdings Limited was incorporated as our holding company in November 2013 by our parent company, E-House, a leading real estate services company in China listed on the NYSE. E-House will remain our parent company and controlling shareholder after this offering. Substantially all of our operations are conducted through the PRC subsidiaries and consolidated VIEs under China Online Housing Technology Corporation, or China Online Housing, Omnigold Holdings Limited, or Omnigold, China E-Real Estate Holdings Limited, or E-Real, and E-House China (Tianjin) Holdings Limited, or E-House Tianjin, each of which became our subsidiary in December 2013 as part of a restructuring by E-House. China Online Housing was incorporated as a joint venture of SINA and E-House in 2008 to operate the SINA real estate and home furnishing websites and related business, including online advertising services. China Online Housing became a consolidated subsidiary of E-House in 2009 and a wholly owned subsidiary of E-House in 2012. Omnigold was incorporated by E-House in October 2010 to operate the home furnishing services business and is currently 84% owned by us. E-Real and E-House Tianjin were incorporated by E-House in June 2011 and March 2012, respectively, and are wholly owned by us. E-Real was incorporated to operate the real estate e-commerce business. E-House Tianjin supports our real estate e-commerce business. Due to PRC legal restrictions on foreign ownership and investment in the internet information services and advertising businesses, we conduct such activities through contractual arrangements with our consolidated VIEs in China. Our e-commerce business with respect to new residential properties is operated through our contractual arrangements with Shanghai Yi Xin and its shareholders. Our e-commerce business with respect to home furnishing is operated through our contractual arrangements with Beijing Jiajujiu and its shareholders. Our online advertising business for new residential properties websites and our secondary listings business are operated through our contractual arrangements with Beijing Leju and its shareholders. We have entered into, through our PRC subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng, a series of contractual arrangements with Beijing Leju, Shanghai Yi Xin, Beijing Jiajujiu and their respective shareholders. These contractual arrangements enable us to (i) direct the activities that most significantly affect the economic performance of Beijing Copies to: Z. Julie Gao, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong +852 3740-4700 David J. Johnson, Jr., Esq. O'Melveny & Myers 31 Floor, AIA Central 1 Connaught Road, Central Hong Kong +852 3512-2300 David Roberts, Esq. Ke Geng, Esq. O'Melveny & Myers LLP Yin Tai Centre, Office Tower, 37th Floor No. 2 Jianguomenwai Ave. Chao Yang District Beijing 100022 People's Republic of China +86-10-6563-4200 Table of Contents Leju, Shanghai Yi Xin, Beijing Jiajujiu and their subsidiaries and branches; (ii) receive substantially all of the economic benefits from the three consolidated VIEs and their subsidiaries in consideration for the services provided by our PRC subsidiaries; and (iii) have an exclusive option to purchase all or part of the equity interests in the consolidated VIEs, when and to the extent permitted by PRC law, or request any existing shareholder of the consolidated VIEs to transfer all or part of the equity interest in the consolidated VIEs to another PRC person or entity designated by us at any time in our discretion. These agreements make us their "primary beneficiary" for accounting purposes under accounting principles generally accepted in the Unites States of America, or U.S. GAAP. For descriptions of these contractual arrangements, see "Related Party Transactions Contractual Arrangements with Beijing Leju, Shanghai Yi Xin and Beijing Jiajujiu (the consolidated VIEs)." As a result of these contractual arrangements, Leju Holdings Limited, through PRC subsidiaries, is the primary beneficiary of these PRC entities and accounts for them as VIEs, and consolidates the financial results of these entities into our financial statements in accordance with U.S. GAAP. If our consolidated VIEs and their shareholders fail to perform their obligations under these contractual arrangements, we could be limited in our ability to exercise effective control over our consolidated VIEs. Further, if we are unable to maintain effective control over our consolidated VIEs, we would not be able to continue to consolidate our consolidated VIEs' financial results in our consolidated financial statements. We rely on dividends and service fees paid to us by our PRC subsidiaries and our consolidated VIEs in China. Entities apart from our consolidated VIEs contributed in aggregate 15.1%, 4.7% and 5.7% of our total net revenues in 2011, 2012 and 2013, respectively. Our operations not conducted through contractual arrangements with the consolidated VIEs primarily consist of outsourcing arrangements business, support services for online advertising business and agency services included with our e-commerce business. In 2011, 2012 and 2013, the total amount of service fees that our PRC subsidiaries received from our consolidated VIEs under all the service agreements between our PRC subsidiaries and consolidated VIEs was $16.1 million, $7.6 million and $24.5 million, respectively. As of December 31, 2013, the amount of service fees payable to us by the consolidated VIEs was $48.1 million, of which $22.5 million has been paid to us during the first two months of 2014. We are subject to foreign exchange control restrictions and restrictions on foreign investment into our PRC subsidiaries and consolidated VIEs, and the payment of dividends by our PRC subsidiaries to our Cayman holding company is subject to certain restrictions under the PRC laws and regulations, all of which may restrict our ability to access the revenues and cash of our PRC subsidiaries and consolidated VIEs. For a description of these contractual arrangements and certain related risks, see "Related Party Transactions Contractual Arrangements with Beijing Leju, Shanghai Yi Xin and Beijing Jiajujiu (the consolidated VIEs)" and "Risk Factors Risks Related to Our Corporate Structure." Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement. Notes: (1)Beijing Yisheng Leju Information Services Co., Ltd., or Beijing Leju, is a VIE established in China in 2008 and is 80% owned by Mr. Xudong Zhu and 20% owned by Mr. Zuyu Ding, and each of Shanghai Yi Xin E-Commerce Co., Ltd., or Shanghai Yi Xin and Beijing Jiajujiu E-Commerce Co., Ltd., or Beijing Jiajujiu is a VIE established in China in 2011 and is 70% owned by Mr. Zuyu Ding and 30% owned by Mr. Weijie Ma. We effectively control Beijing Leju, Shanghai Yi Xin and Beijing Jiajujiu through contractual arrangements. See "Related Party Transactions Contractual Arrangements with Beijing Leju, Shanghai Yi Xin and Beijing Jiajujiu (the consolidated VIEs)." (2)The registered business scope of each of Shanghai Yi Yue Information Technology Co., Ltd., or Shanghai Yi Yue, Shanghai Xiangle Information Technology Limited, or Shanghai Xiangle, Shanghai SINA Leju Information Technology Co., Ltd., or Shanghai SINA Leju, Shanghai Fangxin Information Technology Co., Ltd., or Shanghai Fangxin, and Beijing Maiteng Fengshun Science and Technology Co., Ltd., or Beijing Maiteng contains the business of development of computer software which falls in the encouraged category for foreign investment in the Foreign Investment Industrial Guidance Catalogue. The registered business scope of each of E-House City Rehouse Real Estate Broker (Shanghai) Co., Ltd., or City Rehouse, and all its subsidiaries contains the business of real estate brokerage service which falls in the restricted category for foreign investment in the Foreign Investment Industrial Guidance Catalogue. Under PRC law, foreign investors are allowed to own 100% of PRC subsidiaries with a registered business scope which includes real estate brokerage services so long as they obtain necessary approval from the relevant government authorities. Currently, City Rehouse and all its subsidiaries provide supporting services to our e-commerce business and no longer provide any secondary real estate brokerage services. The other businesses listed in the registered business scope of each of Shanghai Yi Yue, Shanghai Xiangle, Shanghai SINA Leju, Shanghai Fangxin, Beijing Maiteng, and City Rehouse and all its subsidiaries are not listed in the Foreign Investment Industrial Guidance Catalogue and thus fall in the permitted category for foreign investment under PRC law. (3)We are in the process of deregistering Shanghai Xiangle. 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. Table of Contents Recent Developments On March 10, 2014, we entered into a strategic cooperation agreement with Tencent, a provider of comprehensive internet services serving the largest online community in China. Pursuant to the strategic cooperation agreement, we and Tencent have agreed to jointly develop software and tools for use on Tencent's social communication platform, Weixin, to facilitate our opening of Weixin public accounts associated with real estate projects, which we believe will provide real estate information to Weixin users, enable us to better connect with our users through such accounts and expand payment solutions provided to users. We have agreed to adopt Weixin payment solutions as the default payment method for real estate O2O e-commerce transactions conducted by our users on Weixin. We and Tencent have also agreed to explore and pursue additional opportunities for potential cooperation, including but not limited to cooperation involving Tencent's social communications platform, including Weixin, "QQ" and "mobile QQ;" the social media service, "Tencent Weibo;" the social networking service, "Qzone;" and/or certain other Tencent wholly-owned internet properties in China. On March 21, 2014, we entered into a share purchase and subscription agreement with E-House and Tencent, pursuant to which Tencent has acquired from E-House 19,201,800 of our ordinary shares, or 15% of our total outstanding shares on a fully diluted basis, including all options and restricted shares and any other rights to acquire our shares that are granted and outstanding, for $180 million in cash. Concurrent with the consummation of this offering, Tencent will subscribe for an additional number of our ordinary shares, at a price per ordinary share equal to the initial public offering price per ordinary share, sufficient for Tencent to maintain a 15% equity interest in us on a fully diluted basis as of the consummation of this offering. In connection with the sale of shares to Tencent, we have entered into an investor rights agreement with E-House and Tencent, which grants E-House and Tencent certain registration rights with respect to our ordinary shares owned by them, grants certain board representation rights to Tencent and places certain restrictions on the transfer of our ordinary shares by E-House or Tencent. See "Related Party Transactions Transactions and Agreements with Tencent" for more information. Our Relationship with E-House We are a subsidiary of E-House, which will remain our parent company and controlling shareholder after this offering. E-House first reported its real estate online services business as a separate segment in its annual report on Form 20-F for the year ended December 31, 2009. Prior to this offering, E-House has provided us with accounting, administrative, marketing, internal control, customer service and legal support, and has also provided us with the services of a number of its executives and employees. Upon completion of this offering, E-House will hold 76.3% of our then outstanding ordinary shares, including 2,029,420 ordinary shares we will issue and sell in the private placement to Tencent concurrently with this offering and assuming the underwriters do not exercise their over-allotment option. Upon becoming a stand-alone public company, we will contract with third parties to provide certain services to us associated with our being a public company, the costs of which may be higher than our current cost allocation with E-House for the same services. We have entered into agreements with E-House with respect to various ongoing relationships between us. These include a master transaction agreement, an offshore transitional services agreement, an onshore transitional services agreement, a non-competition agreement and an onshore cooperation agreement. See "Our Relationship with E-House" and "Risk Factors Risks Related to Our Carve-out from E-House and Our Relationships with E-House." CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(2)(3) Proposed maximum offering price per share(3) Proposed maximum aggregate offering price(2)(3) Amount of registration fee Ordinary Shares, par value US$0.001 per share(1) 11,500,000 US$12.00 US$138,000,000 US$17,774(4) (1)American depositary shares issuable upon deposit of ordinary shares registered hereby have been registered under a separate registration statement on Form F-6 (Registration No. 333-195067). Each American depositary share represents one ordinary share. (2)Includes ordinary shares that are issuable upon the exercise of the underwriters' over-allotment option. Also includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purpose of sales outside the United States. (3)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933. (4)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Table of Contents Corporate Information Our principal executive offices are located at 15/F, Beijing Shoudong International Plaza, No. 5 Building, Guangqu Home, Dongcheng District, Beijing 100022, People's Republic of China. Our telephone number at this address is +86 10 5895 1000. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. In addition, we have 53 branch offices in mainland China and a branch office in Hong Kong. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is leju.com. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 400 Madison Avenue, 4th Floor, New York, New York 10017. Conventions that Apply to this Prospectus Unless otherwise indicated or the context otherwise requires, references in this prospectus to: "Leju," "we," "us," "our company" and "our" are to Leju Holdings Limited, its subsidiaries and its consolidated VIEs; "ADSs" are to our American depositary shares, each of which represents one ordinary share; "Beijing Leju" are to Beijing Yisheng Leju Information Services Co., Ltd.; "Beijing Jiajujiu" are to Beijing Jiajujiu E-Commerce Co., Ltd.; "Beijing Maiteng" are to Beijing Maiteng Fengshun Science and Technology Co., Ltd.; "China" or the "PRC" are to the People's Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan; "China Online Housing" are to China Online Housing Technology Corporation; "consolidated VIE" are to each of our consolidated variable interest entities, namely each of Beijing Leju, Shanghai Yi Xin and Beijing Jiajujiu; "CITIC" are to CITIC Bank Corporation Limited; "E-House" are to E-House (China) Holdings Limited, a Cayman Islands exempted company with limited liability, and its predecessor entities; "O2O services" are to online to offline services, including in connection with the marketing of new residential properties by developers; "ordinary shares" prior to the completion of this offering are to our ordinary shares, par value $0.001 per share; "RMB" and "Renminbi" are to the legal currency of China; "Shanghai SINA Leju" are to Shanghai SINA Leju Information Technology Co., Ltd.; "Shanghai Yi Xin" are to Shanghai Yi Xin E-Commerce Co., Ltd.; "Shanghai Yi Yue" are to Shanghai Yi Yue Information Technology Co., Ltd.; "Tencent" are to Tencent Holdings Limited or certain of its affiliates which have entered into agreements with us as described under "Related Party Transactions Transactions and Agreements with Tencent," as applicable; and "U.S. dollars," "$," and "dollars" are to the legal currency of the United States. Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option. Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus Dated April 16, 2014 10,000,000 American Depositary Shares Leju Holdings Limited Representing 10,000,000 Ordinary Shares Table of Contents The Offering Offering price We currently estimate that the initial public offering price will be between $10.00 and $12.00 per ADS. ADSs offered by us 10,000,000 ADSs (or 11,500,000 ADSs if the underwriters exercise their over-allotment option in full). Concurrent private placement Concurrently with, and subject to, the completion of this offering, Tencent, our existing shareholder, has agreed to purchase from us such number of ordinary shares, at a price per ordinary share equal to the initial public offering price per ordinary share, sufficient for Tencent to maintain a 15% equity interest in us (on a fully diluted basis, including all options and restricted shares and any other rights to acquire our shares that are granted and outstanding, and assuming the underwriters exercise their over-allotment option to purchase additional ADSs in full) as of the consummation of this offering. As a result, Tencent will purchase 2,029,420 additional ordinary shares from us upon the completion of this offering. Our proposed issuance and sale of ordinary shares to Tencent are being made through a concurrent private placement pursuant to an exemption from registration with the U.S. Securities and Exchange Commission under Regulation S of the Securities Act. Tencent has agreed not to, without a prior written consent, directly or indirectly, sell, transfer or dispose of any ordinary shares acquired in the private placement for six months after the completion of this offering. ADSs outstanding immediately after this offering 10,000,000 ADSs (or 11,500,000 ADSs if the underwriters exercise their over-allotment option in full). Ordinary shares outstanding immediately after this offering 132,029,420 ordinary shares (including 2,029,420 ordinary shares we will issue and sell in the private placement to Tencent concurrently with this offering). The ADSs Each ADS represents one ordinary share, par value $0.001 per share. The depositary will hold ordinary shares underlying your ADSs and the depositary or its nominee will actually be the registered owner of the shares. As an ADS holder, you will not have any shareholder rights and your rights will be limited to those of an ADS holder, according to the deposit agreement. This is an initial public offering of American depositary shares, or ADSs, of Leju Holdings Limited, or Leju. We are offering 10,000,000 ADSs. Each ADS represents one of our ordinary share, par value $0.001 per share. Prior to this offering, there has been no public market for the ADSs or our ordinary shares. We anticipate that the initial public offering price per ADS will be between $10.00 and $12.00. We have applied to list the ADSs on The New York Stock Exchange, or the NYSE, under the symbol "LEJU." We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements. Following the completion of this offering and taking into account the ordinary shares we will issue and sell to Tencent in the concurrent private placement, we will be a "controlled company" as defined under the Corporate Governance Rules of the NYSE because E-House (China) Holdings Limited, or E-House, will hold 76.3% of our then outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, or 75.5% of our then outstanding ordinary shares if the underwriters exercise their over-allotment option in full. See "Principal Shareholders." Investing in our ADSs involves risks. See "Risk Factors" beginning on page 14. Table of Contents We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares after deducting its fees and expenses in proportion to the number of ordinary shares your ADSs represent, unless the depositary determines in its discretion that it is impractical or unlawful to make a distribution available to any ADS holder. If the depositary determines any dividends or distributions to be not practicable to any specific registered ADS holder, the depositary may choose any method of distribution that it deems practicable for such ADS holder, or the depositary may do nothing, in which case such ADS holder will receive nothing. As an ADS holder, you will not be able to directly exercise your right to vote with respect to the underlying shares and you must vote by giving the depositary voting instructions. Neither the depositary nor its agents are responsible for any failure to carry out any voting instructions. There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you will not have the opportunity to exercise a right to vote. You may turn in your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus. Over-allotment option We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 1,500,000 additional ADSs. Use of proceeds We estimate that we will receive net proceeds from this offering of approximately $97.3 million, or approximately $112.6 million if the underwriters exercise their over-allotment option in full, after deducting underwriting discounts and the estimated offering expenses payable by us. In addition, we expect to receive net proceeds of approximately $20.8 million from the concurrent private placement to Tencent, after deducting estimated fees and expenses payable by us in connection with the private placement. These estimates are based upon an assumed initial public offering price of $11.00 per ADS, the midpoint of the price range shown on the front cover page of this prospectus. Neither the United States Securities and Exchange Commission, or the SEC, nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents We plan to use the net proceeds of this offering as follows: approximately $40.0 million to enhance our technology infrastructure and develop new products and services for our online platform; approximately $30.0 million for geographic expansion, including adding new business lines in existing cities and converting outsourced operations to direct operations in select cities; and the balance for general corporate purposes, including funding potential acquisitions of complementary businesses and strategic investments, although we are not currently negotiating any such transactions. See "Use of Proceeds" for more information. Lock-up We, our directors, executive officers and our existing shareholders have agreed with the underwriters not to sell, transfer or dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See "Shares Eligible for Future Sale" and "Underwriting." The share purchase and subscription agreement entered into between us, E-House and Tencent on March 21, 2014, provides for certain restrictions on the transfer of the ordinary shares purchased pursuant to the share purchase and subscription agreement. For an 18-month lock-up period that commenced on the purchase date, Tencent may not directly or indirectly transfer or pledge any of the ordinary shares purchased from E-House without our prior written consent. For a six-month lock-up period that will commence upon the purchase of the ordinary shares for which Tencent will subscribe concurrently with the consummation of this offering, Tencent may not directly or indirectly transfer or pledge any of such ordinary shares without our prior written consent. See "Related Party Transactions Transactions and Agreements with Tencent." Reserved ADSs At our request, the underwriters have reserved for sale, at the initial public offering price, up to an aggregate of 800,000 ADSs offered in this offering to some of our directors, officers, employees, business associates and related persons through a directed share program. Listing We have applied to have the ADSs listed on the NYSE under the symbol "LEJU." Our ADSs and shares will not be listed on any other stock exchange or traded on any automated quotation system. Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of the Depository Trust Company, or DTC, on , 2014. Depositary JPMorgan Chase Bank, N.A. Per ADS Total Initial public offering price $ $ Underwriting discount $ $ Proceeds, before expenses, to Leju $ $ The underwriters have an option to purchase up to an additional 1,500,000 ADSs from us at the initial public offering price less the underwriting discount to cover over-allotments. Table of Contents Summary Consolidated Financial Data The following summary consolidated statements of operations data and summary consolidated statement of cash flow data for the years ended December 31, 2011, 2012 and 2013 and summary consolidated balance sheet data as of December 31, 2012 and 2013 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. Our summary consolidated financial data also includes certain non-GAAP measures, which are not required by, or presented in accordance with, U.S. GAAP, but are included because we believe they are indicative of our operating performance and are used by investors and analysts to evaluate companies in our industry. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Year Ended December 31, 2011 2012 2013 (in thousands of $, except share and per share data) Summary Consolidated Statement of Operations Data Revenues E-commerce 26,996 170,205 Online advertising 132,076 138,767 145,445 Listing 5,015 5,533 19,772 Total revenues 137,091 171,296 335,422 Cost of revenues (37,583 ) (54,118 ) (63,991 ) Selling, general and administrative expenses (121,610 ) (163,535 ) (226,143 ) Goodwill impairment charge (417,822 ) Other operating income 14 153 600 Income (loss) from operations (439,911 ) (46,203 ) 45,888 Income (loss) before taxes and equity in affiliates (440,261 ) (47,926 ) 45,785 Net income (loss) (438,252 ) (43,849 ) 42,650 Net income (loss) attributable to Leju shareholders (438,831 ) (44,759 ) 42,525 Earnings (loss) per share: Basic (3.66 ) (0.37 ) 0.35 Diluted (3.66 ) (0.37 ) 0.35 Weighted average numbers of shares used in computation: Basic 120,000,000 120,000,000 120,000,000 Diluted 120,000,000 120,000,000 120,000,000 Table of Contents As of December 31, 2012 2013 (in thousands of $) Summary Consolidated Balance Sheet Data Cash and cash equivalents 71,090 98,730 Accounts receivable 86,652 87,316 Total current assets 178,968 222,788 Intangible assets, net 163,204 128,530 Total assets 393,867 402,938 Amounts due to related parties 83,143 4,501 Total current liabilities 159,661 123,584 Total liabilities 200,588 151,148 Total Leju equity 190,173 248,706 Year Ended December 31, 2011 2012 2013 (in thousands of $) Summary Consolidated Statement of Cash Flows Data Net cash provided by operating activities 11,175 3,325 83,423 Net cash used in investing activities (26,618 ) (18,159 ) (16,657 ) Net cash provided by (used in) financing activities 26,809 21,504 (41,360 ) Net increase in cash and cash equivalents 12,709 6,836 27,639 Cash and cash equivalents at the beginning of the year 51,545 64,254 71,090 Cash and cash equivalents at the end of the year 64,254 71,090 98,730 Non-GAAP Financial Measures The following table sets forth, for the periods specified, our adjusted income (loss) from operations, our adjusted net income (loss), and our adjusted net income (loss) attributable to Leju shareholders. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance, formulate business plans, and make strategic decisions on capital allocation. These non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges, including share-based compensation expense, amortization of intangible assets resulting from business combinations and goodwill impairment charge. We also believe they are indicative of our operating performance and are used by investors and analysts to evaluate companies in our industry. These non-GAAP measures of our performance are not required by, or presented in accordance with, U.S. GAAP. Such measures are not a measurement of financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to income from operations, net income or any other performance measures derived in accordance with U.S. GAAP or an alternative to cash flows from operating activities as a measure of liquidity. Our presentation of such measures may not be comparable to similarly titled measures presented by other companies. You should not compare such measures as presented by us with the presentation of such measures by other companies because not all companies use the same definition. We define adjusted income (loss) from operations as income (loss) from operations before share-based compensation expense, amortization of intangible assets resulting from business combinations and goodwill impairment charge. Table of Contents (1)Share-based compensation expense includes share-based compensation expenses recorded by us as well as share-based compensation expenses allocated from E-House to us. Table of Contents
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+PROSPECTUS SUMMARY As used in this prospectus, references to the Company, we, our , us or Canso Enterprises Ltd. refer to Canso Enterprises Ltd. unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements, and the notes to the financial statements. OUR COMPANY Canso Enterprises Ltd. was incorporated on June 26, 2013, under the laws of the State of Nevada, for the purpose of conducting mineral exploration activities. We are an exploration stage company formed for the purposes of acquiring, exploring, and if warranted and feasible, developing natural resource property. We raised an aggregate of $52,500 through private placements of our securities. Proceeds from these placements were used for working capital. We are an emerging growth company within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with certain requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see RISK FACTORS--RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS on page 4 of this prospectus. Because we are a shell company, the Rule 144 safe harbor is not available for the resale of any restricted securities issued by us in any subsequent unregistered offering. This will likely make it more difficult for us to attract additional capital through subsequent unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities. We have four mining claims, claims numbers 4262211, 4262212 and 4262213 and 4262214 (collectively, the Arrow River Property ), located in the Thunder Bay Mining District of the Province of Ontario, Canada. The claims were recorded on October 29, 2013, with the Ministry of Northern Development and Mines, Province of Ontario, Canada, of Ontario, Canada. We have had a qualified consulting geologist prepare a geological evaluation report on the Arrow River Property, which report was delivered to us on November 12, 2013. We intend to conduct exploratory activities on the Arrow River Property and, if feasible, develop the Arrow River Property. In order to execute against our plan of operations for the next 12 months, we will need to raise approximately $249,500. Until such funds are obtained by the Company via debt, equity or other form of financing, we will be unable to take concrete steps towards the implementation of our plan of operations. In order to commence work in accordance with Phase 1 of our plan of operation, detailed on page 27, we will need to secure additional financing. Currently, we have no plan or commitment which would provide us with the required capital to begin Phase 1. We are offering our shares and seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are not a shell company by potentially offering stock options, bonuses, or other incentives with a known market value. The Company s principal offices are located at Ave. Javier Rojo Gomez 630, Leyes de Reforma, Istapalapa, Mexico City 09310, Mexico, and our telephone number is +52 (01) 55-10843026. THE OFFERING Securities offered: The selling stockholders are offering hereby up to 1,650,000 shares of common stock. Offering price: The selling stockholders will offer and sell their shares of common stock at a fixed price of $0.15 per share until our shares are quoted on the OTC Bulletin Board, if our shares of common stock are ever quoted on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. Shares outstanding prior to offering: 11,650,000 Shares outstanding after offering: 11,650,000 Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ( FINRA ) for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Use of proceeds: We will not receive any proceeds from the sale of shares by the selling security holders SUMMARY FINANCIAL INFORMATION The tables and information below are derived from our audited financial statements for the period from June 26, 2013 (Inception) to November 30, 2013. Our working capital as at January 23, 2014 was $46,295. November 30, 2013 ($) Financial Summary Cash and Deposits 40,645 Total Assets 46,295 Total Liabilities -0- Total Stockholder s Equity 46,295 Accumulated From June 26, 2013 (Inception) to November 30, 2013 ($) Statement of Operations Total Expenses (6,205 ) Net Loss for the Period (6,205 ) Net Loss per Share -
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001597462_sgwone-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001597462_sgwone-inc_prospectus_summary.txt
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+ITEM 3. PROSPECTUS SUMMARY SGWONE, INC. (D/B/A MobiUnplugged) (A Development Stage Company) One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the Company, Branded Shopping Live, SGWOne, Inc., MOBI-Unplugged, and MOBI refer to MOBIUnplugged. This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including Risk Factors and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus. ABOUT OUR COMPANY General Information about the Company Our Company, SGWone, Inc. was incorporated in the State of Nevada by our Chief Executive Officer, Robert J. McNulty, on February 21, 2012. We are a development stage company. The primary business of our Company is the distribution, marketing, selling of skin care products, and the sale of environmental management solutions. We have recorded no revenue, have had net losses of $370,345 for the year ended December 31, 2013, and we expect our losses to continue, and for that reason our audit firm has issued a going concern opinion. After this offering 69% of the common stock outstanding will be held by our Chief Executive Officer Robert J. McNulty, President Mark Guest and Chief Financial Officer Mark V. Noffke. The Company qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ). SGWone, Inc., through its Mobi-Unplugged branding, will provide both online and offline retail sales of mobile and wireless products. Mobi will allow the customer to discover a unique mobile experience that is useful, innovative, and intuitive to the consumer. This unique experience allows the consumer to compare, learn, and address their needs be it they are looking for the latest and greatest name brand hardware, phones, tablets, speakers and pairing those mobile electronic devices to the most suitable mobile and wireless plans. We want to create a prototypical electronics specialty store, focused on the explosive growth in the mobile market place. We will develop two store sizes: (a) a 12,000 square foot store and (b) an 8,000 square foot store. The purpose of developing two different store footprints is to address specific demographics market by market. Our stores will introduce and provide support for the hottest branded products in the mobile market, from all manufacturers and competitors. The store format will be a showroom type store, with the entire inventory, stored in the back room. The following are our key drivers to success: we will provide superior levels of customer service by having knowledgeable experts giving accurate and useful information to our customers so our customers can make the right decision for their product needs. We want to provide a friendly and inviting shopping experience, so the customer can play, learn, share and have a fun user experience with all the available branded products. Our business model is based on our belief that customers will want to come in to our stores, try the products that they are interested in, learn about the products strengths, weaknesses, accessories, see what the wireless service providers are offering in regards to those products, and then make an educated decision on which new product to purchase. Our mission both online and offline is to discover and promote unique mobile electronic experiences that are useful, innovative and intuitive to the consumer. Our website, www.mobiunplugged.com s distinctive tile like, one click navigation design is focused on the three pillars of e-Commerce success: acquire, convert and retain. Just like at our proposed Mobi-Unplugged retail location the experience is unlike anything, currently within the mobile and wireless marketplace. This unique experience allows the consumer to compare, learn, and address their needs whether they are looking for the latest and greatest name brand hardware, phones, tablets, speakers, or mobile accessories, to the most suitable mobile and wireless plans. The Company s business strategy is aimed at uniting the sale and education of customers through the use of our interactive store models. Brands such as: Apple, Samsung, E-Readers, Sony, Kindle Acer, Surface, Blackberry, Nexus, HP And Dell, LG, Kyocera, Motorola, HTC, Nokia, and Sharp, all provide mobile products, such as, phones, tablets, laptops and accessories; however, they do not provide the wireless service plans that allow those products to be mobile. We will go one step further, by providing our customers with the resources, services, activation, and diagnostics as well as educational classes to give our customer the highest quality of information to use their mobile electronic devices. No check out registers, all our sales are done on mobile devices by our highly trained sales associates. The stores look and feel will be a friendly tech experience, serviced with each brand experience, geographically defined by round tables featuring their products made of carbon fiber identified by their branded logo. There will be a customer service bar area to have our customers personal mobile electronic needs managed by our highly qualified technology experts. The store will be welcoming by having a small coffee cafe for customers who want to stay awhile and relax while looking at products, participating in one of our educational seminars, chat with others about products they are thinking of buying or just to socialize. All of the aforementioned are drivers to success along with a strong pricing model. The Company s fiscal year end is December 31st. Where You Can Find Us Our corporate headquarters are located at 10120 S. Eastern Avenue, Suite 200, Henderson, Nevada 89052. Our telephone number is (630) 251-1285. We maintain a website at www.mobiunplugged.com that contains information about our company, but that information is not a part of this prospectus. Our History The Company was originally incorporated as Branded Shopping Live, Inc., in the State of Nevada on February 21, 2012. On June 4, 2012, the Company increased the authorized capital from 1.0 million shares of common stock to 30 million shares of capital stock, of which 25 million shares are common stock, par value $0.01 per share, and 5.0 million shares are preferred stock, par value $0.01 per share ( Preferred Stock ). The Company also adopted Amended and Restated Bylaws of the Company on the same date. On June 5, 2012 the Company filed Amended and Restated Articles of Incorporation of the Company with the Secretary of State of Nevada and changed the corporate name from Branded Shopping Live, Inc., to SGWOne, Inc. . The name change was to better represent our business plan of entering into the business of mobile electronic device sales, through the utilization of iconic store layouts, locations, superior customer service and the selling of all mobile electronic device brands and wireless providers. On September 18, 2013, the Company increased the authorized capital from 30 million shares of common stock to 210 million shares of capital stock, of which 200 million shares are common stock, par value $0.01 per share, and 10 million shares are preferred stock, par value $0.01 per share ( Preferred Stock ). The Company also adopted Amended and Restated Bylaws of the Company on the same date. On September 20, 2013 the Company issued an aggregate of 36,985,500 shares in a private placement to consultants and service providers as compensation for services provided in the initial business development of the Company. Selling Security Holders Shares being Registered by the Company This is the Company s initial public offering. The Company is registering a total of 9,000,000 shares of its Common Stock. Of the shares being registered, 4,000,000 are being registered for sale by the Selling Security Holders that are currently issued and outstanding. The Company will not receive any proceeds from the sale of any of the 4,000,000 shares of the common stock being sold by the Selling Security Holders. The Selling Security Holders may sell, as soon as practicable following the effectiveness of this registration at a fixed price of $1.00 until the shares are quoted on the Over the Counter Bulletin Board ( OTCBB ) and thereafter at prevailing market prices or in privately negotiated transactions. The Company is offering 4,000,000 Shares for sale in a self-underwritten, best-efforts offering. Each Share consists of one share of the Company s Common Stock. The Company will receive up to $5,000,000 in the event that all the 5,000,000 shares of common stock are sold, of which there can be no assurance. The Company will not receive any proceeds from the sales by the Selling Security Holders. The proceeds, if any, will be used for general working capital purposes. This offering will terminate on the earlier of the sale of all of the shares offered or 180 days after the date of the prospectus, unless extended an additional 90 days by the board of directors. The Company qualifies as an emerging growth company as defined in the Jumpstart our Business Startups Act (the JOBS Act ). We intend 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, 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. As well, our election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until they apply to private companies. Therefore, as a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001598097_privoz_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001598097_privoz_prospectus_summary.txt
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+PROSPECTUS SUMMARY As used in this prospectus, references to the "Company," "we," "our", "us" or "Privoz" refer to Privoz unless the context otherwise indicates. The following summary highlights selected information contained in this prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the "Risk Factors" section, the financial statements, and the notes to the financial statements. Our Company Privoz was incorporated on November 22, 2013, under the laws of the State of Nevada, for the purpose of engaging in a business which holds deliveries in the United States for persons who reside outside of the United States, and then, using a third-party shipping service, forward our customer s deliver to him or her at his or her address outside of the United States. We are presently focusing our services to persons who only reside in Israel. We have entered into contracts with cargo shippers to establish our business relationship with them in order to ship our customers deliveries to our customers in Israel. To date, we have shipped a total of three containers to customers. We are a development stage company that has not realized any revenues to date, and our accumulated deficit as of December 31, 2013 is $5,509. To date we have raised an aggregate of $10,000 through a private placement of our common stock to Mark Milman, our sole officer and director. Proceeds from the private placement will be used for working capital. Our independent auditor has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company s principal offices are located at Montefiore 54, #3, Holon, Israel. Our telephone number is + 972 -3-505-3720. Our working capital as of December 31, 2013 was $4,491. We expend approximately $5,000 per month to fund our operations, and as such a rate our present capital will last approximately 15 months to implement our plan of operations we require a minimum funding of $73,000 for the next twelve months. We plan to raise the additional funding for our twelve month business plan by selling the 1,650,000 shares in this offering. We cannot provide any assurance that we will be able to sell any of the shares being offered to raise sufficient funds to proceed with our twelve-month business plan. From inception until the date of this filing we have had limited operating activities, primarily consisting of the incorporation of our company, the initial issuance of shares of common stock to our sole officer and director, borrowing $5,509 from our sole officer and director, completing our business plan and developing our website. Our financial statements from inception on November 22, 2013, through December 31, 2013, report no revenues and a net loss of $5,509. Our independent auditor has issued an audit opinion for our Company, which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Mark Milman, our sole officer and director did not agree to serve as an officer or director of the Company at least in part due to a plan, agreement or understanding that he would solicit, participate in, or facilitate the sale of the enterprise to (or a business combination with) a third party which desires to obtain or become a public reporting entity, and Mr. Milman confirms that he has no such present intention. As of the date of this prospectus, there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. We are offering our shares and seeking to become a reporting issuer under the Securities Exchange Act of 1934, as amended, because we believe that this will provide us with greater access to capital, that we will become better known, and be able to obtain financing more easily in the future if investor interest in our business grows enough to sustain a secondary trading market in our securities. Additionally, we believe that being a reporting issuer increases our credibility and that we may be able to attract and retain more highly qualified personnel once we are a development stage company by potentially offering stock options, bonuses, or other incentives with a known market value. We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. For a description of the qualifications and other requirements applicable to emerging growth companies and certain elections that we have made due to our status as an emerging growth company, see "RISK FACTORS RISKS RELATED TO THIS OFFERING AND OUR COMMON STOCK - WE ARE AN `EMERGING GROWTH COMPANY AND WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS" on page 6 of this prospectus. This is a direct participation offering since we are offering the stock directly to the public without the participation of an underwriter. Our sole officer and director will be solely responsible for selling shares under this offering and no commission will be paid on any sales. There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such quotation service or that any market for our stock will develop. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares. Under U.S. federal securities legislation, our common stock will be "penny stock". Penny stock is any equity that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a potential investor s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve an investor s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination. Brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. THE OFFERING Securities offered: 1,650,000 shares of our common stock, par value $0.001 per share. Offering price: $0.07 Duration of offering: The 1,650,000 shares of common stock are being offered for a period of 16 months. There will be no extension to the offering period. Net proceeds to us: $115,000, assuming the maximum number of shares sold. For further information on the Use of Proceeds, see page 16. Market for the common shares: There is no public market for our shares. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to eligible for trading on the Over The Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, a purchaser of our common stock may find it difficult to resell the securities offered herein should the purchaser desire to do so when eligible for public resale. Shares outstanding prior to offering: 5,000,000 Shares outstanding after offering: 6,650,000
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001598683_recursos_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001598683_recursos_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including sections outlining the Risk Factors , our consolidated financial statements, the notes related to those financial statements and the Management s Discussion and Analysis of Financial Condition and Results of Operations. RECURSOS QUELIZ, INC. The Company We are an exploration mining company with our principal offices located at No. 24, 4th Street, Las Coabas, Peurto Plata, Dominican Republic. Our phone number is 809-223-2353. Our President, Secretary and Treasurer, Juan Alexi Payamps Dominiguez, incorporated El Caporal Management, SRL in the Domincan Republic and Queliz in Nevada in order to seek out and acquire a mineral property in the Dominican Republic. With strong gold prices at that time he was interested in acquiring a property where gold might be discovered in sufficient quantities to warrant possible future production. We were incorporated in the State of Nevada on September 20, 2012 under the name Recursos Queliz, Inc. On September 18, 2012, we purchased a 100% interest of the Queliz Gold Concession ( Queliz Concession ) in San Jose de Ocoa, Dominican Republic. The Queliz Gold Concession consists of 5,200 mining hectares registered with the Ministry of Mines in the Dominican Republic. The Queliz Concession was acquired on September 18, 2012 by El Caporal Management, SRL, which is the Recursos Queliz, Inc. s wholly owned subsidiary. The Queliz Concession cost $13,000 to acquire it from the Department of Mines in the Dominican Republic. On September 23, 2012, the subsidiary paid $25,800 for an exploration program on the Queliz Concession. The geologist carried out work in November 2012 and prepared a report with recommendations in February 2013. The report can be found further into this prospectus under The Queliz Concession . In August 2013, the Company paid for additional work on the concession in the amount of $19,778. The assays from the soil, rock and sediment samples are disclosed under The Queliz Concession shown below. At this time, we do not have sufficient capital to carry out the recommended exploration program as set forth by the geologist. The proposed exploration plan will cost an estimated amount of $65,753. As at August 31, 2014, we had $37,427 in cash with no other assets . From our inception on September 20, 2012 through August 31, 2014, we have raised $90,000 in capital in private placement (through the issuance of 90,000,000 shares of common stock at the price of $0.001 per share to our director). Queliz has raised no other funds since that time other than advances from its sole director and officer in January and February 2014 in the amount of $50,000. We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of (A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; (B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; (C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (D) the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A(a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. Corporate Information Queliz is incorporated in the State of Nevada. Our principal executive offices are located at No. 24 - 4th Street, Las Caobas, Peurto Plata, Dominican Republic. Our telephone number is 809-223-2353. The Offering Under this prospectus, 20,000,000 shares of our common stock are being resold by the Selling Security Holder (a beneficial owner and the Company s sole shareholder) at a fixed price of $0.002 per share for an aggregate offering price of $40,000. Once this prospectus becomes effective, the stock will be offered for sale by the Selling Security Holder at a price of $0.002 per share. We are not selling any shares of the Company s common stock under this offering, and, therefore, we will not receive any proceeds from this offering. Proceeds to the Selling Security Holder normally do not include all the offering costs (preparation of this registration statement, filing fees, printing costs, legal fees, accounting fees, and transfer agent fees estimated at $33,145). We will pay all of these expenses. The Selling Security Holder, being our sole officer and director, will not pay for any of these expenses. In January 2014, the President of the Company advanced $25,000 to assist in the payment of the expenses of this offering. In February 2014, he advances an additional $25,000 in order that the Company could meet its planned business objectives over the next twelve months. Our shares are not quoted on any exchange but it is the intention of the Company, once this registration statement becomes effective, if ever, to eventually make an application to be quoted on the OTC Bulletin Board ( OTCBB ). This might never happen. THE OFFERING Common stock offered 20,000,000 shares Offering price $0.002 per share Total offering price $40,000 Common stock outstanding after this offering 90,000,000 shares Common stock outstanding prior to this offering 90,000,000 shares Selling security holders One Use of proceeds We will not receive any of the proceeds of the shares offered by the Selling Security Holder. Underwriters The Selling Security Holder is an underwriter, as defined by Section 2(a)(11) of the Securities Act. Voting rights Each share is entitled to one vote. Note that after this offering, our director will still have the majority of votes and be able to elect the Board of Directors. Dividend policy We have never issued dividends on our common stock and might never do so. Any such decision would be the responsibility of our elected Board of Directors. Risk factors Mining is highly speculative and risky; this entire prospectus as well as the section titled Risk Factors found there within should be read thoroughly before making a decision of whether or not to buy our common stock. Distribution plan The Selling Security Holder named in the Prospectus is making this offering at a fixed price of $0.002 per share. No public market (lack of liquidity) Our common stock is not currently quoted or traded on any securities exchange or automated quotation system. No application for such has yet been made. Thus, no assurance can be given that there will ever be an established public trading market for our common stock.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001598924_image_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001598924_image_prospectus_summary.txt
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index 0000000000000000000000000000000000000000..ae29db0600d719c7cebb6fd73a1fbb47d589e416
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+PROSPECTUS SUMMARY The information presented is a brief overview of the key aspects of the offering. The prospectus summary contains a summary of information contained elsewhere in this prospectus. You should carefully read all information in the prospectus, including the financial statements and the notes to the financial statements under the Financial Statements section beginning on page 31 prior to making an investment decision. Business Description Have Gun Will Travel Entertainment, Inc. is an emerging television pre-production company formed to create original concepts and programming in the reality television space for sale, option and licensure to independent producers, cable television networks, syndication companies, and other entities. To-date, the Company has fully completed 4 reality TV show concept projects, three of which have been sold and one is currently under review with a prospective buyer. The Company sold one reality TV concept on February 25, 2014 for $5,500 and a second reality TV concept on March 17, 2014 for $2,000. Subsequently, on May 22, 2014, HGWT sold another reality TV concept for $3,500. The Company is also currently developing several more reality show concepts in-house that it hopes to sell once completed In addition, the Company has contracted a graphic designer to assist in creating visual representations for its projects. We need additional capital to further our business plan. Currently, we rely on the sales of our reality TV concepts to meet the current costs and expenditures of operating the business. We believe that we will need a minimum of $32,500 in capital, including the capital raised in this offering, in order to maintain our current and planned operations through the next 12 months. This is based on our assumption that the Company anticipates to incur $20,000 in legal, accounting, printing and other expenses connected with this offering, and $12,500 to maintain our general, administrative and filing expenses. We intend to raise the capital through the sale of shares of our common stock and/or through the sale/option of our reality TV show concepts. No assurance can be given that HGWT will be able to obtain the necessary capital in order to continue operations or further our business plan. If we are unable to raise sufficient capital to sustain our operations, we will be required to delay or forego some portion of our business plan which would have a material adverse effect on our anticipated results from operations and financial condition. HGWT has been able to generate minimal revenue since inception. During the quarter ended March 31, 2014 our revenues exceeded our expenses for the first time, resulting in net income totaling $1,767. Since inception our aggregate expenses have exceeded our aggregate revenues, resulting in an accumulated deficit of $8,262 as of March 31, 2014. Furthermore, HGWT s auditor has expressed substantial doubt regarding our ability to continue as a going concern due to our status as a development stage company, lack of significant operations and accumulated deficit. As of March 31, 2014, our cash balance was $17,267 with current liabilities of $0, resulting in net working capital of $17,267. Since our inception, our monthly burn rate has amounted to approximately $3,940.50 and included, among others, initial business set-up fee and one-time engagement fees for professional services. Starting in April 2014, we anticipate our burn rate to decrease to approximately $1,000 per month until we become public and consist mainly of bank charges, professional fees, office rent and miscellaneous business expenses related to developing and marketing reality TV concepts. Once HGWT becomes public, we estimate our burn rate to increase to $2,300/mo due to costs of operating as a public company (increased accounting and legal fees), as well as costs of SEC reporting and compliance. HGWT expects to incur $13,800 in total expenses during the time that this Offering is open. We estimate our current cash will fund HGWT for the next 8 months. Mr. Ray, the Company's sole officer and director, is managing the Company s operations and undertaking all aspects of its strategic development. The Company has no employees at this time. Once fully operational, we anticipate to develop 12-18 reality TV concepts and up to 3 pilots (with available financing) per year for sale and licensure to independent producers, cable television networks, syndication companies, and other entities. While our Company currently has limited operational history, we have begun to realize positive earnings. We believe our operations and activities to-date are more than minimal, and are sufficiently significant to manifest our strong commitment to developing a fully operational business. Besides initial start-up and development activities (like formation of the Company and development of our business plan), our Company's operational activities to-date include developing intellectual property, contracting a graphic designer and entering into sales agreements with customers. OVERVIEW HGWT is currently an emerging growth company under the JOBS Act. A company loses its emerging growth company status on (i) the last day of the fiscal year during which it had total annual gross revenues of $1,000,000,000 or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of its first sale of common equity securities pursuant to an effective registration statement under the Securities Exchange Act of 1934, as amended (the Exchange Act ); (iii) the date on which it has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which it is deemed to be a large accelerated filer , as defined in section 240.12b 2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company, HGWT is exempt from certain obligations of the Exchange Act including those found in Section 14A(a) and (b) related to shareholder approval of executive compensation and golden parachute compensation. Furthermore, Section 103 of the JOBS Act provides that as an emerging growth company , HGWT is not required to comply with the requirement to provide an auditor s attestation of ICFR under Section 404(b) of the Sarbanes-Oxley Act for as long as HGWT qualifies as an emerging growth company. However, an emerging growth company is not exempt from the requirement to perform management s assessment of internal control over financial reporting. Have Gun Will Travel Entertainment, Inc. was incorporated under the laws of the state of Nevada on December 18, 2013. Our corporate and operational offices are located at 5850 Canoga Ave., 4th Floor, Woodland Hills, CA 91367, our telephone number is (818) 835-2822 and our fax number is (818) 835-2683. We are a developmental stage corporation that is focused on creating original content in reality television programming genre capable of providing dynamic growth potential to the Company. We are a concept-development, or pre-production, business. The Company's overall plan of operations is to develop independent reality TV concepts for sale, option and licensure, with a goal toward catering to independent producers, cable television networks, syndication companies, and other entities. Currently, the Company does not have any agreements with, or sales to, any independent producers, cable television networks or syndication companies. Since its inception, the Company has fully completed 4 reality TV concepts and has several more in different stages of development. The Company has realized its first 3 sales. The reality TV show concepts/treatments are sold on a pre-arranged flat fee basis. On February 25, 2014, HGWT sold its first reality TV concept for $5,500; on March 17, 2014, HGWT sold its second reality TV concept for $2,000. Subsequently, on May 22, 2014 HGWT sold another reality TV concept for $3,500. The three projects currently in development entail real-life situations of diverse groups of people coping with day-to-day pressures of personal relationships, making a living, and pursuing their passion. One of the projects is in its final stages of completion and currently undergoing video editing for creation of a sizzle-reel. It is being developed under working title "Drag Kings". The Company estimates this project to complete in the next week. The other two projects are past their conceptualization and consumer identification phase and will need to move through the next phases of our product development process which includes commercial viability analysis and creative phase. They are being developed under the tentative project titles "Beyond the Ropes" and "Blagger Boys". Both of these projects are estimated to require additional 15 days till completion. Reality TV show concept developing is emotionally and intellectually demanding and, therefore, could be time-consuming; however, deadlines can be reasonably approximated: on average, a project may take up to 45 days to complete. Please see the BUSINESS section below for a more detailed description of the projects that are currently in development. The Company currently is shopping around its Reality TV concepts/treatments, and has one finished reality TV concept under review with a prospective buyer. The length of the review process is highly individualized at a buyer s discretion and may range from a few days up to no longer than 30 days. We anticipate selling more of our projects to the entertainment industry. In the future, HGWT will also look to engage seasoned professionals in graphics, filmography, development and production to assist in advancing TV show concept to the next level of actual production. It is anticipated that as the Company grows over the next twelve months and fully develops , its management team will be expanded from its current one member to consist of additional members who have expertise in the reality television industry, as well as entrepreneurial experience. We are building the Company to become fully developed and self-sufficient. Since its inception, the Company has progressed from initial start-up activities to business operations like developing intellectual property and generating revenues from its sales. In order to keep generating revenues, we must address, among others, the following areas: product development, target market, marketing strategies, growth strategy and competition. PRODUCT DEVELOPMENT The Company develops reality TV programming content in-house. Although reality TV is mostly unscripted and involves actors that are generally regular people living their lives, a lot of planning is involved behind the scenes of a reality TV production. In our product development process, we utilize the following phases: - conceptualization - consumer identification - commercial viability analysis - creative phase HGWT is a reality TV concept-development, or pre-production, business. We do not produce reality shows, we sell our concepts to independent producers and production companies to be produced and distributed. Our President, Mr. Ray, currently handles all aspects of content development within the Company from conception to creation and execution. To date, all of our concepts have been developed "on spec" (unsolicited and non-commissioned), and required little to no capital expenditures. The first step in our product development process is to come up with a concept for the reality TV show. Since HGWT is in the business of developing reality TV content for sale, it is essential to choose an idea that might provoke interest from prospective buyers and inspire them to see its potential. Mr. Ray uses the concept as an axis from which all other production decisions are to be made. Next, Mr. Ray identifies the audience. Aiming the content at a specific consumer target market increases the chances of a reality TV show concept sparking interest from potential buyers, so it's important to determine the market that the reality show is intended for and to tailor the programming content appropriately to captivate the audience and transcend their expectations. Once a concept has been selected and market identified, a third phase in reality TV production begins and Mr. Ray makes sure that the TV show concept falls in a commercially viable genre within that market. For example, some of the genres that enjoy success today are hidden camera shows such as What Would You Do, talent-search shows such as American Idol, documentary series about ordinary people such as the Jerseylicious, high-concept game shows such as Survivor, home improvement shows such as Flipping Out With Jeff Lewis, court shows featuring real-life cases such as The People's Court, etc. HGWT then proceeds to develop the concepts into projects, and a creative phase begins. This is a crucial and very extensive phase during which Mr. Ray develops the format, characters, story lines and storyboards which are important tools for shaping the direction of the show, as well as shoots video and edits video clips, with the aim of creating a sizzle reel. While reality shows typically don't have scripts, Mr. Ray often writes a shooting script or an outline that details aspects of the reality TV concept. The final product of the Company's development process can be: (a) a flashed out concept accompanied by a pitch which consists of a logline, a synopsis, and a treatment. A logline is a one-sentence description of the show. A synopsis is a brief summary of the show including information about the main characters and the theme of the show. A treatment is much like a synopsis of a show idea but is a more inclusive document which includes detailed descriptions of the characters and the show s plot; (b) a sizzle reel/trailer; (c) a full pilot episode for a TV show (when financing is available). TARGET MARKET HGWT will target the Reality Television segments of the television syndication and cable network industry. The Company's success is greatly dependent on its ability to identify a gap in the market and cater to the unsatisfied demand. Hollywood producers and development executives work full time to create or find new concepts to sell to TV networks. As the changing dynamics that the television industry has been experiencing in the recent years resulted in an acute shortage of development capital for new projects, independent TV producers and smaller production companies all rely on third parties to bring them new exciting developed projects to produce or distribute. This is the market that HGWT has identified and will attempt to fill. MARKETING STRATEGIES Management intends to maintain an extensive marketing campaign that we hope will ensure maximum visibility for the developed reality TV concepts among the targeted market. Although the Company will cater to the reality TV segments of the television syndication and cable network industry, the Company s primary method of competition strategy is to market specifically to independent TV producers and smaller production companies. Marketing Objectives Establish a strong presence in targeted markets Establish connections with entertainment advertising agencies and marketing firms Build a network of industry contacts (e.g. utilizing Hollywood Creative Directory at hcdonline.com) to create additional visibility for the program Other than the buyers of its three sold concepts, currently, HGWT does not have any existing relationships or agreements with independent TV producers, producer s agents, or TV executives. OUR GROWTH STRATEGY The Company s growth strategy is currently set as a three-stage initiative that the Company hopes will culminate within the next few years. During the first stage, we plan on hiring additional employees, adding to the Board of Directors, and attempting to secure the vital agreements required to enter and participate in the lucrative fields of the Reality TV production industry, as well as capitalize on the demand for quality reality TV entertainment. In the second phase, the Company plans to outsource and expand its internal operations by engaging seasoned professionals in graphics, filmography, development and production to assist in advancing a TV show concept to the next level of actual production. In the third phase of HGWT s growth strategy, management plans to direct its attention towards vertically integrating the operations that were previously outsourced, and becoming a full-service television production company that develops, sells, produces, packages and licenses shows and formats domestically and internationally. The Terms of the Offering Securities Being Offered Up to 5,000,000 Shares of common stock Minimum Securities Being Offered: There is no minimum number of shares that need to be purchased for the Offering to be consummated. Initial Offering Price: We will sell our shares at a fixed price of .02 per share. This price was determined arbitrarily by us. Compensation: No compensation will be paid to the officer and director in connection with the sale of the shares. Termination of Offering: The offering will conclude when all of the 5,000,000 shares of common stock have been sold or 180 days from the date of this prospectus, whichever occurs earlier. We may decide to terminate the offering for no reason whatsoever at the discretion of our management team.
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+PROSPECTUS SUMMARY This summary highlights the most significant information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding Purplereal.com, Corp., ( Us, We, Our, "REAL, the Company, or "the Corporation") and our financial statements and the related notes appearing elsewhere in this prospectus. The Corporation Our Business Purplereal.com, Corp. was formed effective on January 15, 2014 under the Laws of the State of Florida. REAL is a shell company as defined in Rule 405 of the 1933 Securities Act rules. A shell company is one that has no or nominal operations and assets consisting primarily of cash or cash equivalents. Since its inception Purplereal.com, Corp. has engaged in the development of an online sales website to import and sell silk products and costume jewelry from Hong Kong and the People s Republic of China. The business model will focus on silk products made from single strand and double strand silkworms and costume jewelry that will target the general public with quality products at an affordable price. At the present time we are not fully operation and have no customers, suppliers or products. Purplereal.com, Corp. will rely on the experience of its management team to try to be competitive in the marketing of our products. We believe we can gain market share due to the quality of the future products and the price point of merchandise we hope to sell, however, there is no guarantee we will be able to do so. By analyzing the advertising of other competitive companies, we know that a low price advertising campaign may be successful because competition has brought the pricing of our type of products to essentially the same price. We believe that by concentrating our efforts on the quality of products while providing for cost effectiveness we can become operational however there is no guarantee that we will be successful at becoming a fully operational company. If we are able to generate sales, they will be strictly limited to online sales through the website www.Purplereal.com. We will maintain an office in Sarasota, Florida to house our management team. We will not sell any products or merchandise through this office. Our competitors have personnel with more experience that may place us at a disadvantage. Due to the number of competitors that have entered our target market, experience has become less of a competitive advantage. Being in a market segment with a high number of competitors makes any investment in our Company a high risk. We will compete with many businesses that have experienced personnel, years in business, capitalization, and a reputation that make it difficult for us to compete with. If we become operational and as a result of such competition, we will concentrate our efforts on trying to more fully develop the personal relationship approach to our business to try to differentiate our company while utilizing quality and price point. Our Principal Executive Officer, Principal Financial Officer, sole Director and owner of 54% of our stock, Diane J. Harrison has the ability to independently control the decisions of the company including the election of directors. Our State of Organization Purplereal.com, Corp. was formed on January 15, 2014 under the Laws of the State of Florida. Our principal address is 6371 Business Boulevard, Suite 200, Sarasota, Florida 34240. Our phone number is (727) 415-4121. I-5 Table of Contents Financial Statements The Offering Number of Shares Being Offered The selling stockholders offering to sell up to 840,000 shares of common stock at the fixed price of $0.05 per share for the duration of the offering. Number of Shares Outstanding After the Offering 1,900,000 shares of our common stock are issued and outstanding. We have no other securities issued. Use of proceeds We will not receive any of the proceeds from the sale of shares of common stock by the selling security holders. Plan of Distribution The Offering is made by the selling security holders named in this Prospectus to the extent they sell shares. We may or may not seek quotation of our common stock on the Over-the-Counter-Bulletin-Board ( OTCBB ). Management has made no decision as to whether to seek a quotation and will not do so until such time as it can properly make a decision based on the value to the shareholders of such a quotation. No assurance can be given that our common stock will be approved for quotation on the OTCBB even if we make application to the OTCBB. Selling security holders, as underwriters, must sell their shares at $0.05 per share for the duration of this offering.
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+Prospectus Summary 1
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+S-1/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 3 TO THE FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MW Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Maryland 6712 To be Applied For (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number) 2110 Beechmont Avenue Cincinnati, Ohio 45230 (513) 231-7871 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant s Principal Executive Offices) Mr. Gregory P. Niesen President and Chief Executive Officer 2110 Beechmont Avenue Cincinnati, Ohio 45230 (513) 231-7871 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Kip A. Weissman, Esq. Robert Lipsher, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W., Suite 780 Washington, D.C. 20015 (202) 274-2000 Gary Bronstein, Esq. Kilpatrick Townsend & Stockton LLP 607 14th Street, NW, Suite 900 Washington, DC 20005 2018 (202) 508-5800 Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered Proposed maximum offering price per share Proposed maximum aggregate offering price Amount of registration fee Common Stock, $0.01 par value per share 1,124,125 shares $10.00 $ 11,241,250(1) $ 1,448(2) (1) Estimated solely for the purpose of calculating the registration fee. (2) Previously paid. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. PROSPECTUS (Proposed Holding Company for Mt. Washington Savings Bank) Up to 977,500 shares of Common Stock (Subject to Increase to up to 1,124,125 shares) MW Bancorp, Inc., a Maryland corporation and the proposed holding company for Mt. Washington Savings Bank, is offering shares of common stock for sale at $10.00 per share in connection with the conversion of Mt. Washington Savings Bank from the mutual to the stock form of organization. There is no established market for our common stock. We expect that our common stock will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group upon conclusion of the stock offering. We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012. We are offering up to 977,500 shares of common stock for sale at a price of $10.00 per share on a best efforts basis. We may sell up to 1,124,125 shares of common stock because of demand for the shares of common stock or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 722,500 shares in order to complete the offering. We are offering the shares of common stock in a subscription offering to eligible current and former depositors of Mt. Washington Savings Bank. Shares of common stock not purchased in the subscription offering may be offered for sale to the public in a community offering, with a preference given to natural persons and trusts of natural persons residing in Hamilton and Clermont Counties, Ohio. We also may offer for sale shares of common stock not purchased in the subscription offering or community offering to the general public through a syndicated community offering managed by Sterne, Agee & Leach, Inc. The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that can be ordered by any person in the offering, or persons exercising subscription rights through a single qualifying account held jointly, is 10,000 shares ($100,000), and no person together with an associate or group of persons acting in concert may purchase more than 25,000 shares ($250,000) in the offering. The offering is expected to expire at 12:00 p.m., Eastern Time, on December 16, 2014 . We may extend this expiration date without notice to you until January 30, 2015 . The Ohio Division of Financial Institutions and the Federal Deposit Insurance Corporation may approve a later date, which may not be beyond December 22, 2016 . Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond January 30, 2015 , or the number of shares of common stock to be sold is increased to more than 1,124,125 shares or decreased to less than 722,500 shares. If the offering is extended past January 30, 2015 , we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.20% per annum. If the number of shares to be sold is increased to more than 1,124,125 shares or decreased to less than 722,500 shares, all funds submitted for the purchase of shares of common stock in the offering will be returned promptly with interest at 0.20% per annum. All subscribers will be resolicited and given an opportunity to place a new order within a specified period of time. Funds received in the subscription and the community offerings and, if applicable, the syndicated community offering will be held in a segregated account at Mt. Washington Savings Bank and will earn interest at 0.20% per annum until completion or termination of the offering. Sterne, Agee & Leach, Inc. will assist us in selling our shares of common stock in the offering on a best efforts basis. Sterne, Agee & Leach, Inc. is not required to purchase any of the shares of common stock that are being offered for sale. OFFERING SUMMARY Price: $10.00 per Share Minimum Midpoint Maximum Adjusted Maximum Number of shares 722,500 850,000 977,500 1,124,125 Gross offering proceeds $ 7,225,000 $ 8,500,000 $ 9,775,000 $ 11,241,250 Estimated offering expenses, excluding selling agent commissions $ 785,000 $ 785,000 $ 785,000 $ 785,000 Selling agent commissions (1) $ 325,000 $ 325,000 $ 325,000 $ 325,000 Estimated net proceeds $ 6,115,000 $ 7,390,000 $ 8,665,000 $ 10,131,250 Estimated net proceeds per share $ 8.46 $ 8.69 $ 8.86 $ 9.01 (1) Selling agent commissions shown assume that all shares are sold in the subscription and community offerings. The amounts shown include: (i) fees and selling commissions payable by us to Sterne, Agee & Leach, Inc. in connection with the subscription and community offerings equal to $225,000; and (ii) other expenses of the offering payable to Sterne, Agee & Leach, Inc. in the subscription and community offerings of up to $100,000. Selling agent commissions on a per share basis amounts to $0.45, $0.38, $0.33 and $0.29, at the minimum, midpoint, maximum and adjusted maximum of the offering, respectively. See The Conversion and Offering Marketing and Distribution; Compensation for information regarding compensation to be received by Sterne, Agee & Leach, Inc. and the other broker-dealers that may participate in a syndicated community offering. If all shares of common stock were sold in a syndicated community offering, the maximum selling agent commissions would be 6.0% of the aggregate offering dollar amount of all shares sold in the syndicated community offering (net of shares purchased by our directors and executive officers and shares purchased by our employee stock ownership plan), or approximately $323,820, $394,200, $464,580 and $545,517 at the minimum, midpoint, maximum, and adjusted maximum levels of the offering, respectively. This investment involves a degree of risk, including the possible loss of principal. Please read Risk Factors beginning on page 16. These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None of the Securities and Exchange Commission, the Ohio Division of Financial Institutions, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System or any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. Sterne Agee (N/M) Not meaningful. 5 The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were utilized by Keller & Company, Inc. to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location. For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see The Conversion and Offering Determination of Share Price and Number of Shares to be Issued. After-Market Stock Price Performance The following table presents stock price performance information for all standard mutual-to-stock conversions completed between June 30, 2013 and August 15, 2014. These companies did not constitute the group of ten comparable public companies utilized in Keller & Company, Inc. s valuation analysis. Mutual-to-Stock Conversion Offerings with Closing Dates between June 30, 2013 and August 15, 2014 Percentage Price Change From Initial Trading Date Company Name and Ticker Symbol Conversion Date Exchange One Day One Week One Month Through August 15, 2014 Blue Hills Bancorp, Inc. BHBK 7/22/2014 NASDAQ 28.50 % 23.50 % 24.00 % 29.10 % Sunshine Bancorp, Inc. SBCP 7/15/2014 NASDAQ 20.30 % 19.00 % 18.80 % 18.80 % Home Bancorp Wisconsin, Inc. HWIS 4/24/2014 OTCBB (3.90 )% (7.40 )% (17.50 )% (16.00 )% Edgewater Bancorp, Inc. EGDW 1/22/2014 OTCBB 2.50 % 3.00 % 2.50 % 9.60 % Coastway Bancorp, Inc. CWAY 1/15/2014 NASDAQ 9.20 % 7.50 % 1.90 % 4.70 % Quarry City S&L Association QRRY 7/26/2013 OTCBB 7.50 % 2.00 % 0.50 % 7.50 % Sunnyside Bancorp Inc. SNNY 7/16/2013 OTCBB 5.00 % 4.50 % 0.10 % (4.50 )% Average 9.87 % 7.44 % 4.33 % 7.03 % Median 7.50 % 4.50 % 1.90 % 7.50 % Stock price performance is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of the company s assets, and the company s market area. None of the companies listed in the table above are exactly similar to MW Bancorp, the pricing ratios for their stock offerings may have been different from the pricing ratios for MW Bancorp shares of common stock and the market conditions in which these offerings were completed may have been different from current market conditions. Furthermore, this table presents only short-term performance with respect to companies that recently completed their mutual-to-stock conversions and may not be indicative of the longer-term stock price performance of these companies. The performance of these stocks may not be indicative of how our stock will perform. Our stock price may trade below $10.00 per share, as the stock prices of certain mutual-to-stock conversions have decreased below the initial offering price. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled Risk Factors beginning on page 16. 6 How We Intend to Use the Proceeds From the Stock Offering We anticipate that MW Bancorp will invest, at the minimum, midpoint, maximum and adjusted maximum of the offering range, approximately $5.4 million, $5.6 million, $5.6 million and $5.6 million, respectively, of the net proceeds from the stock offering in Mt. Washington Savings Bank. Of the remaining funds, we intend that MW Bancorp will loan funds to our employee stock ownership plan to fund the plan s purchase of shares of common stock in the stock offering, and retain the remainder of the net proceeds from the offering. Assuming we sell 850,000 shares of common stock in the stock offering and have net proceeds of $7.4 million, based on the above formula, we anticipate that MW Bancorp will invest $5.6 million in Mt. Washington Savings Bank, loan $680,000 to our employee stock ownership plan to fund its purchase of shares of common stock, and retain the remaining $1.1 million of the net proceeds. MW Bancorp may use the remaining funds that it retains to pay cash dividends, to repurchase shares of common stock (subject to compliance with regulatory requirements), for investments, or for other general corporate purposes. Mt. Washington Savings Bank intends to use the net proceeds it receives from us to fund new loans, enhance existing products and services, invest in securities, expand its banking franchise by establishing or acquiring a new branch as opportunities arise, or for general corporate purposes. We currently have no understandings or agreements to acquire other financial institutions or branches thereof. For more information on the proposed use of the proceeds from the offering, see How We Intend to Use the Proceeds from the Offering. Persons Who May Order Shares of Common Stock in the Offering We are offering the shares of common stock in a subscription offering in the following descending order of priority: (i) First, to depositors with accounts at Mt. Washington Savings Bank with aggregate balances of at least $50 at the close of business on June 30, 2013. (ii) Second, to our tax-qualified employee benefit plans (including Mt. Washington Savings Bank s employee stock ownership plan), which will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering. We expect our employee stock ownership plan to purchase up to 8% of the shares of common stock sold in the offering. (iii) Third, to depositors with accounts at Mt. Washington Savings Bank with aggregate balances of at least $50 at the close of business on September 30, 2014 . (iv) Fourth, to depositors of Mt. Washington Savings Bank at the close of business on October 31, 2014 . Shares of common stock not purchased in the subscription offering may be offered for sale in a community offering, with a preference given to natural persons and trusts of natural persons residing in Hamilton and Clermont Counties, Ohio. The community offering may begin concurrently with, during or after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering to the general public through a syndicated community offering, which will be managed by Sterne, Agee & Leach, Inc. We have the right to accept or reject, in whole or in part, in our sole discretion, orders received in the community offering or syndicated community offering. Any determination to accept or reject stock orders in the community offering or the 7 syndicated community offering will be based on the facts and circumstances available to management at the time of the determination. If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the subscription offering. A detailed description of the subscription offering, the community offering and the syndicated community offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled The Conversion and Offering. Limits on How Much Common Stock You May Purchase The minimum number of shares of common stock that may be purchased is 25. Generally, no individual, or individuals exercising subscription rights through a single qualifying account held jointly, may purchase more than 10,000 shares ($100,000) of common stock. If any of the following purchase shares of common stock, their purchases, in all categories of the offering combined, when combined with your purchases, cannot exceed 25,000 shares ($250,000) of common stock: your spouse or relatives of you or your spouse who reside with you; most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior position; or other persons who may be your associates or persons acting in concert with you. Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying accounts registered to the same address will be subject to the overall purchase limitation of 25,000 shares ($250,000). See the detailed descriptions of acting in concert and associate in the section of this prospectus headed The Conversion and Offering Limitations on Common Stock Purchases. Subject to regulatory approval, we may increase or decrease the purchase limitations at any time. See the detailed description of the purchase limitations in the section of this prospectus headed The Conversion and Offering Limitations on Common Stock Purchases. How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering In the subscription offering and community offering, you may pay for your shares only by: personal check, bank check or money order made payable directly to MW Bancorp, Inc.; or authorizing us to withdraw available funds from the types of Mt. Washington Savings Bank deposit accounts identified on the stock order form. Please do not submit cash or wire transfers. Mt. Washington Savings Bank is not permitted to lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use a Mt. Washington Savings Bank line of credit check or any type of third-party check to pay for shares of common stock. On the stock order form, you may not designate withdrawal from Mt. Washington Savings Bank accounts with check-writing privileges; instead, please submit a 8 check. If you request that we directly withdraw the funds from an account with check writing privileges, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account. Funds received in the subscription and community offerings and, if applicable, the syndicated community offering will be held in a segregated account at Mt. Washington Savings Bank and will earn interest at 0.20% per annum until completion or termination of the offering. You may not authorize direct withdrawal from a Mt. Washington Savings Bank retirement account. See Using Retirement Account Funds to Purchase Shares of Common Stock in the Subscription and Community Offerings. You may subscribe for shares of common stock in the offering by delivering a signed and completed stock order form, together with full payment payable to MW Bancorp, Inc. or authorization to withdraw funds from one or more of your Mt. Washington Savings Bank deposit accounts, provided that the stock order form is received before 12:00 p.m., Eastern Time, on December 16, 2014 . You may submit your stock order form and payment by mail using the stock order reply envelope provided, by overnight delivery to our Stock Information Center at the address noted on the stock order form or by hand-delivery to Mt. Washington Savings Bank s office, located at 2110 Beechmont Avenue, Cincinnati, Ohio. Please do not mail stock order forms to Mt. Washington Savings Bank. Once submitted, your order will be irrevocable unless the offering is terminated or is extended beyond January 30, 2015 , or the number of shares of common stock to be sold is increased to more than 1,124,125 shares or decreased to less than 722,500 shares. For a complete description of how to purchase shares in the stock offering, see The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings. Using Retirement Account Funds to Purchase Shares of Common Stock in the Subscription and Community Offerings You may be able to subscribe for shares of common stock using funds in your individual retirement account ( IRA ), or other retirement account. If you wish to use some or all of the funds in your IRA or other retirement account held at Mt. Washington Savings Bank, the applicable funds must be transferred to a self-directed account maintained by an independent custodian or trustee, such as a brokerage firm, before you place your stock order. If you do not have such an account, you will need to establish one. An annual administrative fee may be payable to the independent custodian or trustee. Because individual circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the December 16, 2014 offering deadline, for assistance with purchases using funds in your IRA or other retirement account held at Mt. Washington Savings Bank or elsewhere. Whether you may use such funds for the purchase of shares in the stock offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held. For a complete description of how to use IRA funds to purchase shares in the stock offering, see The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings Using Retirement Account Funds. You May Not Sell or Transfer Your Subscription Rights Federal regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action against anyone who we believe has sold or transferred his or her subscription rights. In addition, we intend to advise the appropriate federal and state agencies 9 of any person who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights. On the stock order form, you may not add the names of others for joint stock registration who do not have subscription rights or who qualify only in a lower subscription offering priority than you do. You may add only those who were eligible to purchase shares of common stock in the subscription offering at your date of eligibility. In addition, the stock order form requires that you list all qualifying accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation if there is an oversubscription. Purchases by Executive Officers and Directors We expect our directors and executive officers, together with their associates, to subscribe for 125,000 shares ($1.25 million) of common stock in the offering, representing 17.3% of shares to be sold at the minimum of the offering range. However, there can be no assurance that any individual director or executive officer, or the directors and executive officers as a group, will purchase any specific number of shares of our common stock. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Our directors and executive officers will be subject to the same purchase limitations as other participants in the offering set forth under Limits on How Much Stock You May Purchase. For more information on the proposed purchases of shares of common stock by our directors and executive officers, see Subscriptions by Directors and Executive Officers. Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings The deadline for submitting orders for shares of common stock in the subscription and community offerings is 12:00 p.m., Eastern Time, on December 16, 2014 , unless we extend the subscription offering and/or the community offering. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be received (not postmarked) by this time. Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 12:00 p.m., Eastern Time, on December 16, 2014 , whether or not we have been able to locate each person entitled to subscription rights. For a complete description of the deadline for purchasing shares in the stock offering, see The Conversion and Offering Procedure for Purchasing Shares in the Subscription and Community Offerings Expiration Date. Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares If we do not receive orders for at least 722,500 shares of common stock, we may take additional steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may: increase the purchase limitations; and/or seek regulatory approval to extend the offering beyond January 30, 2015 . 10 If we extend the offering past January 30, 2015 , we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period of time, your stock order will be cancelled and your deposit account withdrawal authorizations will be cancelled or your funds submitted will be returned promptly with interest at 0.20% per annum from the date the stock order was processed. If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be and, in our sole discretion, other subscribers may be, given the opportunity to increase their subscriptions up to the newly applicable limit. Conditions to Completion of the Conversion The board of directors of Mt. Washington Savings Bank has approved the plan of conversion. In addition, the ODFI and the FDIC have conditionally approved the plan of conversion and the Federal Reserve Board has conditionally approved our holding company application. We cannot complete the conversion unless: The plan of conversion is approved by a majority of votes eligible to be cast by members of Mt. Washington Savings Bank (depositors of Mt. Washington Savings Bank) as of October 31, 2014 ; We have received orders for at least the minimum number of shares of common stock offered; and We receive the final approvals required from the ODFI and the FDIC to complete the conversion and offering and the final approval from the Federal Reserve Board on the holding company application. Any approval by the ODFI, the FDIC or the Federal Reserve Board does not constitute a recommendation or endorsement of the plan of conversion. Our Dividend Policy Following completion of the stock offering, our board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount of any dividend payments will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; statutory and regulatory limitations; and general economic conditions. See Our Dividend Policy for additional information regarding our dividend policy. Market for Common Stock We have never issued capital stock and there is no established market for our common stock. We anticipate that the common stock sold in the offering will be quoted on the OTC Pink Marketplace (OTCPK) operated by OTC Markets Group. Sterne, Agee & Leach, Inc. currently intends to make a market in the shares of our common stock, but is under no obligation to do so. Due to the small size of the offering, an active and liquid market for our common stock is not expected to develop. See Market for the Common Stock. Delivery of Shares of Common Stock All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription and community offerings will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion and offering. Shares of common stock sold in the syndicated community offering may be delivered electronically through the services of The Depository Trust Company. We expect trading in the stock to begin on the day of completion of the conversion and offering or the next business day. The conversion and offering are expected to be completed as soon as practicable following satisfaction of the conditions described below in —Conditions to Completion of the Conversion. Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they purchased, even though the common stock will have begun trading. Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm. 11 Possible Change in the Offering Range Keller & Company, Inc. will update its appraisal before we complete the offering. If, as a result of demand for the shares or changes in market conditions, Keller & Company, Inc. determines that our pro forma market value has increased, we may sell up to 1,124,125 shares in the offering without further notice to you. If our pro forma market value at that time is either below $7.2 million or above $11.2 million, then, after consulting with the ODFI and the FDIC, we may: terminate the stock offering, cancel deposit account withdrawal authorizations and promptly return all funds received in the offering with interest at 0.20% per annum; set a new offering range; or take such other actions as may be permitted by the ODFI, the FDIC, the Federal Reserve Board, the Financial Industry Regulatory Authority ( FINRA ) and the Securities and Exchange Commission. If we set a new offering range, we will promptly return funds, with interest at 0.20% per annum for funds received in the offering, cancel deposit account withdrawal authorizations and commence a resolicitation. In connection with the resolicitation, we will notify subscribers of their right to place a new stock order for a specified period of time. Possible Termination of the Offering We may terminate the offering at any time prior to the special meeting of members of Mt. Washington Savings Bank that is being called to vote on the conversion, and at any time after member approval with the concurrence of the ODFI and the FDIC. If we terminate the offering, we will promptly return funds, as described above. Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion We expect our employee stock ownership plan, which is a tax-qualified retirement plan for the benefit of all of our employees being established in connection with the conversion and stock offering, to purchase up to 8% of the shares of common stock that we sell in the offering. If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase shares over this maximum, up to a total of 8% of the shares of common stock that we sell in the offering. This would reduce the number of shares available for allocation to eligible depositors. For further information, see Management Benefit Plans and Agreements Employee Stock Ownership Plan. 12 Purchases by the employee stock ownership plan in the offering will be included in determining whether the required minimum number of shares have been sold in the offering. Subject to market conditions and receipt of regulatory approval, the employee stock ownership plan may instead elect to purchase shares of common stock in the open market following the completion of the offering in order to fill all or a portion of the employee stock ownership plan s intended subscription. We also intend to implement one or more stock-based benefit plans no earlier than six months after completion of the conversion. Stockholder approval of these plans will be required, and the stock-based benefit plans cannot be implemented until at least six months after the completion of the conversion pursuant to applicable FDIC regulations. If adopted within 12 months following the completion of the conversion, and provided that upon completion of the offering Mt. Washington Savings Bank has at least a 10% tangible capital to assets ratio, the FDIC conversion regulations would allow for the stock-based benefit plans to reserve a number of shares of common stock equal to not more than 4% of the shares sold in the offering, or up to 39,100 shares of common stock at the maximum of the offering range, for restricted stock awards to key employees and directors, at no cost to the recipients. If adopted within 12 months following the completion of the conversion, the stock-based benefit plans will also reserve a number of shares equal to not more than 10% of the shares of common stock sold in the offering, or up to 97,750 shares of common stock at the maximum of the offering range, for the exercise of stock options granted to key employees and directors. If the stock-based benefit plans are adopted after one year from the date of the completion of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt stock-based benefit plans encompassing more than 136,850 shares of our common stock assuming the maximum of the offering range. We have not yet determined whether we will present these plans for stockholder approval within 12 months following the completion of the conversion or whether we will present these plans for stockholder approval more than 12 months after the completion of the conversion. The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that would be available under one or more stock-based benefit plans if such plans are adopted within one year following the completion of the conversion and the offering and Mt. Washington Savings Bank has at least a 10% tangible capital to assets ratio at that time. The table shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to non-management employees. Dilution Number of Shares to be Granted or Purchased (1) Resulting Value of Grants (2) As a From At At At At Percentage Issuance of Minimum Maximum Minimum Maximum of Common Shares for of of of Offering of Offering Stock to be Stock Benefit Offering Offering Range Range Issued Plans Range Range (In thousands) Employee stock ownership plan 57,800 78,200 8.00 % n/a (3) $ 578 $ 782 Stock awards 28,900 39,100 4.00 3.85 % 289 391 Stock options 72,250 97,750 10.00 9.09 % 257 348 Total 158,950 215,050 22.00 % 12.28 % $ 1,124 $ 1,521 (1) Ratios are annualized. (2) The interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities for the period. (3) The net interest margin represents net interest income as a percent of average interest-earning assets for the period. (4) The efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. (5) Bank only capital ratios presented. 39 Comparison of Financial Condition at September 30, 2014 and June 30, 2014 Total Assets. Total assets were $90.4 million at September 30, 2014, an increase of $1.3 million, or 1.4%, over the $89.1 million at June 30, 2014. The increase was primarily comprised of an increase in net loans, including loans held for sale, of $5.8 million, which was partially offset by a decrease in cash and cash equivalents of $3.2 million and a decrease in investment securities of $1.2 million. Net Loans. Net loans, including loans held for sale, increased by $5.8 million, or 8.6%, to $73.1 million at September 30, 2014 from $67.3 million at June 30, 2014. During the three months ended September 30, 2014, we originated $11.7 million of loans, $7.7 million of which were one- to four-family residential real estate loans, $2.2 million of which were construction loans and $1.5 million of which were commercial real estate loans, and sold $532,000 of loans in the secondary market. During the three months ended September 30, 2014, one- to four-family residential real estate loans increased $3.8 million, or 7.0%, to $57.9 million at September 30, 2014, from $54.1 million at June 30, 2014; commercial real estate loans increased $1.6 million, or 17.9%, to $10.6 million at September 30, 2014; and construction loans increased $460,000, or 16.5%, to $3.3 million at September 30, 2014. Increases in loan balances reflect our strategy to grow and diversify our loan portfolio, with an emphasis on increasing commercial and multi-family residential loans, as a shift in strategy from our traditional focus on one-to four-family residential loans. Such growth has been achieved amid strong competition for commercial real estate, multi-family and one- to four-family residential mortgage loans in our market area in the current low interest rate environment. During the latter part of fiscal 2013, we initiated a program to sell certain fixed-rate, 30-year term mortgage loans in the secondary market. We have sold loans on both a servicing released and servicing retained basis, in transactions with the FHLB-Cincinnati, through its mortgage purchase program, and other investors. We sold $532,000 of loans in the three months ended September 30, 2014. Total loans sold and serviced accumulated to $1.0 million at September 30, 2014. Management intends to continue this sales activity in future periods. Interest-Bearing Time Deposits in Other Financial Institutions. Interest-bearing time deposits in other banks decreased by $400,000, or 10.0%, to a total of $3.6 million at September 30, 2014, compared to $4.0 million at June 30, 2014. Management began to invest in certificates of deposit during the year ended June 30, 2013, to increase the yield on liquid assets beyond the rates available in overnight funds. Investment Securities. Investment securities decreased $1.2 million, or 15.2%, to $6.6 million at September 30, 2014 from $7.8 million at June 30, 2014. The decrease consisted primarily of called securities and principal repayments on mortgage-backed securities during the three months ended September 30, 2014. The yield on our investment securities decreased to 1.29% for the three months ended September 30, 2014 from 1.73% for the three months ended September 30, 2013, as a result of the maturity and sales of securities during the period and the continuing low interest rate environment. At September 30, 2014, investment securities classified as available-for-sale and held-to-maturity consisted entirely of government-sponsored mortgage-backed securities. Foreclosed Assets. Foreclosed assets totaled $189,000 at September 30, 2014 compared to $158,000 at June 30, 2014, as we sold $47,000 of foreclosed properties and added $77,000 of assets through foreclosure. At September 30, 2014, our foreclosed assets included three parcels of one- to four-family residential real estate. 40 Deposits. Deposits increased by $837,000, or 1.4%, to $61.5 million at September 30, 2014 from $60.7 million at June 30, 2014. Our core deposits, which consist of all deposit account types except certificates of deposit, increased $2.7 million, or 18.6%, to $17.4 million at September 30, 2014 from $14.7 million at June 30, 2014. Certificates of deposit decreased $1.9 million, or 4.1%, to $44.2 million at September 30, 2014 from $46.1 million at June 30, 2014. During the three months ended September 30, 2014, management continued its strategy of pursuing growth in demand accounts and other lower cost core deposits. Demand accounts were first offered by the Bank during the year ended June 30, 2013 and totaled $5.1 million at September 30, 2014. Management intends to continue its efforts to increase core deposits, with a special emphasis on growth in consumer and business demand deposits. Federal Home Loan Bank Advances. Federal Home Loan Bank advances increased $1.4 million, or 8.0%, to $18.7 million at September 30, 2014 from $17.3 million at June 30, 2014. Management has pursued a strategy of periodically increasing these advances to take advantage of this low-cost source of funding during the low interest rate environment for growth in the Bank s loans and investments. The aggregate cost of these advances was 1.56% at September 30, 2014, compared to the Bank s cost of deposits of 1.16% at that date. Total Equity. Total equity decreased $18,000, or 0.2%, to $8.8 million at September 30, 2014 and June 30, 2014. The decrease resulted from a net loss of $2,000 during the three months ended September 30, 2014, and a $16,000 increase in the accumulated other comprehensive loss. Comparison of Operating Results for the Three Months Ended September 30, 2014 and September 30, 2013 General. Our net loss for the three months ended September 30, 2014 was $2,000, compared to a net loss of $24,000 for the three months ended September 30, 2013, a decrease of $22,000, or 91.7%. The decrease in net loss was primarily due to a $67,000 increase in net interest income and a $15,000 decrease in the provision for loan losses, which were partially offset by a $42,000 decrease in noninterest income, a $3,000 increase in noninterest expenses and a $15,000 increase in federal income taxes. Interest Income. Interest income increased $88,000, or 12.5%, to $790,000 for the three months ended September 30, 2014 from $702,000 for the three months ended September 30, 2013. This increase was primarily attributable to a $100,000 increase in interest on loans receivable, which was partially offset by a $16,000 decrease in interest on investment securities. The average balance of loans during the three months ended September 30, 2014 increased by $10.5 million, or 17.4%, from the balance for the three months ended September 30, 2013, while the average yield on loans decreased by seven basis points to 4.21% for the three months ended September 30, 2014 from 4.28% for the three months ended September 30, 2013. The decrease in average yield on loans was due to the declining interest rate environment, as well as an increase in payoffs of higher interest rate loans as customers refinanced loans at lower interest rates. The average balance of investment securities decreased $1.8 million to $7.4 million for the three months ended September 30, 2014 from $9.3 million for the three months ended September 30, 2013, while the average yield on investment securities decreased by 44 basis points to 1.29% for the three months ended September 30, 2014 from 1.73% for the three months ended September 30, 2013. The decrease in average yield on securities was due to the declining interest rate environment, as well as our decision to invest in shorter-term securities, which generally bear interest at a lower rate than longer-term securities. Interest income on other interest-bearing deposits, including certificates of deposit in other financial institutions, increased $4,000, or 20.0%, for the three months ended September 30, 2014, as an increase in the average yield of 50 basis points, to 1.41% for the three months ended September 30, 2014, was partially offset by a decrease in the average balance of $1.9 million period-to-period. 41 Interest Expense. Total interest expense increased $21,000, or 9.5%, to $242,000 for the three months ended September 30, 2014 from $221,000 for the three months ended September 30, 2013. Interest expense on deposit accounts increased $1,000, or 0.6%, to $178,000 for the three months ended September 30, 2014 from $177,000 for the three months ended September 30, 2013. The increase was primarily due to an increase of $1.2 million, or 2.1%, in the average balance of deposits to $60.7 million for the three months ended September 30, 2014, which was partially offset by a decrease of two basis points in the average cost of interest-bearing deposits to 1.17% for the three months ended September 30, 2014 from 1.19% for the three months ended September 30, 2013, reflecting the declining interest rate environment. Interest expense on FHLB advances increased $20,000 to $64,000 for the three months ended September 30, 2014 from $44,000 for the three months ended September 30, 2013. The average balance of advances increased by $6.0 million, or 54.8%, to $17.1 million for the three months ended September 30, 2014 compared to the three months ended September 30, 2013, while the average cost of these advances decreased by nine basis points to 1.50% from 1.59%. As noted above, management elected to increase outstanding advances as a source of lower-cost funding. Net Interest Income . Net interest income increased $67,000, or 13.9%, to $548,000 for the three months ended September 30, 2014 compared to $481,000 for the three months ended September 30, 2013. The increase reflected the increase in the interest rate spread to 2.48% for the three months ended September 30, 2014 from 2.34% for the three months ended September 30, 2013, while the average net interest earning assets decreased $596,000 period-to-period. Our net interest margin increased to 2.59% for the three months ended September 30, 2014 from 2.46% for the three months ended September 30, 2013. The interest rate spread and net interest margin were impacted by a continuation of a low interest rate environment. Provision for Loan Losses. Based on our analysis of the factors described in Critical Accounting Policies Allowance for Loan Losses, we recorded a provision for loan losses of $15,000 for the three months ended September 30, 2014 and $30,000 for the three months ended September 30, 2013. The allowance for loan losses was $1.6 million, or 2.08% of total loans, at September 30, 2014, compared to $1.5 million, or 2.23% of total loans, at June 30, 2014. The decrease in the provision for loan losses in the three months ended September 30, 2014 compared to the same period in 2013 was due primarily to lesser balances of nonperforming loans and delinquent loans in the 2014 period. Total nonperforming loans were $1.3 million at September 30, 2014, compared to $1.6 million at September 30, 2013. Classified loans declined to $2.1 million at September 30, 2014, compared to $2.5 million at September 30, 2013, and total loans past due greater than 30 days were $496,000 and $1.3 million at those respective dates. Net charge-offs totaled $1,000 for the three months ended September 30, 2014, compared to net recoveries of $2,000 for the three months ended September 30, 2013. As a percentage of nonperforming loans, the allowance for loan losses was 115.23% at September 30, 2014 compared to 88.05% at September 30, 2013. Management has continued a strategy focused on resolution of problem loans and a reduction of the Bank s volume of nonperforming loans. The provision for loan losses in the three months ended September 30, 2014 and 2013 was attributable primarily to estimated losses recognized on certain impaired loans as well as the Bank s overall growth in loans and the change in the loan product mix, as the Bank continued its efforts to diversify the loan portfolio from its traditional focus on one-to four-family residential loans. The allowance for loan losses reflects the estimate we believe to be appropriate to cover probable incurred losses in the loan portfolio at September 30, 2014 and 2013. While we believe the estimates and assumptions used in our determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions, and the increase in future provisions that may be required may adversely impact our financial condition and results of operations. In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management. 42 Non-Interest Income . Non-interest income decreased $42,000, or 51.2%, to $40,000 for the three months ended September 30, 2014 from $82,000 for the three months ended September 30, 2013. The decrease was primarily due to the effects of a gain on sale of foreclosed assets of $44,000 in the 2013 period compared to a gain on sale of $1,000 in 2014. Gains on sales of loans amounted to $9,000 in the 2014 period, compared to $4,000 in the 2013 period, as the Bank continued a program to sell certain loans in the secondary market. Non-Interest Expense. Non-interest expense increased $3,000, or 0.5%, to $575,000 for the three months ended September 30, 2014 compared to $572,000 for the three months ended September 30, 2013. The increase was due primarily to an $11,000 increase in data processing and a $30,000 increase in professional services, primarily due to costs associated with the conversion, which were partially offset by a $13,000 decrease in compensation expense and a $19,000 decrease in franchise taxes. Non-interest expense can be expected to increase because of costs associated with operating as a public company and increased compensation costs related to possible implementation of one or more stock-based benefit plans, if approved by our stockholders. Federal Income Taxes. Federal income tax credits decreased by $15,000 due to a benefit of $15,000 recognized for the three months ended September 30, 2013. The federal income tax benefit related primarily to the tax effects of changes in the accumulated other comprehensive income, required as a result of the full impairment valuation allowance maintained on the Bank s deferred tax assets in fiscal 2014. Management evaluated the deferred tax asset based upon a projection of future operating results and determined that a full impairment valuation allowance was required at both September 30, 2014 and 2013. The Bank has a total valuation allowance on its net deferred tax assets of $2.1 million at September 30, 2014. The deferred tax asset will only be recognized in future periods when it is more likely than not that the net deferred tax asset can be realized, primarily through the generation of sustainable taxable income. 43 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, which can be identified by the use of words such as estimate, project, believe, intend, anticipate, assume, plan, seek, expect, will, may, should, indicate, would, believe, contemplate, continue, target and words of similar meaning. These forward-looking statements include, but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this prospectus. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: our ability to manage our operations under the current adverse economic conditions nationally and in our market area; adverse changes in the financial industry, securities, credit and national local real estate markets (including real estate values); significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management s assumptions in determining the adequacy of the allowance for loan losses; credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses; the use of estimates in determining fair value of certain of our assets, which may prove to be incorrect and result in significant declines in valuations; competition among depository and other financial institutions; our ability to successfully implement our business plan and to grow our franchise to improve profitability; our success in increasing our one- to four-family, commercial and industrial and consumer lending, and selling one- to four-family loans in the secondary market; our ability to attract and maintain deposits and our success in introducing new financial products; our ability to improve our asset quality even as we increase our commercial real estate and multi-family and commercial business lending; 44 changes in interest rates generally, including changes in the relative differences between short term and long term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources; fluctuations in the demand for loans, which may be affected by the number of unsold homes, land and other properties in our market areas and by declines in the value of real estate in our market area; changes in consumer spending, borrowing and savings habits; declines in the yield on our assets resulting from the current low interest rate environment; risks related to a high concentration of loans secured by real estate located in our market area; the results of examinations by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings; changes in the level of government support of housing finance; our ability to enter new markets successfully and capitalize on growth opportunities; changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act and the JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements, regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available to address such changes; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board; changes in our compensation and benefit plans, and our ability to retain key members of our senior management team and to address staffing needs in response to product demand or to implement our strategic plans; loan delinquencies and changes in the underlying cash flows of our borrowers; our ability to control costs and expenses, particularly those associated with operating as a publicly traded company; the failure or security breaches of computer systems on which we depend; the ability of key third-party service providers to perform their obligations to us; changes in the financial condition or future prospects of issuers of securities that we own; and other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services described elsewhere in this prospectus. Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see Risk Factors beginning on page 16. 45 HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $6.1 million and $8.7 million, or $10.1 million if the offering range is increased by 15%. We intend to distribute the net proceeds as follows: Based Upon the Sale at $10.00 Per Share of 722,500 shares 850,000 shares 977,500 shares 1,124,125 shares (1) Amount Percent of Net Proceeds Amount Percent of Net Proceeds Amount Percent of Net Proceeds Amount Percent of Net Proceeds (Dollars in thousands) Offering proceeds $ 7,225 $ 8,500 $ 9,775 $ 11,241 Less offering expenses (1,110 ) (1,110 ) (1,110 ) (1,110 ) Net offering proceeds (2) $ 6,115 100.0 % $ 7,390 100.0 % $ 8,665 100.0 % $ 10,131 100.0 % Distribution of net proceeds: To Mt. Washington Savings Bank $ (5,400 ) (88.3 )% $ (5,600 ) (75.8 )% $ (5,600 ) (64.6 )% $ (5,600 ) (55.3 )% To fund loan to employee stock ownership plan $ (578 ) (9.5 )% $ (680 ) (9.2 )% $ (782 ) (9.0 )% $ (899 ) (8.9 )% Retained by MW Bancorp $ 137 2.2 % $ 1,110 15.0 % $ 2,283 26.4 % $ 3,632 35.8 % For assistance, please contact the Stock Information Center, toll-free, at (800) 979-4568 . The date of this prospectus is _________, 2014. TABLE OF CONTENTS Page SUMMARY 1
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@@ -0,0 +1 @@
+SUMMARY OF PROSPECTUS One should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this prospectus. In this prospectus, unless the context otherwise denotes, references to "we," "us," "our," the Company VSI and Virtual Sourcing refer to Virtual Sourcing, Inc. General Information about Our Company Virtual Sourcing, Inc. was formed under the laws of the State of Nevada on July 30, 1999 under the name Heritage Scholastic Corp. Heritage Scholastic Corp. was engaged in the business of publishing and distributing supplemental history textbooks for grades Kindergarten through 12. Heritage Scholastic Corp. generated nominal revenue from the sales of its products. On September 12, 2002, the Company filed a Form 10 with the Securities and Exchange Commission, and became a fully reporting entity. On January 27, 2005, Heritage Scholastic Corp. entered into a Stock Purchase and Share Exchange Agreement with Nano Chemical Systems, Inc. On February 15, 2005, pursuant to the Stock Purchase and Share Exchange Agreement, the company changed its name to Nano Chemical Systems Holdings, Inc. Nano Chemical Systems Holdings, Inc. was engaged in the development of aerosol products and conducted operations in the field of nanotechnology. Nano Chemical Systems, Inc. generated approximately 1.7 million dollars in revenue from the sales of its products. On March 3, 2008, the Company changed its name to Pangenex Corporation. Pangenex Corporation developed and marketed novel, patented or patent pending condition specific nutraceuticals, topical over the counter drugs and personal care products. Pangenex generated approximately $250,000 from the sales of its products. On May 12, 2008, the Company filed a Form 15 with the Securities and Exchange Commission in order to terminate its duty to file reports under Sections 13 and 15(d) of the Securities Exchange Act of 1934. On May 1, 2012, the Company amended its articles of incorporation to authorize Series A and Series B Preferred Stock. On May 1, 2012, the Company changed its name to Virtual Sourcing, Inc. On March 6, 2013, the Company acquired 80% of Allied Recycling Corp. Pursuant to the Stock Purchase Agreement between the Company and Allied Recycling Corp., the Company purchased 4,000 common shares, representing 80% of the issued and outstanding common shares of Allied Recycling Corp. in exchange for 55,000,000 restricted common shares, 999 Series A Preferred Shares and 100 Series B Preferred Shares of the Company, with the Common and Preferred Stock being valued in aggregate at $8,250,000. Allied Recycling Corp was formed in March 2013 to be engaged in fiberglass recycling. Allied Recycling Corp. has begun searching for sources of fiberglass waste, capital and equipment that could assist in reprocessing waste and identifying the various types of waste. The Company's current focus is the recycling and remediation of difficult waste streams including fiberglass materials and other composites into recycled goods that can be sold to individual and commercial purchasers. As of September 30, 2014, we had cash or cash equivalents of $1,293. As of the date of this Prospectus, we have cash or cash equivalents of $1,293. In the event that we do not raise sufficient capital to further pursue our operations, and implement our planned future operations, an investor s entire investment could be lost. The Company has begun its project of identifying potential acquisitions and joint venture partners for both recycling of fiberglass waste and creation of end-user products. By acquiring a broad base of both recyclers and producers, VSI will be positioned to shoulder the enormous amount of fiberglass waste being produced by manufacturers of fiberglass and their various customers. Our subsidiary, Allied Recycling Corp (ARC), is engaged in the development of recycling methods and production of its proposed recycled fiber products. While these proposed recycled products may compete with certain recycled plastics, the proposed ARC products will be unique in that fiberglass does not warp, corrode, lose pigment, burn or melt. In addition, the proposed ARC products can be made to any mass, weight, color or shape required by the customer. Allied Recycling Corp. solves waste stream problems by removing all recyclable fiber materials from the clients site and transporting them to our various inventory locations. It is ARC's goal to keep cost neutral prices compared to dumping at commercial dump sites. We are currently developing a mobile grinding system that will allow for access to remote sites where materials may be limited or transportation to distant inventory locations is cost prohibitive. In conjunction with partners, licensors, and the manufacturers themselves, we will utilize a number of facilities around the country for recycling of fiberglass waste and production of useful end-products. Starting in a tri-state region that includes West Virginia, Virginia, South Carolina and North Carolina, the Company will construct or utilize other facilities and subsidiary companies near major fiberglass manufacturing hubs. Additional locations will be developed along the Atlantic seaboard and the Gulf Coast where abandoned, damaged, or sunken boats may be salvaged for fiberglass that can then be used to manufacture our proposed products. In order to pursue its strategic objectives, the Company plans to utilize a portion of the proceeds received from this offering, as well as its available cash, cash generated from operations and additional cash as may be raised via equity or debt offerings as may be approved by its Board of Directors. As of the date of this prospectus, neither the Company, nor Allied Recycling Corp have contracts or agreements to purchase fiberglass waste, purchase concrete, manufacture or produce our proposed products, or distribute our proposed products. On July 5, 2014, Allied Recycling Corp. entered into a Marketing Agreement with EYII, LLC which has allowed Allied Recycling Corp. to obtain the exclusive wholesale marketing rights to a chemical solution that increases the speed of separation of oil and solids from water in existing tanks. The name of the separation product is Kruud Kleen . EYII has allowed Allied Recycling Corp. to purchase the separation product for 2/3 of the suggested retail price at which the product is customarily sold. Payment is owed by Allied Recycling Corp. within five days of its receipt of payment by the customer. The Company plans to sell such separation product to oil production and storage facilities in the United States. The Company agreed to issue to EYII 5 million shares of its common stock as payment for the exclusive wholesale marketing rights. The five million shares to be issued pursuant to the agreement were issued on December 9, 2014. A purchase order was issued to Allied Recycling Corp. on July 23, 2014, consisting of a minimum of 70 barrels per week and a maximum of 105 barrels per week of the separation product to be provided to a third party. To date the Company has sold 18 barrels and the Company is awaiting the completion of the third party s end user site to continue filling the purchase order. The chemical, which was branded today as Kruud Kleen , has a primary function is to separate oil and water to recycle the water for use in fracking, pumping down oil and gas wells or for agricultural irrigation. The separated oil is then available for sale on the spot market. We are looking for other products relative the oil patch to distribute as well so that we might be able to fulfill all the needs of the oil service companies in recovering as much oil as possible from the water and from other mud/slurry derived from pumping the well(s). The product was in the process of being sold by the formula s owners with potential customers before our involvement. This is an exclusive U.S. wholesale distribution agreement so all contacts by our supplier have been forwarded to us. As of the date of this Prospectus, the Company has delivered 18 barrels. The facility creating the product, which is owned and run by a third party, has been operational, but is currently awaiting additional equipment in order to increase its production. The Company is awaiting the completion of the third party s end user site to continue filling the purchase order. Currently, the barrels are either drop shipped to the end user site or picked up by FYA Field Services, LLC from the manufacturer. A small amount of the Kruud Kleen product is stored at a site affiliated with a member of FYA Field Services, LLC. The Company plans on continuing to have the barrels shipped or delivered by FYA Field Services, LLC. Prior to the corporate entity of EYII, LLC being formed, the business was run by its individual owners, and the business distributed products that its owners had developed or agreed to sell on behalf of third party customers. The products included Kruud Kleen, vertical windmills, water treatment systems and centrifugal power systems. Prior to the corporate entity of FYA Field Services, LLC being formed, the business was run by its individual owners, and provided services to clean and dispose of wastes derived from various activities in or around oil and gas wells. Norm Birmingham, a former officer of the Company, does not own any equity in either EYII or FYA Field Services. Mr. Birmingham, as a favor to the individuals who own EYII and FYA, who were running a business as individuals with no corporate entity having been set up, set up the companies in order to give the owners of EYII and FYA some liability protection and a corporate structure. The businesses now operating under the names EYII and FYA were operating prior to the formation of the actual corporate entities and are not startup business, although they had not been run under a formal corporate entity. Mr. Birmingham does not own any equity of EYII or FYA, and is therefore not involved in the agreements between the Company, EYII and FYA. Mr. Birmingham resigned from his positions as officer and director of the Company due to personal health reasons. Mr. Birmingham currently assists with compliance work for the Company, but does not have a contract with the Company and there are no plans to enter into a contract with Mr. Birmingham. Mr. Birmingham is not a promoter, or in any other way an affiliate of the Company. Gallant Acquisitions acted as the initial resident agent for EYII and FYA in order to expedite the process of having EYII and FYA formed prior to the contracts being signed, so the contracts would not need to be signed directly with the individuals who own EYII and FYA. Gallant Acquisitions Corp. is the resident agent for 9 companies in Wyoming, none of which it owns. The owner of the product formula has used it in various wells and tested it on frack water, sludge from oil tanks and mud from wells over the last couple of years. Every test on this formula has been successful in separating the oil from the water in two to three days depending on the material being separated. The savings comes from reducing the cost of other chemicals used, reduction in the use of machinery plus reduced power and labor. The purchase order requires a minimum purchase of 70 barrels per week and a maximum of 105 barrels per week. The sales price is $1,000 per barrel and our contract cost is $800 per barrel., which results in a minimum purchase annually of $3,640,000 with the maximum being $5,460,000. The Company s gross profit is approximately $200 per barrel. The market price per barrel has been set by the members of EYII and that is the standard price at which each barrel has been sold over the previous two years by the owners of EYII. The administrative office of the Company was located at 1200 G St. NW, Suite 800, Washington, DC 20005, and the company has changed locations due to a new office lease. The new office address for the Company is 615 Washington, Independence , KS 67301. The Company plans to use this office space until it requires larger space. The company fiscal year end is June 30. The Company has not been subject to any bankruptcy, receivership or similar proceeding. Explanatory Note This registration statement contains two separate offerings of the Company s common stock. The primary offering includes 25,000,000 common shares to be sold by the Company to potential investors. The secondary offering includes 10,000,000 common shares to be sold by the Company s selling shareholder to potential investors, upon its conversion of a convertible note. While this registration statement includes both the primary and secondary offerings, certain sections of the registration statement are specific to only the primary or secondary offerings. The sections of this registration statement that are specific only to the primary offering of 25,000,000 common shares to be sold by the Company are the sections titled Risks Associated with this Offering , Use of Proceeds , Determination of Offering Price , Dilution of the Price You Pay for your Shares and Description of our Securities . In addition, a portion of the Plan of Distribution section is applicable only to the primary offering. The sections of this registration statement that are specific to only the secondary offering of 10,000,000 shares to be sold by the Company s selling shareholder are the sections titled Selling Shareholder , Description of our Securities and a portion of the Plan of Distribution . All other sections, including the Risk Factors Associated with our Company , Description of Our Business , Description of Property and the financial statements and footnotes are applicable to both offerings, as they provide information to both current and future shareholders regarding the current business and financial status of the Company, as well as the risks associated with our company. The Offering Following is a brief summary of this offering. Please see the Plan of Distribution section for a more detailed description of the terms of the offering. Securities Being Offered by the Company: 25,000,000 shares of common stock, par value $.001, on a best-efforts basis Securities Being Offered by the Selling Shareholder: 10,000,000 shares of common stock, par value $.001, underlying a Convertible Promissory Note dated December 23, 2013. Offering Price per Share: $1.00 Offering Period: The shares being sold by the Company are being offered for a period not to exceed 180 days, unless extended by the Board of Directors for an additional 90 days. The shares being sold by our Selling Shareholder shall be offered for a period not to exceed 12 months from the date of effectiveness of this Registration Statement. In order to purchase shares in the public offering by the Company, potential investors shall purchase the shares directly from the Company and not from any shareholder of the Company. In addition, shares sold by the Company as part of the primary public offering will be sold pursuant to a Subscription Agreement. Net Proceeds to Our Company: $25,000,000, if all the shares are sold Use of Proceeds: The Company intends to use the proceeds to commence day to day business operations and the construction of its recycling facility. The proceeds will not be used to pay any of the Company s current liabilities. Number of Shares Outstanding Before the Offering: 180,684,725 Number of Shares Outstanding After the Offering: 205,684,725 if all the shares are sold The Company officers, directors and control persons do not intend to purchase any shares in this offering. Selected financial data The following financial information summarizes the more complete historical financial information at the end of this prospectus. Total Expenses are composed of General and Administrative costs and Professional Fees. As of June 30, 2014 Balance Sheet Total Assets $ 306 Total Liabilities $ 796,041 Stockholder s Equity (Deficit) $ (795,735) Year ended June 30, 2014 Statement of Operations Revenue $ 0 Total Operating Expenses $ 889,785 Net Loss $ (1,171,160) As of September 30, 2014 Balance Sheet Total Assets $ 13,293 Total Liabilities $ 758,923 Stockholder s Equity (Deficit) $ (745,630) Three months ended September 30, 2014 Statement of Operations Revenue $ 12,000 Total Operating Expenses $ 88,712 Net Loss $ (386,192 )
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001600527_idreamsky_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001600527_idreamsky_prospectus_summary.txt
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--- /dev/null
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@@ -0,0 +1 @@
+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001600694_adamas_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001600694_adamas_prospectus_summary.txt
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@@ -0,0 +1,99 @@
+PROSPECTUS SUMMARY
+
+ 
+
+AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES,
+"WE," "US," "OUR," AND "ADAMAS VENTURES, INC." REFERS TO ADAMAS VENTURES, INC.
+THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE
+PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
+
+ 
+
+ADAMAS VENTURES, INC.
+
+ 
+
+We are a development stage company and plan to operate in the distribution
+of baby products. We plan to market and distribute an assortment of high quality baby products in the Central and South American
+markets. Our products will include cribs, strollers, clothing, shoes, bottles, bibs, blankets, and toys. Some of our baby products
+will be designed as part of a series, meaning they will be designed and made in the same color-scheme and style. We currently have
+no baby products. We intend to purchase baby products from manufacturers in China, ship them to Central and South America and sell
+the products directly to retailers. We have not yet identified any manufacturers or shipping companies or negotiated any arrangements
+for such services. Our business plan first includes securing office space, developing a website, and then commencing our marketing
+efforts. We plan to complete the aforementioned within a one-year time span. In order to compete with other distributors of baby
+products in our target markets, we intend on hiring personnel with strong marketing backgrounds and who are also well connected
+in this industry.
+
+ 
+
+If we are to become a foreign sales agent for one or more domestic
+Chinese manufacturers, we will represent their products and continue our business plan as outlined in this prospectus.
+
+ 
+
+Adamas Ventures, Inc. was incorporated in Nevada on January 31,
+2014. We intend to use the net proceeds from this offering to develop our business operations (See "Description of Business"
+and "Use of Proceeds"). To implement our plan of operations we require a minimum of $30,000 for the next twelve months
+as described in our "Plan of Operations". We expect our operations to begin to generate revenues approximately twelve
+months after completion of this offering. The president of the Company, Jinshan Dai, intends to devote limited time ranging
+up to twenty hours a week to the Company and because we expect the majority of our revenues will derive from Internet sales,
+we do not require additional staff during the first twelve months. In addition, any sales orders are fulfilled by the manufacturer
+or supplier of the product, thereby reducing the need for the Company to hire additional employees to handle inventory. However,
+there is no assurance that we will generate any revenue in the first 12 months after completion of our offering or ever generate
+any revenue.
+
+ 
+
+We are a development stage company. If we are unable to raise the
+minimum funding of $30,000 required to conduct our business over the next twelve months, our business may fail. After twelve months
+period we may need additional financing. If we do not generate any revenue we may need a minimum of $10,000 of additional
+funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. Our
+principal executive offices are located at Room 1403, No. 408 Jie Fang Zhong Road, Guangzhou, Guangdong, PR China, 510030. Our
+phone number is 86-2028-8808 and our fax number is 86-8333-2588.
+
+From Inception until the date of this filing, we have had limited operating activities. Our financial statements from
+Inception (January 31, 2014) report no revenues and a net loss of $3,325. Our independent registered public accounting
+firm has issued an audit opinion for Adamas Ventures, Inc. which includes a statement expressing substantial doubt as to our ability
+to continue as a going concern. As of the date of this prospectus, there is no public trading market for our common stock and there
+is no assurance that a trading market for our securities will ever develop. The Company is publicly offering its shares to raise
+funds in order for our business to develop its operations and increase its likelihood of commercial success.
+
+ 
+
+THE OFFERING
+
+ 
+
+ 
+ 
+
+ The Offering
+ This is a self-underwritten, direct primary offering with no minimum purchase requirement.
+
+ The Issuer
+ ADAMAS VENTURES, INC.
+
+ Securities Being Offered
+ 10,000,000 shares of common stock.
+
+ Price Per Share
+ $0.01
+
+ 
+ Duration of the Offering
+
+ 
+
+ The shares will be offered for a period of two hundred and seventy (270) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (270 days from the effective date of this prospectus), (ii) the date when the sale of all 10,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 10,000,000 shares registered under the Registration Statement of which this Prospectus is part. 
+
+ Gross Proceeds
+ $100,000
+
+ Securities Issued and Outstanding
+ There are 20,000,000 shares of common stock issued and outstanding as of the date of this prospectus, held by our sole officer and director, Jinshan Dai.
+
+ Subscriptions
+ All subscriptions once accepted by us are irrevocable.
+
+ Registration Costs
+ We estimate our total offering registration costs to be approximately $8,000.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001601713_global_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001601713_global_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..3e9d3f9666e8442c0ff295a211fdf5488baf6f8a
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001601713_global_prospectus_summary.txt
@@ -0,0 +1 @@
+PROSPECTUS SUMMARY The following summary highlights material information contained in this prospectus. This summary does not contain all of the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the risk factors section, the financial statements and the notes to the financial statements. You should also review the other available information referred to in the section entitled Where you can find more information in this prospectus and any amendment or supplement hereto. Unless otherwise indicated, the terms the Company, Global Health Technologies we, us, and our refer and relate to Global Health Technologies, Inc.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001601758_woodside_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001601758_woodside_prospectus_summary.txt
new file mode 100644
index 0000000000000000000000000000000000000000..daa66b1863014426395a3420c2962a51e8296d57
--- /dev/null
+++ b/parsed_sections/prospectus_summary/2014/CIK0001601758_woodside_prospectus_summary.txt
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+(2014E -2016E Compound Annual Growth Rate) Attractive expected single-family permit growth Table of Contents to total book capitalization. A reconciliation of (i) net debt to net total book capitalization to (ii) total debt to total book capitalization is presented in the following table: Pro Forma (Unaudited) Historical As of December 31, As of June 30, 2014 As of June 30, 2014 2013 2012 ($ in thousands) Total debt $ $ 279,119 $ 220,000 $ 125,218 Total equity 225,755 201,134 169,073 Total book capitalization $ $ 504,874 $ 421,134 $ 294,291 Percentage of total debt to total book capitalization % 55.3 % 52.2 % 42.5 % Total debt $ $ 279,119 $ 220,000 $ 125,218 Less: Unrestricted cash 50,496 88,136 87,145 Net debt $ 228,623 131,864 38,073 Total book capitalization 504,874 421,134 294,291 Less: Unrestricted cash 50,496 88,136 87,145 Net total book capitalization $ $ 454,378 $ 332,998 $ 207,146 Percentage of net debt to net total book capitalization % 50.3 % 39.6 % 18.4 % (11)Backlog consists of homes sold under pending sales contracts that have not yet closed, some of which are subject to contingencies, including mortgage loan approvals. There can be no assurance that homes sold under pending sales contracts will close. Of the 484 and 652 homes in backlog as of June 30, 2014 and 2013, respectively, 366 and 462 represented homes completed or under construction, respectively, and 118 and 190 represented homes not yet under construction, respectively. Of the 386 and 358 homes in backlog as of December 31, 2013 and 2012, respectively, 309 and 260 represented homes completed or under construction, respectively, and 77 and 98 represented homes not yet under construction, respectively. Backlog figures as of all dates are unaudited. (12)We had $0.4 million, $0.3 million and $0.2 million of restricted cash as of June 30, 2014, December 31, 2013 and 2012, respectively. (13)On March 3, 2014, a subsidiary of Woodside LLC issued a seller note with a stated principal amount of $9.6 million. Although the seller note bears a stated interest rate of zero percent, Woodside LLC was required to impute an effective interest rate in accordance with GAAP. As a result, for financial reporting purposes, the seller note was recorded at the date of issuance with a principal amount of $8.9 million, which reflects an initial debt discount of $0.7 million, and an effective interest rate of 3.9%. As of June 30, 2014, the outstanding principal amount of the seller note recorded on the balance sheet of the Company was $9.0 million, which reflects the amortization of a portion of the initial debt discount recorded with respect to the seller note. On April 29, 2014, we issued $50.0 million in additional principal amount of the 2021 Notes at a purchase price of 100.25% of the principal amount plus accrued interest from December 15, 2013. As of June 30, 2014, the outstanding principal amount of the 2021 Notes recorded on the balance sheet of the Company was $270.1 million, which reflects a premium of $0.1 million recorded for financial reporting purposes. (2014E -2016E Annual Average Growth Rate) Table of Contents RISK FACTORS An investment in our Class A Common Stock involves a high degree of risk. In addition to the other information in this prospectus, prospective investors should carefully consider the following risks before making an investment in our Class A Common Stock. The risks described in this prospectus are not the only ones we may face. Any of these risks and uncertainties could cause our actual results to differ materially from the results contemplated by the forward-looking statements set forth herein, and could otherwise have a significant adverse impact on our business, prospects, financial condition or results of operations. The trading price of our Class A Common Stock could decline due to any of these risks and uncertainties, and you could lose all or part of your investment. Please also read "Cautionary Statement Concerning Forward-Looking Statements" in this prospectus, where we describe additional uncertainties associated with our business and the forward-looking statements included in this prospectus. Risks Related to Our Business and Industry The housing industry has experienced significant downturns and our home sales and operating revenues could decline due to macroeconomic and other factors outside of our control, such as changes in consumer confidence and increases in unemployment levels. The U.S. homebuilding industry was negatively impacted by the recent economic downturn and in particular by declining consumer confidence, restrictive mortgage standards and decreased availability of financing, and large supplies of foreclosed resale and new homes, among other factors. When combined with a prolonged economic downturn, high unemployment levels, and uncertainty in the U.S. economy, these conditions contributed to a decreased demand for housing, declining sales prices, and increasing pricing pressures in our markets, particularly in Arizona, California and Nevada. While some of the many negative factors that contributed to the housing downturn began to moderate in 2012 and 2013, we cannot be sure how long or to what extent the housing recovery will continue. In particular, knowledge of the recent downturn, continuing economic uncertainty, volatility and uncertainty in financial, credit and consumer lending markets, tighter lending standards and increasing interest rates and increases in taxes and other expenses may adversely affect consumer demand for and the pricing of our homes, which could, in turn, impact our performance and cause our revenues and operating income to decline. In the case of any weakening of the national economy, we could experience declines in the market value of our inventory and demand for our homes, which could have a significant adverse impact on our business, financial condition and results of operations. The health of the residential homebuilding industry may also be significantly affected by "shadow inventory" levels. "Shadow inventory" refers to the number of homes with a mortgage that are in some form of distress but that have not yet been listed for sale. Shadow inventory can occur when lenders put properties that have been foreclosed or forfeited to lenders on the market gradually, rather than all at once, or delay the foreclosure process. They may choose to do so because of regulations and foreclosure moratoriums, because of the additional costs and resources required to process and sell foreclosed properties, or because they want to avoid depressing housing prices further by putting many distressed properties up for sale at the same time. A significant shadow inventory in our markets could, were it to be released into our markets, adversely impact home prices and demand for our homes, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our customer base includes move-up homebuyers, whose ability to obtain financing is often subject to contingencies related to the sale of their existing homes. The difficulties facing these buyers in selling their homes during recessionary periods may adversely affect our sales. Moreover, during such periods, we may need to reduce our sales prices and offer greater incentives to buyers to compete for sales that may result in reduced margins. Source: BLS Wage & Salary; JBREC forecasts. Table of Contents Our industry is very sensitive to macro, regional and local economic conditions and has historically been extremely volatile. The residential homebuilding industry is cyclical and is highly sensitive to macroeconomic factors and regional and local economic factors, as well as potential homebuyers' perceptions about these economic factors. General economic conditions such as the following have adversely affected our industry: employment levels and job growth; consumer income levels; market interest rates; the availability of credit generally, which affects the availability and cost of financing for homebuyers; consumer confidence generally and the confidence of potential homebuyers in particular; foreclosure rates; adverse changes in tax laws, including with respect to the deduction of mortgage interest and real estate taxes; inflation; and demographic trends, including population growth and household formation rates. Local conditions, such as the availability of new and existing homes for sale in the area, the local rental market and local material and labor costs also significantly impact our business. Key economic factors in our business may change or remain unfavorable, on a national scale, like the recent global economic downturn, or may affect some of the regions or markets in which we operate more than others. Our properties are concentrated in states that have been disproportionately affected by the housing downturn, including Arizona, California and Nevada. When adverse conditions affect any of our markets, they could have a proportionately greater impact on us than on some other homebuilding companies whose properties are not concentrated in such markets. Also, during recessionary periods, we may need to reduce sales prices and offer greater incentives to buyers in order to compete for sales, which may negatively impact our financial results. Furthermore, slower rates of population growth or population declines in our key markets, especially as compared to the high population growth rates in prior years, could affect the demand for housing, causing home prices in these markets to fall, and adversely affect our business, financial condition and operating results. Adverse changes in economic conditions can cause demand and prices for our homes to decrease or cause us to take longer to build our homes and make it more costly for us to do so. We may not be able to recover these increased costs by raising prices because of weak market conditions and because the price of each home we sell is usually set several months before the home is delivered, as many customers sign their home purchase contracts before construction begins. The potential difficulties described above could impact our customers' ability to obtain suitable financing and cause some homebuyers to cancel or refuse to honor their home purchase contracts altogether. Fluctuations and declines in the market value of land may have an adverse effect on the value of our inventory resulting in impairment charges, which could adversely affect our business, financial condition and results of operations. Land inventory risk can be substantial for homebuilders. We continuously look to acquire land for replacement and expansion of land inventory within the markets in which we build. The market value of land, building lots and housing inventories can fluctuate significantly as a result of changing market Source: Census Bureau; JBREC forecasts. Significant growth in home values Table of Contents conditions, and the measures we employ to manage inventory risk may not be adequate to insulate our operations from a severe decline in inventory values. Further, as a result of these fluctuations, the book value of our real estate assets may not reflect the current or future market value of these assets, and any differences between book and market values may be significant. When market conditions are such that land values are not appreciating or are declining, previously entered into option and purchase agreements may become less desirable, at which time we may elect to forgo deposits, write off pre-acquisition costs and terminate such agreements and, with respect to land we already own, we may have to sell homes at a loss or hold land in inventory longer than planned. In addition, inventory carrying costs can be significant and can result in losses in a poorly performing community or market, and we may have to sell homes at significantly lower margins or at a loss. At times, in the past few years, we have had to recognize inventory impairment charges. If adverse conditions recur or worsen, we may have to incur additional and larger inventory impairment charges which would adversely affect our financial condition and results of operations and our ability to comply with certain covenants in the agreements governing our existing or future indebtedness. Inventory carrying values are reviewed quarterly for potential write-downs when impairment indicators are present. Indicators of impairment include a decrease in demand for housing due to soft market conditions, competitive pricing pressures that reduce the average sales price of homes, which include sales incentives for home buyers, sales absorption rates below management expectations, a decrease in the value of the underlying land and a decrease in projected cash flows for a particular project. During any such review, if the undiscounted estimate of cash flows to be generated by an asset is less than the current carrying value of the asset, then the asset is deemed to be impaired, and a charge is recorded for the amount by which the carrying amount exceeds the fair value of the asset. These estimates of cash flows are significantly impacted by estimates of the timing and amounts of revenues, costs, and other factors. Due to uncertainties in the estimation process, actual results could differ materially from such estimates. Our determination of fair value is primarily based upon discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the assets and related estimated cash flow streams. In performing such impairment analyses, we utilized a discount rate of 15% for the year ended December 31, 2012. Limitations on the availability, increases in the cost and changes in governmental regulation of mortgage financing can adversely affect demand for housing. In general, housing demand is negatively impacted by the unavailability of mortgage financing, which could be caused by declining customer credit quality and tightening of mortgage loan underwriting standards and other factors that increase the upfront or monthly costs of financing a home, such as increases in required down payments and interest rates, insurance premiums or reduction of mortgage interest deductibility. Most buyers finance their home purchases through third-party lenders providing mortgage financing. Even if potential new homebuyers do not need financing, changes in interest rates could make it harder for them to sell their existing homes to potential buyers who need financing. Over the last several years, many third-party lenders have significantly increased underwriting standards, and many subprime and other alternate mortgage products are no longer available to the marketplace in spite of a decrease in mortgage rates. If these trends continue and mortgage loans continue to be difficult to obtain, the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes will be adversely affected, which will adversely affect our results of operations through reduced home sales revenue, gross margins and cash flows. Mortgage interest rates have, in recent years, been at historic lows, but have risen in recent months. Further increases in interest rates could adversely affect our ability to sell homes. In addition, our sales contracts frequently include financing contingency provisions, which permit the buyers to cancel the sales contract in the event that mortgage financing at prevailing interest rates is unobtainable within the period specified in the contract. Our failure to sell homes profitably or at all (Represents LTM 04/30/14 Burns Home Value Index ) Table of Contents because of high mortgage interest rates would have a material adverse effect on our business and results of operations. In addition, changes in governmental regulation with respect to mortgage lenders could adversely affect demand for housing. For example, the Federal Housing Administration, or FHA, significantly reduced the limits on loans eligible for insurance by the FHA in 2014, which has impacted the availability and cost of financing in our markets. In addition, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. Among other things, this legislation provides for a number of new requirements relating to residential mortgage lending practices, many of which are to be developed further by implementing rules. These include, among others, minimum standards for mortgages and lender practices in making mortgages, limitations on certain fees, retention of credit risk, prohibition of certain tying arrangements and remedies for borrowers in foreclosure proceedings. The effect of such provisions on the demand for housing will depend on the rules that are ultimately enacted. In addition, we cannot predict whether similar changes to, or new enactments of, statutes and regulations pertinent to mortgage lending will occur in the future. Any such changes or new enactments could adversely affect the demand for housing, which would have a material adverse effect on our business and results of operations. Certain changes to tax laws could reduce the incentives of homeownership. Tax law changes could make homeownership more expensive or less attractive. Current U.S. tax laws permit certain expenses of owning a home to be deducted by an individual in determining individual federal taxable, and in many cases, state taxable income. Such deductions include mortgage interest and real estate taxes. If these tax deductions were to be eliminated or curtailed, this could reduce the incentives to buy a home and make home buying more expensive which, in turn, could adversely affect our sales and earnings. Increases in real estate taxes by local governments also increase the cost of owning a home, and accordingly, any such increases could affect the demand for and sale of our homes. Increases in our cancellation rates could have a negative impact on our home sales revenue and home building gross margins. During the six months ended June 30, 2014 and 2013, we experienced cancellation rates of 16.1% and 9.9%, respectively. During the years ended December 31, 2013 and 2012, we experienced cancellation rates of 13.7% and 15.0%, respectively. Cancellations negatively impact the number of closed homes, net new home orders, home sales revenue and our results of operations, as well as the number of homes in backlog. Home order cancellations can result from a number of factors, including declines or slow appreciation in the market value of homes, increases in the supply of homes available to be purchased, increased competition, higher mortgage interest rates, homebuyers' inability to sell their existing homes, homebuyers' inability to obtain suitable financing, purchase price considerations and adverse changes in economic conditions. While recently our cancellation rates have been relatively low compared to certain of our competitors, homebuilders vary in their treatment of home sales, rendering comparisons of cancellation rates difficult. For example, we do not record home sales until contingencies (other than mortgage financing) are removed while other homebuilders may record home sales at the time the sale contract is entered into and before contingencies are satisfied, which could result in a higher cancellation rate. In cases of cancellation after construction of the home has started, we remarket the home and usually retain any deposits we are permitted to retain pursuant to the terms of the applicable contract. However, the deposits retained, if any, may not cover the additional costs involved in remarketing the home and carrying of higher inventory. In addition, we may be required to remarket the home at a lower price due to changes in market conditions or for other reasons. Significant numbers of cancellations could adversely affect our business, financial condition and results of operations. Table of Contents We have a history of net losses, we may incur net losses in the future and we may not be able to maintain profitability. We incurred net losses for the years ended December 31, 2010 and 2011, and we may incur additional net losses in future periods. The extent of our future losses will depend, in part, on the condition of the housing market generally and particularly in the markets in which we operate and on the level of our expenses. Although we are presently profitable, we may not be able to maintain or increase profitability on a quarterly or annual basis. Any failure to maintain profitability may cause the price of our Class A Common Stock to decline, in which case you may lose a portion of your investment. Our operating results are cyclical, which may cause the value of our Class A Common Stock to decline. We have historically experienced, and in the future expect to continue to experience, cyclicality in our operating results on a quarterly and annual basis. Factors expected to contribute to this cyclicality include, among other things: the timing of land acquisitions and zoning and other regulatory approvals; the timing of home closings, land sales and level of home sales; our product mix; our ability to continue to acquire additional land and lots or options thereon on acceptable terms; the condition of the real estate market and the general economy; delays in construction due to acts of God, adverse weather, reduced subcontractor, labor or material availability and strikes; changes in prevailing interest rates and the availability of mortgage financing; and employment levels and personal income growth. Adverse changes in these conditions may affect our business or may be more prevalent or concentrated in particular regions or localities in which we operate. In the past several years, unfavorable changes in many of these factors negatively affected all of the markets we serve, and economic conditions in all of our markets continue to be characterized by varying levels of uncertainty. Any deterioration in economic conditions or continuation of uncertain economic conditions would likely worsen the unfavorable trends the housing market experienced in prior years, which could have a material adverse effect on our business and cause the value of our Class A Common Stock to decline. The estimates, forecasts and projections relating to our markets prepared by JBREC are based upon numerous assumptions and may not prove to be accurate. This prospectus contains estimates, forecasts and projections relating to our primary markets that were prepared for us for use in connection with this offering by JBREC, a real estate consulting firm. See "Market Overview" in Appendix A hereto and "Prospectus Summary." The estimates, forecasts and projections relate to, among other things, home value indices, payroll employment growth, median household income, housing permits and household formation. No assurance can be given that these estimates are, or that the forecasts and projections will prove to be, accurate. Any forecasts prepared by JBREC are based on data (including third-party data), significant assumptions, proprietary methodologies and the experience and judgment of JBREC. No assurance can be given regarding the accuracy or appropriateness of the assumptions and judgments made, or the methodologies used, by JBREC. The application of alternative assumptions, judgments or methodologies could result in materially less favorable estimates, forecasts and projections than those contained in this prospectus. Table of Contents MANAGEMENT AND DIRECTORS The following table sets forth certain information concerning the directors, executive officers and certain key employees of Woodside LLC, as of the date of this prospectus. We expect the same people to act in the same capacities for Woodside Inc. Name Age Position Joel Shine 54 Chairman of the Board of Directors, Chief Executive Officer and President Rick Robideau 53 Chief Financial Officer Jay Moss 64 Chief Marketing Officer Wayne Farnsworth 46 General Counsel Scott Hoisington 55 California-Sacramento Division President Chris Williams 45 California-Central Valley Division President Tim McGinnis 55 California-Inland Empire Division President Ryan Ortman 43 Salt Lake City Division President Roger Gannon 47 Phoenix Division President Kent Lay 52 Las Vegas Division President Mike Wittenberg 52 San Antonio Division President Gene Morrison 66 Arizona/Nevada Regional Land President David Barclay(d)(e) 61 Director David Keller(b)(c) 66 Director Ronald Mass(a)(d)(e) 48 Director Mark Porath(c) 52 Director Michael Short(a)(c) 52 Director Michael Stern(b)(d)(e) Table of Contents Other real estate experts may have different views regarding these forecasts and projections that may be less positive or negative, including in terms of the timing, magnitude and direction of future changes. The forecasts and projections are forward-looking statements and involve risks and uncertainties that may cause actual results to be materially different from the projections. JBREC has made these forecasts and projections based on studying the historical and current performance of the residential housing market and applying JBREC's qualitative knowledge about the residential housing market. The future is very difficult to predict, particularly given that the economy and housing markets can be cyclical, subject to changing consumer and market psychology, geo-political events, and governmental policies related to mortgage regulations and interest rates. There usually are differences between projected and actual outcomes, because events and circumstances frequently do not occur as expected, and any such differences may be material. Also, unanticipated events and circumstances may occur and change the results in material ways. Accordingly, the forecasts and projections included in this prospectus might not occur or might occur to a different extent or at a different time. For the foregoing reasons, neither we nor JBREC can provide any assurance that the estimates, forecasts and projections, including third-party data, contained in this prospectus will prove to be accurate. Actual outcomes may vary significantly from those contained or implied by the forecasts and projections, and you should not place undue reliance on these estimates, forecasts and projections. Except as required by law, we are not obligated to, and do not intend to, update the statements in this prospectus to conform to actual outcomes or changes in our or JBREC's expectations. Certain undue or unforeseen delays in our business activities could have material adverse effects on our operating results. The timing of land acquisitions, zoning and other regulatory approvals impacts our ability to pursue the development of new housing projects in accordance with our business plan. If the timing of land acquisitions, zonings or regulatory approvals is delayed, we will be delayed in our ability to develop housing projects. Furthermore, these delays could result in a decrease in our revenues and earnings for the periods in which the delays occur and possibly subsequent periods until the planned housing projects can be completed. In addition, a delay in the development of one or more communities or in a significant number of home closings or land sales due to acts of God, adverse weather, subcontractor, labor or material unavailability, strikes or other unforeseen factors could have a similar impact on revenues and earnings for the periods in which the delays occur and, possibly, subsequent periods. An increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions and may have an adverse impact on us. The U.S. unemployment rate was 6.2% in July 2014, according to the U.S. Bureau of Labor Statistics. People who are not employed, are underemployed or are concerned about the loss, or potential loss, of their jobs are less likely to purchase new homes, may be forced to try to sell the homes they own and may face difficulties in making required mortgage payments. Therefore, any increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions and may have an adverse impact on us both by reducing demand for the homes we build and by increasing the supply of homes for sale. If suitable land is not available at acceptable prices, our home sales revenue and results of operations could be negatively impacted or we could be required to scale back our operations in a given market. Our operations depend on our ability to obtain suitable land for the development of our residential communities at acceptable prices and with terms that meet our underwriting criteria. Our ability to obtain land for new residential communities may be adversely affected by changes in the Table of Contents general availability of land, the willingness of land owners to sell land at reasonable prices, competition for available land, availability of financing to acquire land, zoning regulations that limit housing density, and other market conditions. As conditions in our markets continue to improve, obtaining land that meets our investment criteria will be increasingly difficult because of greater competition for development opportunities, which may result in our inability to obtain land or an adjustment to our underwriting criteria in order to obtain the land. If the supply of land appropriate for development of residential communities continues to be limited or becomes more limited because of any of these factors, or for any other reason, the number of homes that our homebuilding subsidiaries build and sell may decline. To the extent that we are unable to purchase land in a timely manner or enter into new contracts for the purchase of land at acceptable prices, due to the lag time between the time we acquire land and the time we begin selling homes, our home sales revenue and results of operations could be negatively impacted and/or we could be required to scale back our operations in a given market. We are particularly sensitive to market fluctuations between the time we acquire undeveloped land for a project and the time we sell and close on all units in the project. Before a project generates revenues, time and capital are required to acquire land, obtain development approvals and construct project infrastructure, amenities, model homes and sales facilities. We continuously acquire land for new projects, the completion of which typically can take anywhere from one to five years from the acquisition of the land until the last home closing in the project. The market value of land and the costs of homebuilding can fluctuate significantly as a result of changing market conditions. Accordingly, if we acquire undeveloped land for a project and market conditions deteriorate before we actually build, sell and close all units in that project, then the project may become unprofitable even though we may have made significant investments and expected to make a profit at the time we acquired the undeveloped land. These changes in market conditions, including an increase in material and labor costs or a further decrease in demand for new homes, may require us to incur significant write-downs on our real estate inventory or sell homes at a loss or, in extreme cases, delay or abandon a project, which could materially adversely affect our business, financial condition and results of operations. Difficulty in obtaining sufficient capital could result in increased costs and delays in completion of projects. The homebuilding industry is capital-intensive and requires significant up-front expenditures to acquire land and begin development. Land acquisition, development and construction activities may be adversely affected by any shortage or increased cost of financing or the unwillingness of third parties to engage in joint ventures, land banking, model home programs or other alternative arrangements. Any difficulty in obtaining sufficient capital for planned development expenditures could cause project delays and any such delay could result in cost increases and may adversely affect our sales and future results of operations and cash flows. In addition, if we cannot obtain financing to fund the purchase of land or lots under option contracts, we are subject to the forfeiture of option contract deposits that have already been paid. Adverse weather and geological conditions may increase costs, cause project delays and reduce consumer demand for housing, all of which would adversely affect our results of operations and prospects. As a homebuilder, we are subject to numerous risks, many of which are beyond management's control, such as droughts, floods, wildfires, landslides, soil subsidence, earthquakes and other weather related and geologic events that could damage projects, cause delays in the completion of projects, or reduce consumer demand for housing. Many of our projects are located in California, which has historically experienced significant earthquake activity, seasonal wildfires and droughts. In addition to directly damaging or otherwise affecting the value of our projects, earthquakes or other geologic or Table of Contents weather related events could damage roads and highways providing access to those projects and droughts could delay our ability to construct projects, thereby adversely affecting our ability to market homes in those areas and possibly increasing the costs of completion. There are some risks of loss for which we may be unable to purchase insurance coverage. For example, losses associated with landslides, earthquakes and other geologic events may not be insurable and other losses, such as those arising from terrorism, may not be economically insurable. A sizeable uninsured loss could adversely affect our business, results of operations and financial condition. We may not be able to compete effectively against competitors in the homebuilding industry. The homebuilding industry is highly competitive. Homebuilders compete for, among other things, homebuying customers, desirable properties, financing, raw materials and skilled labor. We compete both with large homebuilding companies, some of which have greater financial, marketing and sales resources than we do, and with smaller local or regional builders. Competitive conditions have in the past and could in the future result in, among other things, lower sales prices and increased selling incentives, discounts or price concessions for our homes, difficulty in acquiring suitable land at acceptable prices, impairments in the value of our inventory and other assets, increases in labor costs and increases in the cost of raw materials. Our competitors may independently develop land and construct housing units that are substantially similar to our products. Many of these competitors also have longstanding relationships with subcontractors and suppliers in the markets in which we operate. We currently build in several of the top markets in the nation and, therefore, we expect to continue to face additional competition from new entrants into our markets. We also compete for sales with individual resales of existing homes (including lender-owned homes acquired through foreclosure) and with available rental housing. While we consider our primary competitors to be other homebuilders, existing homes and rental housing may be available at more attractive prices than newly constructed homes. In addition, rental housing is not subject to availability of financing and is less sensitive to macro, regional and local economic conditions. As a result, certain of our customers may consider an existing home or rental as an alternative to purchasing a new home. Our limited geographic diversification could adversely affect us if the homebuilding industry in our markets declines. We have homebuilding operations in Arizona, California, Nevada, Texas and Utah. Our limited geographic diversification could adversely impact us if the homebuilding business in our current markets should decline, since there may not be a balancing opportunity in a stronger market in other geographic regions. Accordingly, a prolonged downturn in one or more of our markets would have a disproportionately greater impact on us than other homebuilders with more geographically diversified operations. We generated 52.0% and 53.7% of our revenue in the six months ended June 30, 2014 and the year ended December 31, 2013, respectively, from, and held 48.3% and 49.7%, as of June 30, 2014 and December 31, 2013, respectively, of the dollar value of our real estate inventory in, California. Although conditions have improved recently, over the last several years, land values, the demand for new homes and home prices have declined substantially in the state, negatively impacting the Company's results of operations. In addition, the state of California has in the past experienced severe budget shortfalls and raised taxes and increased fees to offset the deficit and may do so from time to time in the future, which would further harm our business and financial results. While individual markets are generally sensitive to overall economic conditions, the demand for new homes in the particular regions in which we do business may be especially sensitive to economic factors in that particular region. For example, the demand for new homes in the particular regions where we construct projects may stay low even if the general U.S. housing market continues to recover. Table of Contents Accordingly, an increase in the general demand for new homes may not immediately result in increased sales in our key geographic markets. Our success depends on key executive officers and personnel. Our success depends on the efforts and abilities of our executive officers and other key employees, many of whom have significant experience in the homebuilding industry and in our markets. In particular, we are dependent upon the services of Mr. Joel Shine, our Chief Executive Officer and Chairman of our Board, as well as the services of our division presidents and division management teams and personnel in our corporate office. Because of their roles in developing and implementing the Company's strategy and operations, the loss of services from key senior executives or a limitation in their availability could materially and adversely impact our business, financial condition and results of operations. Further, such a loss could be negatively perceived in the capital markets. Experienced employees in the homebuilding and land acquisition industries are fundamental to our ability to generate, obtain and manage opportunities. In particular, local knowledge and relationships are critical to our ability to source attractive land acquisition opportunities. Competition for qualified personnel in all of our operating markets is intense, and it would be difficult for us to find experienced personnel to replace our current employees, many of whom have significant homebuilding experience. Additionally, like many of our competitors that have reduced staffing in recent years, we anticipate a need to hire additional employees as market conditions improve and expect that competition for talented employees could be intense. Furthermore, a significant increase in the number of our active communities could necessitate the hiring of a significant number of additional skilled personnel, who are in short supply in our markets. Failure to attract and retain experienced personnel or to ensure that the experience and knowledge of our current senior management personnel is not lost when they leave the business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an adverse impact on our business, financial condition and results of operations. Our business and results of operations are dependent on the availability and skill of subcontractors. Substantially all construction work is done by subcontractors with us acting as the general contractor. Accordingly, the timing and quality of construction depend on the availability and skill of our subcontractors. This reliance on subcontractors exposes us to a number of risks, including the possibility of defects in our homes due to improper practices or materials used by subcontractors, which may require us to comply with our warranty obligations and/or bring claims under an insurance policy. While we have been able to obtain sufficient skilled subcontractors in the past and believe that our relationships with subcontractors are generally good, we do not have long-term contractual commitments with any subcontractor. The inability to contract with skilled subcontractors at reasonable costs on a timely basis could have a material adverse effect on our business and results of operations. Several other homebuilders have received inquiries from regulatory agencies concerning whether homebuilders using subcontractors are deemed to be employers of the employees of such subcontractors under certain circumstances. Although subcontractors are independent of the homebuilders that contract with them under normal management practices and the terms of trade contracts within the homebuilding industry, if regulatory agencies were to reclassify the employees of subcontractors as employees of homebuilders, homebuilders using subcontractors could be responsible for wage, hour and other employment-related liabilities of their contractors. Any such reclassification of employees of our subcontractors as our own employees would have a material adverse effect on our business and results of operations. Table of Contents Power, water or other shortages or utility price increases could have an adverse impact on operations. In prior years, our California markets have experienced power shortages, including periods without electrical power, as well as significant increases in utility costs. In addition, our California, Las Vegas, San Antonio and Phoenix markets are currently experiencing droughts, which in some cases are severe. We may incur additional costs and may not be able to complete construction on a timely basis if such power, water or other shortages and utility rate increases continue. Furthermore, power, water or other shortages and rate increases may adversely affect the regional economies in which we operate, which may reduce demand for housing. Our operations may be adversely impacted if further rate increases and/or power, water or other shortages occur. Raw material shortages could delay or increase the cost of home construction and reduce our sales and earnings. The residential construction industry experiences serious raw material shortages from time to time, including shortages of insulation, drywall, cement, steel and lumber. These raw material shortages can be more severe during periods of strong demand for housing and during periods where the regions in which we operate experience natural disasters that have a significant impact on existing residential and commercial structures. Shortages could cause delays in and increase our costs of home construction, which in turn could harm our operating results. From time to time, we have experienced volatile price swings in the cost of raw materials, including, the cost of lumber, cement, steel and drywall. If we are unable to increase our home prices to offset any increases in raw material prices (which we are typically unable to do for customers that have already entered into sales contracts), our gross margin would be reduced and we may not be able to realize a profit on homes sold. Shortages relating to labor can harm our business by delaying project completion and increasing costs, thereby adversely affecting our sales and profitability. The homebuilding industry has, from time to time, experienced significant difficulties with respect to work stoppages, resulting from labor disputes with and shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers, as well as changes in laws relating to union organizing activity. These difficulties can, and often do, cause unexpected short-term increases in construction costs and cause construction delays. We are typically unable to pass on any unexpected increases in construction costs to those customers who have already entered into sales contracts, as those contracts generally fix the price of the home at the time the contract is signed, which is generally several months in advance of the delivery of the home. Furthermore, sustained increases in construction costs may, over time, erode our profit margins. In the future, pricing competition may restrict our ability to increase the prices of our homes in response to higher expected labor and construction costs or to pass on any additional costs, and we may not be able to achieve sufficient operating efficiencies to maintain our current profit margins. Construction defect, soil subsidence and other building-related claims may be asserted against us, and we may be subject to liability for such claims. As a homebuilder, we have been, and continue to be, subject to construction defect, product liability and home warranty claims, including moisture intrusion and related claims, arising in the ordinary course of business. These claims are common to the homebuilding industry and can be costly. Construction defects may occur on projects and developments and may arise a significant period of time after completion. Defects arising on a community development attributable to us may lead to significant contractual or other liabilities and can damage our reputation. Furthermore, once claims are Table of Contents We opportunistically engage in land development in all of our markets to give us the ability to structure transactions to access a broader range of land sellers. We retained most of our senior land acquisition, entitlement and development personnel through the housing downturn to maintain our development capabilities. Illustrating our expertise, since 2012, the Company has processed over 55 different parcels through various aspects of the entitlement process. These processes ranged from relatively minor items such as processing and recording plats to rezoning parcels and obtaining general plan amendments. Our ability to acquire longer life-cycle land parcels that require development and, in some cases, entitlement work enables us to add value through the development process and an opportunity for enhanced margins. As of June 30, 2014, of our 6,401 total owned lots, 2,202 lots were entitled and finished (including 733 lots with homes completed or under construction), 3,514 lots were in the process of being entitled or under development, 624 lots were held for sale and 61 lots were held for additional entitlement or development. We believe our land portfolio is geographically balanced. During the six months ended June 30, 2014, we acquired 1,822 lots in 29 new or existing communities and during the year ended December 31, 2013, we acquired 2,471 lots in 40 new or existing communities. While the homebuilding industry has recently experienced heavy competition for land, we have been able to acquire land in 2013 and the first six months of 2014 that meets or exceeds our investment criteria. The table below sets forth the number of lots acquired by us in each of the MSAs within our markets for the six months ended June 30, 2014 and the twelve months ended December 31, 2013 and the owned and controlled (through option or purchase agreements) lot balance as of June 30, 2014 and December 31, 2013. Six Months Ended June 30, 2014 As of June 30, 2014 Year Ended December 31, 2013 As of December 31, 2013 Market Lots Purchased Owned Lots Controlled Lots Lots Purchased Owned Lots Controlled Lots California Central Valley Bakersfield 394 396 1 284 Fresno 285 184 326 Hanford-Corcoran 167 144 180 Visalia-Porterville 262 482 145 262 110 California Central Valley Total 656 1,330 329 144 769 394 California Inland Empire Riverside-San Bernardino 102 669 537 332 696 523 California Sacramento Sacramento 85 178 440 83 147 517 Stockton 52 386 240 392 Yuba-Sutter 40 59 California Sacramento Total 137 604 440 323 598 517 Las Vegas Las Vegas 718 1,351 380 663 731 644 Phoenix Phoenix 144 1,084 (1) 503 68 970 745 Salt Lake City Ogden-Clearfield 3 314 165 23 399 3 Provo-Orem 42 880 257 840 840 139 Salt Lake City 84 61 20 90 Salt Lake City Total 45 1,278 483 883 1,329 142 San Antonio San Antonio 20 85 556 58 96 543 Total 1,822 6,401 3,228 2,471 5,189 3,508 Table of Contents asserted for construction defects, it can be difficult to determine the extent to which the assertion of these claims will expand in terms of the number of plaintiffs and the nature of the allegations. California law provides that consumers can seek redress for patent (i.e., observable) defects in new homes within three or four years (depending on the type of claim asserted) from when the defect is discovered or should have been discovered. If the defect is latent (i.e., non-observable), consumers must still seek redress within three or four years (depending on the type of claim asserted) from the date when the defect is discovered or should have been discovered, but in no event later than ten years after the date of substantial completion of the work on the construction. Consumers purchasing homes in Arizona, Nevada, Texas and Utah are also be able to obtain redress under state laws for either patent or latent defects in their new homes for a period of six to ten years depending on the state. With respect to certain general liability exposures, including construction defect claims, product liability claims and related claims, the assessment of claims and the related liability and reserve estimation process is highly judgmental due to the complex nature of these exposures, with each exposure exhibiting unique circumstances. Although we have obtained insurance for construction defect claims subject to applicable self-insurance retentions, such policies may not be available or adequate to cover liability for damages, the cost of repairs, and/or the expense of litigation surrounding current claims, and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors. Lack of insurance coverage for certain types of claims and increased insurance costs may affect our results of operations and increase our potential exposure to liability. In recent years, lawsuits have been filed against homebuilders asserting claims of personal injury and property damage, including lawsuits related to reactive drywall, plumbing system deficiencies and the presence of mold in residential dwellings. Some of these lawsuits have resulted in substantial monetary judgments or settlements. Our insurance may not cover all of the potential claims, including personal injury claims, that may be asserted against us arising from such matters, and coverage for such claims may become prohibitively expensive. A material adverse effect on our business, financial condition and results of operations could result if we are subjected to such claims in the future and are unable to obtain adequate insurance coverage. Insurance and surety companies are continuously re-examining their business risk. As a result, the cost of insurance for our operations has risen, deductibles and retentions have increased and the availability of insurance has diminished. In addition, insurance and surety companies have required additional collateral on surety bonds, reduced coverage amounts and restricted coverage or imposed exclusions with respect to certain types of risks, such as mold damage, sinkholes, reactive drywall, certain plumbing components, sabotage and terrorism. Significant increases in the cost of insurance coverage or significant limitations on coverage could have a material adverse effect on our business, financial condition and results of operations from such increased costs or from liability for significant uninsurable or underinsured claims. Inflation could adversely affect our business, financial condition and results of operations, particularly in a period of oversupply of homes. Inflation can adversely affect us by increasing costs of land, materials and labor. However, we may be unable to offset these increases with higher sales prices. In addition, inflation is often accompanied by higher interest rates, which have a negative impact on housing demand. In such an environment, we may be unable to raise home prices sufficiently to keep up with the rate of cost inflation, and, accordingly, our margins could decrease. Moreover, with inflation, our cost of capital increases and the purchasing power of our cash resources decline. Efforts by the government to stimulate the economy Table of Contents may not be successful, and have increased the risk of significant inflation and its resulting adverse effect on our business, financial condition and results of operations. Our business is seasonal in nature and quarterly operating results can fluctuate. We have historically experienced, and expect to continue to experience, seasonality in quarterly results. While new homes sales activity is highly dependent on the number of active selling communities and the timing of new community openings, all of our markets other than San Antonio have experienced higher home sales activity in the spring and summer months, with approximately 60% of consolidated closings occurring in the second half of the year in each of the years ended December 31, 2012 and 2013. As a result, our revenues and cash flows from homebuilding operations (exclusive of the timing of land purchases) are generally higher in the second half of the calendar year as these homes are completed and closed. If, due to construction delays, severe weather, natural disasters or other causes, we cannot close our expected number of homes in the second half of the year, our financial condition and full year results of operations may be adversely affected. Because we experience seasonality in quarterly results, quarter-to-quarter comparisons of our results should not be relied upon as an indicator of future performance. The price of our Class A Common Stock may experience volatility as a result of any seasonal fluctuations in our operating results. We may be unable to obtain suitable bonding for the development of our communities. We provide bonds to governmental authorities and others to ensure the completion of our projects. If we are unable to provide required surety bonds for our projects, our business operations and revenues could be adversely affected. As a result of the deterioration in market conditions, surety providers have become increasingly reluctant to issue new bonds and some providers are requesting credit enhancements, including additional collateral, in order to maintain existing bonds or to issue new bonds. If we are unable to obtain required bonds in the future, or are required to provide credit enhancements with respect to our current or future bonds, our ability to complete projects and our liquidity could be negatively impacted. Governmental laws and regulations and environmental matters could increase the cost or limit the availability of our development and homebuilding projects, which could adversely affect our business or financial results. We are subject to extensive and complex laws and regulations that affect land development and home construction, including zoning, density restrictions, building design and building standards. These laws and regulations often provide broad discretion to the administering governmental authorities as to the conditions we must meet prior to development or construction being approved, if approved at all. The approval process can be lengthy and cause significant delays or result in a temporary or permanent halt to the development process. The approval process may involve public input and public hearings, development may be opposed by neighboring landowners, consumer or environmental groups, and approvals may be challenged in litigation. In addition, in many areas government authorities have implemented "no growth" or other growth control initiatives that impact the availability of land for development and home construction. Although our operations to date have not been impacted by growth control initiatives and we are not aware that governmental authorities are considering implementing such initiatives in our markets, any new, or changes to existing, regulations or delays or temporary or permanent halts in the development process could substantially increase the costs of development or home construction, adversely affect our ability to timely build and sell homes, or cause us to abandon a project and sell the affected land at a loss. Because we currently operate in only seven markets, any increase in costs or delays due to regulatory changes in one or more of our markets may have a proportionately greater impact on us than other homebuilding companies that operate in more markets or more regions of the country. Table of Contents We are subject to a variety of local, state and federal laws and regulations concerning the protection of health, safety and the environment, including those regulating the emission or discharge of materials into the environment, the handling, use, storage and disposal of hazardous substances, impacts to wetlands and other sensitive environments, and the remediation of contamination at properties that we have owned or currently own. Noncompliance with these laws and regulations could result in fines and penalties, obligations to remediate, permit revocations or other sanctions; and contamination or other environmental conditions at or in the vicinity of our developments may result in claims against us for personal injury, property damage or other losses. The impact of environmental laws and regulations varies depending upon the prior uses of the building site or adjoining properties and may be greater in areas, for example, where undeveloped land or desirable alternatives are less available. These laws and regulations may result in delays in the completion of a project, may cause us to incur substantial compliance, remediation, mitigation and other costs, and can prohibit or severely restrict development and homebuilding activity. We anticipate that increasingly stringent requirements will be imposed on developers and homebuilders in the future. Although we cannot predict the effect of these requirements, they could result in time-consuming and expensive compliance programs and in substantial expenditures, which could cause delays and increase our cost of operations. In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted to us or approvals already obtained by us depends on many factors, some of which are beyond our control, such as changes in policies, rules, laws and regulations, and changes in their interpretation and application. We are also subject to other local, state and federal laws and regulations in other aspects of our business, which are evolving both in scope and interpretation. Such laws and regulations, and any failure by us to comply with them, could increase our costs of compliance or otherwise adversely affect our business or financial results. We may incur a variety of costs to engage in future growth or expansion of our operations or acquisitions or disposals of businesses, and the anticipated benefits may never be realized. As a part of our business strategy, we may make acquisitions of, or significant investments in, or disposals of businesses. We may also expand our operations to new markets. Any future acquisitions, investments, disposals or entry into new markets would be accompanied by risks such as: difficulties in assimilating the operations, systems and personnel of acquired companies or businesses, especially if such businesses are outside of our existing markets; diversion of our management's attention from ongoing business concerns; our potential inability to maximize our financial and strategic position through the successful incorporation or disposition of operations; maintenance of uniform standards, controls, procedures and policies; impairment of existing relationships with employees, contractors, suppliers and customers as a result of the integration of new management personnel, cost-saving initiatives and other factors; and risks associated with entering markets in which we have limited or no direct experience or lack local knowledge or relationships. The magnitude, timing and nature of any future acquisition or expansion will depend on a number of factors, including our ability to identify suitable new markets or acquisition candidates. We cannot guarantee that we would be able to successfully integrate any company or business that we might acquire in the future, or that any expansion into a new market will be successfully executed, and our failure to do so could harm our current business. Table of Contents In addition, we may not realize the anticipated benefits of these transactions and there may be other unanticipated or unintended effects. While we would seek protection, for example, through warranties and indemnities in the case of acquisitions, significant liabilities may not be identified in due diligence or may be discovered after the expiration of warranty or indemnity periods. Additionally, while we would seek to limit our ongoing exposure, for example, through liability caps and period limits on warranties and indemnities in the case of disposals, some warranties and indemnities may give rise to unexpected and significant liabilities. Any claims arising in the future may adversely affect our business, financial condition and operating results. We may in the future conduct certain of our operations through unconsolidated joint ventures with independent third parties in which we do not have a controlling interest. We could be adversely impacted by the failure of the joint venture or the other joint venture partners' failure to fulfill their obligations. We may participate in land entitlement or development joint ventures ("JVs") in which we have less than a controlling interest. JVs are sometimes used in the homebuilding industry to acquire land, manage risk and leverage the capital base. Although we do not participate in any such JVs currently, we may elect to do so in the future. JVs are typically entered into with developers, other homebuilders and financial partners to acquire or entitle land or develop finished lots for sale and may result in a number of different business structures. Such JVs may involve risks, such as the possibility of the bankruptcy of a co-venturer, the possibility that we may not control the legal entity with title to the real estate, that a co-venturer may at any time have economic or business goals that are inconsistent with ours, that we may be constrained from engaging in certain activities as a result of non-compete clauses in a JV agreement or the possibility that we may not be able to resolve disputes with a JV partner. In addition, JV agreements often include buy/sell and similar provisions pursuant to which we could be forced to sell our equity interests in the JV to a co-venturer without realizing the expected benefits of the JV. Furthermore, a financing party for a JV may require a guarantee to be provided by us or our subsidiaries for the obligations of the JV or the other JV members or we may have obligations to make additional investments in the JV or contribute capital or lend funds to the JV. If joint venture partners fail to fulfill their obligations under the JV, it may have an adverse impact on our investment in the JV. A major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage. Building sites are inherently dangerous, and operating in the homebuilding industry poses certain inherent health and safety risks. Due to health and safety regulatory requirements and the number of projects we work on, health and safety performance is critical to the success of all areas of our business. Any failure in health and safety performance may result in penalties for non-compliance with relevant regulatory requirements, and a failure that results in a major or significant health and safety incident is likely to be costly in terms of potential liabilities incurred as a result. Such a failure could generate significant negative publicity and have a corresponding negative impact on our reputation, our relationships with relevant regulatory agencies or governmental authorities, and our ability to sell homes, which, in turn, could have a material adverse effect on our business, financial condition and operating results. We may incur additional healthcare costs arising from federal healthcare reform legislation and our compliance therewith. In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the "Healthcare Reform Legislation") were signed into law in the United States. The Healthcare Reform Legislation increases the level of regulatory complexity for companies that offer health and welfare benefits to their employees. Due to the breadth and complexity of the Healthcare Reform Legislation and the staggered implementation, the uncertain timing of the Table of Contents regulations and limited interpretive guidance, it is difficult to predict the overall impact of the healthcare reform legislation on our business over the coming years. Possible adverse effects include increased healthcare costs, which could adversely affect our business, financial condition and results of operations. Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. Our business as a homebuilder depends on our reputation. Consequently, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values, delivering superior products to our customers and caring about our customers. Further, residents of communities we develop often rely on us to resolve issues or disputes that may arise in connection with the development of their communities. Our efforts to resolve these issues or disputes could be deemed unsatisfactory by the affected residents, which would have a negative impact on our reputation. If our reputation is negatively affected by the actions of our subcontractors, employees or otherwise, our business and, therefore, our operating results may be materially adversely affected. An information systems interruption or breach in security could adversely affect us. We rely on accounting, financial and operational management information systems to conduct our operations. Any disruption in these systems could adversely affect our ability to conduct our business. Furthermore, any security breach of information systems or data could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation and a loss of confidence in our security measures, which could harm our business. We may face potential successor liability for liabilities that arose prior to our reorganization. We may be subject to certain liabilities that arose prior to our reorganization, including warranty claims that were subject to discharge in our bankruptcy proceedings. Potential claimants may allege that such liabilities may have arisen in a number of circumstances, including those where: a creditor did not receive proper notice of the pendency of the bankruptcy case relating to our plan of reorganization or the deadline for filing claims therein; the injury giving rise to, or source of, a creditor's claim did not manifest itself in time for the creditor to file the creditor's claim or the conduct giving rise to, or other source of, a creditor's claim, in each case which occurred prior to the commencement of our bankruptcy case, was not of a nature that such creditor could have fairly contemplated that it possessed a claim during the bankruptcy case; a creditor did not timely file the creditor's claim in such bankruptcy case due to excusable neglect; we are liable for liabilities under a federal and/or state theory of successor liability; or the order of confirmation for our plan of reorganization was procured by fraud. To date, we have been able to successfully defend ourselves against such alleged liabilities and enforce and preserve the injunctions imposed pursuant to our confirmed plan of reorganization. If, however, we are determined to be subject to such liabilities, it could materially adversely affect our business, financial condition and results of operations. Table of Contents The following chart summarizes our organizational structure following the consummation of the Offering and Reorganization Transactions. This chart is provided for illustrative purposes only. Table of Contents Future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations. Adverse developments in the war on terrorism, future terrorist attacks against the United States, or any outbreak or escalation of hostilities between the United States and any foreign power, may cause disruption to the economy, our business, our employees and our customers, which could adversely affect our revenues, operating expenses and financial condition. Risks Related to Our Indebtedness We have substantial indebtedness and may incur additional debt in the future. We are highly leveraged and we expect to have a significant amount of indebtedness in the foreseeable future. At June 30, 2014, we had $279.1 million of total debt outstanding, all of which was represented by our 6.750% Senior Notes due 2021 and a seller note in connection with the purchase of land. Subject to the limits contained in the agreements governing our indebtedness, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. Our unsecured revolving credit facility provides for borrowing availability of up to $40.0 million, subject to a borrowing base, which ranges from 40% to 100% of the value of specified types of assets. The terms of the facility provide that it may be increased up to an aggregate borrowing capacity of $100.0 million, subject to obtaining additional commitments for such borrowings and the satisfaction of borrowing base qualifications. We have obtained additional commitments to increase the borrowing capacity under our unsecured revolving credit facility to $100.0 million, subject to borrowing base qualifications, and expect to amend the facility to provide for such increase. If we incur additional debt, the risks related to our high level of debt could intensify. Our high level of indebtedness could have detrimental consequences, including the following: making it more difficult for us to satisfy our obligations with respect to our debt; limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; increasing our vulnerability to general adverse economic and industry conditions; exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our unsecured revolving credit facility, are at variable rates of interest; limiting our flexibility in planning for and reacting to changes in the industry in which we compete; placing us at a disadvantage compared to other, less leveraged competitors; and increasing our cost of borrowing. We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. As of June 30, 2014, we had $279.1 million of debt outstanding. In addition, we have the ability to incur additional debt under our unsecured revolving credit facility that has current borrowing capacity of up to $40.0 million but that may be increased to an aggregate borrowing capacity of $100.0 million, subject to certain conditions. We have obtained additional commitments to increase the borrowing capacity under our unsecured revolving credit facility to $100.0 million, subject to borrowing base Table of Contents qualifications, and expect to amend the facility to provide for such increase. The senior notes mature in 2021 and bear interest at a rate of 6.75% per annum and we will be required to make semi-annual interest payments in the amount of $9.1 million. The unsecured revolving credit facility matures in January 2017 (which maturity will be extended to the third anniversary of the closing of the facility if the unsecured revolving credit facility is amended as expected) and, to the extent that we incur debt thereunder, such debt will accrue interest at a floating rate based on the prime rate or LIBOR and we will be required to make interest payments on a quarterly basis. We are not required to make principal payments on the notes or debt incurred under the unsecured revolving credit facility prior to the applicable maturity date. However, we may be required to offer to purchase the senior notes or prepay borrowings under the senior unsecured revolving credit facility if we sell certain of our assets or, in the case of the senior notes, upon a change of control. Our ability to make scheduled payments on or refinance our debt obligations, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, support operations and meet other obligations. If our cash flows and capital resources are insufficient to fund our debt service and other obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, under the terms of the agreements governing our debt instruments or on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our debt instruments restrict our ability to dispose of assets and use the proceeds from those dispositions and also restrict our ability to raise additional debt. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our debt obligations. If we cannot make scheduled payments on our debt, we will be in default and the lenders or holders of our indebtedness could declare all outstanding principal and interest to be due and payable, the lenders under our unsecured revolving credit facility could terminate their commitments to loan money, secured lenders could foreclose against the assets securing their claims and we could be forced into bankruptcy or liquidation. All of these events could result in the loss of your investment in our Class A Common Stock. The agreements governing our debt restrict our current and future operations, particularly our ability to respond to changes or to take certain actions. The agreements governing our debt impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on the Company and its restricted subsidiaries' ability to: pay dividends or make other distributions or repurchase or redeem capital stock; prepay, redeem or repurchase certain debt; incur additional indebtedness and guarantee indebtedness; issue certain preferred stock; Table of Contents make loans and investments; sell assets; incur liens; enter into transactions with affiliates; alter the businesses we conduct; enter into agreements restricting the ability of our subsidiaries to pay dividends; and consolidate, merge or sell all or substantially all of our assets. In addition, the restrictive covenants in our unsecured revolving credit facility require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to comply with those financial ratios, tests and covenants may be affected by events beyond our control, and we may be unable to comply with them. A breach of the covenants or restrictions under an agreement governing our indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under our unsecured revolving credit facility would permit the lenders under our unsecured revolving credit facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our secured indebtedness, the lenders of such indebtedness could proceed against the collateral granted to them to secure that indebtedness. In the event lenders or holders of our indebtedness accelerate the repayment of our indebtedness, we may not have sufficient assets to repay that indebtedness. As a result of the restrictions contained in the agreements governing our indebtedness, we may be: limited in how we conduct our business; unable to raise additional debt or equity financing to operate during general economic or business downturns; or unable to compete effectively or to take advantage of new business opportunities. These restrictions may affect our ability to generate sufficient cash flow to make required payments on our debt. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing. Risks Related to Our Structure and Organization Woodside Inc.'s only asset after the completion of this offering will be its interest in Woodside LLC, and accordingly it will be dependent upon distributions from Woodside LLC to make payments under the tax receivable agreement, pay dividends, if any, taxes and other expenses. Following the completion of the Offering and Reorganization Transactions, Woodside Inc. will be a holding company and will have no assets other than its ownership of LLC Units. Woodside Inc. will have no independent means of generating revenue. Woodside Inc. intends to cause Woodside LLC to make distributions to its members in an amount sufficient to cover all applicable taxes at assumed tax rates determined by Woodside Inc. as the sole managing member, payments under the tax receivable agreement and dividends, if any, declared by it. To the extent that Woodside Inc. needs funds, and Woodside LLC is restricted from making such distributions pursuant to the terms of the agreements governing its debt or under applicable law or regulation, or is otherwise unable to provide such funds, it could materially and adversely affect Woodside Inc.'s liquidity and financial condition. The earnings Table of Contents from, or other available assets of, Woodside LLC may not be sufficient to pay dividends or make distributions or loans to Woodside Inc. to enable it to make payments under the tax receivable agreement or pay any dividends, if any, on the Class A Common Stock, taxes and other expenses. See " We will be required to pay our existing owners for certain tax benefits we may claim arising in connection with this offering and related transactions, and the amounts we may pay could be substantial." Payments of dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends. Our unsecured revolving credit facility and the indenture governing our 6.750% Senior Notes due 2021 include, and any financing arrangement that we enter into in the future may include, restrictive covenants that limit our ability to pay dividends and make distributions, including to Woodside Inc. Moreover, Woodside LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Woodside LLC (with certain exceptions) exceed the fair value of its assets. Subsidiaries of Woodside LLC are generally subject to similar legal limitations on their ability to make distributions to Woodside LLC. Our Principal Equityholders have substantial influence over our business, and their interests may differ from our interests or those of our other stockholders. Following the Offering and Reorganization Transactions, funds managed by Oaktree and Stonehill will continue to hold approximately % of the combined voting power of Woodside Inc. assuming all existing owners sell their pro-rata portion of the LLC Units pursuant to our offer to purchase LLC Units from existing owners and that such offer is fully subscribed. If no other existing owners sell LLC Units to us in the Offering and Reorganization Transactions and the Principal Equityholders subscribe for the full offer amount, the Principal Equityholders will own approximately % of the combined voting power of our common stock. In addition, pursuant to stockholders agreements that we will enter into with each of our Principal Equityholders in connection with this offering, for so long as a Principal Equityholder or its affiliates collectively own at least 60% of the shares of our Class A Common Stock held by such Principal Equityholder at the consummation of this offering (determined on an as-exchanged basis) after giving effect to the purchase of LLC Units from Woodside LLC's existing owners with the net proceeds therefrom and sales by the selling stockholders in this offering, such Principal Equityholder will be entitled to nominate two members of our Board of Directors and one member of each committee of our Board of Directors (subject to applicable independence requirements). When a Principal Equityholder or its affiliates collectively own less than 60%, but at least 20%, of the shares of our Class A Common Stock held by such Principal Equityholder at the consummation of this offering (determined on an as-exchanged basis) after giving effect to the purchase of LLC Units from Woodside LLC's existing owners with the net proceeds therefrom and sales by the selling stockholders in this offering, such Principal Equityholder will be entitled to nominate one member of our Board of Directors and one member of each committee of our Board of Directors (subject to applicable independence requirements). See "Certain Relationships and Related Party Transactions Stockholders Agreements" and "Management and Directors Voting Arrangement." The limited liability company agreement of Woodside LLC will also provide that the existing owners of Woodside LLC that, together with their affiliates, own at least 5% of the total number of outstanding shares of Class A Common Stock (determined on an as-exchanged basis) will have preemptive rights with respect to certain offerings of the common equity of Woodside Inc. and LLC Units and certain offerings of securities convertible into, exchangeable for or representing the right to acquire the common equity of Woodside Inc. and LLC Units and the stockholders agreements will Table of Contents provide similar rights to the Principal Equityholders. In the event that the preemptive rights holders exercise such preemptive rights, our ability to raise the portion of the required capital that is not funded by such persons could be adversely affected, including because of investor concerns regarding liquidity, the continued power of the existing owners, including the Principal Equityholders, to exercise significant influence over us and for other reasons. Furthermore, Woodside Inc. will not have the right to transfer all or a portion of its LLC Units to any person without the consent of each Principal Equityholder that owns at least 10% of the then outstanding LLC Units, other than in connection with a change of control transaction with respect to which all of the LLC Units (other than LLC Units held by Woodside Inc.) are exchanged pursuant to the terms of the exchange agreement. See "Certain Relationships and Related Party Transactions Limited Liability Company Agreement of Woodside Homes Company, LLC" and "Certain Relationships and Related Party Transactions Stockholders Agreements." Due to their ownership and the terms of the stockholders agreements, our Principal Equityholders have the power to exercise significant influence over us and our subsidiaries, including the power to: elect a majority of the members of our Board of Directors and the committees thereof and exert significant influence in the removal of directors not nominated by them; agree to sell or otherwise transfer a stake in our Company, which may result in the acquisition of effective control of
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus. You should also consider, among other things, the matters described under Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations, in each case appearing elsewhere in this prospectus. Unless otherwise stated, all references to us, our, Vyrix, we, the Company and similar designations refer to Vyrix Pharmaceuticals, Inc. Overview We are a specialty biopharmaceutical company focused on developing and commercializing late-stage prescription drug products to improve men s health and quality of life. We are a wholly-owned subsidiary of Ampio Pharmaceuticals, Inc. (NYSE MKT: AMPE), or Ampio, founded as a Delaware corporation on November 18, 2013. Our company is the result of a carve-out of the sexual dysfunction treatment business, including the late-stage men s health product candidates Zertane and Zertane-ED, from Ampio, which was announced in December 2013. According to recent published analyses, premature ejaculation, or PE, is a highly prevalent male sexual dysfunction affecting 20-30% of men worldwide. Based on internal market research and published reports, we believe that PE is up to 1.5-times more prevalent than erectile dysfunction, or ED. Currently, there are no FDA-approved prescription products in the United States to treat PE, and to our knowledge, only two other prescription products have been approved elsewhere in the world. Treatment options for PE have traditionally included antidepressant drugs prescribed off label, topical numbing medications, and cognitive behavior therapy or counseling, all of which have had limited effectiveness in treating the disorder. PE therefore represents an area of significant unmet medical need. In addition, approximately 32% of the more than 12,000 men with PE surveyed in a 2007 study published in European Urology also suffered from ED. Accordingly, we believe that a combination product candidate to treat both PE and ED represents another significant worldwide market opportunity for us. Our Product Pipeline Zertane Our lead product candidate, Zertane, is a specifically formulated orally disintegrating tablet, or ODT, of tramadol hydrochloride patented for the on-demand treatment of PE. Zertane is being developed utilizing an expedited regulatory pathway pursuant to Section 505(b)(2) of the Food, Drug and Cosmetic Act, as amended, or the FDCA, as the active ingredient is already well characterized for the treatment of pain, and we are relying on the FDA s finding of safety of tramadol hydrochloride to support its use in a new indication, PE, at a lower dose. If we receive marketing approval for Zertane, we believe it will be the first commercial product approved by the United States Food and Drug Administration, or FDA, for PE. By virtue of significant development work performed by a previous partner of our parent company, Zertane has already been evaluated outside the United States in two Phase 1 clinical trials, two Phase 2 clinical trials and two Phase 3 clinical trials. The two Phase 1 safety trials were conducted to characterize the concentration of tramadol hydrochloride in plasma after oral administration of a single Zertane ODT (89 mg) in healthy volunteers. Two randomized, placebo-controlled, blinded Phase 2 clinical trials were conducted in a total of 102 patients. These trials evaluated doses of tramadol hydrochloride between 25 and 120 mg in male subjects with PE. Two placebo-controlled, randomized and double-blind Phase 3 clinical trials were conducted in Europe to investigate tramadol hydrochloride 62 mg and 89 mg ODT for the treatment of PE when taken as needed Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JUNE 19, 2014 Shares Common Stock This is a firm commitment initial public offering of shares of common stock of Vyrix Pharmaceuticals, Inc. We are offering all of the shares of common stock offered by this prospectus. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . We have applied to list our common stock on the NYSE MKT under the symbol VYRX. No assurance can be given that our application will be approved. We are an emerging growth company under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See Risk Factors on page 7 to read about factors you should consider before buying shares of the common stock. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Per Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds to us, before expenses $ $ (1) The underwriters will receive compensation in addition to the underwriting discount. See Underwriting beginning on page 101. We have granted the underwriters a 45-day option to purchase up to an additional shares of common stock from us at the initial price to public less the underwriting discount. The underwriters expect to deliver the shares against payment on or about , 2014. Aegis Capital Corp Fordham Financial Management, Inc. Table of Contents between two and eight hours before a sexual event. This development work has demonstrated a favorable safety and efficacy profile of Zertane in men with PE and helped inform the design and endpoints of the Phase 3 clinical trials needed to obtain FDA approval. Furthermore, the safety and pharmacology of the drug substance in Zertane, tramadol hydrochloride, is well characterized, which will eliminate the need for us to conduct additional pre-clinical studies and safety trials. We believe we are well positioned to initiate Phase 3 clinical trials with Zertane in the United States. Upon completion of the trials, if successful, we plan to submit a New Drug Application, or NDA, and subsequently market Zertane in the United States, if approved. Zertane-ED In addition to Zertane, we also have an early-stage combination product candidate, Zertane-ED, which is a combination of Zertane and an FDA-approved phosphodiesterase type 5, or PDE-5, inhibitor, a category of drug that is found in commonly used treatments for ED (e.g., Viagra, Cialis, Levitra, or Stendra), designed to treat both PE and ED. In light of the fact that approximately 32% of men with PE also suffer from ED, according to a 2007 study published in European Urology, we believe that a combination of tramadol hydrochloride with a PDE-5 inhibitor, if approved, would benefit men that experience both distinct problems. If, and when, the FDA accepts filing of our NDA for Zertane, we will commence developing the Zertane-ED fixed dose combination product candidate. Formulation development, stability studies and analytical work as well as manufacturing of clinical supplies in compliance with current good manufacturing practices, or cGMP, have already been completed by a contract manufacturer, and our collaboration with Daewoong Pharmaceutical Co., Ltd., or Daewoong, in South Korea will provide development support to complement our U.S. development efforts. Our Strategy Our business strategy is focused on the initiation and completion of two Phase 3 clinical trials for Zertane in the United States and the development of worldwide commercialization and marketing partnerships. We expect to finalize clinical development of Zertane, seek FDA marketing approval and commercialize the product candidate in the United States either directly or via partnerships. We will seek collaboration agreements to commercialize Zertane in rest of world, or ROW, markets. We already have such agreements in place to market Zertane in South Korea and Brazil, which could provide near-term revenue for us if, working with our partners, we are successfully able to obtain regulatory approval in those countries. In addition, we recently entered into an agreement with Endo Ventures Limited, which recently acquired Paladin Labs Inc., a leading Canadian specialty pharmaceutical company, to provide exclusive rights to market, sell and distribute Zertane in Canada, the Republic of South Africa, certain countries in Sub-Saharan Africa, Colombia and Latin America. We also intend to build awareness of PE in the United States with the intention of paving the way for successful product introduction and initiate pre-clinical work on Zertane-ED as a potential combination treatment for PE and ED. We expect to use a similar clinical and commercial approach for Zertane-ED and we have a clinical development collaboration in place with our South Korean partner for the combination product candidate. Our Intellectual Property We have patent protection in the United States and several other large markets worldwide for the use of tramadol hydrochloride to treat PE. We also have intellectual property specifically covering Zertane-ED, and methods of using Zertane-ED to treat comorbid PE and ED that has issued patents in several large markets worldwide and is pending in the United States. Table of Contents Table of Contents Page Prospectus Summary 1
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+This summary highlights aspects of our business and the notes. You should, however, carefully read the entire prospectus, including the information presented under the section entitled Risk Factors and our consolidated financial statements and the notes thereto incorporated by reference into this prospectus before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements as a result of certain factors, including those set forth under Risk Factors and Forward-Looking Statements. Unless the context otherwise requires or indicates, references to Biomet, the Company, we, us and our refer to Biomet, Inc. and its subsidiaries. Our Company General Biomet, Inc., an Indiana corporation incorporated in 1977, is one of the largest orthopedic medical device companies in the United States and worldwide with operations in more than 50 locations throughout the world and distribution in approximately 90 countries. Our principal subsidiaries include Biomet U.S. Reconstruction, LLC; Biomet Orthopedics, LLC; Biomet Manufacturing, LLC; Biomet Europe BV; EBI, LLC; Biomet 3i, LLC; Biomet International Ltd.; Biomet Microfixation, LLC; Biomet Sports Medicine, LLC; Biomet Trauma, LLC; and Biomet Biologics, LLC. We design, manufacture and market surgical and non-surgical products used primarily by orthopedic surgeons and other musculoskeletal medical specialists. We operate in one reportable business segment, musculoskeletal products, which includes the design, manufacture and marketing of products in six major categories: Knees, Hips, Sports, Extremities, Trauma, or S.E.T., Spine, Bone Healing and Microfixation, Dental and Cement, Biologics and Other Products. We have three geographic markets: United States, Europe and International. Corporate Information Biomet is incorporated in the State of Indiana. Our principal executive offices are located at 56 East Bell Drive, Warsaw, Indiana 46582. Our website address is www.biomet.com. The information contained on our website or that can be accessed through our website will not be deemed to be incorporated into this prospectus or the registration statement of which this Table of Contents FORWARD-LOOKING STATEMENTS Some of the statements made under the headings Summary and elsewhere in this prospectus contain forward-looking statements within the meaning of U.S. federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements generally preceded by, followed by or that include the words believe, could, expect, forecast, intend, may, anticipate, plan, predict, possibly, project, potential, estimate, should, will, or similar expressions. These statements include, but are not limited to, statements related to: the timing and number of planned new product introductions; the effect of anticipated changes in the size, health and activities of the population or on the demand for our products; assumptions and estimates regarding the size and growth of certain market categories; our ability and intent to expand in key international markets; the timing and anticipated outcome of clinical studies; assumptions concerning anticipated product developments and emerging technologies; the future availability of raw materials; the anticipated adequacy of our capital resources to meet the needs of our business; our continued investment in new products and technologies; the ultimate marketability of products currently being developed; our ability to successfully implement new technologies and transition certain manufacturing operations, including transitions to China; our ability to manage working capital and generate adequate cash flows to service outstanding debt; our ability to sustain sales and earnings growth; our success in achieving timely approval or clearance of our products with domestic and foreign regulatory entities; our success in implementing our operational improvement programs; the stability of certain foreign economic markets; the effect of foreign currency fluctuations on our results; the impact of anticipated changes in the musculoskeletal industry and our ability to react to and capitalize on those changes; our ability to successfully implement desired organizational changes; the impact of our managerial changes; our ability to take advantage of technological advancements; our reliance on our private equity stockholders; our $5,831.7 million of total indebtedness outstanding as of February 28, 2014, and our ability to incur additional indebtedness in the future; and our inability to generate sufficient cash in order to meet our debt service obligations. Any forward-looking statements contained in this prospectus are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, our Principal Stockholders, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. You should not place undue reliance on any forward-looking statement and should consider the following factors, as well as the factors discussed elsewhere in this prospectus, including under Risk Factors . We believe that these factors include: changes in general economic conditions and interest rates; changes in the availability of capital and financing sources; changes in competitive conditions and prices in our markets; changes to the regulatory environment for our products, including national health care reform; the effects of incurring or having incurred a substantial amount of indebtedness under our 6.500% senior notes, 6.500% senior subordinated notes and senior secured credit facilities; the effects upon us of complying with the covenants contained in our senior secured credit facilities and the indentures governing our 6.500% senior notes and 6.500% senior subordinated notes; restrictions that the terms and conditions of our 6.500% senior notes and 6.500% senior subordinated notes and our senior secured credit facilities may place on our ability to respond to changes in our business or take certain actions; changes in the relationship between supply of and demand for our products; fluctuations in costs of raw materials and labor; Table of Contents prospectus forms a part, and investors should not rely on any such information in deciding whether to purchase the notes. We have included our website address in this prospectus only as an inactive textual reference and do not intend it to be an active link to our website. For additional information, contact our Corporate Communications department at (574) 372-1514. Ownership and Corporate Structures LVB Acquisition, Inc., or Parent, owns all of our issued and outstanding capital stock. LVB Acquisition Holding, LLC ( Holding ) owns 97.19% of the issued and outstanding capital stock of Parent. Substantially all the equity interests in Holding are owned, directly or indirectly, by a consortium of private equity funds affiliated with The Blackstone Group, Goldman, Sachs & Co., Kohlberg Kravis Roberts & Co. and TPG Global, LLC (together with its affiliates, TPG ), and their co-investors (jointly, the Sponsors ). Table of Contents the effect of foreign currency fluctuations on our results; changes in other significant operating expenses; decreases in sales of our principal product lines; slowdowns or inefficiencies in our product research and development efforts; increases in expenditures related to increased government regulation of our business; developments adversely affecting our sales activities inside or outside the United States; decreases in reimbursement levels by our customers, including certain of our foreign government customers that are experiencing financial distress; difficulties in transitioning certain manufacturing operations to China and other locations; challenges in effectively implementing restructuring and cost saving initiatives; increases in cost-containment efforts from managed care organizations and other third-party payors; loss of our key management and other personnel or inability to attract such management and other personnel; increases in costs of retaining existing independent sales agents of our products; potential future goodwill and/or intangible impairment charges; inability to obtain, protect or enforce our intellectual property rights; unanticipated expenditures related to litigation; and failure to comply with the terms of the DPA (as defined elsewhere in this prospectus). We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events. MARKET AND INDUSTRY DATA This prospectus includes industry data and forecasts that we obtained from industry and government publications and surveys, studies conducted by third parties, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position and market estimates are based on independent industry publications, government publications, third party forecasts and management s estimates and assumptions about our markets and our internal research. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed in Cautionary Note Regarding Forward-Looking Statements and Risk Factors in this prospectus. TERMS USED IN THIS PROSPECTUS Unless otherwise noted or indicated by the context, in this prospectus: The term guarantors , as of the date of this prospectus with respect to both the senior notes and the senior subordinated notes, means Biomet 3i, LLC, Biomet Biologics, LLC, Biomet Europe Ltd., Biomet Fair Lawn, LLC, Biomet Florida Services, LLC, Biomet International Ltd, Biomet Leasing, Inc., Biomet Manufacturing, LLC, Biomet Microfixation, LLC, Biomet Orthopedics, LLC, Biomet Spine, LLC, Biomet Sports Medicine, LLC, Biomet U.S. Reconstruction, LLC, Biomet Trauma, LLC, Cross Medical Products, LLC, EBI Holdings, LLC, EBI, LLC, EBI Medical Systems, LLC, Electro-Biology, LLC, Implant Innovations Holdings, LLC, Interpore Cross International, LLC, Interpore Spine Ltd., Kirschner Medical Corporation, Lanx, Inc. and Lanx Sales, LLC. However, since each of our current and future wholly owned domestic restricted subsidiaries that is a guarantor of our senior secured credit facilities will fully and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, the identities of the guarantors may change from time to time without notice. See Description of Senior Notes Guarantees and Description of Senior Subordinated Notes Guarantees. The term senior notes indenture refers to the Senior Notes Indenture dated as of August 8, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association and the First Supplemental Indenture, dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association, collectively. The term senior subordinated notes indenture refers to the Senior Subordinated Notes Indenture dated as of October 2, 2012 among Biomet, Inc., the Guarantors listed therein and Wells Fargo Bank, National Association. The term indentures refers to the senior notes indenture and senior subordinated notes indenture, collectively. Table of Contents Summary of the Terms of the Notes The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, you should read the section of the prospectus entitled Description of Senior Notes and Description of Senior Subordinated Notes. For purposes of this summary and the Description of Senior Notes and Description of Senior Subordinated Notes, references to the Company, Biomet, the issuer, we, our and us refer only to Biomet, Inc. and not to its subsidiaries. Issuer Biomet, Inc. Notes Offered Senior Notes $1,825 million in aggregate principal amount of 6.500% Senior Notes due 2020. Senior Subordinated Notes $800 million in aggregate principal amount of 6.500% Senior Subordinated Notes due 2020. Maturity Dates The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. Interest Rates Interest on the notes will be payable in cash and will accrue at a rate of 6.500% per annum. Interest Payment Dates Senior Notes August 1 and February 1, commencing February 1, 2013. Senior Subordinated Notes April 1 and October 1, commencing April 1, 2013. Guarantees Each of our existing and future wholly-owned domestic restricted subsidiaries has jointly, severally and unconditionally guaranteed the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. Table of Contents EXPLANATORY NOTE This Registration Statement relates to the previously filed Registration Statement on Form S-1 (File No. 333-188262) (the Previous Registration Statement ) of Biomet, Inc. ( Biomet ). Biomet filed the Previous Registration Statement to register the following securities issued by Biomet and guaranteed by the guarantors named in the Registration Statement: $1,825,000,000 6.500% Senior Notes due 2020 (the Senior Notes ) and $800,000,000 6.500% Senior Subordinated Notes due 2020 (the Senior Subordinated Notes ). There were no applicable registration fees required to be paid at the time of the original filing of the Previous Registration Statement. This Registration Statement has two purposes: First, to register subsidiary guarantees of the Senior Notes and the Senior Subordinated Notes by certain additional subsidiaries (the Additional Subsidiary Guarantors ) of Biomet, and to include the Additional Subsidiary Guarantors as registrants; and Second, to update the Previous Registration Statement pursuant to Section 10(a)(3) of the Securities Act to incorporate by reference the consolidated financial statements and the notes thereto included in Biomet Annual Report on Form 10-K for the fiscal year ended May 31, 2013 (as updated in the Current Report on Form 8-K filed on April 11, 2014) and to update certain other information in the Registration Statement. Pursuant to Rule 429 under the Securities Act of 1933, as amended, this Registration Statement, upon effectiveness, will serve as a post-effective amendment to the Previous Registration Statement. Table of Contents Ranking Senior Notes The senior notes are our senior unsecured obligations and rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; are senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and are effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior notes are such guarantors senior unsecured obligations and rank pari passu in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto; and are effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Senior Subordinated Notes The senior subordinated notes are our senior subordinated unsecured obligations and rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future subordinated indebtedness and effectively junior to our existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. Similarly, the guarantees of the senior subordinated notes are such guarantors senior subordinated unsecured obligations, and rank junior in right of payment with all existing and future indebtedness of each guarantor that is not expressly subordinated thereto; rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and are senior in right of payment to any future indebtedness of each guarantor that is expressly subordinated in right of payment thereto and effectively junior to all existing and future secured indebtedness of each guarantor to the extent of the value of the collateral securing such indebtedness. Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED APRIL 11, 2014 PRELIMINARY PROSPECTUS $1,825,000,000 6.500% Senior Notes due 2020 $800,000,000 6.500% Senior Subordinated Notes due 2020 NOTES OFFERED $1,825.0 million of our 6.500% Senior Notes due 2020, which we refer to as the senior notes. $800.0 million of our 6.500% Senior Subordinated Notes due 2020, which we refer to as the senior subordinated notes. We refer to the senior notes and the senior subordinated notes collectively as the notes. MATURITY The senior notes will mature on August 1, 2020. The senior subordinated notes will mature on October 1, 2020. INTEREST Senior notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. Senior subordinated notes: Interest is payable in cash and accrues at the rate of 6.500% per annum. INTEREST PAYMENT DATES Senior notes: August 1 and February 1, commencing February 1, 2013. Senior subordinated notes: April 1 and October 1, commencing April 1, 2013. REDEMPTION We may redeem some or all of the senior notes on or after August 1, 2015 at redemption prices described in this prospectus. We may redeem some or all of the notes on or after October 1, 2015 at redemption prices described in this prospectus. CHANGE OF CONTROL Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes as described in this prospectus. GUARANTEES Each of our existing and future wholly-owned domestic restricted subsidiaries will jointly, severally and unconditionally guarantee the senior notes on a senior unsecured basis and the senior subordinated notes on a senior subordinated unsecured basis, in each case to the extent such subsidiaries guarantee our senior secured credit facilities. RANKING The senior notes and the related guarantees will be our senior unsecured obligations and will rank pari passu in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto; be senior in right of payment to any future indebtedness that is expressly subordinated in right of payment thereto (including our senior subordinated notes); and be effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. The senior subordinated notes will be our senior subordinated unsecured obligations and will rank junior in right of payment with all of our existing and future indebtedness that is not expressly subordinated in right of payment thereto (including the senior notes); rank pari passu in right of payment to any of our existing and future senior subordinated indebtedness and other obligations; and be senior in right of payment to any future subordinated indebtedness and effectively junior to our and our guarantors existing and future secured indebtedness (including the borrowings under our senior secured credit facilities), to the extent of the value of the collateral securing such indebtedness and to all existing and future liabilities of our non-guarantor subsidiaries. See Risk Factors beginning on page 7 for a discussion of certain risks that you should consider before investing in the notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus has been prepared for and may be used by Goldman, Sachs & Co. and any affiliates of Goldman, Sachs & Co. in connection with offers and sales of the notes related to market-making transactions in the notes effected from time to time. Goldman, Sachs & Co. or its affiliates may act as principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties, when it acts as agents for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any proceeds from such sales. The date of this prospectus is , 2014. We are responsible for the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus and we take no responsibility for any other information that others may give you. This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front cover of this prospectus or the date of any document incorporated by reference herein. Table of Contents Optional Redemption Senior Notes At any time prior to August 1, 2015, we may redeem up to 35% of the aggregate principal amount of the senior notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to August 1, 2015, we may redeem the senior notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after August 1, 2015, we may redeem some or all of the senior notes at any time at the redemption prices set forth in this prospectus plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Notes Optional Redemption. Senior Subordinated Notes At any time prior to October 1, 2015, we may redeem up to 40% of the aggregate principal amount of the senior subordinated notes with the net proceeds of certain equity offerings at the redemption price set forth in this prospectus, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to October 1, 2015, we may redeem the senior subordinated notes, in whole or in part, at our option, at a redemption price equal to 100% of their principal amount plus a make-whole premium and accrued and unpaid interest, if any, to the date of redemption. On and after October 1, 2015, we may redeem some or all of the senior subordinated notes at any time at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See Description of Senior Subordinated Notes Optional Redemption. Change of Control Upon certain change of control events, each holder of notes may require us to purchase all or a portion of such holder s notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date. See Description of Senior Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Notes Certain Definitions, and Description of Senior Subordinated Notes Repurchase at the Option of Holders Change of Control and the definition of Change of Control under Description of Senior Subordinated Notes Certain Definitions. Table of Contents Certain Covenants The indentures governing the notes contain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: pay dividends on, redeem or repurchase capital stock or make other restricted payments; make investments; incur indebtedness or issue certain equity; create certain liens; incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us; enter into transactions with our affiliates; create or designate unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of our assets. These covenants are subject to important exceptions and qualifications, which are described under the headings Description of Senior Notes and Description of Senior Subordinated Notes in this prospectus. Certain of these covenants will be suspended if the notes are assigned an investment grade rating by Standard & Poor s Rating Services ( Standard & Poor s ) and Moody s Investors Services, Inc. ( Moody s ) and no default has occurred and is continuing. If either rating on the notes should subsequently decline to below investment grade or a default occurs and is continuing, the suspended covenants will be reinstated. Listing We do not intend to list the notes on any securities exchange. Governing Law The notes are governed by, and construed in accordance with, the laws of the State of New York. Trustee Wells Fargo Bank, National Association
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+PROSPECTUS SUMMARY You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information that is contained in this prospectus. You should not rely on any information or representations not contained in this prospectus, if given or made, as having been authorized by us. This prospectus does not constitute an offer or solicitation in any jurisdiction in which the offer or solicitation would be unlawful.. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Except as otherwise indicated, market data and industry statistics used throughout this prospectus are based on independent industry publications and other publicly available information. Our Business VitaCig, Inc. (the Company ) was incorporated under the laws of the state of Nevada on January 22, 2014. VitaCig is a technology company that is engaged in the manufacturing and retailing of nicotine-free Electronic Cigarettes ( eCigs ) that are pre-packaged with vitamins, nutrients, and generic pharmaceuticals. Generic pharmaceuticals include the dietary supplements: Vitamin A1, B1, C, E, and anti-oxidant ubidecarenone (CO-Q10). The Company has established its fiscal year end as April 30. Unlike traditional tobacco cigarettes or the majority of electronic cigarettes, the VitaCig does not contain any nicotine. Therefore, it is geared towards non-smokers or existing smokers that are looking for ways to quit. Since the electronic cigarette industry is relatively new, it is not currently possible to gauge or project the extent of demand for nicotine-free devices. Currently, nicotine-free devices represent a small percentage of the electronic-cigarette industry. VitaCig, Inc. was originally formed as a wholly-owned subsidiary of mCig, Inc. On February 24, 2014 the company entered into a Contribution Agreement with mCig, Inc. In accordance with this agreement VitaCig, Inc. accepted the contribution by mCig, Inc. of specific assets consisting solely of pending trademarks for the term VitaCig filed with the USPTO and $500 in cash as contribution in exchange for 500,135,000 shares of common capital stock representing 100% of the shares outstanding of VitaCig, Inc. As of July 31, 2014, the Company s total assets are $90,615, $50,968 of which consists of our inventory. Inventory consists of finished product. VitaCig electronic vaporizing cigarettes valued at the lower of cost or market valuation under the first-in, first-out method of costing. Our current monthly cash burn is roughly $7,500. Based on our current monthly cash burn, we anticipate that our present capital will sustain us until December 31, 2014 before additional capital will be required. We were incorporated on January 22, 2014; we have started selling our products from April 1, 2014, and have generated nominal revenues. Our net income for the quarter ended July 31, 2014 is $7,515. Our independent registered public accounting firm issued its report connection with the audit of our financial statements for the period ended April 30, 2014, which included an explanatory paragraph in Note 3 describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern. Thus far, VitaCig, Inc. management has relied on mCig, Inc. for capital loans and equity investments for the purpose of maintaining ongoing operations. Without continued loans from our largest shareholder, mCig, Inc. we will not have the necessary capital required to execute our business plan and grow our business. Management has estimated that the costs associated with implementation of its business plan over the next twelve months include, but are not limited to, $100,000 in value for Billboards, $250,000 in value for Endorsements (both of which expenses will be satisfied by means other than available cash expenditure, such as, but not limited to, equity or profit sharing arrangements), $100,000 for Retail Stock Distribution, and $25,000 for Lab Testing. Management estimates that funding of $475,000 will be needed to implement the business plan. In the event funding is not realized, the business plan may need to be reduced or curtailed. There are no written agreements which obligate our largest shareholder, mCig, Inc to continue funding us nor do we have any agreements with prospective investors. If we are unable to develop sufficient revenues to sustain our operations or receive funding, we may need to curtail or abandon our operations. Electronic Cigarettes VitaCig is engaged in the business of marketing and distributing an electronic cigarette (eCig) that provides vapor and vitamins for inhalation while avoiding: smoke, flame, tobacco, tar, carbon monoxide, ash, stub, associated smells and all the other chemicals found in traditional cigarettes. We believe that our products provide our consumers with a smoking experience without the social stigmas increasingly associated with cigarettes. We compete in a highly competitive market that includes other e-cigarette marketing companies, as well as traditional tobacco companies. In this highly fragmented market, we have focused on building brand awareness early through viral adoption and word of mouth. In the future, we expect to employ additional marketing strategies while continuing to develop our supply chain and fulfillment capabilities. Viral Marketing is a technique that uses pre-existing social networking services and other technologies to try to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes. Thus far, we have been successful in driving traffic to our website: www.VitaCig.org and building a client base by utilizing viral marketing strategies. Specifically, we have built a presence on leading social-media sites such as Facebook and Twitter. Through these sites, we post information about our products and make daily attempts to engage our target audience. This process drives traffic to our websites and eventually leads to sales. The viral marketing strategy is cost-effective and we do not anticipate any significant costs arising from this strategy. In addition our largest shareholder, mCig, Inc. has launched a national media campaign which included the deployment of over 40 billboards in Manhattan, Brooklyn, and San Francisco. As part of this campaign several VitaCig billboards have been deployed driving additional traffic and sales. The costs of this campaign have been assumed by our largest shareholder, mCig, Inc. We cannot currently anticipate any future expenditure for billboard marketing due to our financial position unless such expenditures will be underwritten by our largest shareholder, mCig, Inc. Our Electronic Cigarettes We currently offer disposable electronic cigarettes named "VitaCigs" that retail for $5.00 each. We currently offer three flavor combinations: VitaCig Relax - Blueberry and Black Currant flavor with B-Myrcene. VitaCig Refresh Mint and Peppermint flavor with Eucalyptol. VitaCig Energize Orange and Grapefruit flavor with Limonene. In addition to the flavor combinations every VitaCig includes the following base Vitamins: A, B, C, E, and CoQ10 (Ubidecarenone). Our in-house engineering, graphic design, and flavor mixing teams work to provide improvements and research or develop new product categories. As of July 31, 2014, VitaCig did not incur any R&D expenses. The Market for Electronic Cigarettes We market our electronic cigarettes as an alternative to traditional tobacco cigarettes. We offer our products in three flavor combinations. Because electronic cigarettes offer a smoking experience without the burning of tobacco leaf, electronic cigarettes offer users the ability to satisfy their traditional cigarette cravings without smoke, tar, ash or carbon monoxide. In many cases electronic cigarettes may be used where tobacco-burning cigarettes may not. Electronic cigarettes may be used in some instances where for regulatory or safety reasons tobacco burning cigarettes may not be used. However, we cannot provide any assurances that future regulations may not affect where electronic cigarettes may be used. According to the U.S. Centers for Disease Control and Prevention, in 2010, an estimated 45.3 million people, or 19.3% of adults, in the United States smoke cigarettes. According to the Tobacco Vapor Electronic Cigarette Association, an industry trade group, more than 3.5 million people currently use electronic cigarettes in the United States. In 2011, about 21% of adults who smoke traditional tobacco cigarettes had used electronic cigarettes, up from about 10% in 2010, according to the U.S. Centers for Disease Control and Prevention. Annual sales of electronic cigarettes in the United States are estimated to increase to $1 billion in 2013 from $500 million in 2012. Annual sales of traditional tobacco cigarettes, according to industry estimates, were $80 billion in 2012. Private businesses, such as coffee houses, cafes, restaurants, clubs, may impose restrictions on the use of electronic cigarettes even absent regulations. If e-cigarettes are subject to restrictions on smoking in public places, our business, operating results and financial condition could be materially and adversely affected. Restrictions on the public use of e-cigarettes may reduce the attractiveness and demand for our e-cigarettes. Certain states, cities, businesses, providers of transportation and public venues in the U.S. have already banned the use of e-cigarettes, while others are considering banning the use of e-cigarettes. If the use of e-cigarettes is banned anywhere the use of traditional tobacco burning cigarettes is banned, e-cigarettes may lose their appeal as an alternative to traditional tobacco burning cigarettes, which may reduce the demand for our products and, thus, have a material adverse effect on our business, results of operations and financial condition. Advertising Currently, we advertise our products primarily through our direct marketing campaign, on the Internet. We also attempt to build brand awareness through social media marketing activities, web-site promotions, and pay-per-click advertising campaigns. We intend to strategically expand our advertising activities in 2014 and also increase our public relations campaigns to gain editorial coverage for our brands. Some of our competitors promote their brands through print media and through celebrity endorsements, and have substantial resources to devote to such efforts. We believe that our and our competitors efforts have helped increase our sales, our product acceptance and general industry awareness. Distribution and Sales We offer our electronic cigarettes and related products through our online store at www.VitaCig.Org and through a Wholesale Distributor Reseller (WDR) program for large bulk orders. Since their introduction to the U.S. market, electronic cigarettes have predominantly been sold online, while tobacco products, most notably cigarettes are currently sold in approximately 400,000 retail locations. Our online store was beta-launched on April 1, 2014, and officially launched on April 15, 2014. We believe that future growth of electronic cigarettes is dependent on higher volume, lower margin sales channels, such as the broad based distribution network through which traditional cigarettes are sold. The Offering Securities Being Distributed: 270,135,000 shares of common stock, par value $0.0001 per share. Spin Off Date The spin-off date is expected to occur on or about the date of the effectiveness of this registration statement. Holders of record of mCig, Inc. on the record date to be selected will become entitled to receive the Company common shares as outlined above. In addition, their rights as holders of common shares of mCig will continue Spin Off Ratio Pursuant to the mCig, Inc. common stock spin-off and associated distributions outlined above, there will be a dividend to mCig shareholders of VitaCig capital stock based on 1 for 1 basis of the 270,135,000 shares of the outstanding common and preferred shares in VitaCig. Securities Issued and Outstanding: There are 500,135,000 shares of common stock issued and outstanding as of the date of this prospectus Registration Costs We estimate our total offering registration costs to be approximately $15,000.
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+PROSPECTUS SUMMARY 1
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+Table of Contents P R O S P E C T U S SATYA WORLDWIDE, INC. 33,333 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK PRICE PER SHARE: $9.00 TOTAL OFFERING AMOUNT: $300,000.00 The name of our company is Satya Worldwide, Inc. and we were incorporated in the State of Florida on March 26, 2012. We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, which became law in April 2012. This is our initial public offering. Our securities are not listed on any national securities exchange, over the counter quotation system or the Nasdaq Stock Market. We are offering a total of 33,333 shares of our Series A Convertible Preferred Stock, par value $.001 per share, in a direct public offering at a fixed price of $9.00 per share for a period of 180 days from the date of this prospectus, but we may terminate the offering at any time prior to such date. There are no extension periods. This prospectus also relates to the offering of up to 14,999,850 shares of our common stock, par value $.0001 per share, which may be issued upon the conversion of the Series A Convertible Preferred Stock. We will convert all shares of Series A Convertible Preferred Stock within 360 days of the consummation of the offering; however, at your option, you may convert the Series A Convertible Preferred Stock at any time prior thereto. One (1) share of Series A Convertible Preferred Stock will be converted at a conversion rate of 450 shares of common stock for each share of Series A Convertible Preferred Stock. No additional payment is required in connection with such conversion. In the event that a dividend or distribution is declared by the Board of Directors on the Series A Convertible Preferred Stock, the terms of the Series A Convertible Preferred Stock do not require that a fixed amount be payable to such holders. In the event that we are liquidated, the holders of Series A Convertible Preferred Stock would be entitled to receive the amount of $9.00 per share plus any accumulated and unpaid dividends before any distribution is made to the holders of our common stock. However, the holders of Series A Convertible Preferred Stock will lose this $9.00 per share preferred stock liquidation preference upon the conversion to common stock. This is a best efforts offering that will not utilize any underwriters or broker-dealers. The shares are being offered by our directors and officers pursuant to an exemption as a broker/dealer under Rule 3a 4-1 of the Securities Exchange Act of 1934. There is no minimum number of shares of Series A Convertible Preferred Stock that are required to be sold in the offering. The amount of shares being sold to prospective investors may vary and we may not sell all of the shares being offered. We may receive no proceeds or very minimal proceeds from the offering. Prospective investors could end up holding shares in our public reporting company, for which we have no market for our shares and have not received enough proceeds from this offering for our business operations and meeting our reporting obligations as a public company. Proceeds from the sale of the shares, up to $300,000, if all the shares being offered are sold, may be used by us upon receipt. We will not be placing any of these funds in an escrow account, and, as a result, we will immediately begin using these funds and any creditors of the Company may be able to gain access to these funds. We plan to hire a securities broker to serve as our market maker by filing an application on our behalf to apply for quotation of our common stock on the Over-The-Counter Bulletin Board. We anticipate that it may take approximately three months from the date of this prospectus for a market maker to file an application on our behalf to apply for quotation of our common stock on the Over-The-Counter Bulletin Board, and that it may take approximately six months from the date of this prospectus for our common stock to be quoted on the Over-The-Counter Bulletin Board. However, any application filed by a market maker on our behalf to apply for quotation of our common stock on the Over-The-Counter Bulletin Board may not be approved. The purchase of the securities offered through this prospectus involves a high degree of risk. See Risk Factors beginning on page 8. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. We are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Offering Price ($) Offering Expenses ($) Net Proceeds to Us if 25% of Shares Sold (8,333 Shares) ($) Net Proceeds to Us if 50% of Shares Sold (16,667 Shares) ($) Net Proceeds to Us if 75% of Shares Sold (25,000 Shares) ($) Net Proceeds to Us if 100% of Shares Sold (33,333 Shares) ($) Per Share 9.00 (1)(2) 5.40 7.20 7.80 8.10 Total (3) 300,000 30,000 44,998 120,003 195,000 270,000 __________ (1) The total amount of offering expenses is estimated to be $30,000. The offering expenses per share will vary depend on the total number of shares sold in the offering. See Use of Proceeds for additional information. (2) There are no underwriting discounts or commissions being paid in connection with this offering. None of our officers or directors will receive any compensation for their role in offering or selling the shares in this offering. (3) Net Proceeds is calculated after the deduction of offering expenses estimated to be $30,000. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. THE DATE OF THIS PROSPECTUS IS JULY 22, 2014 Table of Contents ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission. The registration statement containing this prospectus, including the exhibits to the registration statement, also contains additional information about Satya Worldwide, Inc. and the securities offered under this prospectus. That registration statement can be read at the Securities and Exchange Commission's website (located at www.sec.gov) or at the Securities and Exchange Commission s Public Reference Room mentioned under the heading Where You Can Find More Information of this prospectus. You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Our business, financial condition or results of operations may have changed since that date. REFERENCES As used in this prospectus: (i) the terms we , us , our , and the Company mean Satya Worldwide, Inc. and its subsidiary, Satya ePublishing, Inc.; (ii) SEC refers to the Securities and Exchange Commission; (iii) Securities Act refers to the United States Securities Act of 1933, as amended; (iv) Exchange Act refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated. - 1 - Table of Contents PROSPECTUS SUMMARY The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the Risk Factors section, the financial statements and the notes to the financial statements included elsewhere herein. Our Company Satya Worldwide, Inc., a Florida corporation, is a development stage company that provides digital book distribution services to authors, poets, memoirists and publishers for managing and exploiting their literary works in electronic format as eBooks , which may be read on an iPad, Kindle or other type of tablet computer or e-reader device. This type of service is commonly referred to as ePublishing . We are the ePublisher of The Third Man: Was there another bomber in Oklahoma City?, an original non-fiction book written by Gerald Posner, the American investigative journalist and author of 11 books. We have made this book available on Amazon, an online retailer. We also own and acquire rights to literary works and receive payments for book sales domestically and internationally. We own Gerald Posner s co-author rights to Mengele: The Complete Story, a non-fiction investigative book written by Gerald Posner and John Ware, which entitles us to half of the aggregate book royalties paid to the authors. The approval of Mr. Ware and Cooper Square, the book s publisher, is required for any additional royalty or fee arrangements with prospective licensees, of which there currently are none. We cannot provide any assurance that we will be able to obtain any such approval from Mr. Ware or Cooper Square. We do not own any other books or literary works in any form. Except as set forth above, we currently have no other ePublishing arrangements or agreements for any other books or literary works in any form and no other arrangements or agreements with any other digital retailers. We plan to develop a book catalog website, but have not taken steps to do so and our two executive officers are the Company s only employees. Accordingly, our proposed business activities are anticipatory in nature and may not come to fruition. During the period from March 26, 2012, our inception, through March 31, 2014, we generated revenues in the amount of $1,472 and had an accumulated deficit in the amount of $5,908. We currently have $7,891 in remaining capital. Our monthly burn rate is approximately $1,500, and our remaining capital will last through November 2014. We will require a minimum amount of $75,000 from the sale of shares in this offering to have an operating business and meet our public company reporting obligations for at least the next 12 months. In the event that we do not raise at least $75,000 in proceeds from this offering, we will not have sufficient capital to allow us to execute our business plan and meet our public company reporting requirements for the duration of this 12 month period. Accordingly, we will need to obtain additional equity and/or debt financing for which no sources may exist. If we are unable to raise a minimum of $75,000 from this offering and/or obtain such minimum amount in combination with other potential sources of equity and/or debt financing on a timely basis, we will become insolvent and forced to discontinue our operations and liquidate our assets. For us to fully implement our business plan, we will require a minimum amount of $300,000 from the sale of shares in this offering to have an operating business and meet our public company reporting obligations for at least the next 24 months. The Company currently has no plans to obtain capital from other potential sources except through this offering. See Management s Discussion and Analysis of Financial Condition and Results of Operations Availability of Additional Funds for additional information. Substantial voting power is concentrated in the hands of Brisance Capital, Inc., which owns 10,030,000 shares of common stock of the Company, or 85% of the Company s outstanding shares of common stock as of the date of this prospectus. If the Company was to sell all of the Series A Convertible Preferred Stock in this offering, such shareholder would own 37.5% of the issued and outstanding shares of common stock of the Company, assuming the conversion of such shares of Series A Convertible Preferred Stock into shares of common stock. Patricia Posner, our Chairman, Chief Executive Officer, President and Treasurer is married to Gerald Posner. This marital relationship creates a conflict of interest, because we are providing services to Gerald Posner in return for him allowing us to exploit his intellectual property rights. The contracted rates that we are charging to Gerald Posner for our services and the contracted price at which he has sold his rights to us for his book, Mengele: The Complete Story, as well as our Digital Print Distribution Agreement with him, are not being determined on an arm s length basis. Accordingly, these existing and future transactions, if any, with Gerald Posner may not be determined on fair market terms, which could be adverse to the interests of the Shareholders. - 2 - Table of Contents Our company structure is set forth in the following chart: SATYA WORLDWIDE, INC. a Florida corporation SATYA ePUBLISHING, INC. a Florida corporation (100% Owned Subsidiary) We are offering a total of 33,333 shares of our Series A Convertible Preferred Stock, par value $.001 per share, in a direct public offering at a fixed price of $9.00 per share for a period of 180 days from the date of this prospectus, but we may terminate the offering at any time prior to such date. There are no extension periods. The amount of shares being sold to prospective investors may vary and we may not sell all of the shares being offered. There is no minimum number of shares that are required to be sold in the offering. We may receive no proceeds or very minimal proceeds from the offering. We will convert all shares of Series A Convertible Preferred Stock within 360 days of the consummation of the offering; however, at your option, you may convert the Series A Convertible Preferred Stock at any time prior thereto. You will lose your $9.00 preferred stock liquidation preference upon the conversion to common stock. One share of Series A Convertible Preferred Stock will be converted at a conversion rate of 450 shares of common stock for each share of Series A Convertible Preferred Stock. No additional payment is required in connection with such conversion. The shares of common stock underlying the shares of Series A Convertible Preferred Stock are penny stock. See Market for the Shares The Penny Stock Rules and Risk Factors Risks Related to this Offering for additional information. We are a shell company , as defined under Rule 144(i) promulgated under the Securities Act of 1933, as amended, and, accordingly, the resale of our restricted securities and stock held by affiliates into the public market is prohibited until such time as the conditions of Rule 144(i)(2) have been satisfied. See Plan of Distribution Resale of our Shares for additional information. We are not a blank check company , because a blank check company is defined as a company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity or person. The Company, its officers and directors, promoters or any of their affiliates, do not intend, once the Company is reporting, for it to be used as a vehicle for a private company to become a reporting company. We qualify as an emerging growth company , as defined in the Jumpstart Our Business Startups Act, which became law in April 2012. Under the JOBS Act, emerging growth companies , can delay adopting new or revised accounting standards until such time as those standards apply to private companies. See Summary of Financial Data for additional information. Our independent auditors have raised substantial doubt as to our ability to continue as a going concern, as expressed in its opinion on our financial statements included in this prospectus. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay our liabilities as they arise. There can be no assurance that we will operate at a profit or such additional financing will be available, or if available, can be obtained on satisfactory terms. The Company currently has no plans to obtain capital from other potential sources except through this offering. Our principal executive offices are located at 429 North Dixie Highway, Suite 201, Pompano Beach, Florida 33060. Our telephone number is (302) 404-0390. Both Satya Worldwide, Inc. and its wholly owned subsidiary Satya ePublishing, Inc. were incorporated under the laws of the State of Florida on March 26, 2012. Our fiscal year-end is December 31. - 3 - Table of Contents The Offering The Issuer: Satya Worldwide, Inc. Securities Offered: We are offering a total of 33,333 shares of our Series A Convertible Preferred Stock, par value $.001 per share, in a direct public offering. The amount of shares being sold to prospective investors may vary and we may not sell all of the shares being offered. There is no minimum number of shares that are required to be sold in the offering. We may receive no proceeds or very minimal proceeds from the offering. We believe that an offering of Series A Convertible Preferred Stock is more attractive than an offering of Common Stock, because there are currently no shares of Series A Convertible Preferred Stock outstanding and such holders will be entitled to a $9.00 per share liquidation preference, plus all accumulated and unpaid dividends on those shares, before any distribution is made to holders of our common stock. Offering Price and Term of Offering: We are offering the shares of Series A Convertible Preferred Stock at a fixed price of $9.00 per share for a period of 180 days from the date of this prospectus, but we may terminate the offering at any time prior thereto in our sole discretion. Dividends: In the event that a dividend is declared by the Board of Directors on the Series A Convertible Preferred Stock, the terms of the Series A Convertible Preferred Stock do not require that a fixed amount be payable to such holders. Also, there is no preference associated with the issuance of dividends on the Series A Convertible Preferred Stock. In the event a dividend is declared on the common stock of the Company, in cash or other property, the holders of the Series A Convertible Preferred Stock will be entitled to receive the amount of cash or property equal to the cash or property which would be received by the holders of the number of shares of common stock into which such shares of Series A Convertible Preferred Stock could be converted immediately prior to such dividend. We have not paid any dividends on our common stock, and it is not anticipated that any dividends will be paid in the foreseeable future. Mandatory Conversion of Series A Convertible Preferred Stock into Common Stock: We will convert all shares of Series A Convertible Preferred Stock within 360 days of the consummation of the offering; however, you may convert the Series A Convertible Preferred Stock at any time prior thereto. You will lose your $9.00 preferred stock liquidation preference upon the conversion to common stock. One share of Series A Convertible Preferred Stock will be converted at a conversion rate of 450 shares of common stock for each share of Series A Convertible Preferred Stock, subject to adjustment in a number of circumstances described under Description of Series A Convertible Preferred Stock. No additional payment is required in connection with such a conversion. - 4 - Table of Contents Voting Rights: The holders of Series A Convertible Preferred Stock will vote, on an as converted basis, on the same matters as the holders of common stock and there is no limitation whatsoever on the voting rights associated with the Series A Convertible Preferred Stock. Material Differences Between Series A Convertible Preferred Stock and Common Stock: The material differences between the Series A Convertible Preferred Stock and Common Stock are that holders of Series A Convertible Preferred Stock are entitled to receive (i) a liquidation Preference, as described above in Securities Offered , and (ii) payment of dividends, as a separate class, if declared, by the Board of Directors. The holders of common stock are not entitled to receive such liquidation preference or any dividends paid to the holders of Series A Convertible Preferred Stock. See Description of Capital Stock for more information. Common Stock Outstanding: Prior to Offering: 11,730,000 shares Assuming sale of all Series A Convertible Preferred Stock and conversion of such shares into shares of common stock: 26,729,850 shares
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+PROSPECTUS SUMMARY This summary highlights the information contained elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information that may be important to you. Before investing in our common stock, you should read this entire prospectus, including the information set forth under the heading Risk Factors and the financial statements and the notes thereto. In this prospectus, unless we indicate otherwise or the context requires, we, our, us and the company refer, prior to the Reorganization Transactions discussed below, to American Addiction Centers, Inc. and, after the Reorganization Transactions, to AAC Holdings, Inc., in each case together with its consolidated subsidiaries. The term Holdings refers to AAC Holdings, Inc. and the term AAC refers to American Addiction Centers, Inc. Unless otherwise noted, all information in this prospectus assumes (i) no exercise of the underwriters over-allotment option, (ii) the consummation of the Reorganization Transactions described under the caption Reorganization Transactions and (iii) the 1.571119-for-1 stock split effected on September 18, 2014. Our Business We believe we are a leading provider of inpatient substance abuse treatment services for individuals with drug and alcohol addiction. As of August 31, 2014, we operated six substance abuse treatment facilities located throughout the United States, focused on delivering effective clinical care and treatment solutions across our 467 beds, which included 338 licensed detoxification beds. In addition, we have three facilities under development and an additional property under contract that we plan to develop into a new facility. The majority of our approximately 750 employees are highly trained clinical staff who deploy research-based treatment programs with structured curricula for detoxification, residential treatment, partial hospitalization and intensive outpatient care. By applying a tailored treatment program based on the individual needs of each client, many of whom require treatment for a co-occurring mental health disorder, such as depression, bipolar disorder and schizophrenia, we believe we offer the level of quality care and service necessary for our clients to achieve and maintain sobriety. For the years ended December 31, 2013 and December 31, 2012, we had $115.7 million and $66.0 million in revenues, $11.6 million and $7.2 million in Adjusted EBITDA and $1.5 million and $1.1 million in net income, respectively. See Summary Historical and Pro Forma Consolidated Financial and Operating Data for a discussion of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure. We have made substantial investments in our treatment facilities with a specific focus on providing aesthetically pleasing properties and grounds, numerous amenities, healthy food and a courteous and attentive staff to distinguish us from our competitors. Our commitment to clinical excellence, premium facilities and customer service has allowed us to form relationships across a broad set of key referral sources, including hospitals, other treatment facilities, employers, alumni and employee assistance programs. In 2013 and the six months ended June 30, 2014, approximately 90% of our revenues were reimbursable by commercial payors, including amounts paid by such payors to clients, and the remaining portion was payable directly by our clients. We currently do not receive any revenues from government healthcare payment programs such as Medicare and Medicaid. Our platform is supported by a centralized infrastructure that includes a multi-faceted sales and marketing program, call center operations, a laboratory facility, billing and collection services and support functions. This infrastructure, in conjunction with our premium service offerings, has enabled us to develop a strong national brand. The substantial investments we have made at a corporate level contribute to our operational efficiencies and provide us flexibility to place clients at a variety of our facilities in order to optimize care that best fits both the clients clinical needs and their insurance benefits. Table of Contents The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 2014 PRELIMINARY PROSPECTUS 5,000,000 Shares Amercian Addiction Centers AAC Holdings, Inc. Common Stock This is the initial public offering of our common stock, and no public market currently exists for our stock. We currently expect the initial public offering price to be between $12.00 and $14.00 per share of common stock. We and the selling stockholders have granted the underwriters a 30-day option to purchase up to 250,000 and 500,000, respectively, of additional shares of common stock to cover over-allotments, if any. Our common stock has been approved for listing on the New York Stock Exchange under the symbol AAC . We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 15. Per Share Total Initial public offering price $ $ Underwriting discounts and commissions1 $ $ Proceeds, before expenses, to us $ $ 1 We refer you to Underwriting beginning on page 142 for additional information regarding underwriting compensation. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares on or about , 2014 through the book-entry facilities of The Depository Trust Company. Joint Book-Running Managers William Blair Raymond James Avondale Partners The date of this prospectus is , 2014 Table of Contents Our Industry Addiction is a chronic disease that affects brain function and behavior. Substance abuse, specifically the abuse of drugs and alcohol, is one of the most common and serious forms of addiction. If left untreated, substance abuse can lead to a variety of destructive social conditions such as problems at home or work, violence, crime and even death. According to the National Institute on Drug Abuse, or NIDA, the total societal cost of substance abuse in the United States is estimated to be over $600 billion annually. The 2012 National Survey on Drug Use and Health estimates that approximately 23.1 million people aged 12 or older needed treatment for a drug or alcohol use problem in the United States in 2012, of which only 2.5 million, or 10.8% of those needing treatment, received treatment at a specialty facility. The mental health and substance abuse treatment industry is expected to continue to expand as a result of a combination of factors, including increased awareness and de-stigmatization of substance abuse treatment and recent healthcare reform improving access to care, particularly for young adults now able to access their parents insurance. According to a 2008 report by the Substance Abuse and Mental Health Services Administration, or SAMHSA, annual spending on treatment for substance abuse in the United States is expected to grow to $35 billion in 2014. The National Comorbidity Survey reports that up to 65% of adults with substance abuse addiction also have a co-occurring mental health disorder, defined by SAMHSA as at least one major mental health disorder, such as depression, bipolar disorder and schizophrenia, occurring concurrently with substance abuse. According to the Disease Management and Health Outcomes Journal, integrating treatment for both substance abuse and a co-occurring mental health disorder is believed to result in significantly better outcomes. In addition to strong industry growth dynamics, the substance abuse treatment sector has several favorable attributes that differentiate it from other healthcare services sectors. Of particular note, as a result of the nature of substance abuse treatment, clients have more control in deciding when to seek treatment and who to select as their treatment provider. Also, clients are typically not limited to their local geographic area in selecting a treatment facility. As a result, providers are able to market and advertise directly to potential clients and their families on a national level. Our Competitive Strengths We believe the following strengths differentiate us from our competitors and will allow us to successfully operate and grow our business: Leading substance abuse treatment platform. We believe we are a leading provider of substance abuse treatment services based on the scale and nationwide reach of our platform, quality of our facilities and breadth of our treatment capabilities. We believe we offer one of the largest for-profit fully licensed programs to treat drug and alcohol addiction regardless of stage or severity. In addition, we believe our commitment to quality and customer service, as well as our dedication to clinical excellence, results in improved client retention, an important factor in ensuring clients receive the care they need. Comprehensive addiction treatment programs with co-occurring mental health disorder treatment capabilities. Our clinical staff is trained to deploy a research-based treatment program with a structured curriculum, particularly focused on identifying and addressing the needs of clients with co-occurring mental health disorders. Given that up to 65% of adults with substance abuse addiction are estimated to also have at least one co-occurring mental health disorder, we believe our medical and clinical staff s ability to identify and treat both disorders is critical in helping clients achieve sobriety. We believe our ability to address these complex conditions enhances our reputation with clients, their families and other referral sources. Table of Contents Our research-based treatment methods and clinical practices have helped thousands treat their addictions. Greenhouse Dallas, Texas Table of Contents Proven ability to develop de novo treatment facilities. We have a successful track record of identifying suitable de novo sites, securing properties, overseeing the licensing and development of facilities and integrating de novo centers into our broader platform. We have successfully transformed acquired properties, such as a luxury spa and an assisted living facility, into substance abuse treatment facilities. We believe our skill and experience in executing our de novo development strategy provides us with a competitive advantage in quickly and cost-effectively developing substance abuse treatment facilities and enrolling clients. Multi-faceted sales and marketing program. Our national sales and marketing program provides a competitive advantage compared to treatment facilities that primarily target local geographic areas and use fewer marketing channels to attract clients. Our national team of 40 professional sales representatives develops and maintains relationships with key referral sources such as hospitals, other treatment facilities, employers, alumni and employee assistance programs. In addition, our team of 75 centralized, trained call center treatment consultants provides coverage and support 24 hours a day, seven days a week. Our coordinated approach across multiple channels and our ability to serve clients from our varied facilities across the United States allows us to reach a broad audience of potential clients and build a nationally recognized brand. Attractive payor mix and diversified client base. We have generated revenues solely from commercial payors and our clients with no reimbursement from government healthcare payment programs such as Medicare and Medicaid, which are typically subject to lower reimbursement rates. The relationships we have developed with our referral sources enhance our interactions with payors and help us achieve our attractive reimbursement profile. For the year ended December 31, 2013 and the six months ended June 30, 2014, approximately 90% of our revenues were reimbursable by commercial payors, including amounts paid by such payors to clients, with the remaining portion of our revenues payable directly by our clients. No single payor in 2013 or the first half of 2014 accounted for more than 12.3% and 14.5% of our revenue reimbursements, respectively. Strong financial performance and attractive returns on invested capital. We have achieved strong financial performance in terms of recent growth and profitability. Our revenues for the year ended December 31, 2013 were $115.7 million, representing a 75.3% increase over $66.0 million in 2012. We have demonstrated the ability to generate attractive returns on investment with our de novo development strategy. Each of our two de novo developments, Greenhouse and Desert Hope, which added 218 total beds on a combined basis, was profitable within its first year of operation. Experienced management team with track record of success. Our senior management team, with an average of over 15 years of experience in the healthcare industry, has significant experience developing, operating and growing a variety of behavioral health treatment facilities. We believe the combination of our management team s skills and experiences provides us with an advantage in developing high quality de novo treatment facilities and quickly integrating them into our broader platform. Our Growth Strategy We have developed our company and the American Addiction Centers national brand through substantial investment in our facilities, our clinical expertise, our professional staff and our national sales and marketing program. We seek to extend our position as a leading provider of treatment for drug and alcohol addiction by executing the following growth strategies: Improve census at existing facilities by increasing our client leads through our multi-faceted sales and marketing program. Table of Contents American Addiction Centers treatment philosophy binds together decades of findings and practices into the essential elements that are designed to help anyone beat addiction. Greenhouse Dallas, Texas Table of Contents Expand capacity at existing residential facilities by selectively increasing our number of residential beds, expanding our clinical facility space and hiring additional clinical staff to enable us to provide services to additional clients. In July 2014, we completed the expansion of our Greenhouse facility to add 60 inpatient beds, all of which are licensed for detoxification. Pursue de novo development of residential facilities built on the success of two full-service residential treatment facilities that we developed in the past two years: Greenhouse, a former luxury spa in Dallas, Texas, and Desert Hope, a former assisted living facility in Las Vegas, Nevada. Opportunistically pursue treatment facility acquisitions to expand and diversify our geographic presence and service offerings. Expand outpatient operations to complement our broader network of residential treatment facilities and further enhance our brand and our ability to provide a more comprehensive suite of services across the spectrum of care. Target complementary growth opportunities, including providing pharmacy and laboratory services, expanding licensure of existing facilities, treating other mental health and wellness disorders and expanding other ancillary services. Our Substance Abuse Treatment Facilities The following table presents information, as of June 30, 2014, about our network of substance abuse treatment facilities, including current facilities, facilities under development and properties under contract: Facility Name(1) Location Capacity (beds) First Clients Served Treatment Certifications(2) Real Property Leased / Owned Desert Hope Las Vegas, NV 148 2013 DTX, RTC, PHP, IOP Owned Greenhouse Grand Prairie, TX (Dallas area) 130 (3) 2012 DTX, RTC, PHP, IOP Owned Forterus Temecula, CA 76 2004 DTX, RTC, PHP, IOP Leased Singer Island West Palm Beach, FL 65 2012 PHP, IOP Leased San Diego Addiction Treatment Center San Diego, CA 36 2010 DTX, RTC, PHP, IOP Leased The Academy West Palm Beach, FL 12 2012 PHP, IOP Leased TBD Riverview, FL (Tampa area) 164 (4) Under Development(4) DTX, RTC, PHP, IOP(4) Owned TBD Arlington, TX (Dallas area) n/a Under Development(5) PHP, IOP(5) Owned TBD Las Vegas, NV n/a Under Development(6) PHP, IOP(6) Owned TBD Ringwood, NJ (New York City area) 150 (7) Under Contract(7) DTX, RTC, PHP, IOP(7) n/a (1) Excluded from this table is our non-substance abuse treatment facility, FitRx, which is a 20-bed leased facility located in Brentwood, Tennessee that provides outpatient treatment services for men and women who struggle with obesity-related behavioral disorders. (2) DTX: Detoxification; RTC: Residential Treatment; PHP: Partial Hospitalization; IOP: Intensive Outpatient. (3) This figure includes 60 additional beds as a result of the Greenhouse expansion completed in July 2014, with respect to which we received licensure in July 2014. (4) Reflects our current expectations with respect to this facility, on which we began construction in May 2014 and target opening in the second half of 2015. Table of Contents Table of Contents (5) In March 2014, we acquired an approximately 20,000 square foot property in Arlington, Texas. We began construction of an outpatient treatment facility at this location in July 2014, and we are targeting opening this facility in the first half of 2015. The facility will provide treatment services and additional programming space for our Greenhouse facility. Treatment certifications reflect our expectations. (6) In May 2014, we acquired an approximately 20,000 square foot property in Las Vegas, Nevada. We began construction of an outpatient treatment facility at this location in July 2014, and we are targeting opening this facility by the end of 2014. The facility will provide treatment services and additional programming space for our Desert Hope facility. Treatment certifications reflect our expectations. (7) We entered into a purchase agreement to acquire a 96 acre property located fewer than 50 miles from New York City, subject to the satisfaction of certain closing conditions and the arrangement of financing. We anticipate beginning construction of a residential treatment facility at this location by early 2015, and we are targeting opening this facility in 2016 with approximately 150 beds. Treatment certifications reflect our expectations. Risks Related to Our Business Our business is subject to a number of risks that you should understand before making an investment decision. These risks, which are discussed more fully in Risk Factors following this prospectus summary, include the following: We currently operate a limited number of treatment facilities. Our revenues, profitability and cash flows could be materially adversely affected if we are unable to operate certain key treatment facilities, our corporate office or our laboratory facility. We rely on our multi-faceted sales and marketing program to continuously attract and enroll clients to our network of facilities. Any disruption in our national sales and marketing program would have a material adverse effect on our business, financial condition and results of operations. We derive a significant portion of our revenues from providing services to clients covered by third-party payors who could reduce their reimbursement rates or otherwise restrain our ability to obtain, or provide services to, clients. This risk is heightened because we are generally an out-of-network provider. An increase in uninsured and underinsured clients or the deterioration in the collectability of the accounts of such clients could have a material adverse effect on our business, financial condition and results of operations. If we overestimate the reimbursement amounts that payors will pay us for services performed, it would increase our revenue adjustments, which could have a material adverse effect on our revenues, profitability and cash flows and lead to significant shifts in our results of operations from quarter to quarter that may make it difficult to project long-term performance. We will need additional financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. Our business may face significant risks with respect to future de novo expansion, including the time and costs of identifying new geographic markets, the ability to obtain necessary licensure and other zoning or regulatory approvals and significant start-up costs including advertising, marketing and the costs of providing equipment, furnishings, supplies and other capital resources. Our acquisition strategy exposes us to a variety of operational and financial risks, which may have a material adverse effect on our business, financial condition and results of operations. Our ability to maintain census and, to a lesser extent, the average length of stay of our clients is dependent on a number of factors outside of our control, and if we are unable to maintain census, or if we experience a significant decrease in average length of stay, our business, results of operations and cash flows could be materially adversely affected. Table of Contents TABLE OF CONTENTS Page Summary 1
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+This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. You should read the following summary together with the entire prospectus, including the more detailed information regarding us, the common stock being sold in this offering and our consolidated financial statements and the related notes included elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus before deciding to invest in our common stock. Some of the statements in this prospectus constitute forward-looking statements. See "Forward-Looking Statements." Except where the context otherwise requires or where otherwise indicated, in this prospectus the terms "Company," "we," "us," "our," "our company" and "our business" refer to Green Bancorp, Inc. and our banking subsidiary, Green Bank, N.A., a national banking association, and the term "Bank" refers to Green Bank, N.A. In this prospectus, we refer to the Houston Sugar Land Baytown, Dallas Fort Worth Arlington and Austin Round Rock metropolitan statistical areas as the Houston, Dallas and Austin MSAs. Our Company We are a Texas focused bank holding company headquartered in Houston, Texas. Our wholly owned subsidiary, Green Bank, N.A., a nationally chartered commercial bank, provides commercial and private banking services primarily to Texas based customers through twelve full service branches in the Houston, Dallas and Austin MSAs. The Houston, Dallas and Austin MSAs are our target markets, and we believe their growing economies and attractive demographics, together with our scalable platform, provide us with opportunities for long-term and sustainable growth. Our emphasis is on continuing to expand our existing business by executing on our proven portfolio banker driven business model as well as pursuing select strategic acquisitions and attracting additional talented bankers. As of March 31, 2014, we had consolidated total assets of $1.8 billion, total loans of $1.4 billion (of which $1.39 billion were originated by us and $18.8 million were acquired), total deposits of $1.5 billion and total shareholders' equity of $203.6 million. Our History and Growth We began operations as a bank holding company on December 31, 2006 when we acquired Redstone Bank, N.A. ("Redstone Bank"), a Houston community bank with two branches and $219.3 million in total assets. We were formed by our Chairman and Chief Executive Officer, Manny Mehos, who previously founded, led and sold Coastal Bancorp, Inc. after overseeing its growth from one branch and less than $11 million in assets in 1986 to 43 branches and $2.7 billion in assets in 2004, with the objective of building a commercially focused bank in attractive Texas metropolitan markets. We have experienced significant growth since commencing operations, while maintaining what we believe to be a healthy balance sheet. During the period from December 31, 2009 through March 31, 2014, we experienced a 37% compounded annual growth rate in total loans and a 31% compounded annual growth rate in total deposits, while extending our branch footprint from five to twelve locations and expanding our team of portfolio bankers from 21 to 50. A key aspect of our growth has been increasing our commercial and industrial loan balances, and as of December 31, 2013, we had the eleventh largest commercial and industrial loan portfolio among banks headquartered in Texas. Our scale has allowed us to leverage our infrastructure to operate our business more efficiently as evidenced by the decrease in our efficiency ratio from 103.4% for the year ended December 31, 2009 to 64.6% for the year ended December 31, 2013, while our total assets grew from $545.4 million to $1.7 billion as of December 31, 2009 and 2013, respectively. We have also increased our net income from a loss of $3.3 million in 2009 to net income of $12.6 million in 2013, while preserving a strong credit culture and Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). We will continue to be an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year following the fifth anniversary of this offering; (ii) the last day of the fiscal year in which we have more than $1.0 billion in annual revenues; (iii) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (iv) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities. Until we cease to be an emerging growth company, we may take advantage of specified reduced reporting and other regulatory requirements generally unavailable to other public companies. Those provisions allow us to present only two years of audited financial statements, discuss only our results of operations for two years in related Management's Discussions and Analyses and provide less than five years of selected financial data in an initial public offering registration statement; to not provide an auditor attestation of our internal control over financial reporting; to choose not to comply with any new requirements adopted by the Public Company Accounting Oversight Board ("PCAOB") requiring mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and our audited financial statements; to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosure regarding our executive compensation; and to not seek a non-binding advisory vote on executive compensation or golden parachute arrangements. We may choose to take advantage of some or all of these reduced reporting and other regulatory requirements. We have elected in this prospectus to take advantage of the reduced disclosure requirements relating to executive compensation arrangements. The JOBS Act also permits an "emerging growth company" to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. However, we have "opted out" of this provision. As a result, we will comply with new or revised accounting standards to the same extent that compliance is required for non-emerging growth companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. Table of Contents conservative risk profile, as evidenced by the fact that our historical non-performing assets to total assets ratio has consistently remained below the average among all publicly traded banks in the United States, according to information obtained from SNL Financial. Loans (Dollars in millions) Deposits (Dollars in millions) Net income (Dollars in thousands) Return on Average Assets Following our acquisition of Redstone Bank, we have supplemented our organic growth and increased our total deposits by successfully completing and integrating the following acquisitions: OneWest Bank Asset Purchase: one branch of OneWest Bank located in the Dallas MSA with $188.4 million in total deposits, acquired in October 2010; Main Street Bank Asset Purchase: three branches of Main Street Bank located in the Houston MSA with $167.7 million in total deposits and $12.7 million in loans, acquired in October 2011; and Opportunity Bancshares, Inc. ("Opportunity Bancshares") Stock Purchase: Opportunity Bancshares with one branch located in the Dallas MSA, $44.1 million in total deposits and $25.6 million in total loans, acquired in May 2012. These acquisitions have provided significant strategic benefits and opportunities, including additional quality deposits which have provided funding for our lending business, new business lines which have contributed to the expansion of our product offerings and additional branches which have extended our geographic footprint and provided opportunities for consolidation of our support areas. In addition, we recently entered into a definitive agreement for the acquisition of SP Bancorp, Inc., which owns SharePlus Bank (together, "SharePlus"), a Texas chartered state bank headquartered in the Dallas MSA. As of March 31, 2014, SharePlus had four branches (three in the Dallas MSA and one in Green Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) Table of Contents FORWARD-LOOKING STATEMENTS Forward-looking statements included in this prospectus are based on various facts and derived utilizing numerous important assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. You should understand that the following important factors could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements: risks related to the focus of our business within our geographic areas of operation in Texas, including risks associated with downturns in the energy, technology and real estate sectors within these areas; our ability to execute our growth strategies, including through the identification of acquisition candidates that will be accretive to our financial condition and results of operation; our ability to attract and retain successful bankers that meet our expectations in terms of customer relationships and profitability; risks related to the integration of any acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions; our ability to comply with various governmental and regulatory requirements applicable to financial institutions; market conditions and economic trends nationally, regionally and in our target markets, particularly in Texas and the geographic areas in which we operate; risks related to our strategic focus on lending to small to medium-sized businesses; risks associated with our commercial and industrial loan portfolio, including the risk for deterioration in value of the general business assets that generally secure such loans; potential changes in the prices, values and sales volumes of commercial and residential real estate securing our real estate loans; the sufficiency of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates; risks associated with the relatively unseasoned nature of a significant portion of our loan portfolio; risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area; our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy and operations or to meet increased minimum regulatory capital levels; Table of Contents Kentucky), $33.1 million in stockholders' equity, $315.8 million in total assets, $273.5 million in deposits and $228.7 million in loans. See " Recent Developments" below for more information. Our Strategy Our goal is to be a leading provider of personalized commercial and private banking services to Texas businesses, entrepreneurs and individuals while capitalizing on the vibrant and growing economies of our target markets. We have made the strategic decision to focus on the Houston, Dallas and Austin MSAs because we believe these markets offer a compelling combination of economic growth, favorable demographics and desirable prospective customers. We employ a model that relies upon experienced bankers to originate quality loans, attract and retain low cost deposits, and generate fee income. Within this model, which we refer to as our portfolio banking model, our customers are generally assigned a dedicated portfolio banker who acts as the primary point of contact and relationship manager. We believe that this model allows us to build and maintain long-term relationships, leading to increased business opportunities and referrals, while improving our risk profile through ongoing and proactive credit monitoring and loan servicing. Our portfolio banking model has been the primary driver of our loan growth and has also helped us achieve what we believe to be a comparatively high level of average deposits per branch. Our target commercial customers include Texas based small and medium-sized businesses in the manufacturing, distribution, supply and energy sectors, as well as real estate investors, mortgage originators and professional firms. We offer a wide variety of banking products and services, including credit and deposit products and treasury management services. We also seek to attract traditional retail customers and to generate retail business from mass affluent individuals with the capacity to maintain significant deposit balances through a combination of diverse product offerings with attractive rates, convenient branch locations and personalized service. As a significant portion of our historical growth has occurred in a low interest rate environment, a key aspect of our strategy has been the maintenance of an asset-sensitive balance sheet that we believe will produce increased net interest income if market interest rates rise. As of March 31, 2014, 76.9% of our total loans were comprised of floating-rate loans, which may be subject to changes in yield as the interest rate environment changes. Our loan portfolio has grown to $1.4 billion as of March 31, 2014 from $373.0 million as of December 31, 2009, largely as a result of new loans originated by us during that period. Accordingly, our loan portfolio includes loans that we originated within the past two years, which we consider to be relatively unseasoned because of their limited payment history. We intend to continue our legacy of growth by executing our portfolio banker driven organic growth strategy complemented by disciplined strategic acquisitions. Portfolio Banker Growth Strategy. Our portfolio banker driven growth strategy will continue to emphasize organic growth through: increasing the productivity of our existing portfolio bankers, as measured by loans, deposits and fee income per banker, while improving profitability by leveraging our existing scalable operating platform and lowering our cost of funding; hiring additional seasoned and proven bankers who will thrive within our portfolio banking model as well as opening additional branches in attractive locations within our target markets that offer strong commercial and private banking opportunities; providing a wide range of credit product offerings, including commercial lines of credit, working capital loans, commercial real estate-backed loans (including loans secured by owner occupied commercial properties), reserve-based energy loans, equipment financing, mortgage-warehouse Texas (State or Other Jurisdiction of Incorporation or Organization) 6021 (Primary Standard Industrial Classification No.) 42-1631980 (I.R.S. Employer Identification No.) 4000 Greenbriar Houston, Texas 77098 (713) 275-8220 (Address, Including Zip Code, of Registrant's Principal Executive Offices) John P. Durie Executive Vice President and Chief Financial Officer Green Bancorp, Inc. 4000 Greenbriar Houston, Texas 77098 (713) 275-8220 (Name, Address and Telephone Number, Including Area Code, of Agent For Service) Table of Contents changes in market interest rates that affect the pricing of our loans and deposits and our net interest income; our ability to maintain an effective system of disclosure controls and procedures and internal controls over financial reporting; the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; potential fluctuations in the market value and liquidity of the securities we hold for sale; potential impairment on the goodwill we have recorded or may record in connection with business acquisitions; risks associated with system failures or failures to prevent breaches of our network security; our ability to keep pace with technological change or difficulties when implementing new technologies; risks associated with data processing system failures and errors; risks associated with fraudulent and negligent acts by our customers, employees or vendors; the institution and outcome of litigation and other legal proceeding against us or to which we become subject; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"); governmental monetary and fiscal policies, including the policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve"); our ability to comply with supervisory actions by federal banking agencies; changes in the scope and cost of Federal Deposit Insurance Corporation (the "FDIC") insurance and other coverages; and systemic risks associated with the soundness of other financial institutions. Other factors not identified above, including those described under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," may also cause actual results to differ materially from those described in our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control. You should consider these factors in connection with considering any forward-looking statements that may be made by us. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law. Table of Contents lines, residential mortgage products, loans guaranteed by the U.S. Small Business Administration ("SBA loans"), and purchased receivables financing; and adhering to our disciplined and sophisticated underwriting process and a portfolio banker based loan servicing model to maintain strong credit metrics and a conservative risk profile. Strategic Acquisitions. We intend to supplement our organic growth by executing a disciplined acquisition strategy: focusing on targets with a quality loan and deposit customer base and attractive branch locations in the Houston, Dallas and Austin MSAs that possess favorable market share, low cost deposit funding, compelling noninterest income generating businesses and other unique and attractive characteristics; leveraging our reputation as an experienced acquirer of banks, recognizing many banks in our target markets face scale and operational challenges, regulatory burdens, management succession issues or shareholder liquidity expectations; and pursuing transactions that we expect will produce attractive risk-adjusted returns for our shareholders. Our Competitive Strengths We believe the following competitive strengths will allow us to capitalize on our substantial market opportunity and achieve our business goals: Well-positioned within attractive major metropolitan markets in Texas. We are one of the few Texas based banking franchises focused primarily on the major metropolitan markets in the state with a presence in each of the Houston, Dallas and Austin MSAs. Substantially all of our branches are strategically located within these markets in areas that we consider to be among the most attractive in terms of serving existing and attracting new customers. We believe our model will allow us to continue to capitalize on the favorable demographic and commercial characteristics of our economically robust target markets. Within these markets, we target commercial customers with annual revenues between $5 and $150 million, and we believe that we offer customers of this size a greater level of attention than our larger competitors while providing access to a broad range of sophisticated banking products that cannot be matched by most community banks. There are numerous businesses located in the markets we serve meeting this profile and we believe that we are well-positioned to attract these target customers relative to our competitors as a result of our extensive local knowledge, broad service offerings and portfolio banking model. Scalable portfolio banking and operational platforms with the capacity to generate and accommodate significant organic growth. Our management team has built a capable and knowledgeable staff and made significant investments in the technology and systems necessary to build a scalable corporate infrastructure with the capacity to support continued growth, while also improving operational efficiencies. As a result of the personalized nature of our portfolio banking model, we generally expect that it will take up to five years for our portfolio bankers to reach full capacity in terms of customer relationships and profitability. As of March 31, 2014, the average tenure across our team of portfolio bankers was approximately three years, and we believe that our current team has the capacity to grow loans, deposits and fee income without significant additional overhead expense. Furthermore, we believe that our scalable credit, operational, technology and governance infrastructure will continue to allow us to efficiently and effectively manage the growth driven by our strategies. For example, our efficiency ratio has decreased from 103.4% for the year ended December 31, 2009 to 64.6% for the Copies to: Michael J. Zeidel, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 (212) 735-2000 (facsimile) Sanford M. Brown William S. Anderson Jason M. Jean Bracewell & Giuliani LLP 1445 Ross Avenue, Suite 3800 Dallas, Texas 75202 (214) 468-3800 (214) 758-8300 (facsimile) Table of Contents year ended December 31, 2013, while our total assets grew from $545.4 million to $1.7 billion as of December 31, 2009 and 2013, respectively. Disciplined and sophisticated credit governance process. Our approach to credit risk management balances well-defined credit policies, disciplined underwriting criteria and ongoing risk monitoring and review processes with our portfolio banking model which demands that we respond promptly to our customers' needs. Our processes emphasize early-stage review of loans and regular credit evaluations, which supplement the ongoing and proactive credit monitoring and loan servicing provided by our portfolio bankers. This balanced team approach has allowed us to maintain strong credit metrics while executing our growth strategy, as evidenced by the fact that our historical non-performing assets to total assets ratio has consistently remained below the average among all publicly-traded banks in the United States, according to information obtained from SNL Financial. In addition, we believe our nimble and responsive credit culture and underwriting process will help us to attract and retain experienced bankers who are eager to be more responsive to customers' credit requests. Experienced acquirer and integrator of financial institutions. We have developed a proven platform to identify acquisition candidates, conduct comprehensive due diligence, model financial expectations, and effectively consummate the transaction and integrate the acquired institution into our scalable infrastructure and achieve synergies. Since completing a successful capital raise in 2010, we have completed three acquisitions and have recently entered into a definitive agreement to acquire SharePlus. In addition, members of our senior management team have successfully led over 30 bank merger and acquisition transactions since the mid-1980s, including public company transactions. There are approximately 500 banks headquartered in Texas, approximately 150 of which are headquartered in our target markets. Of these 150 banks, 85 reported total assets between $100 million and $1.5 billion as of December 31, 2013. These banks provide us with opportunities to selectively pursue strategic transactions that meet our stringent financial, cultural and risk criteria to support our continued growth. We believe that becoming a publicly traded company will further enhance our ability to execute on our acquisition strategy since we will be able to offer publicly traded stock as consideration. Strong and experienced management team. We are managed by a team of banking executives with complementary experience and personal attributes who have a history of managing large teams, leading acquisition and divestiture projects and managing significant growth in diverse markets and economic climates. Our four executive management team members are career bankers and each has over 25 years of banking experience, including significant experience within large, nationally recognized financial institutions. As a result, our executive management team has substantial expertise with numerous sophisticated banking products, extensive knowledge of the bank regulatory landscape, significant experience throughout numerous interest rate and credit cycles and a range of experience with banks of all sizes. We believe that this varied experience has resulted in a diverse and adaptive culture that enhances our ability to attract driven, entrepreneurial bankers as well as seasoned and capable credit professionals. Our Market Areas We believe that a key factor contributing to our ability to achieve our business objectives and to create shareholder value is the attractiveness of the Texas market, including the favorable demographic and economic characteristics of our target markets within Texas. Texas is the second most populous state in the country with an estimated population in 2013 of 26.4 million. Population within the state grew 5.2% from April 1, 2010 to July 1, 2013, compared to growth of 2.4% for the nation as a whole during the same period according to the U.S. Census Bureau. According to SNL Financial, the five-year population growth rate for the period from 2013 to 2018 is projected to be 7.6%, compared to a 3.6% projected growth rate for the nation as a whole during the Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 under the Exchange Act. (check one) Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price(2)(3) Amount of Registration Fee Common Stock, $0.01 par value per share 5,390,625 $17.00 $91,640,625 $11,803.31(4) (1)Includes 703,125 shares subject to the underwriters' option to purchase additional shares. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)Includes the offering price of any additional shares of common stock that the underwriters have the option to purchase. (4)$12,880 was previously paid in connection with the initial filing of this Registration Statement. 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 AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. Source: The Dallas Fed Our primary markets are the Houston, Dallas and Austin MSAs, which we consider to be among the most attractive markets in the United States. The 2013 median household income and the projected five-year population and median household income growth rates for these MSAs are substantially greater than the nation as a whole. The following map illustrates the projected 2018 population and Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion, Dated July 29, 2014 PROSPECTUS 4,687,500 Shares Green Bancorp, Inc. Common Stock (1)As of March 31, 2014; excludes branches to be acquired in the SharePlus acquisition. (2)As of July 1, 2013, according to U.S. Census Bureau estimates. (3)According to SNL Financial. This is the initial public offering of shares of the common stock of Green Bancorp, Inc., the holding company for Green Bank, N.A., a national banking association headquartered in Houston, Texas. We are offering 4,687,500 shares of our common stock. No public market currently exists for our common stock. We have applied to list our common stock on the NASDAQ Global Select Market under the symbol "GNBC." We anticipate that the initial public offering price per share of our common stock will be between $15.00 and $17.00. We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and are subject to reduced public company disclosure standards. Investing in our common stock involves risks. See "Risk Factors" beginning on page 15 of this prospectus to read about factors you should consider before investing in our common stock. Per share Total Initial public offering price of our common stock $ $ Underwriting discounts and commissions Proceeds, before expenses, to us We have granted the underwriters the option to purchase up to an additional 703,125 shares of our common stock from us within 30 days of the date of this prospectus on the same terms and conditions set forth above. Neither the Securities and Exchange Commission, any state securities commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency nor any other regulatory authority has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. These securities are not deposits, savings accounts or other obligations of any bank or savings association and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency and are subject to investment risks, including the possible loss of the entire amount you invest. The underwriters expect to deliver the shares to purchasers on or about , 2014, subject to customary closing conditions. SANDLER O'NEILL + PARTNERS, L.P. Jefferies J.P. Morgan RBC Capital Markets Keefe, Bruyette & Woods A Stifel Company Table of Contents Houston. Houston ranks second in the nation as a home to Fortune 500 company headquarters, including Phillips 66, ConocoPhillips, Marathon Oil and Sysco, along with the Texas Medical Center, which is the largest health complex in the world, and benefits from a vibrant and diverse economy underpinned by a strong energy sector. The Houston MSA is the fifth largest in the country and the city of Houston is the fourth most populous city in the United States, according to 2012 U.S. Census Bureau estimates. The Houston MSA had the second highest percentage employment growth of the 12 most populous MSAs during the 12 months ended October 2013, according to the U.S. Bureau of Labor Statistics. Dallas. Dallas ranks third in the nation as a home to Fortune 500 company headquarters, including ExxonMobil, AT&T, Texas Instruments and Southwest Airlines. The Dallas MSA is the fourth largest in the country and the city of Dallas is the ninth most populous city in the United States, according to 2012 U.S. Census Bureau estimates. The Dallas MSA had the highest percentage employment growth of the 12 most populous MSAs during the 12 months ended October 2013, according to the U.S. Bureau of Labor Statistics. Austin. Austin is the capital of Texas, home to the University of Texas, and a major national cultural, arts, film and media center and a home to numerous company headquarters including Dell and Whole Foods Markets. The Austin MSA ranked ninth among the nation's 10 fastest growing MSAs with a 37.3% population increase between 2000 and 2010, according to 2010 U.S. Census data. The city of Austin experienced 11.8% private sector job growth over the five-year period ending October 2013, and was the only city in the nation to post double-digit percentage growth during that period. Austin was recently ranked first among the best cities for future job growth by Forbes.com. Recent Developments For the three months ended June 30, 2014, we expect to report net income in the range of $4.4 million to $4.7 million as compared to $3.3 million for the three months ended June 30, 2013. We also expect to report net income in the range of $7.9 million to $8.2 million for the six months ended June 30, 2014 as compared to $6.0 million for the six months ended June 30, 2013. The increase in net income for these periods is primarily attributable to an increase in net interest income. The increase was also attributable to other factors including an increase in noninterest income and a decrease in provision for loan losses, offset by increases in noninterest expense and provision for income taxes. For the three months ended June 30, 2014, we expect to report return on average assets in the range of 1.00% to 1.05%. We also expect to report return on average assets in the range of 0.91% to 0.94% for the six months ended June 30, 2014. As of June 30, 2014, we expect to report consolidated total loans of approximately $1.4 billion representing a $172.7 million increase from June 30, 2013 and a $29.4 million increase from March 31, 2014. We also expect to report total deposits of approximately $1.5 billion as of June 30, 2014 representing a $50.3 million increase from June 30, 2013 and a $48.1 million increase from March 31, 2014. Changes were primarily driven by the execution of our growth strategy and the continued strength of our target markets. We have provided a range, rather than a specific amount, for certain of the preliminary results described above primarily because our financial closing procedures for the three and six months ended June 30, 2014 are not yet complete and, as a result, we expect that our final results upon completion of our closing procedures may vary from the preliminary estimates within the ranges as described above. We expect to complete our closing procedures with respect to the three and six months ended June 30, 2014 after the completion of this offering. Our auditors have not yet completed their review of our results for the three and six months ended June 30, 2014. The estimates were prepared by our management, based upon a number of assumptions, in connection with preparation of our financial statements and completion of the interim period review. Additional items that would require material The date of this prospectus is , 2014 Table of Contents adjustments to the preliminary financial information may be identified. Estimates of results are inherently uncertain and subject to change, and we undertake no obligation to update this information. See "Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies," "Risk Factors Risks Related to Our Business" and "Forward-Looking Statements." On May 5, 2014, we entered into a definitive agreement to acquire SP Bancorp, Inc., which owns SharePlus Bank, a Texas chartered state bank headquartered in the Dallas MSA for aggregate cash consideration of $46.2 million, subject to adjustment. SharePlus operates as a full-service commercial bank, providing services that include the acceptance of checking and savings deposits and the origination of one- to four-family residential mortgage, mortgage warehouse, commercial real estate, commercial business, home equity, automobile and personal loans. SharePlus' business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in loans and securities. As of March 31, 2014, SharePlus had four branches (three in the Dallas MSA and one in Kentucky), $33.1 million in stockholders' equity, $315.8 million in total assets, $273.5 million in deposits and $228.7 million in loans, and $177.5 million, or 77.6%, of its total loan portfolio was comprised of residential and commercial real estate loans. Subject to satisfaction of certain conditions, including receipt of SharePlus shareholder approval and customary regulatory approvals, the acquisition is expected to close before the end of 2014. Upon completion of the SharePlus acquisition, five portfolio bankers will be added to the Dallas MSA. This offering and our proposed acquisition of SharePlus are not conditioned on one another. Other than SharePlus, we have no current plans, arrangements or understandings to make any acquisitions. However, at any given time we may be evaluating other acquisition candidates, conducting due diligence and may have entered into one or more letters of intent. We cannot assure you that we will enter into any definitive agreements in respect of any such transaction. Our Corporate Information Our principal executive offices are located at 4000 Greenbriar, Houston, Texas 77098, and our telephone number is (713) 275-8220. Our website is www.greenbank.com. The information contained on or accessible from our website does not constitute a part of this prospectus and is not incorporated by reference herein. Table of Contents The Offering Common stock we are offering 4,687,500 shares (5,390,625 shares if the underwriters exercise their option to purchase additional shares in full). Common stock to be outstanding after this offering 25,467,754 shares (26,170,879 shares if the underwriters exercise their option to purchase additional shares in full). Use of proceeds We estimate that our net proceeds from the sale of the shares of common stock by us will be approximately $67.6 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial public offering price of $16.00 per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus. If the underwriters exercise their option to purchase additional shares in full, the net proceeds to us will be approximately $78.1 million. We intend to use $8.0 million of the net proceeds from this offering received by us to pay a portion of the purchase price of SharePlus (see " Recent Developments" for a description of the terms of the transaction), and to contribute all but $5.0 million of the remaining net proceeds to the Bank to be used for general corporate purposes. Other than SharePlus, we have no current plans, arrangements or understandings to make any acquisitions. However, at any given time we may be evaluating other acquisition candidates, conducting due diligence and may have entered into one or more letters of intent. We cannot assure you that we will enter into any definitive agreements in respect of any such transaction. Dividend policy We have not declared or paid any dividends on our common stock. We currently intend to retain all of our future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. See "Dividend Policy."
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+The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS ORION GLOBAL CORP. $36,000 3,000,000 SHARES OF COMMON STOCK $0.012 PER SHARE This registration statement constitutes the initial public offering of ORION GLOBAL CORP. (the "Company", "us", or "ORION GLOBAL CORP.") common stock. ORION GLOBAL CORP. is registering 3,000,000 shares of common stock at an offering price of $0.012 per share for a total amount of $36,000. There are no underwriting or broker dealers involved with the offering. The company will offer the securities on a BEST EFFORTS basis, which means that our director and officer will use his best efforts to market and sell the common stock. The shares will be offered at a fixed price of $0.012 per share for the duration of the offering or until such time as the stock is quoted on the OTCBB or other exchange at which time the selling security holders may then sell at the prevailing market price or at privately negotiated prices, and there is no minimum number of shares required to be sold to close the offering. The company is not expected to receive enough proceeds from the offering to begin operations; and there is no market for its shares. The Company s sole officer and director, Mr. Eric Negroni, will be responsible to market and sell these securities. We are considered a shell company as defined under Rule 4095 of the Securities Act, because it is a company with nominal operations and it has assets consisting solely of cash and cash equivalents. Accordingly, there will be illiquidity of any future trading market until the company is no longer considered a shell company, as well as restrictions imposed upon the transferability of unregistered shares outlined in Rule 144(i). Refer to the section entitled "Risk Factors" on page 7. SHARES OFFERED PRICE TO SELLING AGENT PROCEEDS TO BY COMPANY PUBLIC COMMISSIONS THE COMPANY Per Share $ 0.012 Not applicable $ 0.012 Minimum Purchase None Not applicable Not applicable If 35% Sold 12,600 Not applicable 12,600 If 50% Sold 18,000 Not applicable 18,000 If 75% Sold 27,000 Not applicable 27,000 If 100% Sold (3,000,000 Shares) 36,000 Not applicable 36,000 Currently, Mr. Eric Negroni owns 100% of the Company s common stock. After the offering, Mr. Negroni will retain a sufficient number of shares to continue to control the operations of the Company. If all the shares are not sold, there is the possibility that the amount raised may be minimal and might not even cover the costs of the offering which the Company estimates at $9,000. The proceeds from the sale of the securities will not be placed into a separate escrow account it will be placed directly into the Company s account and will be immediately available for our use, regardless of the amount of proceeds raised; any investor who purchases shares will have no assurance that any monies besides their own investment will be subscribed to the prospectus. Investors who execute a subscription to purchase shares have a two day cancellation right and can cancel their Subscription Agreement by sending notice to the Company by midnight on the 2nd business day after signing the Subscription Agreement. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. The Company will pay all expenses incurred in this offering. There has been no public trading market for the common stock of ORION GLOBAL CORP. The Company qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act which became law in April 2012 and will be subject to reduced public company reporting requirements. See "Jumpstart Our Business Startups Act" contained herein. The offering shall terminate on the earlier of (i) the date when the sale of all 3,000,000 shares is completed or (ii) ninety (90) days from the date of this prospectus becomes effective. The Company may, at its discretion, extend the offering for an additional 90 days beyond the ninety (90) days from the effective date of this prospectus. THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO , ' ': RISK FACTORS , ' ': BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this Prospectus. The date of this prospectus is ____________, 2014 - 1 - UNDERTAKINGS The registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post—effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post—effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; 2. That for the purpose of determining liability under the Securities Act, each post—effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; 3. To remove from registration by means of a post—effective amendment any of the securities being registered which remain unsold at the termination of the offering; and 4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. 5. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424; (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and PROSPECTUS SUMMARY This summary only highlights selected information contained in greater detail elsewhere in this Prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including "Risk Factors" beginning on Page 6, and the consolidated financial statements, before making an investment decision. Our independent auditor s report expresses substantial doubt about the company s ability to continue as a going concern. All dollar amounts refer to US dollars unless otherwise indicated. THE CORPORATION Our State of Organization We are a development-stage company, incorporated as ORION GLOBAL CORP. under the laws of Florida on April 4, 2014 with a fiscal year end of April 30. Our business and registered office is located at 5612 Brooklyn Ave., Sarasota, FL 34231. Our telephone number is 818-621-4642, E-mail ericnegronil@yahoo.com. Our Business ORION GLOBAL CORP. intends to open a 40,000-50,000 net leasable square feet Self Storage Center in Sarasota County, Florida We intend to develop our business to cater to the needs of residential customers for storage of personal items as well as for commercial customers storing stock. As of the date of this Prospectus we have not established any business operations. The development of our business have been limited to organizational matters, the preparation of the financial statements and other information presented in this Prospectus including limited efforts in developing our business plan and web site. We have not established a set of specific tasks or milestones; this will be accomplished as we continue the development of our business plan. We have not generated any revenues to date. We need to raise $36,000 from the capital raise from this offering to complete our business plan. Whether we raise 100% or 35% of the proceeds from this offering we intend to complete our business plan and comply with SEC reporting requirements. Nevertheless, if we are only successful in selling 35% or less of the shares being registered we will dedicate all of the proceeds to satisfying our continuous disclosure requirements. The expenses of this offering, including the preparation of this Prospectus and the filing of this registration statement, estimated at $9,000 are being paid by us and not from this offering. Because we have taken no steps to identify potential sources of financing other than what we are seeking to raise through this offering via friends and family we are unable to provide a timeline for the implementation of our business plan. See Risk Factor. We estimate a burn rate of approximately $1,000 per month. At 35% of shares sold, our burn rate would be 13 months; at 50% it would be 18 months; at 75%; 27 months; and at 100%; 36 months. As of April 30, 2014 we had $9,000 cash on hand. We need to raise Phase I ($500,000) and Phase II ($475,000) a total of Phase I and Phase II amounting to $975,000 in financing and a construction loan of $1,080,000 in addition to the $36,000 that we are seeking to raise through this offering to execute our business plan over the next 18 months. The funds raised in this offering, even assuming we sell all the shares being offered, will be insufficient to commercialize our intended business. - 3 - After the anticipated effectiveness of our registration statement by the Securities And Exchange Commission, we intend to accomplish the following milestones: MILESTONE TIMELINE Raise capital from this offering. 1 Month Raise capital for Phase I 3-9 Months Complete development of our business plan. 1-2 Months Complete investigations for: Obtaining landsite 1-4 Months Obtaining Architectural Engineering & Construction Co. 1-4 Months Obtaining Consulting Team 1-6 Months Development of Website and Marketing tools 1-5 Months Obtaining Operating & Administration Equipment 1-6 Months Obtain Market Maker & Apply to FINRA for symbol 1-3 Months Our budgetary allocations may vary however, depending on the percentage of proceeds that we obtain from the offering. Nevertheless, if we are only successful in selling 35% or less of the shares being registered, we will dedicate all proceeds to satisfying our continuous disclosure requirements. We intend to pursue capital for Phase I through public or private equity financing and by borrowing from any available sources if required in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.
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+This summary provides a brief overview of information contained elsewhere in this prospectus. It does not contain all of the information that you should consider before investing in the common units. You should carefully read the entire prospectus, including Risk Factors and the historical and pro forma financial statements and accompanying notes included elsewhere in this prospectus, before investing in our common units. Unless we otherwise specify, all references to information and data in this prospectus about our business and fleet refer to our business and fleet immediately after the closing of this offering. Unless otherwise indicated, the information in this prospectus assumes (i) an initial public offering price of $20.00 per unit (the midpoint of the price range set forth on the cover of this prospectus) and (ii) that the underwriters do not exercise their option to purchase additional common units. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. Dollars. All references in this prospectus to Transocean Partners, we, our, us, and the company refer to Transocean Partners LLC and its subsidiaries, including the RigCos, unless the context otherwise indicates. We will own a 51 percent interest and Transocean will own a 49 percent noncontrolling interest in each of the entities that own and operate Discoverer Inspiration, Discoverer Clear Leader and Development Driller III. Each of these drilling rigs will be owned by and operated by separate subsidiaries of ours. We refer to the rig-owning and rig-operating company for each drilling rig together as a RigCo and collectively for all of our drilling rigs as the RigCos. References in this prospectus to our fleet, refer to the drilling rigs in which we hold interests indirectly through the RigCos. Unless otherwise specifically noted, financial results and operating data are shown on a 100 percent basis and are not adjusted to reflect Transocean s 49 percent noncontrolling interest in the RigCos. References in this prospectus to Transocean refer, depending on the context, to Transocean Ltd. (NYSE: RIG, SIX: RIGN) and/or to any one or more of its direct and indirect subsidiaries, other than us. References in this prospectus to Transocean Member refer to the owner of the Transocean Member interest, initially Transocean Partners Holdings Limited, the selling unitholder in this offering and an indirect wholly owned subsidiary of Transocean Ltd. The Transocean Member interest is a non-economic interest in Transocean Partners that includes the right to appoint three members of our board of directors. References in this prospectus to Chevron and BP refer to the subsidiaries of Chevron Corporation and BP plc, respectively, that are our customers. We have provided definitions for some of the terms we use to describe our business and industry and other terms used in this prospectus in the Glossary of Terms beginning on page B-1 of this prospectus. TRANSOCEAN PARTNERS LLC We are a growth-oriented limited liability company recently formed by Transocean, one of the world s largest offshore drilling contractors, to own, operate and acquire modern, technologically advanced offshore drilling rigs. Our initial assets consist of 51 percent interests in the RigCos that own and operate three ultra-deepwater drilling rigs that are currently operating in the U.S. Gulf of Mexico. Transocean owns the remaining 49 percent noncontrolling interest in each of the RigCos. We generate revenue through contract drilling services, which involves contracting our mobile offshore drilling fleet, related equipment and work crews on a dayrate basis to large international energy companies to drill oil and gas wells. Our drilling rigs currently operate under long-term contracts with Chevron and BP, two leading international energy companies, with an average remaining contract term of approximately 4.1 years as of July 7, 2014. We believe that our drilling contracts will generate stable and reliable cash flows over their term. We intend to use the relationships and expertise of Transocean to re-contract our fleet when the existing contracts expire and identify opportunities to expand our fleet through acquisitions. Table of Contents EXHIBIT A to the Second Amended and Restated Limited Liability Company Agreement of Transocean Partners LLC Certificate Evidencing Common Units Representing Membership Interests in TRANSOCEAN PARTNERS LLC No. Common Units In accordance with Section 4.1 of the Second Amended and Restated Limited Liability Company Agreement of
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+This 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 Risk Factors and our financial statements and the related notes included elsewhere in this prospectus, before investing. Unless otherwise stated in this prospectus, references to: we, us, company or our company are to Terrapin 3 Acquisition Corporation; public shares are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); public stockholders are to the holders of our public shares, including our initial stockholders and members of our management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder s and member of our management team s status as a public stockholder shall only exist with respect to such public shares; management or our management team are to our executive officers and directors; Macquarie sponsor are to MIHI LLC ( MIHI ), a Delaware corporation and a subsidiary of Macquarie Group Limited (ASX:MQG); Terrapin sponsor are to Apple Orange LLC and Noyac Path LLC, both Delaware limited liability companies, and Periscope, LLC, a New Jersey limited liability company, affiliated with the families of Nathan Leight, our Chairman of the Board, Sanjay Arora, our Chief Executive Officer, and Guy Barudin, our Chief Operating Officer and Chief Financial Officer, respectively; sponsors are to our Macquarie sponsor and our Terrapin sponsor, collectively; founder shares are to shares of our Class F common stock, 5,318,750 of which have been issued to our initial stockholders prior to this offering (up to 693,750 of which are subject to forfeiture depending on the extent to which the underwriter s over-allotment option is exercised); common stock are to Class A common stock and Class F common stock; private placement units are to the 4,000,000 of our units our Macquarie sponsor intends to purchase on substantially the same terms as the sale of units in this offering at $10.00 per unit, to occur concurrently with the consummation of our initial business combination; private placement warrants are to the warrants issued to our sponsors in a private placement simultaneously with the closing of this offering; and initial stockholders are to holders of our founder shares prior to this offering. Unless we tell you otherwise, the information in this prospectus assumes that the underwriter will not exercise its over-allotment option, gives effect to a recapitalization of the company (intended to qualify as a reorganization under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended) which included a 1.0131-for-1 split of our common stock on May 19, 2014 and the classification of our common stock into two classes, Class A and Class F. TABLE OF CONTENTS CALCULATION OF REGISTRATION FEE Title of Each Class of Security Being Registered Amount Being Registered Proposed Maximum Offering Price per Security 1 Proposed Maximum Aggregate Offering Price 1 Amount of Registration Fee Units, each consisting of one share of Class A common stock, $.0001 par value, and one warrant 2 3 21,275,000 Units $ 10.00 $ 212,750,000 $ 27,402 Shares of Class A common stock included as part of the units 2 3 21,275,000 Shares 4 Warrants included as part of the units 2 3 21,275,000 Warrants 4 Total $ 212,750,000 $ 27,402 5 (1) Estimated solely for the purpose of calculating the registration fee. (2) Includes 2,775,000 units, consisting of 2,775,000 shares of Class A common stock and 2,775,000 warrants to purchase Class A common stock, which may be issued upon exercise of a 45-day option granted to the underwriter to cover over-allotments, if any. (3) Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. (4) No fee pursuant to Rule 457(g). (5) Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. TABLE OF CONTENTS General We are a newly organized blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock 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 not identified any potential business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. We intend to focus our efforts on seeking an initial business combination with a company that has an enterprise value of between $200 million and $1.25 billion, although a target entity with a smaller or larger enterprise value may be considered. Following the initial business combination, our objective will be to implement or support the acquired company s operating strategies in order to generate additional value for shareholders. General goals may include additional acquisitions and operational improvements. Our efforts to identify a prospective target business will not be limited to a particular industry. We believe that private equity firms and others will find the opportunity to enter into the initial business combination with us attractive for the following reasons: Track Record of Our Management Team. Nathan Leight has served as chairman of two previous blank check companies that completed successful business combinations. Mr. Leight served as chairman of Aldabra Acquisition Corporation, or Aldabra 1, which completed a merger with affiliates of and into Great Lakes Dredge & Dock Corporation, or GLDD (NASDAQ: GLDD) in 2006. Mr. Leight later served as chairman, and Mr. Arora and Mr. Barudin served as key members of the management team of Aldabra 2 Acquisition Corp. or Aldabra 2, which completed a merger in 2008 with certain paper and packaging businesses of Boise Cascade Company. The resulting company was subsequently listed on the New York Stock Exchange as Boise, Inc. or Boise. Mr. Leight has been on the board of GLDD since 2006 and has served as chairman of GLDD since 2011. He served as a member of the board of directors of Boise for five years following the merger with Aldabra 2. Both GLDD and Boise assets were owned by private equity investors prior to these transactions. We believe private equity firms will view the consummation of the Aldabra 1 and Aldabra 2 mergers, and the subsequent management of those companies, as positive factors in considering whether to sell a portfolio company to us. Minimum Funding Available as a Result of the $40 Million MIHI LLC Private Placement. Our Macquarie sponsor has agreed to enter into a contingent forward purchase contract with us to purchase, in a private placement for gross proceeds of approximately $40,000,000 to occur concurrently with the consummation of our initial business combination, 4,000,000 of our units on substantially the same terms as the sale of units in this offering at $10.00 per unit, and 1,000,000 shares of Class F common stock on the same terms as the sale of shares of Class F common stock to our sponsors prior to this offering. The funds from the sale of units will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement will be used for working capital in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their public shares and provides us with a minimum funding level for the initial business combination. The contingent forward purchase contract is subject to the following closing conditions: the representations and warranties made by us in the contingent forward purchase contract shall be true and correct in all material respects; all covenants, agreements and conditions contained in the agreement shall have been performed by us; TABLE OF CONTENTS The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2014 PRELIMINARY PROSPECTUS TERRAPIN 3 ACQUISITION CORPORATION $185,000,000 18,500,000 Units Terrapin 3 Acquisition Corporation is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock 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 not identified any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any potential business combination target. Our sponsors, which we refer to as our Terrapin sponsor and our Macquarie sponsor throughout this prospectus, have committed to purchase an aggregate of 10,900,000 warrants at a price of $0.50 per warrant, or $5,450,000 in the aggregate (or up to 12,000,000 warrants, or $6,000,000 in the aggregate, if the over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant is exercisable to purchase one-half of one share of our Class A common stock at $5.75 per half share. Our Macquarie sponsor, a subsidiary of Macquarie Group Limited, or Macquarie (ASX: MQG), has agreed to enter into a contingent forward purchase contract with us to purchase, in a private placement for gross proceeds of approximately $40,000,000 to occur concurrently with the consummation of our initial business combination, 4,000,000 of our units on substantially the same terms as the sale of units in this offering at $10.00 per unit, and 1,000,000 shares of Class F common stock on the same terms as the sale of shares of Class F common stock to our sponsors prior to this offering. The funds from the sale of units will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement will be used for working capital in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their public shares and provides us with a minimum funding level for the initial business combination. The contingent forward purchase contract is contingent upon, among other things, our Macquarie sponsor approving the business combination, which approval can be withheld for any reason. Prior to this offering, our initial stockholders purchased 5,318,750 shares of Class F common stock (up to 693,750 of which are subject to forfeiture by our initial stockholders (other than our independent director nominees) depending on the extent to which the underwriter s over-allotment option is exercised). Class F common stock is, at the time of this offering, convertible into Class A common stock on a one-for-one basis. In the case that additional shares of Class A common stock, or equity-linked securities, are deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of Class A common stock sold pursuant to the prospectus plus all common shares or equity-linked securities deemed to be issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to the sponsors plus the Class F common stock and the Class A common stock (but not the warrants) issued pursuant to the Macquarie contingent forward purchase contract. Currently, there is no public market for our units, Class A common stock or our warrants. We have applied to list our units on the NASDAQ Capital Market, or NASDAQ, under the symbol TRTLU on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NASDAQ. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on NASDAQ under the symbols TRTL and TRTLW, respectively. (Continued on inside front cover) We are an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors beginning on page 28 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. 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. Per Unit Total Public offering price $ 10.00 $ 185,000,000 Underwriting discounts and commissions 1 $ 0.55 $ 10,175,000 Proceeds, before expenses, to us $ 9.45 $ 174,825,000 (1) Includes $0.35 per unit, or approximately $6,475,000 (or up to approximately $7,446,250 if the underwriter s over-allotment option is exercised in full) in the aggregate payable to the underwriter for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriter only on completion of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of common stock sold as part of the units in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriter in connection with this offering. See also Underwriting beginning on page 141 for a description of compensation and other items of value payable to the underwriter. The underwriter is offering the units for sale on a firm commitment basis. The underwriter expects to deliver the units to the purchasers on or about , 2014. Deutsche Bank Securities , 2014 TABLE OF CONTENTS we have obtained all blue sky law permits and qualifications required by any state for the offer and sale of the private placement securities; and MIHI has provided its consent to the business combination, which it can withhold for any reason. MIHI LLC is a wholly owned subsidiary of Macquarie Capital, which, in turn, is a wholly owned subsidiary of Macquarie Group Limited, or Macquarie (ASX: MQG). Macquarie is a global provider of financial, advisory, investment, and funds management services. Macquarie s main business focus is generating returns to investors and shareholders by providing a diversified range of services to clients. Macquarie acts on behalf of institutional, corporate, and retail clients and counterparties around the world. Founded in 1969, Macquarie operates in 65 office locations in 28 countries, employs approximately 13,900 people and has assets under management of over $394 billion (as of March 31, 2014). Macquarie Capital comprises Macquarie s advisory, capital raising and principal investing capabilities. The firm provides varied services to corporate, financial sponsor and government clients involved in mergers and acquisitions, debt and equity fund raising, corporate restructuring, project finance and public private partnerships. In the US, Macquarie Capital has specialist sector expertise and a comprehensive advisory and capital markets platform. Macquarie Capital s expertise spans a variety of industry sectors including: Industrials; Telecommunications, Media, Entertainment and Gaming; Financial Institutions; Real Estate; Resources; Infrastructure; and Power, Utilities and Renewables. We believe private equity firms and management teams will view the track record of our management team and Macquarie Capital s deal sourcing and execution capabilities as a positive attribute contributing to our ability to identify attractive acquisition opportunities, and structure and complete a successful business combination. With respect to the above transactions, past performance by Mr. Leight and Macquarie is not a guarantee either of success with respect to any business combination we may consummate or that we will be able to locate a suitable candidate for our initial business combination. Initial Business Combination NASDAQ rules require that our initial business combination be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our 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 accounting firm or an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, with respect to the satisfaction of such criteria. We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target TABLE OF CONTENTS (continued from front cover) This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one warrant. Each warrant entitles the holder thereof to purchase one-half of one share of our Class A common stock at a price of $5.75 per half share, subject to adjustment as described in this prospectus. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of common stock to be issued to the warrant holder. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriter a 45-day option to purchase up to an additional 2,775,000 units to cover over-allotments, if any. We will provide our stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements, and less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described herein. Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $185,000,000 or $212,750,000 if the underwriter s over-allotment option is exercised in full ($10.00 per unit, regardless of whether or not the underwriter exercises any portion of their over-allotment option) will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee. Except for the withdrawal of interest income (net of taxes payable and any amounts released to us to fund working capital requirements), our amended and restated certificate of incorporation provides that none of the funds held in trust will be released from the trust account until the earlier of the completion of our initial business combination or the redemption of our public shares if we are unable to complete our business combination within 24 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. TABLE OF CONTENTS management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. We do not have any specific business combination under consideration. Our officers and directors have neither individually identified nor considered a target business nor have they had any discussions regarding possible target businesses amongst themselves or with our underwriter or other advisors. Our Macquarie sponsor, through its financial advisory business, is continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination. However, we have not (nor has anyone on our behalf) contacted any prospective target business or had any discussions, formal or otherwise, with respect to a business combination transaction. We will not consider a business combination with any company that has been identified by or to Macquarie Capital as an acquisition candidate for our initial business combination prior to the closing of this offering. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition. We have identified the certain general criteria and guidelines for evaluating prospective target businesses. We will use these criteria and guidelines, but we may decide to enter into our initial business combination with a target business that does not meet some or all of these criteria and guidelines. Fundamentally, we intend to focus on companies with positive operating cash flow, significant assets, and experienced and successful management teams that are also well-positioned to capitalize on one or more of the following investment themes. These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. Fundamental Changes in Socio-Economics and Demographics. We may focus on candidates who would benefit from global and regional socio-economic and demographic trends including, but not limited to, growing consumer demand in emerging markets and aging populations in developed markets. While these trends provide opportunities for broad market growth of sales and profits, we believe that certain companies may not have altered their strategy to specifically prepare for such trends. If we acquire such a company, we intend to support strategies aimed at accelerating its ability to benefit from the effect of these types of fundamental economic changes on its business. TABLE OF CONTENTS Under-managed Intellectual Property, Proprietary Business Practices and/or Other Intangible Assets. We intend to focus on companies that have potentially underexploited intellectual property, proprietary business practices or other under-managed assets. If we acquire such a company, we intend to focus on applying new resources, technologies, or business models to leverage or more fully develop its intangible assets, and thereby increase growth and improve profitability. Competitive Advantage. We will seek targets that can take advantage of barriers to entry of competition for its products or services. For example, companies with assets that are difficult to replicate, either due to proprietary technology, location, or simply because their replacement cost exceeds the capacity of competitors to invest, may be able to earn sustainable profits. Fundamental Changes in Competitive Dynamics. Certain markets may be undergoing disruptive change or shifts in historic patterns of competition. This may occur in both rapidly growing and mature, stable industries. We believe there are good investments not only in high-growth industries but also in more mature sectors in which significant restructuring drives better asset utilization and improved pricing discipline. We may seek targets in industries in which fundamental changes, regardless of their source, are altering the relative advantages enjoyed by new and old competitors. Increasingly Networked Economies. Accelerated change in and deployment of telecommunication grids and electronic commerce in both developing and developed economies, and more intensive use of air, rail, road, and maritime transportation, creates growth opportunities. Overleveraged Governments. Governmental organizations at national, regional, and local levels may be seeking ways to reduce their cost of providing services, thereby creating opportunities for growth. Sourcing of Potential Business Combination Targets We believe certain non-public companies and their shareholders can benefit from a transaction with us. Acquisition candidates are entities that may need stable, permanent equity financing, but may currently have limited access to the public markets. While targets may be either independent entities or divisions of larger organizations, we believe there is an opportunity for us to provide value to current owners of targets that fall into four general categories. 1) Private Equity Fund Portfolio Companies Substantial amounts of capital have been invested by private equity and venture firms. According to Pitchbook Data, Inc., U.S. private equity funds raised more than $1.6 trillion from 2000 through 2013 in more than 2,400 different funds. From 2007 through April 2013, the median hold time of companies with enterprise values in excess of $1 billion held globally by private equity funds increased from approximately 3.0 years to more than 6.1 years. Therefore, we believe that there should be a significant number of portfolio companies available for sale from private equity firms in the coming years as they seek liquidity. These funds have an ongoing need for investment realizations, particularly in older vintage portfolios. Additionally, private equity-backed firms may need to divest non-core assets in order to reduce and refinance debt. 2) Entities Struggling with Complex or Failed Transactions Failed auctions and failed IPO s occur for a variety of reasons. Public or strategic investors may have previously judged these transactions to be too complicated to close in a timely manner. There may have been generally unreceptive market conditions at the time the transaction was prepared to begin. A business combination with us can be a solution for investors in firms that have experienced these types of failed transactions. TABLE OF CONTENTS 3) Entities Held by Non-Traditional Investors Financial institutions, banks, non-bank lenders, hedge funds, or any other investor who does not typically hold and manage operating assets, may be anxious to divest their holdings. In the event that those types of investors are experiencing liquidation or other pressures in their core businesses, they may need to divest certain holdings in order to maximize the return on their portfolios or from their other assets. 4) Divestiture of Non-Core Assets by Large Conglomerates Certain multi-unit companies may face the need to rationalize their business by sale or spin-off of operating units due to pressures from lenders, customers, suppliers, or shareholders. We may or may not consummate our business combination with a company that falls into one of the categories above. In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsors, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsors, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent accounting firm or an independent investment banking firm which is a member of FINRA that our initial business combination is fair to our company from a financial point of view. Members of our management team may directly or indirectly own common stock and warrants following this offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Each of our sponsors, officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to another entity pursuant to which such sponsor, officer or director is required to present a business combination opportunity to such entity. Accordingly, if any of our sponsors, 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, it, he or she will honor its, his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation 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. Notwithstanding the foregoing, our amended and restated certificate of incorporation will provide that the doctrine of corporate opportunity, or any other analogous doctrine, will not apply to our Macquarie sponsor s board designee. Our Terrapin sponsor and our executive officers, directors and director nominees have agreed, pursuant to a written letter agreement, not to participate in the formation of, or become an officer or director of, another blank check company that is seeking an initial business combination with total consideration to the seller less than $1.25 billion until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within the time frame set forth in this prospectus. TABLE OF CONTENTS Our Macquarie sponsor and Macquarie sponsor s director nominee have agreed, pursuant to a written letter agreement, not to participate in the formation of or investment in, or become an officer or director of, any other blank check company that is seeking equity proceeds between $175 million and $350 million until 3 months after our initial public offering. Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business combination. 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 $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock 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 during the prior three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act. Our executive offices are located at 590 Madison Avenue, 35th Floor, New York, NY 10022 and our telephone number is (212) 710-4100. TABLE OF CONTENTS The Offering In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, 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 below entitled Risk Factors beginning on page 28 of this prospectus. Securities offered 18,500,000 units, at $10.00 per unit, each unit consisting of: one share of Class A common stock; and one warrant to purchase one-half of one share of Class A common stock. Proposed NASDAQ symbols Units: TRTLU Class A common stock: TRTL Warrants: TRTLW Trading commencement and separation of common stock and warrants The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Deutsche Bank Securities Inc. informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K In no event will the Class A common stock and warrants be traded separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the underwriter s over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriter s over-allotment option. TABLE OF CONTENTS Units: Number outstanding before this offering 0 Number outstanding after this offering 18,500,000 1 Common stock: Number outstanding before this offering 5,318,750 2 4 Number outstanding after this offering 23,125,000 1 3 4 Warrants: Number outstanding before this offering 0 Number of private placement warrants to be sold in a private placement simultaneously with this offering 10,900,000 1 Number of warrants to be outstanding after this offering and the private placement 29,400,000 1 Exercisability Each warrant offered in this offering is exercisable to purchase one-half of one share of our Class A common stock. Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. We structured each warrant to be exercisable for one-half of one share of our Class A common stock, as compared to warrants issued by some other similar blank check companies which are exercisable for one whole share. This structure was created in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share. We believe that this makes us a more attractive merger partner for target businesses. (1) Assumes no exercise of the underwriter s over-allotment option. (2) Includes 4,625,000 founder shares and up to 693,750 founder shares that are subject to forfeiture by our initial stockholders (other than our independent director nominees) depending on the extent to which the underwriter s over-allotment option is exercised. (3) Includes 18,500,000 public shares and 4,625,000 founder shares. (4) Founder shares are classified as shares of Class F common stock, which shares, at the time of this offering, are convertible into Class A common stock on a one-for-one basis, subject to adjustment as described below adjacent to the caption Founder share anti-dilution. TABLE OF CONTENTS Exercise price $5.75 per half share ($11.50 per whole share), subject to adjustments as described herein. Exercise period The warrants will become exercisable on the later of: 30 days after the completion of our initial business combination, and 12 months from the closing of this offering; provided in each case that we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed; provided, that if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a covered security under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account. Redemption of warrants Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants): in whole and not in part; at a price of $0.01 per warrant; upon a minimum of 30 days prior written notice of redemption, which we refer to as the 30-day redemption period; and if, and only if, the last sale price of our Class A common stock equals or exceeds $24.00 per TABLE OF CONTENTS share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In determining whether to require all holders to exercise their warrants on a cashless basis, our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled Description of Securities Warrants Public Stockholders Warrants for additional information. None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees. Private placement at initial business combination Our Macquarie sponsor has agreed to enter into a contingent forward purchase contract to purchase, in a private placement for gross proceeds of approximately $40,000,000 to occur concurrently with the consummation of our initial business combination, 4,000,000 of our units TABLE OF CONTENTS on substantially the same terms as the sale of units in this offering at $10.00 per unit (which we call our private placement units) and 1,000,000 shares of Class F common stock on the same terms as the sale of shares of Class F common stock to our sponsors prior to this offering (which we call our private placement shares). The funds from the sale of units will be used as part of the consideration to the sellers in the initial business combination; any excess funds from this private placement will be used for working capital in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their shares and provides us with a minimum funding level for the initial business combination. The contingent forward purchase contract is contingent upon, among other things, our Macquarie sponsor approving the business combination, which approval can be withheld for any reason. Founder shares On December 31, 2013, our Terrapin sponsor and an affiliate thereof purchased an aggregate of 5,318,750 founder shares (up to 693,750 of which are subject to forfeiture depending on the extent to which the underwriter s over-allotment option is exercised) for an aggregate purchase price of $25,000. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding shares upon completion of this offering. Prior to the initial investment in the company of $25,000 by the Terrapin sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. On May 19, 2014, our Terrapin sponsor sold 1,211,563 founder shares to our Macquarie sponsor (up to 242,813 of which are subject to forfeiture depending on the extent to which the underwriter s over-allotment option is exercised). In July 2014, Apple Orange LLC, one of our sponsors, transferred an aggregate of 90,000 founder shares (none of which is subject to forfeiture) to Messrs. Kagan, Brokaw and Mendelson, each an independent director nominee, and 56,061 founder shares to Terrapin Partners Green Employee Partnership, LLC, an affiliate of Apple Orange LLC. Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering). If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or a share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20.0% of our TABLE OF CONTENTS issued and outstanding shares of our common stock upon the consummation of this offering. Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions other than approval of our initial business combination. Up to 693,750 founder shares will be subject to forfeiture by certain of our initial stockholders (or their permitted transferees) depending on the extent to which the underwriter s over-allotment option is exercised. The founder shares are identical to shares of Class A common stock included in the units being sold in this offering, except that: the founder shares are subject to certain transfer restrictions, as described in more detail below; our initial stockholders, officers, directors and director nominees have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares in connection with the completion of our initial business combination and to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination; and the founder shares are subject to certain anti-dilution rights, as described in more detail below. Transfer restrictions on founder shares Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares or private placement shares until one year after our initial business combination (except as described herein under Principal Stockholders Transfers of Shares and Warrants Held by Our Initial Stockholders ). We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the last sale TABLE OF CONTENTS price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (2) if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash or property, the founder shares and private placement shares will be released from the lock-up. Founder share anti-dilution We have issued 5,318,750 shares of Class F common stock, par value $0.0001 per share, convertible at the time of this offering into shares of Class A common stock at a ratio of one-for-one. In the case that additional shares of Class A common stock, or equity-linked securities, are deemed issued in excess of the amounts offered in this prospectus and related to the closing of the business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of Class A common stock sold pursuant to the prospectus plus all common shares or equity-linked securities deemed to be issued in connection with the business combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination or pursuant to warrants issued to the sponsors plus the Class F common stock and the Class A common stock (but not the warrants) issued pursuant to the Macquarie contingent forward purchase contract. Private placement warrants Our sponsors have committed to purchase an aggregate of 10,900,000 warrants at a price of $0.50 per warrant, or $5,450,000 in the aggregate (or up to 12,000,000 warrants, or $6,000,000 in the aggregate, if the over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one-half of one share of our Class A common stock at $5.75 per half share. The purchase price of the private placement warrants will be added to the net proceeds from this offering to be held in the trust account less offering expenses, existing loans from shareholders and $1,000,000 in working capital to be held outside of the trust. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement warrants will be used, in part, to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will be TABLE OF CONTENTS non-redeemable so long as they are held by the sponsors or their permitted transferees (except as described below under Principal Stockholders Transfers of Founder Shares and Private Placement Warrants ). If the private placement warrants are held by holders other than the sponsors or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Our sponsors, or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Transfer restrictions on private placement warrants The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination. Proceeds to be held in trust account The rules of NASDAQ provide that at least 90% of the gross proceeds from this offering and the private placement be deposited in a trust account. Of the $190,450,000 in proceeds we will receive from this offering and the sale of the private placement warrants described in this prospectus, or approximately $218,750,000 if the underwriter s over-allotment option is exercised in full, $185,000,000, or approximately $212,750,000 ($10.00 per unit regardless of whether the underwriter s over-allotment option is exercised), will be deposited into a segregated trust account with Continental Stock Transfer & Trust Company acting as trustee. An estimated $750,000 of the proceeds of this offering will be used to pay expenses in connection with the closing of this offering and an estimated $1,000,000 of the proceeds from this offering will be used for working capital following this offering. In addition, our sponsors have committed up to $500,000 each, for an aggregate of $1,000,000, in working capital loans to be provided to us to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination. The proceeds to be placed in the trust account include approximately up to $6,475,000 (or approximately up to $7,446,250 if the underwriter s over-allotment option is exercised in full) in deferred underwriting commissions. Except for the withdrawal of interest income (net of taxes payable and any amounts payable to us to fund working capital requirements), none of the funds held in the trust account will be released from the trust account until the earlier of the completion of our initial business combination and the redemption of 100% of our public TABLE OF CONTENTS shares if we are unable to complete our initial business combination within the allotted time period. Based on current interest rates, we do not expect that interest earned on the trust account will be sufficient to pay taxes. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders. Anticipated expenses and funding sources Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except for the withdrawal of interest income (net of taxes payable and any amounts payable to us to fund working capital requirements). Based upon current interest rates, we expect the trust account to generate approximately $100,000 of interest income during the next 24 months. Unless and until we complete our initial business combination, we may pay our expenses only from: the net proceeds of this offering not held in the trust account, which will be approximately $1,000,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering; any interest income earned from the trust account net of taxes payable and any amounts payable to us to fund working capital requirements; and working capital loans from our sponsors, their respective affiliates or designees, who have committed up to $500,000 each, for an aggregate of $1,000,000, to be provided to us in the event funds held outside of the trust are insufficient to fund our expenses relating to investigating and selecting a target business and other working capital requirements after this offering and prior to our initial business combination and may, but are not obligated to, loan us additional funds to fund our expenses relating to investigating and completing our initial business combination. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,000,000 of such loans may be convertible into warrants of the post business TABLE OF CONTENTS combination entity at a price of $0.50 per warrant at the option of the lender at the time of the business combination. The warrants would be identical to the private placement warrants issued to the initial stockholders. Conditions to completing our initial business combination There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. NASDAQ rules require that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our 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 accounting firm or an independent investment banking firm that is a member of FINRA. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on the structure of the initial business combination and on valuations ascribed to the target and us in the business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Our initial business combination must be approved by our Macquarie sponsor as a closing condition to the contingent forward purchase contract. In addition, we have entered into an agreement among sponsors with the Terrapin sponsor and the Macquarie sponsor pursuant to which we have agreed not to consummate a business combination without the Macquarie sponsor s consent, which consent can be withheld for any reason. TABLE OF CONTENTS Permitted purchases of public shares by our affiliates If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information and to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as such purchases will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either enter make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our initial stockholders, directors, executive officers, advisors or their affiliates will not make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Redemption rights for public stockholders upon completion of our initial business combination We will provide our stockholders with the opportunity to redeem all or a portion of their Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest income TABLE OF CONTENTS (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding Class A common stock issued in this initial public offering, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share (regardless of whether or not the underwriter exercises any portion of its over-allotment option). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriter. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and private placement shares in connection with the completion of our business combination. Manner of conducting redemptions We will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either in connection with a stockholder meeting called to approve the business combination or by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20.0% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and file tender offer documents with the SEC prior to TABLE OF CONTENTS completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. Upon the public announcement of our business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsors will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination. If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will: conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and file proxy materials with the SEC. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. Each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. TABLE OF CONTENTS Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: cash consideration to be paid to the target or its owners, cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof. Limitation on redemption rights of stockholders holding 10% or more of the shares sold in this offering if we hold stockholder vote Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. We believe the restriction above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder s shares are not purchased by us or our management at a premium to then-current market price or on other undesirable terms. By limiting our stockholders ability to redeem to no more than 10% of the shares sold in this offering, we believe we will limit TABLE OF CONTENTS the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote all of their shares (including all shares held by those stockholders that hold 10% or more of the shares sold in this offering) for or against our business combination. Redemption Rights in connection with proposed amendments to our certificate of incorporation Some other blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended only if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our common stock, subject to applicable provisions of the Delaware General Corporation Law, or the DGCL, or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 20.0% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsors, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding TABLE OF CONTENTS public shares. Our initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares in connection with the completion of our initial business combination. Release of funds in trust account on closing of our initial business combination On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon completion of our initial business combination, to pay the underwriter its deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using stock 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, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of 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. Redemption of public shares and distribution and liquidation if no initial business combination Our sponsors, executive officers, directors and director nominees have agreed that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such time period, we will: cease all operations except for the purpose of winding up, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), and less up to $50,000 to pay dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and as promptly as reasonably possible following such redemption, subject to the approval of our remaining TABLE OF CONTENTS stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination within the allotted time period. Our initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted time frame. The underwriter has agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within the allotted time frame and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. Our sponsors, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income (net of taxes payable and any amounts released to us to fund working capital requirements), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC s penny stock rules). Limited payments to insiders There will be no finder s fees, reimbursements or cash payments made to our sponsors, officers or directors, or our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this TABLE OF CONTENTS offering held in the trust account prior to the completion of our initial business combination: Repayment of up to $200,000 in loans and advances made to us by one of our sponsors, Apple Orange LLC, which it has committed to cover offering-related and organizational expenses; Repayment of up to $1,000,000 in loans our sponsors, their affiliates or designees have committed to make to us to cover working capital costs and to finance transaction costs in connection with an intended initial business combination following this offering; Payment to an affiliate of our Terrapin sponsor of a total of $10,000 per month for office space, utilities and secretarial support; Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and Repayment of loans (other than the $1,000,000 in loans which they have committed to make) which may be made by our sponsors or an affiliate of our sponsors or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. There is no cap or ceiling on the reimbursement of out-of- pocket expenses incurred in connection with activities on our behalf. We have granted Macquarie Capital (USA) Inc. a right of first refusal for a period of 36 months from the closing of this offering to provide certain financial advisory, underwriting, capital raising, and other services for which they may receive fees. Our audit committee will review on a quarterly basis all payments that were made to our sponsors, officers or directors, or our or their affiliates. Audit Committee We have established and will maintain an audit committee, which will be composed entirely of independent directors to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled Management Committees of the Board of Directors Audit Committee. TABLE OF CONTENTS Risks We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see Proposed Business Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419. You should carefully consider these and the other risks set forth in the section entitled Risk Factors beginning on page 28 of this prospectus. TABLE OF CONTENTS
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+Item 3. Prospectus Summary and Risk Factors Prospectus Summary MITU Resources Inc. This summary does not contain all the information that should be considered before making an investment in MITU Resources Inc. s common stock. The entire prospectus should be read including the Risk Factors on page 5 and financial statements before deciding to invest in our common stock. The Offering Common Stock Outstanding Prior to the Offering 30,000,000 shares Common Stock to be Outstanding following the Offering 30,000,000 shares Common Stock Offered 15,000,000 shares Offering Price $0.002 per share Aggregate Offering Price $30,000 Selling Security Holders Two Use of Proceeds We will not receive any of the proceeds of the shares offered by the Selling Security Holders. MITU will pay all the expenses of this offering estimated at $29,802.14. Underwriters The Selling Security Holders are underwriters, within the meaning of Section 2(11) of the Securities Act. Plan of Distribution The Selling Security Holders named in the Prospectus are making this offering. Lack of Liquidity -No Public Market Our common stock is not currently quoted or traded on any securities exchange or automated quotation system. No application for such has yet been made. Thus, no assurance can be given that there will ever be an established public trading market for our common stock. Risk Factors Carefully consider all the information, especially the Risk Factors , contained within the Prospectus before deciding whether to invest in common shares of our company. Legal Proceedings None pending or anticipated. Dividend Policy We intend to retain any future earnings to fund development and growth of our business and do not anticipate paying cash dividends. Our Business MITU Resources Inc. ( MITU , we , us , our , the Company or similar terms) was formed under the laws of the State of Nevada on April 17, 2013. MITU Resources Inc. s offices are located at Cll 62B 32c-60, Bogota, 11011, Colombia, and it can be reached at (57) (313) 881 8969. We are a start-up, exploration stage mining company formed to explore mineral properties for gold. We have purchased a 100% interest in a nine-unit claim block ( MITU Gold Claim ) containing 92.5 hectares that have been staked and recorded with the Bogota Regional Office of the Ministry of Mining of the Republic of Colombia. The claim was purchased on April 25, 2013 from Alvarez Explorations Inc. for the sum of $5000.00. We do not currently have the necessary funds to undergo exploration of this property and will need to raise capital in order to do so. If we cannot, we may have to go out of business. The proposed two phase exploration plan will cost approximately $19,712. There has been no production to date. There are no full-time employees and management is able to spend only a small amount of time with respect to these affairs. MITU has no other assets. In May 2013, we hired a mining consultant Jorge Villaneuva - to study and propose exploration plans for the MITU Gold Claim. The proposal can be found further into the prospectus under, Description of Property on page 15. Since our inception on April 17, 2013, we have raised $30,000 in capital in private placements by issuing 30,000,000 shares of common stock at the price of $0.001 per share. We have no subsidiaries. Metric Conversion Table For ease of reference, the following conversion factors are provided: Metric Unit U.S. Measure U.S. Measure Metric Unit 1 hectare 2.471 acres 1 acre 0.4047 hectares 1 metre 3.2881 feet 1 foot 0.3048 metres 1 kilometre 0.621 miles 1 mile 1.609 kilometres 1 gram 0.032 troy oz. 1 troy ounce 31.1 grams Financial Information and Accounting Principles All $ or dollars refer to the U.S. dollar unless otherwise specified. All references to COP refer to the Colombian Peso. All financial statements refer to GAAP in the United States and are reported in U.S. dollars. Exchange Rate Information One COP is approximately $0.000530617. Inversely, $1 was worth 1884.67 COP as of June 9, 2014. A five-year low conversion strength for the US dollar was in mid-2011 where $1 was roughly 1745 COP and the five-year high was in early 2009 when $1 was worth approximately 2600 COP. For the purposes of this prospectus $1 equates to 1884.67 PHP. Summary of Financial Data The financial information below should be read in conjunction with the financial statements found later in the prospectus. Inception to March 31, 2014 Statement of Operations Data Revenue $0 Net Loss ($13,239 ) Balance Sheet Data Current Assets $21,761 Current Liabilities ($10,000 ) Accumulated Deficit ($13,239) Risk Factors There is a high degree of risk associated with buying our common stock. Prospective investors should carefully read this prospectus and consider the following risk factors when deciding whether to purchase our shares. These are speculative stocks and should be purchased by only those who can afford to lose their entire investment. The risk factors outlined below are all the known, substantial, material and potential risks that could adversely affect our business, financial condition, operating results and common share value. We cannot assure that we will successfully address these or any unknown risks and a failure to do so can have a negative impact on your investment. Risks Associated with our Company and our Industry We are governed by only two people, which may lead to faulty corporate governance . We have only one director Juan Perez - and two executive officers Mr. Perez and Nelson Rincon- who make all the decisions regarding corporate governance. These decisions will include their (executive) compensation, accounting overview, related party transactions and so on. Mr. Perez will have full control over matters that require Board of Directors approval. This may introduce conflicts of interest and prevent the segregation of executive duties from those that require Board of Directors approval. This may lead to ineffective disclosure and accounting controls. Noncompliance with laws and regulations may result in fines and penalties. They would have the ability to take any action that they review and approve. So long as they are the sole shareholders, they would exercise control over all matters requiring shareholder approval including significant corporate transactions. We have not implemented various corporate governance measures nor have we adopted any independent committees as we presently do not have any independent directors. Our sole director and executive officers will own a substantial amount of common stock and will have substantial influence over our operations denying an investor an effective voice . Before this offering, Mr. Rincon has control of our company with 67%, or 20,000,000, of the 30,000,000 outstanding common shares. Mr. Perez has 33%, or 10,000,000, of the 30,000,000 outstanding shares. Should the entire offering be sold, they will still own 50% of the outstanding shares (33% and 17% respectively). If less than all the shares are sold, they will have more than 50% and complete control. This means that investors cannot buy an effective voice in the company. Our director and officers are not residents of the United States making the enforcement of liabilities against them difficult . Our director and executive officers reside outside the United States in the Republic of Columbia. If a shareholder wishes to sue them for damages, the shareholder would have to serve on them a summons and complaint. Even if personal service is accomplished and a judgement is entered against that person, the shareholder would then have to locate the assets of that person, and register the judgement in the foreign jurisdiction where the assets are located. Our executive officers have other business interests which may limit the amount of time they can devote to our Company. Our executive officers have other business interests, meaning they may not have enough time to devote to our business operations. This could cause business failure. They have been devoting and in the future plan to devote only 10 hours per month to company affairs which may lead to sporadic exploration activities and periodic interruptions of business operations. Unforeseen events may cause this amount of time to become even less. We must attract and maintain key personnel or our business will fail . Success depends on the acquisition of key personnel. We will have to compete with other companies both within and outside the mining industry to recruit and retain competent employees. If we cannot maintain qualified employees to meet the needs of our anticipated growth, this could have a material adverse effect on our business and financial condition. We are recently formed, lack an operating history and have yet to make any revenues. If we cannot generate any profits, you may lose your entire investment . We are a recently formed company and have yet to generate any revenues. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing. We have no operating history and thus no way for you to measure progress or potential future success. Success has yet to be proved. Currently, there are no operations in place to produce revenue. We are exploration stage and have yet to find or produce sellable product. Financial losses should be expected to continue in the near future and at least until such time that we enter the production stage. As a new business we face all the risks of a , ' ': start-up venture including unforeseen costs, expenses, problems, and management limitations and difficulties. Since inception, we have a loss of approximately 13,239. There is no guarantee, unfortunately, that we may ever be able to turn a profit or locate additional opportunities, hire additional management and other personnel. We need to acquire additional financing or our company will fail. We must obtain additional capital or our business will fail. In order to explore the claim and eventually establish operations, we must secure more funds. Currently, we have very limited resources and have already accumulated a net loss. Unless we complete the planned exploration work on the MITU Gold Claim and commence operations, we will make no money, which may result in complete loss of your investment. Financing is also needed to bring product to market. Financing may be subject to numerous factors including investor sentiment, acceptance of mining claims and so on. We currently have no arrangements for additional financing. We may also have to borrow large sums of money that require substantial capital and interest payments. We must perform mineral explorations on the MITU Gold Claim to determine if any ore reserves are present and to keep the property in good standing. The planned exploration work alone is expected to cost 19,713. On March 31, 2014, we had cash of only 21,761. We will receive no proceeds from this offering. The probability of a mineral claim having profitable reserves is very small and our claim, even with large investments, may never generate a profit. We are dependent upon our mining property for success. All anticipated future revenues would come directly from the MITU Gold Claim. Should we fail to extract and sell gold from this property, our business will fail. Mineral deposit estimates are imprecise and subject to error, and resource calculations when made may prove unreliable. Assumptions made regarding the supporting data may prove inaccurate and unforeseen events may lead to further inaccuracies. Sample variability, mining and processing adjustments, environmental changes, metal price fluctuations, and law and regulation changes are all factors that could lead to deviances from the original estimations. No assurances can be given that any mineral deposit estimate will ever be reclassified as a reserve. We have no known ore reserves. Despite future investment in exploration activities, there is no guarantee we will locate a commercially viable ore reserve. Most exploration projects do not result in discovery of commercially mineable deposits. With little capital available, we will have to limit our exploration which decreases the chances of finding a commercially viable ore body. Even if gold is identified, the MITU Gold Claim may not be put into production due to high extraction costs, low gold prices, or inadequate amount and reduced recovery rates. If the exploration activities do not suggest a commercially successful prospect then we may altogether abandon plans to develop the property. The exploration and prospecting of minerals is speculative and extremely competitive which may make success difficult. We face strong competition from other mining companies for the acquisition of new properties. New properties increase the probability of discovering a profitable reserve. Most companies have greater financial and managerial resources than we do and can acquire and explore attractive new mining properties. We will face similar difficulties raising new capital to expand operations against the larger, better capitalized competitors. Limited supply and unforeseen demand from larger, more competitive companies may make secure all necessary equipment and materials difficult and may result in periodic interruptions or even business failure. Success depends on a combination of many factors including but not limited to: the quality of management, technical (geological) expertise, quality of land available for exploration and the capital available for exploration. International operations in Columbia are subject to inherent risks. Political instability, uncertainty of the economic climate, currency fluctuations, exchange controls and taxation laws may be significant. Access to all of the equipment, supplies and materials necessary to begin exploration may not be available and delay such activity. We have not yet attempted to locate or negotiate with any suppliers of products, equipment or materials but plan to do so when exploration begins. Exchange rate changes between the COP and the U.S. Dollar may also adversely affect success. Our future operations may be adversely affected by future governmental and environmental regulations and permitting. Environmental regulations may negatively affect the progression of operations and these regulations may become stricter in the future. In Columbia, all mining is regulated by the Deputy Minister of Mines and the National Mining Agency. Licenses and permits must be obtained from these entities as well as an environmental impact study developed for each mining property before starting mining activities. These are expensive and may affect the timing of operations. Pollution can be anticipated with mining activities. If we are unable to comply with current or future regulations, this may expose us to fines, penalties and litigation that could cause our business to fail. We are subject to inherent mining hazards and risks that may result in future financial obligations. Risks and hazards associated with the mining industry may adversely affect our operations such as but not limited to: political and country risks, industrial accidents, labor disputes, inability to retain necessary personnel or equipment, environmental hazards, unexpected geologic formations, cave-ins, landslides, flooding and monsoons, fires, explosions, power outages, processing problems. Personal injury and death could result as well as property damage, delays in mining, environmental damage, legal liability and monetary loss. We may not be able to obtain insurance to cover these risks at economically reasonable premiums. We do not carry any sort of insurance and may have difficulties obtaining such once operations start as insurance is generally sparse and cost prohibitive. Our independent auditors have expressed substantial doubt about our ability to continue as a going concern. We incurred a net loss of ($13,239) for the period from April 17, 2013 (date of inception) to March 31, 2014 and we expect to incur further losses in the development of our business, which raises substantial doubt about the Company's ability to continue as a going concern. We had cash of $21,761 as at March 31, 2014. We are in the development stage and have yet to attain profitable operations and in their report on our financial statements for the period from inception to March 31, 2014, our independent auditors included an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. Our officers and director have never visited the MITU Gold Claim If any feature of the MITU Gold Claim is obvious and might impede the claim's exploration, that feature might remain undiscovered because no officer or director of the Company has personally visited the claim. Risks related to this offering and our stock We may not be able to raise additional capital through the offering of more shares but doing so will dilute those shares issued and outstanding . Raising additional capital through future offerings of common stock may be necessary for our company to continue operations, but there is no guarantee that this will be possible. Doing so will, however, dilute the total share number issued and outstanding. Financing may be achieved by issuing more shares which will increase the number of common shares outstanding. This may decrease the percentage interest held by each of our shareholders. Obtaining financing through the sale of our common stock will dilute other shareholders interests. As the total number of outstanding common shares increases, the equity attached to any individual share will decrease causing a dilution of shareholder ownership over the company. With little other access to funds currently, we may have to rely on this method substantially to raise additional capital. There is no market for our common stock meaning that you may not be able to resell your shares . Our common stock currently has no market limiting shareholders ability to resell them or use them as collateral. Thus, the shareholder must sell their shares privately which may prove very difficult. The shares are not currently listed on any exchange or quotation system. Private sales are more difficult and often give lower than anticipated prices. Should a public market develop for our stock, future sales of shares may negatively affect their market price. Even if a market develops, the shares may be sparsely traded and have wide share price fluctuations. If we succeed in receiving a quotation, the liquidity of the stock may be low despite there being a market making it difficult to get a return on the investment. The price also depends on potential investor s feelings regarding the results of our operations, the competition of other companies shares, mineral prices, our ability to generate future revenues, and market perception about future mineral exploration. Because our stock is a penny stock , trading of it may be restricted and limit a shareholder s ability to buy and sell shares. As our stock is a penny stock, there are restrictions imposed by the United States Securities and Exchange Commission s penny stock regulations and the FINRA s sales practice requirements. This might limit a shareholder s ability to buy and sell their shares as broker-dealers may be less likely to engage in transactions of our common shares. A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Our common stock is expected to trade well below that mark. Rules 15g-1 through 15g-9 under the Exchange Act impose sale practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a penny stock . We have not paid and do not anticipate paying cash dividends on our common stock. Cash dividends are not currently paid on our common stock shares nor are they expected to be paid in the near future. We intend to retain our cash for the continued development of our business. Thus, you will not be able to derive any dividend income and your return on investment will solely be based on your ability to sell your shares in a secondary market.
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+This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and related notes thereto included elsewhere in this prospectus before deciding whether to purchase our common shares. Some of the statements in this summary constitute forward-looking statements, with respect to which you should review the section of this prospectus entitled Cautionary Statement Concerning Forward-Looking Statements. Our Company Avolon is a leading global aircraft leasing company focused on acquiring, managing and selling commercial aircraft. We were launched in May 2010 by an experienced team of aircraft leasing and financing professionals. Our strategy is to build and maintain a portfolio of young, modern, fuel-efficient commercial aircraft while seeking to maximize long-term earnings growth and generate attractive risk-adjusted returns through the aviation industry cycle. Since our founding, we have built an Owned Portfolio of aircraft totaling $5,261.6 million in Aggregate Net Book Value as of September 30, 2014. Our Owned, Managed and Committed Portfolio of 227 aircraft as of September 30, 2014, made us the ninth largest aircraft lessor by current market value as of September 30, 2014, according to ICF. The average age of our Owned and Managed Portfolio, weighted by current market value, was the lowest of the ten largest operating lessors as identified by ICF. The average age of our Owned Portfolio, weighted by net book value, was 2.50 years as of September 30, 2014. For the year ended December 31, 2013 and the nine months ended September 30, 2014, we reported total revenues of $449.8 million and $433.3 million, respectively, and net income of $112.8 million and $104.2 million, respectively. As of September 30, 2014, our Owned, Managed and Committed Portfolio consisted of 227 aircraft, including 122 owned, 12 managed and 93 committed aircraft. Our Owned Portfolio consists primarily of narrowbody aircraft, including the Airbus A320 family and the Boeing 737-800, and select widebody aircraft, including the Airbus A330, the Boeing 777 and the Boeing 787. Our Committed Portfolio as of September 30, 2014 includes 66 next generation Airbus A320neo, Boeing 737 MAX, Airbus A330neo and Boeing 787 family of aircraft, which are designed to deliver new levels of operating efficiency and are expected to be in high demand. We are a global business, headquartered in Dublin, Ireland, with offices in China, Dubai, Singapore and the United States. Our global presence provides local access to airline customers and capital providers in key geographic regions, particularly emerging and high growth markets such as China, South East Asia, the Middle East and Latin America. As of September 30, 2014, our customer base comprised 49 customers in 27 countries. We lease our aircraft pursuant to net operating leases that require the lessee to pay for maintenance, insurance, taxes and all other aircraft operating expenses during the lease term. As lessor, we receive the investment benefits from, and assume the residual risk of, the aircraft. We select aircraft that we believe will retain a high residual value and will be less susceptible to asset impairment risk. We also provide fleet management services to other aircraft investors. Our business model allows for flexibility to adjust to market conditions and to balance and manage risk. We use multiple aircraft acquisition channels to grow our business, thereby reducing dependence on large scale, long-dated capital commitments associated with direct orders from OEMs. Our portfolio consists of aircraft acquired through sale-leaseback transactions, aircraft ordered directly from OEMs and aircraft purchased from other lessors. We believe our deep industry relationships enable us to source transactions that are not broadly available. By changing the emphasis between the sale-leaseback, direct order and portfolio acquisition channels, we seek to accelerate growth and optimize value at different points in time during the aviation industry cycle. 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. Subject to completion, dated December 1, 2014 Prospectus 13,636,363 Common Shares Avolon Holdings Limited The selling shareholders are offering all of the 13,636,363 common shares to be sold in this offering. This is our initial public offering and no public market exists for our common shares. We are a newly formed holding company which, prior to consummation of this offering, will own 100% of the outstanding shares of Avolon Investments S. r.l. We will not receive any proceeds from the sale of common shares by the selling shareholders in this offering. We anticipate that the initial public offering price will be between $21.00 and $23.00 per common share. Our common shares have been approved for listing on the New York Stock Exchange under the symbol AVOL. Investing in our common shares involves risks. See Risk Factors beginning on page 15 of this prospectus. PRICE $ PER SHARE Public Offering Price Underwriting Discounts and Commissions(1) Proceeds to Selling Shareholders Per common share $ $ $ Total $ $ $ (1) See Underwriting for a description of all compensation payable to the underwriters. The selling shareholders have granted the underwriters the right to purchase up to an additional 2,045,455 common shares to cover over-allotments at the initial public offering price less the underwriting discounts and commissions. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the common shares on or about , 2014. Joint Bookrunners J.P. Morgan Morgan Stanley Citigroup UBS Investment Bank Wells Fargo Securities Co-Managers BNP PARIBAS Cowen and Company Credit Agricole CIB DBS Bank Ltd. Natixis The date of this prospectus is , 2014. Table of Contents transport consultancy firm, and the Company s own internal estimates and research. Industry publications, research, surveys and studies generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Although we believe that such publications, research, surveys and studies are reliable, we have not independently verified industry, market and competitive position data from third party sources. CERTAIN TERMS USED IN THE PROSPECTUS Unless otherwise noted or unless the context otherwise requires, all references in this prospectus to: ACP refer to Avolon Capital Partners, a joint venture between Avolon and Wells Fargo & Company. Aggregate Net Book Value refer, as of any date, to the sum of (i) our flight equipment and (ii) assets held for sale on such date. Annualized Lease Rates refer to annualized lease revenue for flight equipment held at the end of each reporting period divided by the Aggregate Net Book Value of flight equipment held at the end of each reporting period. Avolon, the Company, we, our, and us refer to Avolon S. r.l. and its consolidated subsidiaries for periods prior to the Share Exchange, and to Avolon Holdings and its consolidated subsidiaries for periods after the Share Exchange, giving effect thereto. Avolon Holdings refer to Avolon Holdings Limited, a Cayman Islands exempted company incorporated with limited liability on June 5, 2014, which is tax resident in Ireland. Avolon S. r.l. refer to Avolon Investments S. r.l., a private limited liability company incorporated under the laws of Luxembourg and the parent company of the Avolon business immediately prior to the Share Exchange. Cinven refer to the funds affiliated with Cinven Limited that are shareholders in Avolon. Committed Portfolio refer to the 93 aircraft for which we had entered into binding contracts or non-binding letters of intent to acquire through sale-leaseback transactions or direct orders from Boeing and Airbus as of September 30, 2014. Of this number, 29 aircraft were subject to non-binding letters of intent. These letters of intent represent our intention to acquire the aircraft, subject to the execution of definitive documentation which will include customary closing conditions. The remaining aircraft in our Committed Portfolio are subject to binding purchase contracts, which are also subject to customary closing conditions. CVC refer to the funds affiliated with CVC Capital Partners SICAV-FIS S.A. (together with its affiliates, CVC Capital Partners ) that are indirect shareholders in Avolon (or, as the context requires, the wholly owned special purpose vehicle through which such funds hold their investment in Avolon). Managed Portfolio refer to the seven aircraft that, as of September 30, 2014, we managed on behalf of other aircraft investors and five aircraft owned and managed by ACP, with whom we have entered into agreements to contribute personnel and other administrative resources. Oak Hill Advisors refer to the funds affiliated with Oak Hill Advisors, L.P. that are shareholders in Avolon. Oak Hill Advisors, L.P. is an independent investment firm that is not an affiliate of Oak Hill Management, LLC or its related funds. Oak Hill Capital Funds refer to the funds managed by Oak Hill Capital Management, LLC that are shareholders in Avolon. Oak Hill Capital Funds are not affiliates of Oak Hill Advisors, L.P. OEM refer to original equipment manufacturer. Owned Portfolio refer to our owned fleet of 122 aircraft as of September 30, 2014, which includes one aircraft classified as held for sale. Table of Contents We maintain relationships with aircraft investors globally and seek to sell assets to proactively manage our portfolio in response to market conditions. Aircraft sales facilitate management of portfolio concentrations, provide ongoing liquidity of the portfolio, enable us to monetize value in our aircraft, help maintain visibility and momentum with our customers and are an effective tool for managing both asset residual value and lease remarketing risk. We seek to mitigate asset, credit and liability risks associated with owning and leasing aircraft through our comprehensive risk management platform that uses proprietary analytical systems and credit scoring processes. These systems, tools and models, combined with formal risk committees, inform our decision-making process. The combination of young, modern aircraft and robust risk management has contributed to 100% fleet utilization and no unscheduled lease terminations, credit losses or asset impairments since our inception. Our highly experienced executive leadership team is led by our Chief Executive Officer, D mhnal Slattery, formerly the founding Chief Executive Officer of RBS Aviation Capital ( RBS AC ), now known as SMBC Aviation Capital and one of the largest aircraft lessors in the industry. Our President and Chief Commercial Officer is John Higgins, formerly Chief Commercial Officer of RBS AC; our Chief Financial Officer is Andy Cronin, formerly Senior Vice President Investor Markets at RBS AC; our Head of Strategy is Dick Forsberg, formerly Head of Portfolio Strategy at RBS AC; and our Chief Operating Officer and Head of Risk is Tom Ashe, formerly Head of Europe, the Middle East and Africa at RBS AC. This executive leadership team has on average over 23 years of experience in the aircraft leasing industry, covering several industry cycles, and deep and long-standing customer, lender, investor and OEM relationships. Our team seeks to provide thought leadership in the sector through materials such as white papers, discussion documents and webinars, an approach which is embedded in our core business activity. The team is supported by our Board of Directors, led by our Non-Executive Chairman, Denis Nayden, who was formerly Chairman and Chief Executive Officer of GE Capital Corporation and held several roles during his tenure, including oversight of GE Capital Aviation Services. Airline Industry According to ICF, commercial aviation is a critical component of the global economy. Demand for air transport is strongly correlated to economic activity and has grown at a rate in excess of 1.5 times the global gross domestic product ( GDP ) growth rate over the past 40 years. Published forecasts predict that, over the next 20 years, annual growth in air traffic, both passenger and cargo, will average around 5%, resulting in a further doubling of traffic within 15 years. To keep pace with this growth, according to analysis by ICF, the size of the global commercial aircraft fleet is expected to approximately double over the next two decades. Airlines have increasingly turned to operating lessors to meet their aircraft needs. Since 1980, the percentage of the global active commercial aircraft fleet under operating lease has increased from less than 2% to nearly 41% in 2014, an average annual growth rate of approximately 14%, compared to fleet growth of 3.7% over the same period. Boeing Capital forecasts that operating leasing will account for over 50% of the in-service aircraft by the end of this decade. Operations to Date Owned, Managed and Committed Portfolio Our Owned, Managed and Committed Portfolio consists of 227 young, modern, fuel-efficient aircraft, with lease arrangements with 49 customers in 27 countries. Our Owned Portfolio of 122 aircraft, as of September 30, 2014, includes 110 narrowbody and 12 widebody aircraft, with an average age, weighted by net book value, of 2.50 years. As of September 30, 2014, we had committed to acquire a total of 93 aircraft at a capital commitment of $6,574.2 million, with scheduled delivery dates through 2022. Table of Contents Owned and Managed Portfolio refer, collectively, to our Owned Portfolio and our Managed Portfolio. Owned, Managed and Committed Portfolio refer, collectively, to our Owned Portfolio, our Managed Portfolio and our Committed Portfolio. Pre-IPO Options refer to new nominal price options for the purchase of 150,064 common shares to be granted to certain members of management and employees under the Incentive Plan immediately following the Share Exchange, assuming an initial offering price of $22.00 (the midpoint of the price range set forth on the cover of this prospectus), based on the common shares held by the Trustee immediately following the Share Split, which options will have a term of seven years and will be immediately exercisable. Reorganization refer collectively to the Share Split, the Share Exchange and the grant of the Pre-IPO Options. Share Exchange refer to the reorganization transactions that will occur prior to completion of this offering in which Avolon Holdings will issue 79,576,905 of its common shares, assuming an initial public offering price of $22.00 (the midpoint of the price range set forth on the cover of this prospectus), in exchange for all of the outstanding shares of Avolon S. r.l., such that Avolon S. r.l. will become a direct, wholly owned subsidiary of Avolon Holdings, as more fully described under Our Corporate Reorganization. Avolon Holdings will issue 78,539,277 common shares in the Share Exchange at the low end of the price range and 79,712,575 common shares at the high end of the price range. Share Split refer to the 137.5476-for-1, assuming an initial public offering price of $22.00 (the midpoint of the price range set forth on the cover of this prospectus), subdivision into a lesser par value of the Avolon Holdings outstanding common shares that will occur immediately prior to the Share Exchange, as more fully described under Our Corporate Reorganization. The Share Split would be 241.3104-for-1 at the low end of the price range and 123.9806-for-1 at the high end of the price range. Sponsors refer to Cinven, CVC, Oak Hill Capital Funds and Vigorous, our four largest shareholders. Syndicatees refer to certain beneficial owners of our common shares that acquired such shares directly or indirectly from one or more of our Sponsors or through the assumption of such Sponsors equity commitment. Trustee refer to State Street Trustees (Jersey) Limited, as trustee for the beneficiaries under a trust instrument between the trustee and Avolon Aerospace Limited. Trust refer to Avolon Share Trust, a discretionary trust through which common shares may be delivered to employees in satisfaction of outstanding awards under the Incentive Plan. Vigorous refer to Vigorous Investment Pte Ltd, a subsidiary of GIC (Ventures) Pte Ltd ( GIC Ventures ). Vigorous is managed by GIC Special Investments Pte Ltd, a subsidiary of GIC Private Limited ( GIC ). GIC and GIC Ventures are wholly owned by the Government of Singapore. Vigorous is a shareholder of Avolon. Unless otherwise stated herein, all information with respect to industry and market data as well as data relating to our Owned, Managed and Committed Portfolio is as of September 30, 2014. Table of Contents As of September 30, 2014, our Owned, Managed and Committed Portfolio consisted of the following aircraft: Owned, Managed and Committed Portfolio Aircraft type Owned Portfolio Managed Portfolio Committed Portfolio Total Portfolio Airbus A319ceo 2 3 5 Airbus A320ceo 48 2 6 56 Airbus A320neo 20 20 Airbus A321ceo 6 4 10 Airbus A330-300 8 3 11 Airbus A330-900neo 15 15 Boeing 737-800 48 3 14 65 Boeing 737 MAX 20 20 Boeing 777-300ER 3 3 Boeing 777F 4 4 Boeing 787-8/9 1 11 12 Embraer 190 6 6 Total 122 12 93 227 Our Business and Growth Strategies Our objective is to build and maintain a portfolio of young, modern and fuel-efficient commercial aircraft while seeking to maximize long-term earnings growth and generate attractive risk-adjusted returns through the aviation industry cycle. In order to achieve our business objectives, we pursue the following strategies: Focus on robust fleet growth through investment in young, modern, fuel-efficient aircraft. Our investment strategy is focused on acquiring young, modern, fuel-efficient aircraft that we believe will remain in strong demand. As airlines face continuing high fuel prices, environmental regulation and an aging asset base, we believe that demand for modern, fuel-efficient aircraft will increase. According to forecasts by Boeing Capital, over 50% of the world s aircraft will be under operating leases by 2020 compared to nearly 41% in 2014. We believe the robust order backlogs of next-generation aircraft at Boeing and Airbus, combined with these favorable industry dynamics, present a significant growth opportunity for Avolon. We also believe young, modern, fuel-efficient aircraft will have strong long-term value retention characteristics and lower re-marketing risks and will enable us to generate stable cash flows over the long term. In addition, we believe that maintaining a young, modern fleet will help minimize asset impairment risks. We plan to maintain a young, modern, fuel-efficient fleet by maintaining our focus on our investment strategy while continuing to pursue our strategy of actively selling aircraft in order to manage the mix of aircraft in our portfolio. We have a dedicated team of experienced professionals focused on aircraft sales across multiple channels, including asset-backed securitizations and other structured portfolio sales. Leverage multiple aircraft procurement channels to optimize growth and performance through the aviation industry cycle. We intend to continue to utilize multiple procurement channels to source aircraft, including sale-leaseback transactions with airlines, direct orders with Airbus, Boeing and other OEMs, and portfolio acquisitions from Table of Contents FINANCIAL INFORMATION This prospectus contains the historical financial statements and other financial information of Avolon S. r.l., which is expected to be acquired by Avolon Holdings prior to consummation of this offering. Avolon Holdings common shares are being offered hereby by the selling shareholders. Avolon Holdings is a newly formed holding company, currently beneficially owned by management and certain other employees of Avolon and by the Trustee, and has engaged in operations and activities incidental to its formation, the Reorganization and the initial public offering of our common shares. Prior to the consummation of this offering, Avolon Holdings will effect the Share Split and, immediately thereafter, each existing shareholder of Avolon S. r.l. will transfer all of its interests in Avolon S. r.l. to Avolon Holdings in the Share Exchange, resulting in Avolon S. r.l. becoming a wholly owned subsidiary of Avolon Holdings. The Share Exchange will be accounted for as Avolon Holdings succeeding to the business and activities of Avolon S. r.l. for financial reporting purposes. Following the Share Exchange, the historical financial statements of Avolon Holdings will be retrospectively adjusted to include the historical financial results of Avolon S. r.l. for all periods presented. Table of Contents other lessors to selectively build our portfolio. We believe that the utilization of multiple aircraft procurement channels will provide us the flexibility to enhance our portfolio and performance through the cycle as each channel can be calibrated to react to, and increase opportunity from, prevailing market conditions. The sale-leaseback channel helps us to manage risk as we have clear visibility into the counterparty and lease terms, with no placement risk. This channel provides us with flexibility to manage cycle risk and be responsive to market opportunities and conditions. Our direct orders are strategically important as they give us access to highly sought-after, next generation, fuel-efficient aircraft. We anticipate strong leasing demand from airlines due to the attractiveness of these aircraft and their limited availability. Portfolio acquisitions typically include multiple aircraft and multiple airlines and, as such, the transactions are more diversified than single sale-leaseback opportunities. Actively sell aircraft through the aviation cycle. The principle of active aircraft sales is central to our portfolio strategy. Aircraft sales facilitate management of portfolio concentrations, provide ongoing liquidity of the portfolio, enable us to monetize value in our aircraft, help us maintain visibility and momentum with our customers and are a tool for effectively managing both asset residual value and lease remarketing risk. We have a dedicated team of experienced professionals focused on aircraft sales across channels, including asset backed securitizations and other structured portfolio sales. Aircraft sales can also be a source of fee income from associated asset management opportunities, while allowing us to recycle and redeploy capital to fund further growth. Utilize our deep, long-standing and valuable industry relationships. We believe our team s broad industry experience and expertise enables us to leverage relationships globally to drive our growth and performance. We have active relationships with over 150 airlines globally, which are either existing customers or airlines with which we maintain regular dialogue in relation to potential transaction opportunities. Our relationships with these airlines help us to place new aircraft, re-market end of lease aircraft and source transactions to grow our fleet through multiple acquisition channels. We believe our market knowledge enables us to source transactions that are not broadly available. We are actively involved with consultative bodies, events and forums that have been formed by the aircraft and major engine OEMs to engage with the industry on the development and design of new products. Our membership of these groups provides us with multiple opportunities to share opinions and seek to influence OEM development and design activity to align with customer requirements and drive future growth. Leverage platform to expand asset management activity. We have a scalable platform that includes technical, marketing, risk management and other capabilities critical to managing a fleet of leased aircraft. Providing asset management services provides us contracted fee income. As of September 30, 2014, Avolon managed seven aircraft on behalf of other aircraft investors, and ACP, our joint venture with Wells Fargo & Company, managed five aircraft. Our Competitive Strengths We believe the following strengths assist us in executing our business and growth strategies and underpin our ability to generate future earnings growth. Scaled and efficient business with growth visibility. Since our launch in 2010, we have grown the size of our Owned, Managed and Committed Portfolio to 227 young, modern and fuel-efficient narrowbody and widebody aircraft. This portfolio made us the ninth largest aircraft lessor by current market value as of September 30, 2014, according to ICF. We believe our platform has Table of Contents extensive capabilities in key commercial, technical, risk management and financial functions and is designed to be efficient and to accommodate a large portfolio of aircraft without requiring additional investment in the platform. We believe rigorous internal processes and controls and a transparent culture underpin our platform. We believe our size, scale, capitalization and industry contacts will enable us to capitalize on the opportunities afforded by the growing aircraft leasing industry. Our Owned Portfolio, with an Aggregate Net Book Value of $5,261.6 million as of September 30, 2014, is leased to airlines under long-term leases, and the average lease term remaining on our leases, weighted by the net book value of the aircraft, was 6.9 years as of such date, providing considerable predictability to our revenues. Additionally, we have a Committed Portfolio of 93 aircraft, of which 32 are scheduled for delivery through June 2016. We have entered into leases or letters of intent for the leasing of all but one of our new aircraft scheduled for delivery through the second quarter of 2018, with an average lease term of 10.7 years, weighted by acquisition price, providing growth and cash flow visibility. Young, modern, fuel-efficient aircraft fleet. Our Owned Portfolio consists of young, modern and fuel-efficient aircraft. As of September 30, 2014, the average age of our Owned Portfolio, weighted by net book value, was 2.50 years. We believe that our aircraft are in high demand among our airline customers and are readily deployable to markets throughout the world, demonstrated by the 100% utilization rate we have achieved for our aircraft since our launch in May 2010. We seek to acquire aircraft with high liquidity characteristics because we believe these aircraft have high residual value retention and are less likely to be exposed to asset impairment risk. We believe that our fleet of young, modern and fuel efficient aircraft will enable us to generate stable cash flows over the long term. Highly experienced and proven management team with deep aviation and financial institution experience. Our executive leadership team has on average over 23 years of experience in the aircraft leasing industry covering several industry cycles, and deep, long-standing customer, lender, investor and OEM relationships. This team has demonstrated its competency in the aircraft leasing industry by being instrumental in building RBS AC into one of the largest aircraft lessors in the industry, as well as founding our company and growing our portfolio into one of the ten largest in the industry by current market value in only four years. This team is supported by an additional 11 senior executives with an average of approximately 14 years of industry experience. Together, this combined team of executives, with an average age of 44, has extensive expertise in aircraft leasing, acquisitions, technical management, financing and risk management. We believe management s deep industry relationships over an extended period allow us to source transactions that are not broadly available. Sophisticated, rigorous and proactive risk management systems, tools and models. Our business model is underpinned by a methodical approach to risk management that uses proprietary analytical tools and a rigorous corporate governance structure to manage asset, credit and liability risks closely and proactively. This framework has been developed and refined by the management team since our inception. Our asset risk management model uses a quantitative matrix to benchmark aircraft asset types in terms of their investment suitability and relative liquidity, with the objective of reducing asset impairment and lease re-marketing risk. Our customer risk management model uses a system of quantitative and qualitative factors to monitor credit quality and extends to over 110 airlines. We have not incurred any asset impairment charges since our founding nor have we had to terminate any aircraft leases prior to their scheduled expiration. We believe we have a conservative approach to liability risk management and we use a variety of forecasting methods and reporting frameworks to manage our liquidity risks. These risk management tools are used in conjunction with our formal risk management reporting structure, consisting of three executive risk committees, each of which reports to the risk management committee of our Board. The implementation of our risk management framework supports our objective to grow in a controlled fashion in a dynamic business environment. Table of Contents Stable funding base and access to diverse sources of capital. Our capital and financing structure has helped to establish Avolon as a leading aircraft lessor and a business of scale. Our growth has been financed by equity contributions from our shareholders together with debt financing from a range of banks and financial institutions. As of September 30, 2014, we had total outstanding indebtedness of $4,258.3 million consisting of term debt facilities, facilities backed by the European Export Credit Agencies ( ECA ) and the Export-Import Bank of the United States ( EXIM ), an asset-backed securitization, unsecured revolving credit facilities and pre-delivery payment and warehouse facility debt. As of September 30, 2014, we had an additional $1,296.5 million of undrawn debt facilities, consisting of $1,045.5 million of committed secured debt and $251.0 million of unsecured revolving credit facilities. The volume, quality and mix of our committed financings, combined with our overall market presence, have created a substantial capital base, which we believe is capable of supporting further portfolio growth. Prominent and strategic thought leadership. We believe that one of the essential elements of an experienced and growth-focused aircraft leasing business is to have considered and empirically defensible views on key trends in the aviation industry. We have communicated our thought leadership through issuing industry white papers, hosting webinars, attending and speaking at major global industry conferences, contributing articles to prominent industry publications and presenting to banks and financial institutions on topics such as risk management. We are represented on a number of industry bodies, including the International Society of Transport Aircraft Trading (at Board level) and the Aviation Working Group. Our approach to thought leadership is embedded in our core business activity. We believe our insight into global aviation trends helps to inform our investment and sales decisions, our allocation of capital between procurement channels and our overall risk management processes. Financing Strategy The successful implementation of our financing strategy is a critical component of the success and growth of our business. The overall objective of our financing strategy is to provide the capital required to continue to grow our business through arrangements that provide us with maximum flexibility and a low cost of capital and that minimize risks relating to changes in market conditions. We intend to fund our business with future earnings and cash flow from operations, existing debt facilities and potential future debt financing from multiple sources, which may include term debt facilities, ECA and EXIM backed facilities, unsecured revolving credit facilities, securitization debt and pre-delivery payment and warehouse facility debt as well as other debt capital markets products. We actively manage our debt maturity profile and interest rate exposure by generally seeking long-term, fixed rate debt facilities, which we believe best matches the characteristics of our assets. We seek to identify markets and products with favorable and flexible terms as well as to maximize the diversification of funding solutions and to reduce our reliance on any one market or financial institution. As of September 30, 2014, we had committed financing from a total of 30 financial institutions (excluding holders of our publicly issued debt), with total outstanding indebtedness of $4,258.3 million. This outstanding indebtedness comprised $2,798.9 million of recourse and non-recourse term facilities, including accrued interest and capital lease obligations, $558.8 million of ECA and EXIM backed facilities, $124.0 million of unsecured revolving credit facilities, $598.3 million of securitization indebtedness and $178.3 million in the aggregate of pre-delivery payment and warehouse facility debt. In addition, as of September 30, 2014, we had $1,296.5 million of undrawn debt facilities, consisting of $1,045.5 million of committed secured debt and $251.0 million of unsecured revolving credit facilities. As of September 30, 2014, the weighted average interest rate of our outstanding indebtedness was 4.0% (not including the effect of upfront fees, undrawn fees, issuance cost amortization or fair value gains/losses on derivative financial instruments) and the weighted average Table of Contents remaining maturity was 4.6 years. Floating rate debt accounted for 25.0% of our total outstanding indebtedness as of such date. Partially hedging this exposure, we have interest rate derivatives that have notional profiles of 11.3% of our total indebtedness as of September 30, 2014. Furthermore, debt associated with floating rate leases accounted for 13.3% of our total outstanding debt. Risks Affecting Us Our business is subject to a number of risks, as discussed more fully in the section entitled Risk Factors beginning on page 15 of this prospectus, which you should read in its entirety. Some of these risks include: general economic and financial conditions; the financial condition of our lessees; our ability to obtain additional capital to finance our growth and operations on attractive terms; decline in the value of our aircraft and market rates for leases; the loss of key personnel; lessee defaults and attempts to repossess aircraft; our ability to regularly sell aircraft; our ability to successfully re-lease our existing aircraft and lease new aircraft; our ability to negotiate and enter into profitable leases; periods of aircraft oversupply during which lease rates and aircraft values decline; changes in the appraised value of our aircraft; changes in interest rates; competition from other aircraft lessors; and the limited number of aircraft and engine manufacturers. Our Corporate Reorganization Avolon Holdings Limited is a Cayman Islands exempted company incorporated with limited liability on June 5, 2014 for purposes of effectuating our initial public offering and is tax resident in Ireland. Currently, Avolon Holdings has a nominal issued share capital, all of which is beneficially owned by management and certain other employees of Avolon and the Trustee. Prior to consummation of this offering, we will complete the Reorganization pursuant to which Avolon Holdings will effect the Share Split and, immediately thereafter, will complete the Share Exchange pursuant to which it will issue 79,576,905 of its common shares, assuming an initial public offering price of $22.00 (the midpoint of the price range set forth on the cover of this prospectus), in exchange for all of the outstanding shares of Avolon S. r.l., such that Avolon S. r.l. will become a direct, wholly owned subsidiary of Avolon Holdings. As a result of the Share Exchange, the shareholders of Avolon S. r.l. immediately prior to the Share Exchange will constitute all of the shareholders of Avolon Holdings immediately following the Share Exchange and prior to this offering. Avolon S. r.l. is currently owned by our Sponsors, Cinven, CVC, Oak Hill Capital Funds and Vigorous, as well as members of our management and certain other investors. Avolon S. r.l. is, and upon consummation of the Share Exchange Avolon Holdings will be, a holding company with no material assets other than our ownership interests in our operating subsidiaries. Please refer to Our Corporate Reorganization for additional information regarding the Reorganization. Table of Contents The following chart sets forth our ownership structure upon consummation of this offering. This chart is for illustrative purposes only and does not purport to represent all legal entities owned or controlled by us. Corporate Information Our principal executive offices are located at The Oval, Building 1, Shelbourne Road, Ballsbridge Dublin 4, Ireland. Our website is www.avolon.aero and our main telephone number is +353 (1) 231 5800. Information on our website is not part of or incorporated by reference into this prospectus and should not be relied upon in determining whether to make an investment in our common shares. Table of Contents The Offering Common Shares Offered by the Selling Shareholders 13,636,363 common shares. Common Shares to be Issued and Outstanding After This Offering 80,952,381 common shares. Option to Purchase Additional Common Shares The selling shareholders have granted the underwriters the option for a period of 30 days from the date of this prospectus to purchase up to an additional 2,045,455 common shares to cover over-allotments at the initial public offering price, less the underwriting discounts and commissions. Use of Proceeds We will not receive any proceeds from the sale of common shares by the selling shareholders in this offering. See Use of Proceeds. Dividend Policy We currently intend to retain future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. See Dividend Policy. Listing Our common shares have been approved for listing on the New York Stock Exchange (the NYSE ) under the symbol AVOL.
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+PROSPECTUS SUMMARY The following summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "RISK FACTORS" section, the financial statements and the notes to the financial statements. If you invest in our common stock, you are assuming a high degree of risk. As used throughout this prospectus, the terms " Cabinet Grow", "Company", "we," "us," or "our" refer to Cabinet Grow, Inc.. Our Company We make cabinet based horticultural systems. The design and production of our hydroponic and soil grow cabinets makes the process of small scale home growing in a self-contained cabinet automated and simplified. Our mission is to make hydroponic and soil growing simpler, more efficient and a better value than other products found on the market. Our product offerings are split into two categories; (1) self-contained horticultural grow cabinets and (2) specifically constructed kits and packages offered to satisfy the "do-it-yourself" ("DIY") home horticulturist which involves a modular growing solution. Implications of Being an Emerging Growth Company We are an "emerging growth company" within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. Following this offering, we will continue to be an emerging growth company until the earliest to occur of (1) the last day of the fiscal year during which we had total annual gross revenues of at least $1 billion (as indexed for inflation), (2) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering under this prospectus, (3) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt and (4) the date on which we are deemed to be a "large accelerated filer," as defined under the Securities Exchange Act of 1934, as amended (which we refer to as the "Exchange Act"). We also qualify as a "smaller reporting company" under Rule 12b-2 of the Securities Exchange Act of 1934, as amended, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings some of which are similar to those of an emerging growth company including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In their opinion letter for the fiscal year ended December 31, 2013, our auditors included an explanatory paragraph that disclosed conditions that raise concerns about the Company's ability to continue as a going concern. Please refer to the audited financial statements and accompanying auditors report within this filing. Corporate Information Cabinet Grow, Inc. was incorporated in Nevada on May 14, 2014. Our principal place of business is in Irvine, California. On May 15, 2014, Cabinet Grow merged with our predecessor, Cabinet Grow, Inc., a California corporation formed on April 28, 2014, with the Nevada entity being the surviving entity. Our founder, Matt Lee, started our company in 2008 as Universal Hydro ("Hydro"), an unincorporated entity and contributed the Hydro assets to the California entity in April 2014 pursuant to the terms of an Agreement to Assign Assets. Our website is: www.cabinetgrow.com. The information that can be accessed through our website is not part of this prospectus, and investors should not rely on any such information in deciding whether to purchase our common stock. Summary of the Offering Common stock outstanding before the offering 33,000,000 Shares. Common Stock offered by the Company 5,000,000 Shares. Common stock to be outstanding after the offering 38,000,000 Shares. Market for the common shares No public market currently exists for the Shares and a public market may not develop, or, if any market does develop, it may not be sustained. There cannot be any 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. Offering Price Per Share Our Officers and Directors will sell the Shares at a price of $0.40 per share upon effectiveness of this registration statement on a direct primary "self-underwritten" basis. There is no minimum number of Shares required to be purchased, and subscriptions, once received and accepted, are irrevocable. Our transfer agent, VStock Transfer LLC, will issue common stock subscribed for in this offering promptly after we accept subscriptions from investors. Shares purchased by investors in this offering will remain outstanding upon its termination regardless of the number of Shares subscribed for. Use of proceeds We intend to use the proceeds to further our business expansion by increasing purchases of inventory, spending on advertising and marketing, trade shows and travel, web site development and social media platforms, fees for public company reporting requirements, staffing, and general working capital. See "Use of Proceeds."
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001613136_enovation_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001613136_enovation_prospectus_summary.txt
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This Prospectus, and any supplement to this Prospectus include forward-looking statements . To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as intends , anticipates , believes , estimates , projects , forecasts , expects , plans and proposes . Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These include, among others, the cautionary statements in the Risk Factors section beginning on page 8 of this Prospectus and the Management's Discussion and Analysis of Financial Position and Results of Operations section elsewhere in this Prospectus. 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 Oculus Company, we, us and our refer to Oculus Inc. Corporate Background: We were incorporated on January 9, 2014 under the laws of the state of Nevada. Our principal executive offices are located at 1451 W Cypress Creek Road, Suite 300, Ft. Lauderdale, FL 33309, United States. Our telephone number is (888) 623-8883. Our fiscal year end is April 30. Since we are in our startup stage, we have predominately been involved in administrative activities such as setting up bank accounts, establishing relationships with service providers and establishing our office facilities. We are a development stage company in the business of selling and providing services for GPS Tracking Devices. Our product, called the AnyTrack GPS is a next generation remote personal locator device used to primarily located and aid in the timely rescue of missing children, the elderly and pets. In addition, our devices will have additional functionalities, such as keeping track of heart rates, with data being sent remotely and in the future we will add additional functionalities such as keeping track of blood alcohol content, which will be useful for parolees or anyone that has been convicted of a DUI. In addition to selling these devices, we will offer monthly services, such as tracking and data collection at a monthly fee. We plan to market our devices to the U.S., Canada and Europe and then extending to Asia. Our products and services, as well as our website and mobile interface are all in the development stage. We have only recently begun operations, have no sales or revenues, and therefore rely upon the sale of our securities to fund our operations. Our auditors have issued an audit opinion which includes a statement describing substantial doubt about our ability to continue as a going concern. Neither our company, our directors, officers, promoters or affiliates intend for the company, once it is reporting, to be used as a vehicle for a private company to go become a reporting company. We are not a blank check company and do not have any current plans or intentions to be acquired or to merge with an operating company nor do we, or our shareholders, have plans to enter into a change of control or similar transaction. The Offering: Securities Being Offered Up to 11,367,670 shares of common stock Offering Price The selling shareholders will sell our shares at $0.005 per share for the duration of the offering. We cannot ensure that our shares will be quoted on the OTC Bulletin Board. We determined this offering price based upon the price of the last, sale of our common stock to investors. Terms of the Offering The selling shareholders will determine when and how they will sell the common stock offered in this prospectus Termination of the Offering The offering will conclude when all of the 11,367,670 shares of common stock have been sold, the shares no longer need to be registered to be sold or we decide to terminate the registration of the shares. Securities Issued and to be Issued 46,367,670 shares of our common stock are issued and outstanding as of the date of this prospectus. All of the common stock to be sold under this prospectus will be sold by existing shareholders. Use of Proceeds We will not receive any proceeds from the sale of the common stock by the selling shareholders. Financial Summary Information All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted. The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus. Income Statement Data Period from January 9, 2014 (inception) to April 30, 2014 Three Months Ended July 31, 2014 (unaudited) Revenues - - Operating Expenses $1,975 $6,673 Net Loss $1,975 $6,673 Net Loss Per Share (0.00) (0.00) Balance Sheet Data April 30, 2014 July 31, 2014 (unaudited) Working Capital (Deficiency) $39,128 $32,455 Total Assets $40,364 $37,893 Total Liabilities $1,236 $5,438 Emerging Growth Company We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act. We shall continue to be deemed an emerging growth company until the earliest of: the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title; the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or the date on which such issuer is deemed to be a large accelerated filer , as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto. As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting. As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. For so long as we are an emerging growth company, we will be permitted to provide the scaled executive compensation disclosure applicable to smaller reporting companies even if we no longer qualify as a smaller reporting company. In addition, as an emerging growth company, we are exempt from PCAOB rules regarding mandatory firm rotation or the auditor reporting model.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001616283_carnival_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001616283_carnival_prospectus_summary.txt
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+Prospectus Summary 1
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001617049_navios_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001617049_navios_prospectus_summary.txt
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+This summary highlights information contained elsewhere in this prospectus. Unless we otherwise specify, all references to information and data in this prospectus about our business refer to the business and fleet that will be transferred to us in connection with this offering. Prior to the closing of this offering, we will not own interests in any vessels. You should read the entire prospectus carefully, including the historical financial statements and the notes to those financial statements. The information presented in this prospectus assumes, unless otherwise noted, that the underwriters option is not exercised. You should read Risk Factors for more information about important risks that you should consider carefully before buying our common units. We include a glossary of some of the terms used in this prospectus in Appendix B. Unless otherwise indicated, all references to dollars and $ in this prospectus are to, and amounts are presented in, U.S. Dollars. Unless otherwise indicated, all data regarding our fleet, the terms of our charters and all industry data is as of September 30, 2014. References in this prospectus to Navios Maritime Acquisition refer, depending on the context, to Navios Maritime Acquisition Corporation or any one or more of its subsidiaries. References in this prospectus to Navios Maritime Midstream Partners L.P., the Partnership, we, our, us or similar terms when used in a historical context refer to the assets of Navios Maritime Acquisition Corporation and its vessels and vessel-owning subsidiaries that are being sold, transferred or contributed to Navios Maritime Midstream Partners L.P. in connection with this offering. When used in the present tense or prospectively, those terms refer, depending on the context, to Navios Maritime Midstream Partners L.P. or any one or more of its subsidiaries, or to all of such entities. References in this prospectus to Navios Maritime Holdings refer, depending on the context, to Navios Maritime Holdings Inc. or any one or more of its subsidiaries. References in this prospectus to the Manager refer to Navios Tankers Management Inc., a wholly owned subsidiary of Navios Maritime Holdings. References in this prospectus to Navios Maritime Partners refer to Navios Maritime Partners L.P. References in this prospectus to the Navios Group refer, depending on the context, to Navios Maritime Holdings, Navios Maritime Acquisition, Navios Maritime Partners, us and any one or more of our and their subsidiaries.
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diff --git a/parsed_sections/prospectus_summary/2014/CIK0001617667_neff-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/CIK0001617667_neff-corp_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that you may consider important in making your investment decision and is qualified in its entirety by the more detailed information and historical financial statements, including the notes thereto, that are included elsewhere in this prospectus. You should read this entire prospectus carefully and consider, among other things, the matters discussed in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Certain statements in this summary are forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements. See "Forward-Looking Statements." Except as otherwise stated or required by the context, in this prospectus, the "Company," "we," "our" and "us" refer (1) prior to the consummation of the Organizational Transactions described under " The Organizational Transactions," to Neff Holdings LLC ("Neff Holdings") and, unless the context otherwise requires, its consolidated subsidiaries, and (2) after the consummation of the Organizational Transactions described under " The Organizational Transactions," to Neff Corporation and, unless the context otherwise requires, its consolidated subsidiaries, including Neff Holdings. Our Company We are a leading regional equipment rental company in the United States, focused on the fast-growing Sunbelt states. We offer a broad array of equipment rental solutions for our diverse customer base, including non-residential construction, oil and gas and residential construction customers. Our broad fleet of equipment includes earthmoving, material handling, aerial and other rental equipment, which we package together to meet the specific needs of our customers. We consider the earthmoving equipment category to be a core competency of our Company and a key differentiator of our business. We believe that the earthmoving equipment category offers a return on investment and future growth prospects that are among the strongest in the equipment rental industry. For the 12 months ended September 30, 2014, we generated revenues of $358.3 million (88% from equipment rentals), net income of $15.9 million and Adjusted EBITDA (as defined below) of $176.1 million. Our Branch Network and Fleet As of September 30, 2014, we operated 64 branches organized into operating clusters in five regions in the United States: Florida, Atlantic, Central, Southeastern and Western. We are strategically located in markets that we believe feature high levels of population growth as well as high levels of construction activity over the near term. We believe that our clustering approach enables us to establish a strong local presence in targeted markets and meet the needs of our customers that have multiple projects within a specific region. Furthermore, we have invested in and developed a highly successful fleet management capability which allows us to share equipment among our branches in order to improve time utilization (as defined below) and drive a higher return on invested capital. Revenues by Region for the 12 Months Ended September 30, 2014 Amendment No. 6 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Our Five Regions We seek to improve returns on our investments in rental equipment by applying a highly-disciplined asset-management approach to acquiring, renting, maintaining and divesting our fleet. This effort is supported by our customized asset tracking software and a rigorous maintenance and repair program, which promotes the extended useful life of our equipment. As of September 30, 2014, our rental fleet consisted of over 13,650 units of equipment with an original equipment cost, or OEC (as defined below), of approximately $723.6 million and an average age of approximately 46 months. Our earthmoving fleet represented approximately 54% of OEC and had an average age of approximately 34 months. We believe that our focus on earthmoving equipment positions us to take advantage of future growth opportunities in our key end-markets. Rental Fleet by Equipment Category as a Percentage of OEC as of September 30, 2014 Industry Overview According to the American Rental Association, the North American rental industry grew from approximately $18 billion in annual rental revenues in 1997 to approximately $38 billion in 2013, representing a compounded annual growth rate ("CAGR") of approximately 5%. The primary end-markets served by the rental industry include the broader industrial and construction markets, which Neff Corporation (Exact name of registrant as specified in its charter) Table of Contents include non-residential construction, oil and gas and residential construction. The American Rental Association projects that the North American rental industry will grow by approximately 8% annually through 2018, resulting in estimated annual rental revenues of $56 billion by 2018. We believe that approximately 70% of total North American rental industry revenues is attributable to the industrial and commercial construction markets. North America Rental Industry Revenues: 1997 - 2018E Source: American Rental Association Rental Market Monitor. We believe that part of this industry growth will be driven by the ongoing secular shift in North America toward reliance on equipment rental instead of ownership, as evidenced by the increasing percentage of new equipment sold to rental companies as a percentage of the total amount of new equipment sold, which we refer to as the penetration rate. According to the American Rental Association'sEquipment Rental Penetration Index, the penetration rate rose from 41% in 2003 to 53% in 2013. North America Equipment Rental Penetration Rate Index Source: American Rental Association Equipment Rental Penetration Index. We believe that the shift from owning to renting equipment in North America will continue as construction and industrial firms recognize the advantages of renting rather than owning equipment, and that this trend will continue to result in increased penetration rates in the future. Renting equipment allows firms to: avoid large equipment capital investments; access a broad selection of equipment featuring current technology; obtain equipment on an as-needed basis; reduce costs related to idle equipment; reduce storage and maintenance costs; and reduce depreciation charges. Table of Contents Furthermore, the material handling and aerial categories each have higher penetration rates than the earthmoving equipment category. Given the relatively lower penetration rate in the earthmoving equipment category, we expect growth in this category to outpace the overall equipment rental market. North America Penetration Rates by Category for 2013 Equipment Rental Market Source: Yengst Associates Market Machinery Research Rental Industry Report. Data segmented by the Company to reflect the three primary equipment classes. The equipment rental industry in North America is highly fragmented. According to Yengst Associates, the industry is comprised of approximately 4,000 rental business locations that offer construction equipment as a primary source of revenue. In 2013, according to the Rental Equipment Register, revenues of the 15 largest equipment rental companies accounted for approximately 30% of the total market. We believe that larger rental companies will be able to continue to increase their market share and outperform smaller, independent companies by better meeting customer demands to deliver a broad selection of high-quality and reliable equipment in a timely and efficient manner. Our Business Strengths Well Positioned to Capitalize on Key End-Market Growth. For the 12 months ended September 30, 2014, approximately 85% of our rental revenues were derived from five key end-markets: infrastructure, non-residential construction, oil and gas, municipal and residential construction. The U.S. equipment rental industry has historically benefitted from growth in these end-markets, which are expected to grow at a weighted average CAGR of approximately 8% from 2014 to 2018, as shown below. We believe that our current business is well aligned with these growing end-markets, and that we will continue to benefit from macroeconomic growth. Our Rental Revenues by End-Market for the 12 Months Ended September 30, 2014 Projected End-Market Growth: 2014E - 2018E CAGRs Source: Company data. Source: FMI Construction Outlook Q3 2014 data; Oil and Gas Capital Expenditures from IHS data as of October 2014. Prominent Position in Fast-Growing Sunbelt States. 60 of our 64 branches are located in the Sunbelt states of Virginia, North Carolina, South Carolina, Florida, Georgia, Alabama, Tennessee, Louisiana, Texas, Arizona, Nevada and California. Our Sunbelt state locations benefit from favorable climate conditions that facilitate year-round construction activity and reduce seasonality in our business. According 3750 N.W. 87th Avenue, Suite 400 Miami, FL 33178 (305) 513-3350 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Table of Contents to the American Rental Association, construction and industrial equipment rental revenue in the states where we have branch locations is expected to grow approximately 10% annually from 2014 to 2018, compared to an average growth rate of approximately 8% for all other states. By clustering our operations and concentrating our branches in these strategic regional markets, we have established a strong local presence and developed significant brand recognition in those markets. High-Quality Fleet Focused on Earthmoving Equipment. We offer our customers a broad array of rental equipment with a focus on the earthmoving category. We believe that we are well positioned to benefit from additional penetration in the earthmoving equipment category, which had a penetration rate of approximately 51% in 2013, compared to approximately 95% for the aerial and 85% for the material handling categories, respectively. As of September 30, 2014, we had over 5,200 units of earthmoving equipment, accounting for 54% of the OEC of our rental fleet. By comparison, as presented below, the earthmoving equipment category represented only 13-22% of the OEC of selected public industry peers. Percentage of Earthmoving Equipment OEC Among Selected Public Industry Peers Source: Company data and most recent public filings for selected public industry peers. Disciplined Sales Culture Drives Strong Customer Relationships. We have a diverse base of repeat customers who we believe value our knowledge and expertise. Our customer base includes large and mid-sized construction firms, municipalities, utilities and industrial users. Typically, we serve over 14,000 customers annually. For the 12 months ended September 30, 2014, no single customer accounted for more than 1% of our total rental revenues and our ten largest customers accounted for approximately 5% of our total rental revenues. Our culture is built around the disciplined use of our customer relationship management system, or "CRM system," at every level of our organization, which we believe provides our employees with the tools and information to efficiently provide customized solutions to our existing and potential customers. In addition, our CRM system automatically notifies our sales force of new construction projects within their territories and provides them with the names and contact information of key contractors. We believe that the consistent and disciplined use of our CRM system is a competitive advantage that has resulted in greater sales coordination, increased corporate control over customer account information, high-quality customer service and higher time utilization. Strong Operating Trends. We have experienced substantial earnings momentum since 2011, driven by the rebound in our end-markets and supported by significant investment in our fleet, which has resulted in an increase in OEC from $471.1 million at December 31, 2011 to $723.6 million at September 30, 2014. In addition, our time utilization has increased from 65% for the year ended December 31, 2011 to 71% for the 12 months ended September 30, 2014, and our rental rates (as defined below) have increased by over 6% on an annual basis over the same period. We believe that the combination of favorable industry dynamics, significant investments in our fleet and our focus on operating leverage (which has seen our Adjusted EBITDA margin increase from 35% for the year ended December 31, 2011 to 49% for the 12 months ended September 30, 2014) have driven our Adjusted EBITDA from $86.7 million to $176.1 million over this period. Experienced Management Team. Our senior management team has significant operating experience in the equipment rental industry and has worked together at our Company for over a decade. Graham Hood, our Chief Executive Officer, has 36 years of rental industry experience and Mark Irion, our Chief Financial Officer, has 16 years of rental industry experience. Our regional Vice Presidents, with an average of Mark Irion Chief Financial Officer Neff Corporation 3750 N.W. 87th Avenue, Suite 400 Miami, FL 33178 (305) 513-3350 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents 17 years with our Company and 29 years of industry experience, provide us with a stable base of operating management with long-term, local relationships and deep equipment rental industry expertise. This industry expertise, combined with our disciplined sales culture and CRM system, enables our regional management team to respond quickly to changing market conditions. Our Business Strategy Focus on Premium Customer Service to Create Strong Customer Relationships. We are committed to providing our customers with premium service. We believe that our customers value our strong regional presence, well-established local relationships and full-service branches, which offer 24/7 customer support. Furthermore, our regional presence is supplemented by a national account focus that allows us to differentiate our brand and product offering to our larger customer accounts. We believe that our ability to provide expert advice with respect to earthmoving equipment is an advantage over our competitors. As of September 30, 2014, we have received over 98% favorable customer reviews based on our policy of polling a sampling of all customer transactions. We intend to continue to leverage our national account program, our customer service capabilities and our advanced CRM system to retain our existing customers and further penetrate our target customer base. Emphasis on Active Asset Management. We have invested significantly in both customized technologies and the development of our personnel to ensure that we manage our fleet efficiently to increase our returns on invested capital. Our technologies form the basis of our sales force's customer targeting efforts and allow us to improve rental rates and identify equipment demand changes in real time. Our equipment clustering strategy allows us to share and re-deploy equipment among our branches as demand for equipment shifts throughout our branch network. Over time, we have demonstrated our ability to both increase and decrease the age of our fleet in response to changing market conditions. We actively monitor the market environment to determine where investment in fleet assets should be made or when fleet asset divestitures should occur. Our emphasis on active asset management, combined with our rigorous repair and maintenance program, allows us to increase time utilization, extend the useful life of our fleet and results in higher resale value of our equipment. Focus on Growing Markets. We believe that our focus on the non-residential construction, oil and gas and residential construction end-markets positions us to benefit from favorable industry and macroeconomic trends. We believe that all of these end-markets are currently experiencing significant growth and will continue to benefit from investment spending driven by the economic recovery in the United States. FMI Construction Outlook predicts that U.S. infrastructure spending will grow approximately 5% annually through 2018, U.S. non-residential construction spending will grow at 5% annually through 2018, and U.S. residential construction will grow 9% annually through 2018. IHS estimates that oil and gas investment in the United States will grow 9% annually through 2018. We believe that our focus on these end-markets will position us to achieve significant growth in revenues. Capitalize on Operating Leverage. We have a highly scalable business model constructed around our network of 64 full-service branch locations. We believe that our current network can support significant additions to our rental fleet without substantial additional investment in infrastructure, personnel or information technology. We intend to capitalize on anticipated growth opportunities primarily by increasing our fleet size within our existing branch network, using our active asset management capabilities to increase time utilization and improve pricing levels and serving customers who value our equipment mix and service capabilities. We have a proven track record of successfully opening new branches in our key markets, as evidenced by the successful development of six new branch locations since January 1, 2011. We regularly evaluate new branch opportunities based on stringent return criteria to identify promising new branch locations, and will continue to monitor opportunities to expand our strategic branch network. Copies to: Kirk A. Davenport II, Esq. Dennis Lamont, Esq. Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, New York 10022 (212) 906-1200 Arthur D. Robinson, Esq. Lesley C. Peng, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 (212) 455-2000 Table of Contents Ability to Generate Free Cash Flow. Our significant rental fleet investment and focus on active asset management provide us the operational flexibility to generate cash flow through different business cycles. We believe that our borrowing availability as of September 30, 2014, after giving effect to this offering and the use of proceeds therefrom, will provide the resources to continue to invest in our rental fleet. Our fleet investments are largely discretionary and we have the ability to temporarily defer capital expenditures or sell used rental equipment to manage cash flows. There is a developed secondary market for used rental equipment, and industry resale values of equipment have averaged approximately 49% of OEC over the past three years. We believe that our focus on cash flow and operating flexibility will allow us to continue to generate strong returns throughout various business cycles. The Organizational Transactions Wayzata Opportunities Fund II, L.P. and Wayzata Opportunities Fund Offshore II, L.P., private investment funds managed by Wayzata Investment Partners LLC (collectively, "Wayzata"), formed Neff Corporation as a Delaware corporation on August 18, 2014 to serve as the issuer of the Class A common stock offered hereby. On or prior to the closing of this offering we will consummate the following organizational transactions: we will amend the Neff Holdings LLC Agreement (as defined below) to, among other things, (i) provide for common units, (ii) convert Wayzata's existing membership interest in Neff Holdings and membership interests underlying certain existing options granted by Neff Holdings into common units and (iii) appoint Neff Corporation as the sole managing member of Neff Holdings upon its acquisition of such common units; we will amend and restate Neff Corporation's certificate of incorporation to, among other things, (i) provide for Class A common stock and Class B common stock and (ii) convert Wayzata's equity interests in Neff Corporation into shares of Class B common stock; we will issue 10,476,190 shares of our Class A common stock to the purchasers in this offering (or 12,047,618 shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in exchange for net proceeds, which we define as the gross proceeds of this offering less underwriting discounts and commissions but before other offering expenses, of approximately $204.6 million (or approximately $235.3 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock); we will use the net proceeds from this offering (excluding any net proceeds from any exercise of the underwriters' option to purchase additional shares of Class A common stock) as follows (i) to purchase 2,142,857 common units of Neff Holdings directly from Wayzata at a price per unit equal to the initial public offering price per share of Class A common stock in this offering less the underwriting discounts and commissions, in an amount aggregating $41.8 million, and (ii) to purchase 8,333,333 common units directly from Neff Holdings at the same price per unit, collectively representing 45.0% of Neff Holdings' outstanding common units, in an amount aggregating $162.8 million; we will use the net proceeds, if any, received upon any exercise of the underwriters' option to purchase additional shares of Class A common stock to purchase additional common units directly from Neff Holdings at a price per unit equal to the initial public offering price per share of Class A common stock in this offering less the underwriting discounts and commissions; to the extent the underwriters exercise in full their option to purchase additional shares of Class A common stock, we would acquire a total of 48.5% of Neff Holdings' outstanding common units; Neff Holdings will use the net proceeds from the sale of common units to Neff Corporation to (i) repay or prepay certain indebtedness (including any prepayment premium) and (ii) pay the other fees and expenses from this offering. See "Use of Proceeds"; Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934 (the "Exchange Act"). (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents we will grant stock options and restricted stock units covering a total of 139,466 shares of our Class A common stock to certain of our directors and certain of our employees as described under the captions "Executive Compensation Director Compensation Following this Offering" and "Executive Compensation Offering Grants to Employees under the 2014 Incentive Award Plan"; existing options to purchase 1,264,985 common units in Neff Holdings will remain outstanding; and Neff Corporation will enter into a registration rights agreement (the "Registration Rights Agreement") with Wayzata and the individuals who hold existing options granted by Neff Holdings (collectively, our "existing owners") and a tax receivable agreement (the "Tax Receivable Agreement") with our existing owners. For a description of the terms of the Registration Rights Agreement and the Tax Receivable Agreement, see "Certain Relationships and Related Party Transactions." We collectively refer to the foregoing transactions as the "Organizational Transactions." Immediately following the completion of this offering and the Organizational Transactions: Neff Corporation will be a holding company and the sole material asset of Neff Corporation will be common units of Neff Holdings; Neff Corporation will be the sole managing member of Neff Holdings and will control the business and affairs of Neff Holdings and its subsidiaries; Neff Corporation will own 10,476,190 common units of Neff Holdings representing approximately 45.0% of Neff Holdings' total outstanding membership units (or approximately 48.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock); Wayzata will own 12,808,768 common units of Neff Holdings representing approximately 55.0% of Neff Holdings' total outstanding membership units (or approximately 51.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Each common unit held by Wayzata or acquired by individuals upon exercise of existing options granted by Neff Holdings will be redeemable, at the election of such member, for, at Neff Corporation's option, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to a volume-weighted average market price of one share of Class A common stock for each common unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the Neff Holdings LLC Agreement; provided that, at Neff Corporation's election, Neff Corporation may effect a direct exchange of such Class A common stock or such cash for such common units. See "Certain Relationships and Related Party Transactions Neff Holdings LLC Agreement"; the purchasers in this offering (i) will own 10,476,190 shares of Neff Corporation's Class A common stock, representing approximately 45.0% of the combined voting power of all of Neff Corporation's common stock (or approximately 48.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and (ii) through Neff Corporation's ownership of Neff Holdings' common units, indirectly will hold approximately 45.0% of the economic interest in the business of Neff Holdings and its subsidiaries (or 48.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock); Wayzata, through (i) its ownership of Neff Corporation's Class B common stock, will have approximately 55.0% of the combined voting power of all of Neff Corporation's common stock (or approximately 51.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and (ii) its ownership of Neff Holdings' common units, will hold approximately 55.0% of the economic interest in the business of Neff Holdings and its subsidiaries The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents (or approximately 51.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and certain individuals who hold existing options granted by Neff Holdings will have the right to acquire 1,264,985 common units of Neff Holdings which, if such existing options were exercised in full, would represent approximately 5.2% of the economic interest in the business of Neff Holdings and its subsidiaries on a fully diluted basis. As a result of the Organizational Transactions, Neff Corporation will hold a 45.0% economic interest in Neff Holdings, even though it will be purchasing units in Neff Holdings for cash. Neff Holdings currently has negative members' equity and Neff Corporation will acquire a 45.0% interest in the Neff Holdings members' deficit that exists as of the date of the closing of this offering. The Neff Holdings members' deficit was $(324.1) million as of September 30, 2014 and will be $(190.6) million on a pro forma basis after giving effect to the Organizational Transactions (including this offering). See "Unaudited Pro Forma Condensed Consolidated Financial Statements." For more information regarding our structure, see "Our Organizational Structure." Table of Contents PROSPECTUS (Subject to Completion) Issued November 19, 2014 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. 10,476,190 Shares Neff Corporation CLASS A COMMON STOCK *Options and restricted stock units over shares of Class A common stock to be granted concurrently with the consummation of this offering. **Includes 1,145,328 options over common units which are expected to be vested as of the consummation of this offering. Our Sponsor Neff Holdings is owned by Wayzata Opportunities Fund II, L.P. and Wayzata Opportunities Fund Offshore II, L.P., which are investment funds managed by Wayzata Investment Partners LLC ("Wayzata Investment Partners"). Wayzata Investment Partners was formed in May 2004 and is based in Wayzata, Minnesota. The senior management team at Wayzata Investment Partners has significant experience in investing in alternative investments. After completion of this offering, Wayzata will continue to control a majority of the voting power of our outstanding common stock. For a discussion of certain risks, potential conflicts and other matters associated with Wayzata's control, see "Risk Factors Risks Relating to Our Organizational Structure Wayzata will continue to have substantial control over us after this offering including over decisions that require the approval of stockholders, and its interest in our business may conflict with yours." Neff Corporation is offering 10,476,190 shares of its Class A common stock. This is our initial public offering and no public market currently exists for our Class A common stock. The initial public offering price is expected to be between $20.00 and $22.00 per share. Table of Contents Implications of Being an Emerging Growth Company As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), under the rules and regulations of the SEC. An emerging growth company may take advantage of specified reduced reporting and other requirements 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 management's discussion and analysis of financial condition and results of operations disclosure; reduced disclosure obligations regarding executive compensation in periodic reports; no requirement for non-binding advisory votes on executive compensation or golden parachute arrangements; and an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. In future years, we will cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt securities over a three-year period. We may choose to take advantage of some but not all of these reduced requirements. We have elected to take advantage of certain of the reduced disclosure obligations regarding financial statements and executive compensation in this prospectus and may elect to take advantage of other reduced requirements in future filings. As a result, the information we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. The JOBS Act permits an EGC like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to take advantage of this provision and, as a result, we will not be required to comply with new or revised accounting standards until those standards would otherwise apply to private companies. Corporate Information Neff Corporation is a Delaware corporation. Our principal executive offices are located at 3750 N.W. 87th Avenue, Suite 400, Miami, Florida 33178, and our telephone number is (305) 513-3350. Our website address is www.neffrental.com. The information contained on, or accessible through, our website is not incorporated into this prospectus and is not part of this prospectus. After giving effect to the Organizational Transactions, Neff Corporation will be a holding company whose only asset will be 45.0% of the outstanding common units of Neff Holdings, a Delaware limited liability company (or 48.5% if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Neff Holdings was formed by Wayzata to acquire our business in the bankruptcy proceedings of Neff Holdings Corp. pursuant to a plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code. The acquisition was completed on October 1, 2010. We refer to Neff Holdings Corp. and certain of its affiliates as our "Prior Predecessor."
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should read the entire prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the information set forth under the headings "Risk Factors" and "Management s Discussion and Analysis of Financial Condition and Results of Operations." When used herein, unless the context requires otherwise, references to the "Company", "Holdings," "we," "our" and "us" refer to Corbus Pharmaceuticals Holdings, Inc., a Delaware corporation, collectively with its wholly-owned subsidiary, Corbus Pharmaceuticals, Inc., a Delaware corporation. Our Company General We are a clinical stage biopharmaceutical company, focused on the development and commercialization of novel therapeutics to treat rare, life-threating inflammatory-fibrotic diseases with clear unmet medical needs. Our product Resunab is a novel oral anti-inflammatory drug that is expected to commence Phase IIa clinical trials for the treatment of cystic fibrosis and scleroderma, pending U.S. Food and Drug Administration, or FDA, approval of an Investigational New Drug Application, or IND, which we expect to file with the scleroderma clinical protocol before the end of 2014. We intend to seek orphan drug status for Resunab for the treatment of cystic fibrosis and diffuse scleroderma, which, if approved by the FDA, will provide us with seven years of market exclusivity in the United States under the Orphan Drug Act. Inflammation is a natural defense mechanism carried out by our immune system to protect our bodies from infection and injury. However, under certain circumstances inflammation is triggered but is unable to be resolved, resulting in a chronic inflammatory disease. Since each organ in the body is capable of protecting itself from infection and injury by recruiting inflammatory cells to its site, each organ can therefore suffer from excessive inflammation leading to inflammatory diseases that may cause discomfort, pain, loss of organ function, disability or even death. There are hundreds of inflammatory diseases, many of which are chronic, life-long and incurable. A key aspect of the body s inflammatory response is the recruitment of inflammatory cells to the site of tissue infection/injury whereupon these cells act to destroy the infection and/or repair tissue damage. The signaling pathway that modulates the inflammatory response involves the production of bioactive lipids termed eicosanoids by the enzymes COX and LOX, resulting in pro-inflammatory mediators as shown in Figure 1 below. These mediators trigger the activation and maintenance of a cellular inflammatory state resulting in the further generation of pro-inflammatory mediators termed cytokines. This fundamental pathway is involved in a wide spectrum of inflammatory diseases. While the onset of inflammation has been well understood for some time, the mechanisms that resolve inflammation have only recently been discovered. This "resolution pathway" involves shifting the production of pro-inflammatory eicosanoids by the COX and LOX enzymes to the production of anti-inflammatory eicosanoids. These anti-inflammatory eicosanoids act to resolve inflammation and promote tissue healing. The lack of sufficient inflammatory resolution is a key contributor to many chronic inflammatory diseases. Resunab is a synthetic oral small molecule that selectively binds to CB2 receptors found on immune cells. The CB2 receptor plays a natural role in modulating and resolving inflammation by, in effect, turning inflammation "off." Through activation of CB2, Resunab stimulates the production of anti-inflammatory mediators and causes a concomitant reduction in pro-inflammatory mediators and cytokines. Because it acts through this natural resolving pathway, Resunab offers a new mechanism to potentially treat a wide spectrum of chronic inflammatory diseases in which the resolution of inflammation (the "off" switch) fails to occur. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any state where the offer or sale is not permitted. Preliminary Prospectus Subject to Completion, dated October 2, 2014 Corbus Pharmaceuticals Holdings, Inc. 20,206,636 Shares Common Stock This prospectus relates to the offer for sale of up to an aggregate of 20,206,636 shares of common stock of Corbus Pharmaceuticals Holdings, Inc. by the selling stockholders named herein. We are not offering any securities pursuant to this prospectus. The shares of common stock offered by the selling stockholders include 10,731,636 shares of common stock underlying warrants with an exercise prices ranging from $0.60 to $1.00 per share. Our common stock is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the trading of our common stock on the Over-the-Counter, or OTC, Bulletin Board and/or OTCQB Market upon the effectiveness of the registration statement of which this prospectus forms a part. The 20,206,636 shares of our common stock can be sold by selling security holders at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB Market and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, or FINRA, nor can we provide assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB Market or, if quoted, that a viable public market will materialize or be sustained. On September 23, 2014, our board of directors approved a reverse stock split within a range of 1:1.25 to 1:5 (the "reverse stock split range") and we are currently seeking approval of the reverse stock split range from our stockholders. We are seeking approval of our stockholders to provide our board of directors with flexibility to effect a reverse stock split within the reverse stock split range as it may deem advisable. We do not expect to effect a reverse stock split within the reverse stock split range prior to the effectiveness of the registration statement of which this prospectus is a part, but we may do so in the future. Following the effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered hereby may be effected in one or more transactions that may take place on the OTC Bulletin Board and/or OTCQB Market, including ordinary brokers transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling stockholders. See "Plan of Distribution." Certain of the selling stockholders and intermediaries, who are identified as broker-dealers in the footnotes to the selling stockholder table contained in this prospectus, through whom such securities are sold are deemed "underwriters" within the meaning of the Securities Act of 1933, as amended, with respect to the securities offered hereby, and any profits realized or commissions received may be deemed underwriting compensation. We believe that all securities purchased by broker-dealers or affiliates of broker-dealers were purchased by such persons and entities in the ordinary course of business and at the time of purchase, such purchasers did not have any agreements or understandings, directly or indirectly, with any person to distribute such securities. We are an "emerging growth company" under the federal securities laws and, as such, we intend to comply with certain reduced public company reporting requirements. Investing in our common stock is highly speculative and involves a significant degree of risk. See "Risk Factors" beginning on page 8 of this prospectus for a discussion of information that should be considered before making a decision to purchase our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is ______________, 2014. Figure 1: the ON and OFF cellular inflammatory pathways In many chronic diseases unresolved inflammation causes progressive damage to tissues and organs resulting in excessive tissue scarring (fibrosis) that leads to organ failure and death. Examples of such chronic diseases include cystic fibrosis, scleroderma, liver cirrhosis and non-alcoholic steatohepatitis, or NASH, chronic kidney disease, muscular dystrophies, rheumatoid arthritis, systemic lupus erythematosus and myositis. Resunab has demonstrated pre-clinical efficacy in a number of inflammatory and fibrotic disease animal models. In inflammatory models it was shown to reduce the migration of inflammatory cells into the site of inflammation, stimulate the production of the resolving, or anti-inflammatory, eicosanoids, and down-regulate and reduce pro-inflammatory mediators and cytokines. In fibrosis models it was shown to reduce tissue collagen production, tissue fibrosis, stimulate the production of the resolving, or anti-inflammatory, eicosanoids and reduce the pro-fibrotic cytokine TGF-beta. The net result is that Resunab - through activation of CB2 - triggers a natural inflammatory resolution pathway and is therefore expected to offer a new and promising mechanism for the potential treatment of chronic inflammation and fibrosis. Our Pipeline The development status of Resunab is summarized below: Figure 2: Drug developmental pipeline TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+Prospectus Summary 1
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+The following summary highlights certain information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and consolidated financial statements included elsewhere in this prospectus. Because this is a summary, it may not contain all of the information that is important to you in making a decision to invest in our ordinary shares. Before making an investment decision, you should carefully read the entire prospectus, including the Risk Factors and Important Information and Cautionary Statement Regarding Forward-Looking Statements sections, our audited combined and consolidated financial statements and the notes to those statements. Unless the context indicates otherwise, when we refer to we, our, us, successor and the Company for purposes of this prospectus, we are referring to Constellium N.V. and its consolidated subsidiaries. We refer to volumes for the nine month period ended September 30, 2013 as nine-month 2013 volumes . On January 4, 2011, Omega Holdco B.V., which later changed its name to Constellium Holdco B.V., and then again to Constellium N.V., acquired the Alcan Engineered Aluminum Products business unit (the AEP Business or the Predecessor ) from affiliates of Rio Tinto (the Acquisition ). For comparison purposes, our results of operations for the years ended December 31, 2011 and 2012 and for the nine months ended September 30, 2012 and 2013 are presented alongside the results of operations of the Predecessor for the year ended December 31, 2010. However, our Successor and Predecessor periods are not directly comparable due to the impact of the application of purchase accounting and the preparation of the Predecessor accounts on a carve-out basis. The financial position, results of operations and cash flows of the Predecessor do not necessarily reflect what our financial position or results of operations would have been if we had been operated as a standalone entity during the periods covered by the Predecessor financial statements and are not indicative of our future results of operations and financial position. Management Adjusted EBITDA and Adjusted EBITDA are defined and discussed in footnotes (2) and (3) to the Summary Consolidated Historical Financial Data. Management Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of Operations Key Performance Indicators. Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of Operations Covenant Compliance and Financial Ratios. The Company Overview We are a global leader in the design and manufacture of a broad range of innovative specialty rolled and extruded aluminum products, serving primarily the aerospace, packaging and automotive end-markets. We have a strategic footprint of manufacturing facilities located in the United States, Europe and China. Our business model is to add value by converting aluminum into semi-fabricated products. We believe we are the supplier of choice to numerous blue-chip customers for many value-added products with performance-critical applications. Our product portfolio commands higher margins as compared to less differentiated, more commoditized fabricated aluminum products, such as common alloy coils, paintstock, foilstock and soft alloys for construction and distribution. As of December 31, 2013, we operate 23 production facilities, 10 administrative and commercial sites and one research and development ( R&D ) center and have approximately 8,600 employees. We believe our portfolio of flexible and integrated facilities is among the most technologically advanced in the industry. It is our view that our established presence in the United States and Europe and our growing presence in China strategically position us to service our global customer base. For example, based on information available to us as a market participant, we believe we are one of only two suppliers of aluminum products to the aerospace 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 U.S. 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. Subject to Completion, dated February 3, 2014 PROSPECTUS 37,561,475 Class A Ordinary Shares Constellium N.V. (Incorporated in the Netherlands) This prospectus relates to the offering of up to 37,561,475 shares of our Class A ordinary shares, nominal value 0.02 per share, by the selling shareholder identified in this prospectus. Throughout this prospectus, we refer to our Class A ordinary shares, nominal value 0.02 per share, as ordinary shares. We will not receive any of the proceeds from the sale of our ordinary shares being sold by the selling shareholder. From the date of this prospectus, the selling shareholder may offer the ordinary shares from time to time in amounts, at prices and on terms determined by market conditions at the time of the offering. The sales may be effected in one or more transactions, on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise. The selling shareholder may sell the ordinary shares directly or alternatively through underwriters, broker-dealers or agents it selects. These transactions may include block transactions or crosses (transactions in which the same broker acts as an agent on both sides of the trade). If the selling shareholder uses an underwriter or underwriters for any offering, except to the extent otherwise set forth in a prospectus supplement, the selling shareholder will agree in an underwriting agreement to sell to the underwriter(s), and the underwriter(s) will agree to purchase from the selling shareholder, the number of ordinary shares set forth in the prospectus supplement for the offering. Any such underwriter(s) may offer our ordinary shares from time to time for sale in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The underwriter(s) may also propose initially to offer the ordinary shares to the public at a fixed public offering price set forth on the cover page of the prospectus supplement. If the selling shareholder uses underwriters, broker-dealers or agents to sell the ordinary shares, we will name them and describe their compensation in a prospectus supplement. For more information regarding the sales of ordinary shares by the selling shareholder pursuant to this prospectus, please read Plan of Distribution. Our ordinary shares are listed on the New York Stock Exchange and Euronext Paris under the symbol CSTM. The last reported closing price of our ordinary shares on the New York Stock Exchange on February 3, 2014 was $25.44 per share. Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Investing in our ordinary shares involves risks. See Risk Factors beginning on page 26 of this prospectus. The date of this prospectus is February , 2014. Table of Contents This prospectus is part of a shelf registration statement that we have filed with the Securities and Exchange Commission (the SEC ) using a shelf registration process. Under this shelf registration process, the selling shareholder may, from time to time, offer and sell the ordinary shares described in this prospectus and in an accompanying prospectus supplement in one or more offerings. This prospectus provides you with a general description of the ordinary shares the selling shareholder may offer. Each time the selling shareholder sells our ordinary shares using this prospectus, to the extent necessary, we will provide a prospectus supplement that will contain specific information about the terms of that offering, including the number of shares being offered, the manner of distribution, the identity of any underwriters or other counterparties and other specific terms related to the offering. The prospectus supplement may also add, update or change information contained in this prospectus. To the extent that any statement made in an accompanying prospectus supplement is inconsistent with statements made in this prospectus, the statements made in this prospectus will be deemed modified or superseded by those made in the accompanying prospectus supplement. You should read both this prospectus and any prospectus supplement together. Neither we nor the selling shareholder have authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. Neither we nor the selling shareholder take any responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the selling shareholder have not authorized any other person to provide you with different or additional information, and neither of us are making an offer to sell the ordinary shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of the prospectus or any sale of the ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. For investors outside of the United States, neither we nor the selling shareholder have done anything that would permit the offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to the offering and the distribution of this prospectus outside of the United States. Table of Contents market with facilities in both the United States and Europe. We believe this gives us a key competitive advantage in servicing the needs of our aerospace customers, including Airbus S.A.S. and The Boeing Company. We believe our well-invested facilities combined with more than 50 years of manufacturing experience, quality and innovation and pre-eminent R&D capabilities have put us in a leadership position in our core markets. We seek to sell to end-markets that have attractive characteristics for aluminum, including (i) higher margin products, (ii) stability through economic cycles and (iii) favorable growth fundamentals, such as customer order backlogs in aerospace and substitution trends in automotive and European can sheet. We are the leading global supplier of aluminum aerospace plates, the leading European supplier of can body stock and a leading global supplier of automotive structures. Our unique platform has enabled us to develop a stable and diversified customer base and to enjoy long-standing relationships with our largest customers. Our relationships with our top 20 customers average over 25 years. Our customer base includes market leading firms in aerospace, packaging, and automotive including Airbus, Boeing, Rexam PLC, Ball Corporation, Crown Holdings, Inc., and several premium automotive original equipment manufacturers, or OEMs, including BMW AG, Mercedes-Benz and Volkswagen AG. We believe that we are a mission critical supplier to many of our customers due to our technological and R&D capabilities as well as the lengthy and complex qualification process required for many of our products. Our core products require close collaboration and, in many instances, joint development with our customers. For the years ended December 31, 2012, 2011 and 2010, we shipped approximately 1,033 kt, 1,058 kt and 972 kt of finished products, generated revenues of 3,610 million, 3,556 million and 2,957 million, generated profits of 134 million and incurred losses of 174 million and 207 million for the periods, respectively, and generated Adjusted EBITDA of 228 million, 160 million and 48 million, respectively. For the nine months ended September 30, 2013 and 2012, we shipped 791 kt and 798 kt of finished products, generated revenues of 2,689 million and 2,796 million, generated profits of 67 million and 85 million and generated Adjusted EBITDA of 221 million and 181 million, respectively. The financial performance for the year ended December 31, 2012 represented a 2% decrease in shipments, a 2% increase in revenues and a 43% increase in Adjusted EBITDA from the prior year. The financial performance for the nine months ended September 30, 2013 represented a 1% decrease in shipments, a 4% decrease in revenues and a 22% increase in Adjusted EBITDA in comparison to the nine months ended September 30, 2012. Please see the reconciliation of Adjusted EBITDA in Management s Discussion and Analysis Management Adjusted EBITDA Reconciliation and footnote (3) to Summary Consolidated Historical Financial Data. Our Operating Segments Our business is organized into three operating segments: (i) Aerospace & Transportation, (ii) Packaging & Automotive Rolled Products, and (iii) Automotive Structures & Industry. Table of Contents MARKET AND INDUSTRY DATA This prospectus includes estimates of market share and industry data and forecasts that we have obtained from industry publications, surveys and forecasts, as well as from internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. However, we and the selling shareholder have not independently verified any of the data from third-party sources, nor have we or the selling shareholder ascertained the underlying economic assumptions relied upon therein. In addition, this prospectus includes market share and industry data that we have prepared primarily based on our knowledge of the industry in which we operate. Statements as to our market position relative to our competitors are based on volume (by tons) for the year ended December 31, 2012 or December 31, 2013, and unless otherwise noted, internal analysis and estimates may not have been verified by independent sources. Our estimates, in particular as they relate to market share and our general expectations, involve risks and uncertainties and are subject to change based on various factors, including those discussed in the section entitled Risk Factors. All information regarding our market and industry is based on the latest data currently available to us, which in some cases may be several years old. In addition, some of the data and forecasts that we have obtained from industry publications and surveys and/or internal company sources are provided in foreign currencies. BASIS OF PREPARATION Unless the context indicates otherwise, when we refer to we, our, us, Constellium and the Company in this prospectus, we are referring to Constellium N.V. and its subsidiaries. We refer to volumes for the nine month period ended September 30, 2013 as nine-month 2013 volumes . On January 4, 2011, Omega Holdco B.V., which later changed its name to Constellium Holdco B.V., and then again to Constellium N.V. (the Successor ), acquired the Alcan Engineered Aluminum Products business unit (the AEP Business or the Predecessor ) from affiliates of Rio Tinto (the Acquisition ). The Predecessor s financial information has been derived from the audited combined financial statements as of and for the year ended December 31, 2010 included elsewhere in this prospectus. The Predecessor s financial information has been prepared on a carve-out basis from the accounting records of Rio Tinto to present the assets, liabilities, revenues and expenses of the combined AEP Business up to the date of the divestment. For more information regarding arrangements between Constellium and Rio Tinto regarding preparation of the financial statements, see Certain Relationships and Related Party Transactions Agreement Relating to 2009 and 2010 Financial Statements. The financial information of Constellium N.V. and its subsidiaries after the Acquisition has been derived from the audited consolidated financial statements as of and for the years ended December 31, 2011 and 2012 and from the unaudited condensed interim consolidated financial statements as of September 30, 2013 and for the nine months ended September 30, 2012 and 2013 included elsewhere in this prospectus. For comparison purposes, our results of operations for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013 are presented alongside the results of operations of the Predecessor for the year ended December 31, 2010. However, it should be noted that the comparability of our Successor periods to the Predecessor periods are impacted by the application of purchase accounting and the fact that the Predecessor accounts were prepared on a carve-out basis. The financial position, results of operations and cash flows of the Predecessor do not necessarily reflect what our financial position or results of operations would have been if we had been operated as a standalone entity during the periods covered by the audited combined financial statements and are not indicative of our future results of operations and financial position. As of December 30, 2011, we disposed of a number of entities in one of our operating segments, the specialty chemicals and raw materials supply chain services division, Alcan International Network ( AIN ). These operations have been classified as discontinued operations in the audited financial statements for the year Table of Contents The following charts present our revenues by operating segment and geography for the nine months ended September 30, 2013: 1 Revenue by geographic zone is based on the destination of the shipment. Aerospace & Transportation Operating Segment ( A&T ) Our Aerospace & Transportation operating segment has market leadership positions in technologically advanced aluminum and specialty materials products with wide applications across the global aerospace, defense, transportation, and industrial sectors. We offer a wide range of products including plate, sheet, extrusions and precision casting products which allows us to offer tailored solutions to our customers. We seek to differentiate our products and act as a key partner to our customers through our broad product range, advanced R&D capabilities, extensive recycling capabilities and portfolio of plants with an extensive range of capabilities across North America and Europe. In order to reinforce the competitiveness of our metal solutions, we design our processes and alloys with a view to optimizing our customers operations and costs. This includes offering services such as customizing alloys to our customers processing requirements, processing short lead time orders and providing vendor managed inventories or tolling arrangements. The Aerospace & Transportation operating segment accounted for 33% of our revenues and 45% of Management Adjusted EBITDA for the year ended December 31, 2012 and 34% of our revenues and 43% of Management Adjusted EBITDA for the nine months ended September 30, 2013. Eight of our manufacturing facilities produce products that are sold via our Aerospace & Transportation operating segment. Our aerospace plate manufacturing facilities in Ravenswood (West Virginia, United States), Issoire (France) and Sierre (Switzerland) offer the full spectrum of plate required by the aerospace industries (alloys, temper, dimensions, pre-machined) and have unique capabilities such as producing some wide and very high gauge plates required for some aerospace programs (civil and commercial). Sierre is in the process of becoming a new qualified aerospace heat treat plate mill. A step in this process was successfully achieved with the agreement in February 2013 by one of the largest commercial aircraft manufacturers to authorize Sierre to become a rolling and heat treat subcontractor of Issoire. We expect Sierre to become a fully qualified source for aerospace plate in 2015. Downstream aluminum products for the aerospace market require relatively high levels of R&D investment and advanced technological capabilities, and therefore tend to command higher margins compared to more Table of Contents ended December 31, 2011 and 2012 and the unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2012 and 2013 and also represented as discontinued operations in the audited combined financial statements for the year ended December 31, 2010. The assets and liabilities of AIN have not been presented as held for sale in the combined financial statements as of and for the year ended December 31, 2010 as AIN did not meet the criteria for such classification as of December 31, 2010. TRADEMARKS We have proprietary rights to trademarks used in this prospectus which are important to our business, many of which are registered under applicable intellectual property laws. Solely for convenience, trademarks and trade names 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 possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this prospectus is the property of its respective holder. Table of Contents commoditized products. We work in close collaboration with our customers to develop highly engineered solutions to fulfill their specific requirements. For example, we developed AIRWARE , a lightweight specialty aluminum-lithium alloy, for our aerospace customers to address demand for lighter and more environmentally sound aircraft; it combines optimized density, corrosion resistance and strength in order to achieve up to 25% weight reduction compared to other aluminum products and significantly higher corrosion and fatigue resistance than equivalent composite products. In addition, unlike composite products, any scrap produced in the AIRWARE manufacturing process can be fully recycled, which reduces production costs. Since the opening of our AIRWARE casthouse in Issoire, we are the first company to commercialize and produce AIRWARE on an industrial scale, and the material is currently being used on a number of major aircraft models, including the newest Airbus A350 XWB aircraft, the fuselage of Bombardier s single-aisle twinjet C-Series short-haul planes, the Airbus A380 and the Boeing 787 Dreamliner. Our customer base includes Airbus, Boeing, Embraer, Dassault, Bombardier and Lockheed Martin. Aerospace products are typically subject to long qualification, development and supply lead times and the majority of our contracts with our largest aerospace customers have a term of five years or longer, which provides excellent volume and profitability visibility. In addition, demand for our aerospace products typically correlates directly with aircraft backlogs and build rates. As of August 2013, the backlog reported by Airbus and Boeing for commercial aircraft reached 9,935 units on a combined basis, representing approximately eight years of production at current build rates. The following table summarizes our volume, revenues, Management Adjusted EBITDA and Adjusted EBITDA for our Aerospace & Transportation operating segment for the periods presented: ( in millions, unless otherwise noted) Predecessor for the year ended December 31, Successor for the year ended December 31, Successor for the nine months ended September 30, 2010 2011 2012 2012 2013 Aerospace & Transportation: Segment Revenues 810 1,016 1,182 916 904 Segment Shipments (kt) 195 216 223.7 171 183 Segment Revenues ( /ton) 4,154 4,704 5,284 5,357 4,940 Segment Management Adjusted EBITDA(1) 35 26 92 65 80 Segment Management Adjusted EBITDA ( /ton) 179 120 411 380 438 Segment Management Adjusted EBITDA margin (%)(2) 4 % 3 % 8 % 7 % 9 % Segment Adjusted EBITDA(3) 36 41 105 78 91 (1) Management Adjusted EBITDA is not a measure defined under IFRS. Please see the reconciliation in Management s Discussion and Analysis of Financial Condition and Results of Operations Key Performance Indicators and also in footnote (2) to Summary Consolidated Historical Financial Data. (2) Management Adjusted EBITDA margin (%) is not a measure defined under IFRS. Management Adjusted EBITDA margin (%) is defined as Management Adjusted EBITDA as a percentage of Segment Revenue. (3) Adjusted EBITDA is not a measure defined under IFRS. Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of Operations Management Adjusted EBITDA Reconciliation. Please see the reconciliation in that section and in footnote (3) to Summary Consolidated Historical Financial Data. Packaging & Automotive Rolled Products Operating Segment ( P&ARP ) In our Packaging & Automotive Rolled Products operating segment, we produce and develop customized aluminum sheet and coil solutions. Approximately 83% of operating segment volume for the nine months ended September 30, 2013 was in packaging applications, which primarily include beverage and food can stock, as well Table of Contents as closure stock and foil stock. The remaining 17% of operating segment volume for that period was in automotive and customized solutions, which include technologically advanced products for the automotive and industrial sectors. Our Packaging & Automotive Rolled Products operating segment accounted for 43% of revenues and 39% of Management Adjusted EBITDA for the year ended December 31, 2012 and 43% of our revenues and 34% of Management Adjusted EBITDA for the nine months ended September 30, 2013. We are the leading European supplier of can body stock and the leading worldwide supplier of closure stock. We are also a major European player in automotive rolled products for Auto Body Sheet (the structural framework of a car) and heat exchangers. We have a diverse customer base, consisting of many of the world s largest beverage and food can manufacturers, specialty packaging producers, leading automotive firms and global industrial companies. Our customer base includes Rexam PLC, Audi AG, Daimler AG, Peugeot S.A., Ball Corporation, Can-Pack S.A., Crown Holdings, Inc., Alanod GmbH & Co. KG, Ardagh Group S.A., Amcor Ltd. and ThyssenKrupp AG. We have two integrated rolling operations located in Europe s industrial heartland. Neuf-Brisach, our facility on the border of France and Germany, is, in our view, a uniquely integrated aluminum rolling and finishing facility. Singen, located in Germany, is specialized in high-margin niche applications and has an integrated hot/cold rolling line and high-grade cold mills with special surfaces capabilities that facilitate unique metallurgy and lower production costs. We believe Singen has enhanced our reputation in many product areas, most notably in the area of functional high-gloss surfaces for the automotive, lighting, solar and cosmetic industries, other decorative applications, closure stock, paintstock and foilstock. Our Packaging & Automotive Rolled Products operating segment has historically been relatively resilient during periods of economic downturn and has had relatively limited exposure to economic cycles and periods of financial instability. According to CRU, during the 2008-2009 economic crisis, can stock volumes decreased by 10% in 2009 versus 2007 levels as compared to a 24% decline for flat rolled aluminum products volumes in aggregate during the same period. This demonstrates that demand for beverage cans tends to be less correlated with general economic cycles. In addition, we believe European can body stock has an attractive long-term growth outlook due to the following trends: (i) end-market growth in beer, soft drinks and energy drinks, (ii) increasing use of cans versus glass in the beer market, (iii) increasing use of aluminum in can body stock in the European market, at the expense of steel, and (iv) increasing consumption in eastern Europe linked to purchasing power growth. The following table summarizes our volume, revenues, Management Adjusted EBITDA and Adjusted EBITDA for our Packaging & Automotive Rolled Products operating segment for the periods presented: ( in millions, unless otherwise noted) Predecessor for the year ended December 31, Successor for the year ended December 31, Successor for the nine months ended September 30, 2010 2011 2012 2012 2013 Packaging & Automotive Rolled Products: Segment Revenues 1,373 1,625 1,554 1,205 1,159 Segment Shipments (kt) 588 621 606 468 464 Segment Revenues ( /ton) 2,335 2,617 2,566 2,575 2,498 Segment Management Adjusted EBITDA(1) 74 63 80 64 64 Segment Management Adjusted EBITDA ( /ton) 126 101 132 137 138 Segment Management Adjusted EBITDA margin(%)(2) 5 % 4 % 5 % 5 % 6 % Segment Adjusted EBITDA(3) 46 95 92 74 85 Table of Contents (1) Management Adjusted EBITDA is not a measure defined under IFRS. Please see the reconciliation in Management s Discussion and Analysis of Financial Condition and Results of Operations Key Performance Indicators and also in footnote (2) to Summary Consolidated Historical Financial Data. (2) Management Adjusted EBITDA margin (%) is not a measure defined under IFRS. Management Adjusted EBITDA margin (%) is defined as Management Adjusted EBITDA as a percentage of Segment Revenue. (3) Adjusted EBITDA is not a measure defined under IFRS. Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of Operations Management Adjusted EBITDA Reconciliation. Please see the reconciliation in that section and in footnote (3) to Summary Consolidated Historical Financial Data. Automotive Structures & Industry Operating Segment ( AS&I ) Our Automotive Structures & Industry operating segment produces (i) technologically advanced structures for the automotive industry including crash management systems, side impact beams and cockpit carriers and (ii) soft and hard alloy extrusions and large profiles for automotive, rail, road, energy, building and industrial applications. We complement our products with a comprehensive offering of downstream technology and services, which include pre-machining, surface treatment, R&D and technical support services. Our Automotive Structures & Industry operating segment accounted for 24% of revenues and 20% of Management Adjusted EBITDA for the year ended December 31, 2012 and 23% of our revenues and 21% of Management Adjusted EBITDA for the nine months ended September 30, 2013. We believe that we are the second largest provider of automotive structures in the world and the leading supplier of hard alloys and large profiles for industrial and other transportation markets in Europe. We manufacture automotive structures products for some of the largest European and North American car manufacturers supplying a global market, including Daimler AG, BMW AG, Audi AG, Chrysler Group LLC and Ford Motor Co. We also have a strong presence in soft alloys in France and Germany, with customized solutions for a diversity of end-markets. Fifteen of our manufacturing facilities, located in Germany, the United States, the Czech Republic, Slovakia, France, Switzerland and China, produce products sold in our Automotive Structures & Industry operating segment. We believe our local presence, downstream services and industry leading cycle times help to ensure that we respond to our customer demands in a timely and consistent fashion. Our two integrated remelt and casting centers in Switzerland and the Czech Republic both provide security of metal supply and contribute to our recycling efforts. The following table summarizes our volume, revenues, Management Adjusted EBITDA and Segment Adjusted EBITDA for our Automotive Structures & Industry operating segment for the periods presented: ( in millions, unless otherwise noted) Predecessor for the year ended December 31, Successor for the year ended December 31, Successor for the nine months ended September 30, 2010 2011 2012 2012 2013 Automotive Structures & Industry: Segment Revenues 754 910 861 663 612 Segment Shipments (kt) 212 219 206 159 146 Segment Revenues ( /ton) 3,557 4,155 4,180 4,170 4,192 Segment Management Adjusted EBITDA(1) -4 20 40 32 40 Segment Management Adjusted EBITDA ( /ton) -19 91 194 201 275 Segment Management Adjusted EBITDA margin (%)(2) -1 % 2 % 5 % 5 % 7 % Segment Adjusted EBITDA(3) -11 37 46 39 46 Table of Contents (1) Management Adjusted EBITDA is not a measure defined under IFRS. Please see the reconciliation in Management s Discussion and Analysis of Financial Condition and Results of Operations Key Performance Indicators and also in footnote (2) to Summary Consolidated Historical Financial Data. (2) Management Adjusted EBITDA margin (%) is not a measure defined under IFRS. Management Adjusted EBITDA margin (%) is defined as Management Adjusted EBITDA as a percentage of Segment Revenue. (3) Adjusted EBITDA is not a measure defined under IFRS. Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of Operations Management Adjusted EBITDA Reconciliation. Please see the reconciliation in that section and in footnote (3) to Summary Consolidated Historical Financial Data. Holdings and Corporate Our Holdings and Corporate segment includes the net cost of our head offices in Schiphol-Rijk, the Netherlands, our treasury center in Zurich and our corporate support services functions in Paris. Our Holdings and Corporate segment accounted for 0% of revenues, (4%) of Management Adjusted EBITDA and (7%) of Adjusted EBITDA for the year ended December 31, 2012 and 1% of revenues, 2% of Management Adjusted EBITDA and 0% of Adjusted EBITDA for the nine months ended September 30, 2013. Our Management Adjusted EBITDA and Adjusted EBITDA is defined and discussed in Management s Discussion and Analysis of Financial Condition and Results of operations Key Performance Indicators Management Adjusted EBITDA and Management s Discussion and Analysis of Financial Condition and Results of Operations Management Adjusted EBITDA Reconciliation, respectively. Voreppe Research & Development Center Voreppe is our dedicated R&D center in Grenoble, France and, as of December 31, 2013, employs approximately 85 scientists and 90 technicians. Voreppe uses its full-scale facilities, which include a pilot casthouse that enables process and alloy development on an industrial scale, and external links with several universities and other research facilities to develop new solutions and meet customers needs. Our scientists and technicians are active in the development of aluminum product metallurgy and casting, rolling and extrusion technologies. Voreppe s proven track record includes development of an intellectual property portfolio with approximately 900 active patents organized into over 150 patent families. We believe that a major factor in our R&D success has been the close interaction with key customers in our most technically demanding markets at the early stages of the development and innovation process. This collaborative effort with long-term customers has led to the in-house development of advanced alloys and solutions that have applications for products sold to multiple end-markets. This collaboration often takes the form of formal partnership or co-development arrangements or the formation of joint teams with our customers. An example of such a development is our Surfalex alloy, which was developed for the demanding specifications of the auto body market. We believe the alloy s superior surface appearance combined with high mechanical resistance level and optimized formability make it an alloy of choice for this sector. This alloy is already used at premium OEM s like Audi, Porsche and Daimler. Our Industry The specialty metals industry is comprised of producers of a variety of high performance metals and semi-fabricated products manufactured from those metals, which include stainless steel and titanium in addition to aluminum. We also compete with producers of other materials that can be used in our target end-markets, such as composites in aerospace or copper in certain automotive applications, as well as traditional carbon steel in automotive and packaging. Aluminum is lightweight, has a high strength-to-weight ratio and is resistant to Table of Contents corrosion. It compares favorably to several alternative materials, such as steel, in these respects. Aluminum is also unique in the respect that it can also be recycled repeatedly without any material decline in performance or quality. The recycling of aluminum delivers energy and capital investment savings relative to the cost of producing both primary aluminum and many other competing materials. Due to these qualities, the penetration of aluminum into a wide variety of applications continues to increase. We believe that long-term growth in aluminum consumption generally, and demand for those products we produce specifically, will be supported by factors that include growing populations, continued urbanization in emerging markets and increasing focus globally on sustainability and environmental issues. Aluminum is increasingly seen as the material of choice in a number of applications, including aerospace, packaging and automotive. The following charts illustrate expected global demand for aluminum extruded and rolled products. The expected growth through 2018 for the extruded products market and the flat rolled products market is 5.8% and 5.4%, respectively. Projected Aluminum Demand 2013-2018 (in thousand metric tons) The global aluminum industry consists of (i) mining companies that produce bauxite, the ore from which aluminum is ultimately derived, (ii) primary aluminum producers that refine bauxite into alumina and smelt alumina into aluminum, (iii) aluminum semi-fabricated products manufacturers, including aluminum casters, recyclers, extruders and flat rolled products producers (such as Constellium) and (iv) integrated companies that are present across multiple stages of the aluminum production chain. The price of aluminum, quoted on the London Metal Exchange (which we refer to in this prospectus as LME ), is subject to global supply and demand dynamics and moves independently of the costs of many of its inputs. Producers of primary aluminum have limited ability to manage the volatility of aluminum prices and can experience a high degree of volatility in their cash flows and profitability. We do not smelt aluminum, nor do we participate in other upstream activities such as mining or refining bauxite. We recycle aluminum, both for our own use and as a service to our customers. Table of Contents Rolled and extruded aluminum product prices are generally based on price of metal plus a conversion fee (i.e., the cost incurred to convert the aluminum into its semi-finished product). The price of aluminum is not a significant driver of our financial performance, in contrast to the more direct relationship of the price of aluminum to the financial performance of primary aluminum producers. Instead, the financial performance of producers of rolled and extruded aluminum products, such as Constellium, is driven by the dynamics in the end-markets that they serve, their relative positioning in those markets and the efficiency of their industrial operations. Our Competitive Strengths We believe that the following competitive strengths differentiate our business and will allow us to maintain and build upon our strong industry position: Leading positions in each of our attractive and complementary end-markets In our core industries aerospace, packaging and automotive we have market leading positions and established relationships with many of the main manufacturers. Within these attractive and diverse end-markets, we are particularly focused on product lines that require expertise, advanced R&D, and technology capabilities to produce. The drivers of demand in our core industries are varied and largely unrelated to one another. We are the largest supplier globally of aerospace plates. We believe that our ability to fulfill the technical, R&D and quality requirements needed to supply the aerospace market gives us a significant competitive advantage. In addition, based on our knowledge as a market participant, we are one of only two suppliers of aerospace plate to have qualified facilities on two continents, which enables us to more effectively supply both Airbus and Boeing. We have sought to develop our strategic platform by making significant investments to increase our capacity and improve our capabilities and to develop our proprietary AIRWARE material solution. We believe we are well-positioned to benefit from strong demand in the aerospace sector, as demonstrated by the currently high backlogs for Boeing and Airbus that are driven by increased global demand for air travel, especially in Asia. We are the largest supplier of European can body stock by volume with approximately 35% of the market in 2012 and, in our view, we have benefited from our strong relationships with the leading European can manufacturers, our recycling capabilities and our fully integrated Neuf-Brisach facility, which has full production capabilities ranging from recycling and casting to rolling and finishing. As the leader in the European market, we believe that we are well-positioned to benefit from the ongoing trend of steel being replaced by aluminum as the material of choice for can sheet. Packaging provides a stable cash flow stream through the economic cycle that can be used to invest in attractive opportunities in the aerospace and automotive industries to drive longer-term growth. In automotive, we believe our leading positions in the supply of aluminum products are due to our advanced design capabilities, efficient production systems and established relationships with leading automotive OEMs. This includes being the second largest global supplier of auto crash management systems by volume. We expect that E.U. and U.S. regulations requiring reductions in carbon emissions and fuel efficiency, as well as relatively high fuel prices, will continue to drive aluminum demand in the automotive industry. Whereas growth in aluminum use in vehicles has historically been driven by increased use of aluminum castings, we anticipate that future growth will be primarily in the kinds of extruded and rolled products that we supply to the OEMs. Table of Contents In addition, we hold market leading positions in a number of other attractive product lines. (a) CRU International Limited, based on data regarding the year ended 2012 (b) Based on Company internal market analysis for the year ended 2012 (c) Based on Company internal market analysis for the year ended 2013 * Based on volumes Advanced R&D and technological capabilities We have made substantial investments to develop unique R&D and technological capabilities, which we believe give us a competitive advantage as a supplier of the high value-added, specialty products on which we focus and which make up the majority of our product portfolio. In particular, our R&D facility in Voreppe, France has given us a leading position in the development of proprietary next-generation specialty alloys, as evidenced by our robust intellectual property portfolio. We use our technological capabilities to develop tailored products in close partnerships with our customers, with the aim of building long-term and synergistic relationships. One of our hallmark R&D achievements was the recent development of AIRWARE , a lightweight specialty aluminum-lithium alloy developed for our aerospace customers to enable them to reduce fuel consumption and costs. AIRWARE was developed for certain customers using our pilot cast-house in Voreppe, and following a substantial capital expenditure investment, is now being produced on an industrial scale in our aerospace facility in Issoire, France. AIRWARE combines optimized density, corrosion resistance and strength in order to achieve up to 25% weight reduction compared to other aluminum products and significantly higher corrosion and fatigue resistance than equivalent composite products. This technology drives incremental margin compared to tradition aluminum alloys. Table of Contents Global network of efficient facilities with a broad range of capabilities operated by a highly skilled workforce We operate a network of strategically located facilities that we believe allows us to compete effectively in our selected end-markets across numerous geographies. With an estimated replacement value of over 6.5 billion without inventories, our facilities have enabled us to reliably produce a broad range of high-quality products. They are operated by a highly skilled workforce with decades of accumulated operational experience. We believe this collective knowledge base would be very difficult to replicate and is a key contributing factor to our ability to produce consistently high-quality products. Our six key production sites feature industry-leading manufacturing capabilities with required industry qualifications that are, in our view, difficult for market outsiders to accomplish. For example, we believe that Neuf-Brisach is the most integrated downstream aluminum production facility in Europe, with capabilities spanning the recycling, casting, rolling and finishing phases of production. In July 2013, we completed two projects to enhance the capacity and performance of one of our main rolling mills at Neuf-Brisach, representing a total investment of 23 million. The first project modernized a casting complex dedicated to rolling slab production, delivering safety and quality improvements and increasing casting capacity, and the second project involved the complete replacement of a pusher furnace, dedicated to the homogenization and preheating of slabs before rolling. Our Issoire, France and Ravenswood, West Virginia, United States plants have unique capabilities for producing the specialized wide and very high gauge plates required for the aerospace sector. We spent 20 million in the two-year period ended December 31, 2012 at Ravenswood, mainly to complete significant equipment upgrades, including a hot mill and new stretcher that we believe is the most powerful stretcher in our industry. Additionally, our network of small extrusion and automotive structures plants enables us to serve many of our customers on a localized basis, allowing us to more rapidly meet demand through close proximity. We believe our portfolio of facilities provides us with a strong platform to retain and grow our global customer base. Long-standing relationships with a diversified and blue-chip customer base Our customer base includes some of the largest manufacturers in the aerospace, packaging and automotive end-markets. We believe that our ability to produce tailored, high value-added products fosters longer-term and synergistic relationships with this blue-chip customer base. We regard our relationships with our customers as partnerships in which we work together to utilize our unique R&D and technological capabilities to develop customized solutions to meet evolving requirements. This includes developing products together through long-term R&D partnerships. In addition, we collaborate with our customers to complete a rigorous process for qualifying our products, which requires substantial time and investment and creates high switching costs. We have a relatively diverse customer base with our 10 largest customers representing approximately 47% of our revenues and approximately 51% of our volumes for the nine months ended September 30, 2013. The average length of our relationships with our top 20 customers exceeds 25 years, and in some cases goes back as far as 40 years, particularly with our aerospace and packaging customers. Most of our major aerospace, packaging and automotive customers have multi-year contracts with us (i.e., contracts with terms of three to five years), making us critical partners to our customers. As a result, we estimate that approximately 53% of our nine-months 2013 volumes are generated under multi-year contracts, with more than 50% of nine-month 2013 volumes governed by contracts valid until 2014 or later, more than 40% of nine-month 2013 volumes governed by contracts valid until 2015 or later, and more than 36% of nine-month 2013 volumes governed by contracts valid until 2016 or later. We believe this provides us with stability and significant visibility into our future volumes and earnings. Stable business model that delivers robust free cash flow across the cycle There are several ways in which our business model is designed to produce stable and consistent cash flows and profitability. For example, we seek to limit our exposure to commodity metal price volatility primarily by utilizing pass-through mechanisms or contractual arrangements and financial derivatives. Table of Contents Our business also features relatively countercyclical cash flows. During an economic downturn, lower demand causes our sales volumes to decrease, which results in a corresponding reduction in our inventory purchases and a reduction in our working capital requirements. As a result, operating cash flows become positive. We believe this helps to drive robust free cash flow across cycles and provides significant downside protection for our liquidity position in the event of a downturn. For example, in 2009 during the last prolonged downturn in demand, our volumes declined from 1,058 kt to 868 kt. This decline resulted in a 276 million reduction of our total working capital, mainly driven by inventory purchases reductions of 213 million and a positive operating cash flow from continuing operations of 181 million. In addition, we have a significant presence in what have proved to be relatively stable, recession-resilient end-markets with 47% of volumes in the year ended December 31, 2012 sold into the can sheet and packaging end-markets, and 9% of volumes in that period sold into the aerospace end-market, which is driven by global demand trends rather than regional trends. Our automotive products are predominantly used in premium models manufactured by the German OEMs, which are not as dependent on the European economy and continue to benefit from rising demand in developing economies, particularly China. We are also focused on optimizing the cost efficiency of our operations. In 2010, we implemented a rigorous continuous improvement program with the annual goal of outperforming inflation in our non-metal cost base (labor, energy, maintenance) and lowering our breakeven level. As a result of this program, we reduced our costs by 49 million in 2010, 67 million in 2011 and 57 million in 2012. Strong and experienced management team We have a strong and experienced management team led by Pierre Vareille, our Chief Executive Officer, who has more than 30 years of experience in the manufacturing industry and a successful track record of leading global manufacturing companies, particularly in the domain of metal transformation for industries such as aerospace and automotive. Both Mr. Vareille and our Chief Financial Officer, Didier Fontaine, have previously been involved in the management of public companies. Our executive officers and other key members of our management team have an average of more than 15 years of relevant industry experience. Our team has expertise across the commercial, technical and management aspects of our business and industry, which provides for strong customer service, rigorous quality and cost controls, and focus on health, safety and environmental improvements. Our board of directors includes current and former executives of Alcan, Rio Tinto, Bosch, Ascometal SAS, Alcatel-Lucent, Continental AG, Kaiser Aluminum and automotive suppliers such as Faurecia, who bring extensive experience in operations, finance, governance and corporate strategy. Our Business Strategies Our objective is to expand our leading position as a supplier of high value-added, technologically advanced products in which we believe that we have a competitive advantage. Our strategy to achieve this objective has three pillars: (i) selective participation, (ii) global leadership position and (iii) best-in-class efficiency and operational performance. Selective Participation Continue to target investment in high-return opportunities in our core markets (aerospace, packaging and automotive), with the goal of driving growth and profitability We are focused on our three strategic end-markets aerospace, packaging and automotive which we believe have attractive growth prospects for aluminum. These are also markets where we believe that we can differentiate ourselves through our high value-added products, our strong customer relationships and our R&D and technological capabilities. Our capital expenditures and R&D spend are focused on these three strategic end- Table of Contents markets and are made in response to specific volume requirements from long-term customer contracts, which ensures relatively short payback periods and good visibility into return on investment. Examples of this focused approach include a new casthouse at Issoire to support growing demand for AIRWARE , a new state-of-the-art press at Singen to increase capacity for automotive extrusions and a heat treatment and conversion line at Neuf-Brisach to serve growing demand for aluminum automotive sheet. As part of our focus on our core end-markets and our strategy to improve our profitability, we also consider potential divestitures of non-strategic businesses. For example, we divested the vast majority of our Alcan International Network ( AIN ) specialty chemicals and raw materials supply chain services division in 2011 to CellMark AB. In each of 2011 and 2012, the discontinued operations of our AIN business generated losses of 8 million. More recently, in May 2013, we announced the sale of our French extrusion plants in Ham and Saint-Florentin to OpenGate Capital, which were dedicated to the production of aluminum profiles intended mainly for the building and construction industry. Focus on higher margin, technologically advanced products that facilitate long-term relationships as a mission critical supplier to our customers Our product portfolio is predominantly focused on high value-added products, which we believe we are particularly well-suited to developing and manufacturing for our customers. These products tend to require close collaboration with our customers to develop tailored solutions, as well as significant effort and investment to adhere to rigorous qualification procedures, which enables us to foster long-term relationships with our customers. Our products typically command higher margins than more commoditized products, and are supplied to end-markets that we believe have highly attractive characteristics and long-term growth trends. Global Leadership Position Continue to differentiate our products, with the goal of maintaining our leading market positions and remaining a supplier of choice to our customers We aim to deepen our ties with our customers by consistently providing best-in-class quality, market leading supply chain integration, joint product development projects, customer technical support and scrap and recycling solutions. We believe that our product offering is differentiated by our market leading R&D capabilities. Our key R&D programs are focused on high growth and high margin areas such as specialty material solutions, next generation alloys and sustainable engineered solutions / manufacturing technologies. Recent examples of market leading breakthroughs include our AIRWARE lithium alloy technology and our Solar Surface Selfclean, a coating solution used in the solar industry which provides additional performance and functionality of the aluminum by chemically breaking down dirt and contaminants in contact with the surface. Build a global footprint with a focus on expansion in Asia, particularly in China, and work to gain scale through acquisitions in Europe and the United States We intend to selectively expand our global operations where we see opportunities to enhance our manufacturing capabilities, grow with current customers and gain new customers, or penetrate higher-growth regions. We believe disciplined expansion focused on these objectives will allow us to achieve attractive returns for our shareholders. In line with these principles, our recent expansions include: the formation of a joint venture in China, Engley Automotive Structures Co., Ltd., which is currently producing aluminum crash-management systems in Changchun and Kunshan, China; and the successful expansion of our Constellium Automotive USA, LLC plant, located in Novi, Michigan, which is producing highly innovative crash-management systems for the automotive market. Table of Contents Best-in-Class Performance Contain our fixed costs and offset inflation with increased productivity We have been executing an extensive cost savings program focusing on selling, general and administrative expenses ( SG&A ), conversion costs and purchasing. In 2010, 2011 and 2012, we realized a structural realignment of our cost structure and achieved annual costs savings of 49, 67, and 57 million, respectively. This represents approximately 4% of our estimated addressable cost base in 2012 (i.e., excluding raw material cost). These savings are split between operating expenses (48%), SG&A savings (21%) and procurement savings (31%). This program was designed to right-size our cost structure, increase our profitability and provide a competitive advantage against our peers. Our cost savings program will continue to be a priority as we focus on optimizing our cost base and offsetting inflation. Establish best-in-class operations through Lean manufacturing We believe that there are significant opportunities to improve our services and quality and to reduce our manufacturing costs by implementing Lean manufacturing initiatives. Lean manufacturing is a production practice that improves efficiency of operations by identifying and removing tasks and process steps that do not contribute to value creation for the end customer. We continually evaluate debottlenecking opportunities globally through modifications of, and investments in, existing equipment and processes. We aim to establish best-in-class operations and achieve cost reductions by standardizing manufacturing processes and the associated upstream and downstream production elements where possible, while still allowing the flexibility to respond to local market demands and volatility. To focus our efforts, we have launched a Lean manufacturing program that is designed to improve the flow of value to customers by eliminating waste in both processes and resources. We measure operational success of this program in six key areas: (i) safety, (ii) quality, (iii) acceleration of the flows and working capital reduction, (iv) delivery performance, (v) equipment efficiency and (vi) innovation. Our Lean manufacturing program is overseen by a dedicated team, headed by Yves M rel. Mr. M rel reports directly to our Chief Executive Officer, Pierre Vareille. Mr. Vareille and Mr. M rel have long track records of successfully implementing Lean manufacturing programs at other companies they have managed together in the past. Recent Developments Expected Results We are currently in the process of finalizing our financial results for the three months and twelve months ended December 31, 2013. Based on preliminary unaudited information for the three months ended December 31, 2013, our total shipment volumes are expected to be approximately 234kt in comparison to 235kt for the three months ended December 31, 2012. The disposal of our Ham and Saint-Florentin plants in France earlier in 2013 together with lower volumes within our packaging business were offset by higher automotive volumes and higher volumes in our Aerospace and Transportation segment. We estimate that our revenues for the three months ended December 31, 2013 will be approximately 802 million to 812 million. This would represent a decrease of approximately 0% - 2%, when compared to 814 million for the three months ended December 31, 2012. Excluding the volumes and revenues of our Ham and Saint-Florentin plants from the same period in the prior fiscal year, our volumes are expected to increase by 5kt, or 2%, and revenues are expected to increase by between 1% and 3% compared with last year. Our A&T segment volumes and revenue are expected to grow by 15% and approximately 11%, respectively in the three months ended December 31, 2013, compared with the three months ended December 31, 2012, due to higher sales in both the aerospace and transportation sectors. We saw lower volumes and revenues in our Table of Contents P&ARP segment with lower sales to the packaging sector being partly offset by higher auto body sheet volumes and revenue. Our AS&I segment volumes and revenue declined primarily due to the disposal of our Ham and Saint-Florentin plants. Excluding the results of these plants from the same period in the prior fiscal year, AS&I volumes and revenues are expected to increase by 11% for the three months ended December 31, 2013, compared with the three months ended December 31, 2012. This reflects higher sales of large profiles and extruded products for the automotive industry. Management Adjusted EBITDA for the three months ended December 31, 2013, is expected to be in the range of 39 million to 45 million, and Adjusted EBITDA is expected to be in the range of 56 million to 62 million. This would represent a change in Management Adjusted EBITDA of approximately 0% to 15% from 40 million for the three months ended December 31, 2012 and an increase in Adjusted EBITDA of 27% to 41% from 44 million for the three months ended December 31, 2012. These increases in the three months ended December 31, 2013 reflect the combined enhancement of our product mix, higher sales to the aerospace and automotive markets and the continued benefit from the cost and productivity improvements achieved, partially offset by the limited impact of work stoppages at two of our French plants. We expect our income before income taxes for the three months ended December 31, 2013 will be in the range of 18 million to 36 million, in comparison to 67 million for the three months ended December 31, 2012. This change reflects the inclusion in the three months ended December 31, 2012 of one-time events, including a gain of 48 million in respect of the Ravenswood pension plan amendments. Our revenue for the twelve months ended December 31, 2013 is expected to be approximately 3,491 to 3,501 million, a decrease of 3% in comparison to our revenues for the twelve months ended December 31, 2012 of 3,610 million. Management Adjusted EBITDA and Adjusted EBITDA are expected to be approximately 226 million to 232 million and 277 million to 283 million, respectively, for the twelve months ended December 31, 2013, representing an increase in Management Adjusted EBITDA of between 11% and 14% and an increase in Adjusted EBITDA of between 21% and 24% for the twelve months ended December 31, 2013. The increase reflects mainly improved sales to both the aerospace and automotive sectors together with the production and cost efficiency measures undertaken at our major locations. Income before income taxes for the twelve months ended December 31, 2013 is expected to be between 124 million and 142 million. We expect our net debt as at December 31, 2013 to be approximately 132 million in comparison to net debt as at September 30, 2013 of 181 million. This movement reflects the net cash generation of the business during the quarter ended December 31, 2013. Table of Contents The following table reconciles our estimated income before income taxes for the three months and twelve months ended December 31 to our Management Adjusted EBITDA and Adjusted EBITDA: Three months ended December 31 Year ended December 31 ( in millions other than per share and per ton data) (unaudited) 2013 2012 2013 2012 Low High Low High Income before income tax 18 36 67 124 142 189 Finance costs net and Unrealized (gains) losses on derivatives at fair value and exchange (gains)/losses from the remeasurement of monetary assets and liabilities 2 (10 ) 44 32 Share of loss/(profit) from joint ventures 5 (3 ) (3 ) 5 Depreciation, amortization and impairments 13 13 7 32 32 14 Expenses related to the acquisition and separation 3 Expenses related to the IPO 3 3 27 27 Restructuring costs 2 2 10 8 8 25 Pension settlement and amendment (48 ) (11 ) (11 ) (40 ) Ravenswood CBA renegotiation (1 ) 7 (Gains)/losses on disposals 1 1 5 5 Management Adjusted EBITDA 39 45 40 226 232 203 Favorable metal price lag 8 8 0 29 29 16 Apollo management fee 1 2 2 3 Other 9 9 3 20 20 6 Adjusted EBITDA 56 62 44 277 283 228 Management Adjusted EBITDA and Adjusted EBITDA are not measures defined by IFRS. For definitions of Management Adjusted EBITDA and Adjusted EBITDA and the reasons why management believes the inclusion of such measures is useful to provide additional information to investors about our performance, see footnotes (2) and (3) of Summary Consolidated Historical Financial Data. We have provided ranges for our preliminary results described above because our financial closing procedures for the three months and twelve months ended December 31, 2013 are not yet complete. We currently expect that our final results will be within the ranges described above. However, these estimates are preliminary, and are based on, and represent the most current information available to management as of the date of this prospectus. Therefore, it is possible that our actual financial results may differ materially from these estimates as we undergo the completion of our financial closing procedures, make final adjustments and consider other developments which may arise between now and the time we finalize our financial results for the three months and twelve months ended December 31, 2013. Accordingly, you should not place undue reliance on these preliminary estimates. The preliminary unaudited financial data for the three months and twelve months ended December 31, 2013 included in this prospectus have been prepared by, and are the responsibility of, our management and have not been reviewed or audited or subject to any other procedures by our independent registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect to the preliminary unaudited financial data. Multi-year Boeing Contract On November 21, 2013, we announced that we have been awarded a multi-year agreement with The Boeing Company to support all of The Boeing Company s leading commercial airplane programs. With this agreement, Table of Contents we will increase both the scope and range of products we supply. Under the new agreement, we will supply Boeing aluminum products for airframes utilizing our current and advanced-generation aluminum alloys. The products will be supplied from our two major A&T manufacturing sites in Ravenswood, WV and in Issoire, France. Body-in-White Investment On January 15, 2014, we announced that we plan to invest up to 200 million over the next three years to further grow our European Body-in-White business. Our investment is expected to run from 2014 through the end of 2016. In Phase 1, we plan to increase production capacity at our Neuf-Brisach facility in France and start Body-in-White production at our Singen facility in Germany by revamping its continuous annealing line. By 2016, we expect to add up to 40,000 metric tons to our current capacity with the first BiW coils produced in Singen expected to be as early as mid-2014. In Phase 2, we plan to add a new continuous annealing and conversion line in Europe with a targeted capacity of 100,000 metric tons, with the aim to start commissioning in the second half of 2016. Body-in-White Joint Venture On January 23, 2014, we announced that Constellium and UACJ Corporation ( UACJ ), through Tri-Arrows Aluminum Inc. (TAA) (UACJ s subsidiary with Sumitomo Corporation and Itochu Group), intend to create a joint venture company in the United States, as an equal partnership, to serve the North American market. The joint venture, in which Constellium expected to own 51% of the equity, is expected to include a continuous heat treatment and conversion line with an initial target capacity of 100,000 metric tons supplied by cold rolled coils from both partners rolling mills. The planned facility is designed to allow for expansion beyond 100,000 tons. The total joint investment by both parties is expected to amount to approximately $150 million. Constellium and UACJ are working to finalize definitive documentation regarding the joint venture by the end of the second quarter 2014. Until such time as definitive agreements are executed, there can be no guarantee that the parties will engage in the joint venture. Corporate History and Information Constellium Holdco B.V. (formerly known as Omega Holdco B.V.) was incorporated as a Dutch private limited liability company on May 14, 2010. Constellium Holdco B.V. was formed to serve as the holding company for various entities comprising the Alcan Engineered Aluminum Products business unit (the AEP Business ), which it acquired from affiliates of Rio Tinto on January 4, 2011. Our principal shareholders are investment funds affiliated with, or co-investment vehicles that are managed (or the general partners of which are managed) by subsidiaries of, Apollo Global Management, LLC (Apollo Global Management, LLC and its subsidiaries collectively, or any one of such entities individually, Apollo ), a leading global alternative investment manager and Bpifrance Participations (f/k/a Fonds Strat gique d Investissements), a soci t anonyme incorporated under the laws of the Republic of France, which is a French public investment fund specializing in the business of equity financing via direct investments or fund of funds ( Bpifrance ). Bpifrance is a wholly-owned subsidiary of BPI-Groupe (bpifrance), a French financial institution jointly owned and controlled by the Caisse des D p ts et Consignations, a French special public entity ( tablissement special) and EPIC BPI-Groupe, a French public institution of industrial and commercial nature. As used in this prospectus, the term Apollo Funds means investment funds affiliated with, or co-investment vehicles that are managed (or the general partners of which are managed) by, Apollo; the term Rio Tinto refers to Rio Tinto or an affiliate of Rio Tinto, a leading international mining group, combining Rio Tinto plc, a London listed public company headquartered in the United Kingdom, and Rio Tinto Limited, which is listed on the Australian Stock Exchange, with executive offices in Melbourne (the two companies are joined in a dual listed Table of Contents companies ( DLC ) structure as a single economic entity, called the Rio Tinto Group; and the term Bpifrance means Bpifrance Participations (f/k/a Fonds Strat gique d Investissements) or other entities affiliated with Bpifrance. On December 30, 2011, we disposed of substantially all of our interests in AIN, our specialty chemicals and raw materials supply chain services division, to CellMark AB. The remaining entities have ceased operations. On March 28, 2013, we made a distribution of share premium to our Class A and Class B1 shareholders of 103 million (and an additional distribution to our class B2 shareholders of 392,000 on May 21, 2013). Our board of directors further approved a distribution of profits of an additional 147 million to our existing Class A, Class B1 and Class B2 shareholders. Due to certain European tax and accounting restrictions, however, we did not anticipate being able to pay such additional distribution to such shareholders until after the completion of the initial public offering. Consequentially, in order to facilitate the payment of such distribution, we issued preference shares to our existing pre-IPO Class A, Class B1 and Class B2 shareholders. These preference shares entitled them to receive distributions in priority to ordinary shareholders in the aggregate amount of 147 million in proportion to their percentage immediately prior to the completion of the initial public offering. We were able to make such distribution of 147 million on May 21, 2013 and the preference shares were acquired by the Company for no consideration on May 29, 2013. Our Amended and Restated Articles of Association and Dutch law provide that so long as the preference shares are held by the Company, they will have no voting rights and no right to profits. On May 16, 2013, we effected a pro rata share issuance of Class A ordinary shares, Class B1 ordinary shares and Class B2 ordinary shares to our existing shareholders, which we implemented through the issuance of 22.8 new Class A ordinary shares, 22.8 Class B1 ordinary shares and 22.8 Class B2 ordinary shares for each outstanding Class A, Class B1 and Class B2 ordinary share, respectively. As a result, the Company issued an aggregate amount of 83,945,965 additional Class A ordinary shares, 815,252 additional Class B1 ordinary shares and 923,683 additional Class B2 ordinary shares, nominal value 0.02 per share, prior to consummation of the initial public offering. The pro rata share issuance was undertaken in order to provide an appropriate per-share valuation in respect of the offering price for our initial public offering. On May 21, 2013, Constellium Holdco B.V. was converted into a Dutch public limited liability company and renamed Constellium N.V. Any references to Dutch law and the Amended and Restated Articles of Association are references to Dutch law and the articles of association of the Company as applicable following the conversion. On May 29, 2013, we completed our initial public offering of 22,222,222 of our ordinary shares at a price to the public of $15.00 per share. A total of 13,333,333 shares were offered by us and a total of 8,888,889 shares were offered by Apollo Funds and Rio Tinto. On June 24, 2013, the underwriters of our initial public offering exercised their over-allotment option to purchase from us an additional 2,251,306 Class A ordinary shares at a public offering price of $15.00 per share less the underwriting discount. The exercise of the over-allotment option brought the total number of Class A ordinary shares sold in the initial public offering to 24,473,528. In connection with our initial public offering, Apollo Funds and Rio Tinto entered into an agreement with Bpifrance pursuant to which Bpifrance agreed to place an order to purchase approximately 4.4 million ordinary shares at a per share price equal to the public offering price (the Bpifrance share purchase ). Apollo Funds and Rio Tinto agreed to use best efforts to cause the underwriters to allocate such number of shares to Bpifrance. The agreement further provides that for one year following the closing of our initial public offering, Bpifrance is restricted from buying additional shares in the Company unless this restriction is waived by both Apollo Funds and Rio Tinto or certain specified events occur. On November 14, 2013, we completed a secondary public offering of 17,500,000 of our ordinary shares at a price to the public of $17.00 per share. The shares were offered by Rio Tinto and Omega Management GmbH & Co. KG ( Management KG ). On November 8, 2013, the underwriters of this secondary public offering Table of Contents exercised their option to purchase from Rio Tinto an additional 2,625,000 Class A ordinary shares at a public offering price of $17.00 per share less the underwriting discount. The exercise of the purchase option brought the total number of Class A ordinary shares sold in the secondary public offering to 20,125,000. On December 16, 2013, we completed a secondary public offering of 8,345,713 of our ordinary shares at a price to the public of $19.80 per share. The shares were offered by Rio Tinto. On December 12, 2013, the underwriter of this secondary public offering exercised its option to purchase from Rio Tinto an additional 1,251,847 Class A ordinary shares at a public offering price of $19.80 per share less the underwriting discount. The exercise of the purchase option brought the total number of Class A ordinary shares sold in the secondary public offering to 9,597,560. Risk Factors Investing in our ordinary shares involves substantial risk. The risks described under the heading Risk Factors immediately following this summary may cause us not to realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges include the following: our potential failure to implement our business strategy, including our productivity and cost reduction initiatives; our susceptibility to cyclical fluctuations in the metals industry, our end-markets and our customers industries and changes in general economic conditions; the highly competitive nature of the industry in which we operate and the risk that aluminum will become less competitive compared to alternative materials; the possibility of unplanned business interruptions; and adverse conditions and disruptions in European economies. You should carefully consider all of the information included in this prospectus, including matters set forth under the headings Risk Factors and Important Information and Cautionary Statement Regarding Forward-Looking Statements, before deciding to invest in our ordinary shares. Table of Contents
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+S-1/A 1 a2220843zs-1a.htm S-1/A Use these links to rapidly review the document TABLE OF CONTENTS INDEX TO FINANCIAL STATEMENTS Table of Contents As filed with the Securities and Exchange Commission on July 22, 2014 Registration No. 333-196808 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Table of Contents TABLE OF CONTENTS You should rely only on the information contained in this prospectus, any free writing prospectus prepared by us or on our behalf or any other information to which we have referred you in connection with this offering. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. Forward-Looking Statements v Summary 1
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+PROSPECTUS SUMMARY This summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire prospectus carefully, including the section entitled Risk Factors, our financial statements and the notes thereto incorporated by reference in our annual report and quarterly reports, and the other documents we refer to and incorporate by reference in this prospectus for a more complete understanding of us and this offering before making an investment decision. In particular, we incorporate important business and financial information in this prospectus by reference. Corporate Overview F & M Bank Corp., incorporated in Virginia in 1983, is a one bank holding company pursuant to section 3(a)(1) of the Bank Holding Company Act of 1956, and owns 100% of the outstanding stock of its affiliate, Farmers & Merchants Bank. TEB Life Insurance Company ( TEB ) and Farmers & Merchants Financial Services, Inc. ( FMFS ) are wholly-owned subsidiaries of the Bank. The Bank also holds a majority ownership interest in VBS Mortgage LLC ( VBS ). The Bank was chartered on April 15, 1908, as a state chartered bank under the laws of the Commonwealth of Virginia. TEB was incorporated on January 27, 1988, as a captive life insurance company under the laws of the State of Arizona. FMFS is a Virginia chartered corporation and was incorporated on February 25, 1993. VBS (formerly Valley Broker Services, Inc.) was incorporated on May 11, 1998. The Bank purchased a majority interest in VBS on November 3, 2008. The Bank offers all services normally offered by a full-service commercial bank, including commercial and individual demand and time deposit accounts, repurchase agreements for commercial customers, commercial and consumer loans, internet and mobile banking, drive-in banking services, ATMs at all branch locations and several off-site locations, as well as courier service for its commercial banking customers. TEB was organized to re-insure credit life and accident and health insurance currently being sold by the Bank in connection with its lending activities. FMFS was organized to write title insurance, but now provides brokerage services and commercial and personal lines of insurance to customers of the Bank. VBS originates conventional and government sponsored mortgages through their offices in Harrisonburg and Woodstock, Virginia. The Bank provides services to customers located mainly in Rockingham, Shenandoah and Page Counties in Virginia, and the adjacent counties of Augusta, Virginia and Hardy, West Virginia. Services are provided at nine branch offices, a Dealer Finance Division and a loan production office. The Bank makes various types of commercial and consumer loans and has a large portfolio of residential mortgages and a concentration in development lending. The local economies in the Bank s market area are relatively diverse with strong employment in the agricultural, manufacturing, service and governmental sectors. As of June 30, 2014, we reported total consolidated assets of $569.4 million, gross loans held for investment of $495.3 million, deposits of $472.2 million and shareholders equity of $67.8 million. Our Common Stock is quoted on the OTC Markets Group s OTCQB tier under the symbol FMBM. The closing price of our Common Stock on August 18, 2014 was $18.75. Private Placement On March 20, 2014, we entered into securities purchase agreements with a limited number of institutional and other accredited investors, including certain directors and executive officers of the Company, to sell a total of 774,231 newly issued shares of our Common Stock at a purchase price of $16.50 per share, for an aggregate gross purchase price of approximately $12.8 million (the Private Placement ). The net proceeds of the Private Placement, after placement agent discounts and commissions and estimated expenses, were approximately $12.0 million. We intend to use the net proceeds from the Private Placement for general corporate purposes. The Private Placement closed on March 20, 2014. Corporate Information Our principal executive office is at 205 South Main Street, Timberville, VA 22853, and our phone number is (540) 896-8941. We maintain a website at www.fmbankva.com, which contains information relating to us. Unless specifically incorporated by reference, information on our website is not a part of this prospectus. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE We incorporate by reference the documents listed below: Our annual report on Form 10-K for the year ended December 31, 2013 (the Form 10-K ); The portions of our definitive proxy statement for our 2014 annual meeting of shareholders, filed with the SEC on April 11, 2014, that have been incorporated by reference into the Form 10-K; Our quarterly reports on Form 10-Q for the periods ended March 31, 2014 and June 30, 2014; and Our current reports on Form 8-K filed with the SEC on March 21, 2014 and May 15, 2014 (except to the extent the information contained therein is furnished and not filed pursuant to SEC rules). On the written or oral request of each person, including any beneficial owner, to whom a copy of this prospectus is delivered, we will provide, without charge, a copy of any or all of the documents incorporated in this prospectus or in any related prospectus supplement by reference, except the exhibits to those documents, unless the exhibits are specifically incorporated by reference. Written requests for copies should be directed to Neil W. Hayslett, Executive Vice President and Chief Administrative Officer, F & M Bank Corp., P.O. Box 1111, Timberville, Virginia 22853. Telephone requests for copies should be directed to (540) 896-8941. You should rely only upon the information provided in this document, or incorporated in this document by reference. We have not authorized anyone to provide you with different information. You should not assume that the information in this document, including any information incorporated by reference, is accurate as of any date other than the date indicated on the front cover or the date given in the applicable document. The Offering Securities Offered Up to $10,000,000 of Series A Preferred Stock, par value $5.00 per share. Offering Price per Share $25.00 Liquidation Preference $25.00 per share of Series A Preferred Stock, plus an amount equal to the sum of all declared, accrued and unpaid dividends. Maturity Perpetual Dividends % per annum, which is equivalent to $ per annum per share. Dividends are payable quarterly, when, as and if declared, on the last day of March, June, September and December of each year, commencing , 2014. In order for the Series A Preferred Stock to qualify for Tier 1 capital treatment, dividends are noncumulative and are payable if, when and as authorized and declared by our board of directors. If for any reason the board of directors does not authorize full cash dividends for a dividend period, we will have no obligation to pay any dividends for that period, whether or not our board of directors authorizes and declares dividends on the Series A Preferred Stock for any subsequent dividend period. Notwithstanding the foregoing, holders of the Series A Preferred Stock have a priority on the receipt of dividends relative to the holders of our Common Stock or any other junior securities of ours, if any. If we have not declared and paid or set aside for full payment of the quarterly dividends on the Series A Preferred Stock for a particular dividend period, we may not declare or pay dividends on, or redeem or purchase, shares of securities junior to the Series A Preferred Stock during the next succeeding dividend period except in limited circumstances. Conversion by Holder Each share of Series A Preferred Stock will be convertible at the option of the holder into shares of our Common Stock (which reflects an initial conversion price of $ per share of Common Stock), subject to certain adjustments. See Description of the Series A Preferred Stock Optional Conversion Right. Conversion by Us We may, at our option, at any time or from time to time cause some or all of the Series A Preferred Stock to be converted into shares of our Common Stock at the then applicable conversion rate. We may exercise our conversion right if, for 20 trading days within any period of 30 consecutive trading days, the closing price of our Common Stock exceeds % of the then applicable conversion price of the Series A Preferred Stock. See Description of the Series A Preferred Stock Mandatory Conversion at Our Option. Redemption Subject to prior approval by the Board of Governors of the Federal Reserve System (the Federal Reserve ), the Series A Preferred Stock is redeemable at our option at any time, in whole or in part, on and after the third anniversary of the original issue date of the Series A Preferred Stock, at $25.00 per share, plus declared and unpaid dividends, if any, for the prior and the then current dividend periods. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Ranking The Series A Preferred Stock will be, with respect to dividends and upon liquidation, dissolution or winding-up: (i) junior to each class of capital stock or series of preferred stock, the terms of which expressly provide that it ranks senior to the Series A Preferred Stock; (ii) on a parity with any future class of capital stock or preferred stock, the terms of which expressly provide that such class ranks on parity with the Series A Preferred Stock; and (iii) senior to all classes of our Common Stock or series of preferred stock, the terms of which do not expressly provide that it ranks senior to or on a parity with the Series A Preferred Stock. In addition, the rights of the holders of Series A Preferred Stock will be subordinate to the rights of our existing and future debt obligations and our general creditors, including depositors. As of the consummation of this offering, the Series A Preferred Stock will not rank junior to any of our securities and will rank senior to our Common Stock. Description of the Series A Preferred Stock Ranking. Voting Except as required by law and our articles of incorporation, which will include the terms of the Series A Preferred Stock, the holders of Series A Preferred Stock will have no voting rights. Use of Proceeds We expect to receive net proceeds from this offering of approximately $9.5 million, after deducting sales agents and commissions and other estimated expenses. We intend to use the proceeds of the offering for the redemption, repurchase or exchange of the subordinated debt of the Bank. See Use of Proceeds. Listing The Series A Preferred Stock will not be listed for trading on any stock exchange nor will they be available for quotation on any national quotation system. Redemption or Exchange of Subordinated Debt Upon the sale of preferred shares to certain prospective purchasers who currently hold the outstanding subordinated debt of the Bank, we may accept, in lieu of cash consideration, such debt with a principal face amount equal to the offering price of the Series A Preferred Stock to be received. See Use of Proceeds. Tax Consequences Material U.S. federal tax considerations relevant to the purchase, ownership and disposition of our Series A Preferred Stock and Common Stock issued upon its conversion are described in Material U.S. Federal Income Tax Consequences. Prospective investors are advised to consult with their own tax advisors regarding the tax consequences of acquiring, holding or disposing of our Series A Preferred Stock and Common Stock issued upon its conversion in light of current tax laws, their particular personal investment circumstances and the application of state, local and other tax laws. Management Participation in Offering We currently expect certain of our directors and executive officers to participate in the offering and collectively to purchase approximately $550,000 of Series A Preferred Stock in exchange for outstanding subordinated debt of the Bank held by them. Shares Outstanding after this Offering 3,290,329 shares of Common Stock. 400,000 shares of Series A Preferred Stock. Risk Factors Before investing, you should carefully review the information contained under "Risk Factors" beginning on page 6 for a discussion of the risks related to an investment in our Series A Preferred Stock. Pre-Effective Amendment No. 2 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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+Prospectus summary This summary highlights certain information appearing elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the "Risk factors," "Forward-looking statements," "Management's discussion and analysis of financial condition and results of operations" and "Unaudited Condensed Combined Pro Forma Financial Data" sections, our Consolidated Financial Statements and the related notes, the Colombian Acquisitions Consolidated Financial Statements and the related notes, and the Rio das Contas Consolidated Financial Statements and the related notes, included in this prospectus, before deciding to invest in our common shares. Although we believe that the estimates and projections included in this prospectus are based on reasonable assumptions, you should be aware that these estimates and projections are subject to many risks and uncertainties as described in "Risk factors" and "Forward-looking statements." We have provided definitions for certain industry terms used in this prospectus in the "Glossary of oil and natural gas terms" included as Appendix A to this prospectus. Our business Overview We are an independent oil and natural gas exploration and production, or E&P, company with operations in South America and a proven track record of growth in production, reserves and cash flows since 2006. We operate in Chile, Colombia, Brazil and, to a lesser extent, in Argentina, and expect to further expand our footprint in Brazil following the closing of our pending Rio das Contas acquisition. See " Recent developments." We have a well-balanced portfolio of assets that includes working and/or economic interests in 26 onshore hydrocarbons blocks, nine of which are currently in production, as well as in an additional concession in Brazil upon the closing of our pending Rio das Contas acquisition and two new concessions in Brazil that are subject to confirmation of qualification requirements by the ANP. We produced a net average of 13,148 boepd during the first nine months of 2013, 53% of which was produced in Chile, 46% of which was produced in Colombia and 0.5% of which was produced in Argentina, and of which 82% was oil. Accounting for our pending Rio das Contas acquisition, on a pro forma basis, we would have produced an average of 16,869 boepd during the first nine months of 2013, with Chile, Colombia and Brazil representing 42%, 36% and 22% of our production, respectively, and with oil representing 64% of our total production. As of December 31, 2012, we had net proved reserves of 16.8 mmboe (composed of 71% oil and 29% natural gas), of which 10.2 mmboe, or 61%, and 6.6 mmboe, or 39%, were in Chile and Colombia, respectively. According to the D&M Brazil and Colombia Reserves Report, our net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in an additional 2.4 mmboe (composed of 100% oil). Additionally, according to this report, as of June 30, 2013, Rio das Contas had net proved reserves of 8.1 mmboe (composed of approximately 98% natural gas). We have developed our company around three principal abilities: to successfully explore the subsurface in the search for oil and gas; to efficiently operate, drill, produce and market hydrocarbons from our properties; and to acquire and consolidate assets in the main oil- and natural gas-producing regions in South America. We believe that our risk and capital management policies have enabled us to compile a geographically diverse portfolio of properties that balances exploration, development and production of oil and gas. These attributes have also allowed us to raise capital and to partner with premier international companies. Amendment No. 5 to FORM F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents Presentation of financial and other information Certain definitions Unless otherwise indicated or the context otherwise requires, all references in this prospectus to: "GeoPark Limited," "GeoPark," "we," "us," "our," the "company" and words of a similar effect, are to GeoPark Limited (formerly GeoPark Holdings Limited), an exempted company incorporated under the laws of Bermuda, together with its consolidated subsidiaries; "Agencia" are to GeoPark Latin America Limited Agencia en Chile, an established branch, under the laws of Chile, of GeoPark Latin America Limited, an exempted company incorporated under the laws of Bermuda; "GeoPark Latin America" are to our subsidiary GeoPark Latin America Limited, an exempted company incorporated under the laws of Bermuda; "GeoPark Fell" are to our subsidiary GeoPark Fell SpA., a sociedad por acciones incorporated under the laws of Chile; "GeoPark Chile" are to our subsidiary GeoPark Chile S.A., a sociedad an nima cerrada incorporated under the laws of Chile; "GeoPark Colombia" are prior to our internal corporate reorganization of our Colombian operations, to our subsidiary GeoPark Colombia S.A., a sociedad an nima cerrada incorporated under the laws of Chile and subsequent to such reorganization, to GeoPark Colombia Co peratie U.A., a cooperative duly incorporated under the laws of the Netherlands; "GeoPark Colombia S.A.S." are to our subsidiary GeoPark Colombia S.A.S., a sociedad an nima simplificada incorporated under the laws of Colombia, which absorbed Winchester, Luna and C erva and their Colombian branches by merger and assumed all rights and obligations of each; "Winchester" are to our subsidiary Winchester Oil and Gas S.A., now GeoPark Colombia PN S.A. Sucursal Colombia, a Colombian branch of a sociedad an nima incorporated under the laws of Panama, which merged into GeoPark Colombia S.A.S.; "Luna" are to our subsidiary La Luna Oil Company Limited S.A., a sociedad an nima incorporated under the laws of Panama, which merged into GeoPark Colombia S.A.S.; "Cuerva" are to our subsidiary GeoPark Cuerva LLC, formerly known as Hupecol Caracara LLC, a limited liability company incorporated under the laws of the state of Delaware, which merged into GeoPark Colombia S.A.S.; "LGI" are to LG International Corp., a company incorporated under the laws of Korea; "Panoro" are to Panoro Energy do Brasil Ltda., a limited liability company incorporated under the laws of Brazil and a subsidiary of Panoro Energy ASA, a company incorporated under the laws of Norway, with assets in Brazil and Africa; "Rio das Contas" are to Rio das Contas Produtora de Petr leo Ltda., a limited liability company incorporated under the laws of Brazil; Table of Contents Finally, we believe we have developed a distinctive culture within our organization that promotes and rewards partnership, entrepreneurship and merit. Consistent with this approach, all of our employees are eligible to participate in our long-term incentive program, or our Performance-Based Employee Long-Term Incentive Program. See "Management Compensation Executive compensation Performance-Based Employee Long-Term Incentive Program." In Chile, we are the first and the largest non-state controlled oil and gas producer. We began operations in 2006 in the Fell Block and have evolved from having a non-operated, non-producing interest to having a fully-operated and producing asset with over 10.2 mmboe of net proved reserves as of December 31, 2012 and average production of 7,013 boepd in the first nine months of 2013. In addition, we operate five other hydrocarbon blocks in Chile with significant prospective resources. In Colombia, following our successful acquisitions of Winchester, Luna and Cuerva in early 2012, we have an asset base of 10 hydrocarbon blocks where we were able to increase average production to 6,075 boepd in the first nine months of 2013, an increase of 89% (on a pro forma basis, giving effect to our Colombian acquisitions) as compared to the first nine months of 2012. As of December 31, 2012, we had net proved reserves of 6.6 mmboe in Colombia. Furthermore, according to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in an additional 2.4 mmboe of net proved reserves. Recently, we expanded our footprint to Brazil. In May 2013, we agreed to acquire Rio das Contas from Panoro, which holds a 10% working interest in the shallow offshore Manati Field, the largest non-associated gas field in Brazil, which produced, in the year ended December 31, 2012, approximately 8.7% of the gas produced in Brazil. Rio das Contas's 10% working interest in the Manati Field represented 3,721 boepd of production during the first nine months of 2013. We expect to close our pending Rio das Contas acquisition in the first quarter of 2014. Separately, in September 2013, we entered into concession agreements with the ANP relating to seven new concessions in the onshore Rec ncavo Basin in the State of Bahia and in the onshore Potiguar Basin in the State of Rio Grande do Norte, or, our Round 11 concessions, and in November 2013, the ANP awarded us two additional concessions in the Parna ba Basin in the State of Maranh o and the Sergipe Alagoas Basin in the State of Alagoas, subject to confirmation of qualification requirements, or, our Round 12 concessions. See " Recent developments." The table below sets forth certain of our financial and operating data for the periods indicated, as well as pro forma data reflecting our acquisitions of Winchester, Luna and Cuerva in Colombia and our Brazil Acquisitions. For the nine-month period ended September 30, For the year ended December 31, 2013 2012 2012 2011 (unaudited) (unaudited) Financial data Revenues (US$ thousands) 250,530 182,139 250,478 111,580 Pro forma revenues (US$ thousands) (unaudited)(1) 287,188 325,403 Profit for the period/year (US$ thousands) 25,203 24,399 18,446 5,062 Pro forma profit for the period/year (US$ thousands)(1) 31,276 32,245 Adjusted EBITDA (US$ thousands)(2) 125,894 94,793 121,404 63,391 Pro forma Adjusted EBITDA (US$ thousands) (unaudited)(1)(2) 148,423 168,708 Operating data (unaudited) Average net production (boepd) 13,148 11,533 11,292 7,593 % oil and liquids 82% 64% 66% 33% Pro forma average net production (boepd)(3) 16,869 14,952 Pro forma % oil and liquids(4) 64% 50% GeoPark Limited (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant's name into English) Bermuda (State or other jurisdiction of incorporation or organization) 1311 (Primary Standard Industrial Classification Code Number) NOT APPLICABLE (I.R.S. Employer Identification Number) Nuestra Se ora de los ngeles 179 Las Condes, Santiago, Chile +56 (2) 2242-9600 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) Table of Contents our "Brazil Acquisitions" are to our pending Rio das Contas acquisition, which is expected to be completed in the first quarter of 2014, our award of two new concessions by the ANP, which are subject to confirmation of qualification requirements, and our award of seven new concessions by the ANP, in Brazil; "Chile" are to the Republic of Chile; "Colombia" are to the Republic of Colombia; "Brazil" are to the Federative Republic of Brazil; "Argentina" are to the Argentine Republic; "Peru" are to the Republic of Peru; "US$" and "U.S. dollars" are to the official currency of the United States of America; "Ch$" and "Chilean pesos" are to the official currency of Chile; "Col$" and "Colombian pesos" are to the official currency of Colombia; "GBP" are to the official currency of the United Kingdom; "AR$" and "Argentine pesos" are to the official currency of Argentina; "real," "reais" and "R$" are to the official currency of Brazil; "IFRS" are to International Financial Reporting Standards as adopted by the International Accounting Standards Board, or IASB; "US GAAP" are to generally accepted accounting principles in the United States; "ANP" are to the Brazilian National Petroleum, Natural Gas and Biofuels Agency (Ag ncia Nacional do Petr leo, G s Natural e Biocombust veis); "CNPE" are to the Brazilian National Council on Energy Policy (Conselho Nacional de Pol tica Energ tica); "ANH" are to the Colombian National Hydrocarbons Agency (Agencia Nacional de Hidrocarburos); "economic interest" means an indirect participation interest in the net revenues from a given block based on bilateral agreements with the concessionaires; and "working interest" means the right granted to the lessee of a property to explore for and to produce and own oil, gas, or other minerals. The working interest owners bear the exploration, development and operating costs on either a cash, penalty or carried basis. Financial statements Our consolidated financial statements This prospectus includes our audited consolidated financial statements as of and for each of the years ended December 31, 2012 and 2011, or our Annual Consolidated Financial Statements, and our unaudited interim consolidated financial statements as of September 30, 2013 and for the nine-month periods ended September 30, 2013 and 2012, or our Interim Consolidated Financial Statements. We refer to our Annual Table of Contents (1) Pro forma revenues, pro forma profit for the period/year and pro forma Adjusted EBITDA are revenues, profit for the period/year and Adjusted EBITDA, respectively, after giving effect to the acquisitions of Winchester, Luna, Cuerva and Rio das Contas for the year ended December 31, 2012 and, after giving effect to the acquisition of Rio das Contas, for September 30, 2013, in each case as if such acquisitions had occurred as of January 1, 2012. For a reconciliation of pro forma Adjusted EBITDA to the IFRS financial measure of profit for the period before income tax, see "Unaudited Condensed Combined Pro Forma Financial Data Note 6 Reconciliations." (2) We define Adjusted EBITDA as profit for the period before net finance cost, income tax, depreciation, amortization and certain non-cash items such as impairments and write-off of exploration and evaluation assets, accrual of stock options and stock awards and bargain purchase gain on acquisition of subsidiaries. Adjusted EBITDA is not a measure of profitability or cash flows as determined by IFRS. See "Presentation of financial and other information Financial statements Non-IFRS financial measures." For a reconciliation of pro forma Adjusted EBITDA to the IFRS financial measure of profit before income tax, see "Unaudited Condensed Combined Pro Forma Financial Data Note 6 Reconciliations." (3) Pro forma average net production is production after giving effect to the acquisitions of Winchester, Luna, Cuerva and Rio das Contas for the year ended December 31, 2012 and, after giving effect to the acquisition of Rio das Contas, for the nine-month period ended September 30, 2013, in each case as if such acquisitions had occurred as of January 1, 2012. (4) Pro forma % oil and liquids is % oil and liquids after giving effect to the acquisitions of Winchester, Luna, Cuerva and Rio das Contas for the year ended December 31, 2012 and, after giving effect to the acquisition of Rio das Contas, for the nine-month period ended September 30, 2013, in each case as if such acquisitions had occurred as of January 1, 2012. Our history We were founded in 2002 by Gerald E. O'Shaughnessy and James F. Park, who have over 25 and 35 years of international oil and natural gas experience, respectively, and who, as of the date of this prospectus, collectively held approximately 33.5% of our common shares and are involved in our operations and strategy. Mr. O'Shaughnessy currently serves as our Executive Chairman and Mr. Park currently serves as our Chief Executive Officer and Deputy Chairman, and both actively contribute to our ongoing operations and business decisions. Our history commenced with the purchase of AES Corporation's upstream oil and natural gas assets in Chile and Argentina. Those assets included a non-operating working interest in the Fell Block in Chile, which at that time was operated by the Empresa Nacional de Petr leo, or ENAP, the Chilean state-owned hydrocarbon company, and operating working interests in the Del Mosquito, Cerro Do a Juana and Loma Cortaderal blocks in Argentina, which we collectively refer to as the Argentina Blocks. Since 2002, our business has grown significantly. In 2006, after demonstrating our technical expertise and committing to an exploration and development plan, we obtained a 100% operating working interest in the Fell Block by the Republic of Chile. Also in 2006, the International Finance Corporation, or the IFC, a member of the World Bank Group, became one of our principal shareholders, and we listed our common shares on AIM, a market operated by the London Stock Exchange plc, in an initial public offering of common shares outside the United States. Subsequently, in 2008 and 2009, we issued and sold additional common shares outside the United States. In 2008 and 2009, we continued our growth in Chile by acquiring operating working interests in each of the Otway and Tranquilo Blocks, and by forming partnerships with Pluspetrol, Wintershall, Methanex and IFC. In 2010, we formed a strategic partnership with LGI, a Korean conglomerate, to jointly acquire and develop upstream oil and gas projects in South America. LGI's business includes a portfolio of energy and raw material projects, including oil and gas projects in the Middle East and in Southeast and Central Asia. In 2011, we were awarded by ENAP the opportunity to obtain operating working interests in each of the Isla Norte, Flamenco and Campanario blocks in Tierra del Fuego, Chile, which we refer to collectively as the Tierra del Fuego Blocks, and in 2012, we formalized and jointly with ENAP entered into special operation contracts (Contratos Especiales de Operaci n para la Exploraci n y Explotaci n de Yacimientos de Hidrocarburos), each of which we refer to as a CEOP, with Chile for the exploration and exploitation of hydrocarbons within these blocks. CT Corporation System 111 Eighth Avenue New York, NY 10011 212-894-8940 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents Consolidated Financial Statements and our Interim Consolidated Financial Statements collectively as our Consolidated Financial Statements. Our Consolidated Financial Statements are presented in U.S. dollars and have been prepared in accordance with IFRS. Our Annual Consolidated Financial Statements have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina, a member firm of PricewaterhouseCoopers Network, or PwC, an independent registered public accounting firm, as stated in their report included elsewhere in this prospectus. Our fiscal year ends December 31. References in this prospectus to a fiscal year, such as "fiscal year 2012," relate to our fiscal year ended on December 31 of that calendar year. Colombian acquisitions In the first quarter of 2012, we extended our operations into Colombia, through our acquisitions of Winchester and Luna on February 14, 2012 and the acquisition of Cuerva on March 27, 2012. For accounting purposes, such acquisitions were computed as if they had occurred on January 31, 2012 and March 31, 2012, respectively. In addition, we disposed of 20% of our interest in our Colombian operations to LGI on December 18, 2012. Included in this prospectus are the audited consolidated financial statements of each of Winchester and Luna, each in accordance with IFRS, and Cuerva, in accordance with US GAAP, as of and for the year ended December 31, 2011, which we refer to as the Winchester Annual Consolidated Financial Statements, the Luna Annual Consolidated Financial Statements and the Cuerva Annual Consolidated Financial Statements, respectively, and as the Colombian Acquisitions Audited Consolidated Financial Statements, collectively. Also included in this prospectus are the consolidated financial statements for the one-month period ended January 31, 2012 of each of Winchester and Luna, each in accordance with IFRS, and the consolidated financial statements for the three-month period ended March 31, 2012 for Cuerva, in accordance with US GAAP, which we refer to collectively as the Colombian Acquisitions Interim Consolidated Financial Statements. Accordingly, our results for the nine-month period ended September 30, 2013 and the year ended December 31, 2012 are not fully comparable with each other and prior periods. The Colombian Acquisitions Audited Consolidated Financial Statements have been audited by PricewaterhouseCoopers Ltda., Colombia, a member firm of PricewaterhouseCoopers Network, independent accountants, as stated in their reports appearing herein. We refer to the Colombian Acquisitions Audited Consolidated Financial Statements and the Colombian Acquisitions Interim Consolidated Financial Statements collectively as the Colombian Acquisitions Consolidated Financial Statements. Acquisition of Rio das Contas On May 14, 2013, we agreed to acquire all of the issued and outstanding shares of Rio das Contas from Panoro, for a total cash consideration of US$140.0 million subject to certain purchase price and easement adjustments. The closing of the acquisition is subject to certain conditions, including approval by the ANP, among others. We expect the acquisition to close in the first quarter of 2014. This prospectus includes the consolidated financial statements in accordance with IFRS of Rio das Contas as of and for the years ended December 31, 2012 and 2011, or the Rio das Contas Audited Consolidated Financial Statements, which have been audited by Ernst & Young Auditores Independentes S.S., or Ernst & Young, as stated in their report appearing herein, and the unaudited condensed consolidated interim financial statements of Rio das Contas as of September 30, 2013 and for the nine-month periods ended September 30, 2013 and 2012, or the Rio das Contas Interim Consolidated Financial Statements. References to Rio das Contas Consolidated Financial Statements are to the Rio das Contas Audited Consolidated Table of Contents Also in 2011, LGI acquired a 20% equity interest in GeoPark Chile and a 14% equity interest in GeoPark TdF S.A., or GeoPark TdF, for US$148.0 million. LGI also provided to GeoPark TdF US$84.0 million in stand-by letters of credit to partially secure the US$101.4 million performance bond required by the Chilean government to guarantee GeoPark TdF's obligations with respect to the minimum work program under the Tierra del Fuego CEOPs. Our agreement with LGI in the Tierra del Fuego Blocks allows us to earn back up to 12% equity participation in GeoPark TdF, depending on the success of our operations in Tierra del Fuego. See "Business Significant agreements Agreements with LGI." In the first quarter of 2012, we moved into Colombia by acquiring three privately held E&P companies, Winchester, Luna and Cuerva. These acquisitions provided us with an attractive platform in Colombia that includes working interests and/or economic interests in 10 blocks located in the Llanos, Magdalena and Catatumbo Basins and covering an area of 575,700 gross acres. In December 2012, LGI acquired a 20% equity interest in GeoPark Colombia for US$20.1 million, including the assumption of existing debt and the commitment to provide additional funding to cover LGI's share of required future investments in Colombia. In addition, our agreement with LGI in Colombia allows us to earn back up to 12% of equity participation in GeoPark Colombia, depending on the success of our operations in Colombia. See "Business Significant agreements Agreements with LGI." We and LGI also agreed that we would extend our strategic partnership to build a portfolio of upstream oil and gas assets throughout South America through 2015. We believe our partnership with LGI represents a positive independent assessment and validation of the quality of our Chilean and Colombian asset inventory, the extent of our technical and operational expertise and the ability of our management to structure and effect significant transactions. In May 2013, we entered into agreements to expand our operations to Brazil. See " Recent developments." Our operations We have been able to successfully develop our assets through drilling, with 99 of the 145 wells that we drilled from 2006 through September 30, 2013 having become productive wells, a 68% success ratio. We have grown our business through winning new licenses and acquiring strategic assets and businesses, with 15 new blocks incorporated into our portfolio since January 1, 2006, seven new concessions in Brazil awarded to us following our entry into concession agreements with the ANP and an additional concession in Brazil upon the closing of our pending Rio das Contas acquisition. Since our inception, we have supported our growth through our prospect development efforts and our drilling program, as well as by developing long-term strategic partnerships and alliances with key industry participants, accessing debt and equity capital markets and developing and retaining a technical team with vast experience and a successful track record of finding and producing oil and gas in South America. A key factor behind our success ratio is our experienced team of geologists, geophysicists and engineers, including professionals with specialized expertise in the geology of Chile, Colombia, Brazil and Argentina. For the first nine months of 2013, we drilled 32 new wells (14 in Chile and 18 in Colombia) in blocks in which we have working interests and/or economic interests. We made total capital expenditures of US$191.5 million (US$115.4 million, US$71.5 million and US$4.6 million in Chile, Colombia and Brazil, respectively) for the first nine months of 2013, consisting of US$111.3 million related to exploration and R$10.2 million (approximately US$4.6 million, at the September 30, 2013 exchange rate of R$2.23 to US$1.00) in license fee payments to the ANP for our Round 11 concessions. We expect our total capital expenditures for 2013 to have been between US$200 million to US$230 million in Chile, Colombia and Brazil. Copies to: Maurice Blanco Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 Phone: (212) 450-4000 Fax: (212) 701-5800 Pedro Aylwin Nuestra Se ora de los ngeles 179 Las Condes, Santiago, Chile Phone: +56 (2) 2242-9600 Fax: +56 (2) 2242-9600 ext. 2016 John R. Vetterli White & Case LLP 1155 Avenue of the Americas New York, NY 10036 Phone: (212) 819-8200 Fax: (212) 354-8113 Table of Contents Financial Statements and the Rio das Contas Interim Consolidated Financial Statements. Accordingly, our results as reflected in our Consolidated Financial Statements included in this prospectus are not comparable to our results for any period following the future date on which we consolidate the results of Rio das Contas. Pro forma financial data In light of our Colombian acquisitions and our pending Rio das Contas acquisition, we include in this prospectus unaudited pro forma condensed combined financial data to illustrate: the combined results of operations for GeoPark for the year ended December 31, 2012 to give pro forma effect to the acquisitions of Winchester, Luna, Cuerva and Rio das Contas and to the disposition of a 20% equity interest in GeoPark Colombia as if such transactions had occurred as of January 1, 2012; the combined results of operations for GeoPark for the nine-month period ended September 30, 2013 to give pro forma effect to the acquisition of Rio das Contas as if such acquisition had occurred as of January 1, 2012; and the combined statement of financial position for GeoPark as of September 30, 2013 to give pro forma effect to the acquisition of Rio das Contas as if such acquisition had occurred as of September 30, 2013. We refer to the above-described pro forma financial statements as our Unaudited Condensed Combined Pro Forma Financial Data. For purposes of preparing our Unaudited Condensed Combined Pro Forma Financial Data, we have made certain adjustments to the historical and pre-acquisition financial information of Winchester, Luna, Cuerva and Rio das Contas. See "Prospectus summary Summary unaudited condensed combined pro forma financial data" and "Unaudited Condensed Combined Pro Forma Financial Data." Our Unaudited Condensed Combined Pro Forma Financial Data is presented for informational purposes only and does not purport to represent our results of operations or financial condition had our acquisitions of Winchester, Luna, Cuerva or Rio das Contas and to the disposition of a 20% equity interest in GeoPark Colombia occurred at the respective dates indicated above. Our historical financial information and pro forma financial data should be read in conjunction with "Management's discussion and analysis of financial condition and results of operations," our Consolidated Financial Statements, the Colombian Acquisitions Consolidated Financial Statements and the Rio das Contas Consolidated Financial Statements, including, in each case, the accompanying notes thereto, included elsewhere in this prospectus. Non-IFRS financial measures Adjusted EBITDA Adjusted EBITDA is a supplemental non-IFRS financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as profit for the period before net finance cost, income tax, depreciation, amortization and certain non-cash items such as impairments and write-offs of unsuccessful exploration and evaluation assets, accrual of stock options and stock awards and bargain purchase gain on acquisition of subsidiaries. Adjusted EBITDA is not a measure of profit or cash flows as determined by IFRS. Our management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above from profit for the period in (1) We entered into an agreement on May 10, 2013 with Panoro to acquire Rio das Contas, which holds a 10% working interest in the BCAM-40 Concession. We expect our pending Rio das Contas acquisition to be completed in the first quarter of 2014. We have also entered into seven new concession agreements with the ANP in the Rec ncavo and Potiguar Basins in Brazil and were awarded, two new concessions, subject to confirmation of qualification requirements, by the ANP in the Parna ba Basin and the Sergipe Alagoas Basin. See " Recent developments." Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, 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. CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered(1) Proposed maximum offering price per share(2) Proposed maximum aggregate offering price(1)(2) Amount of registration fee(3) Common shares, par value US$0.001 per share 14,300,000 US$8.00 US$114,400,000 US$14,734.72 (1)Includes common shares which the underwriters have the option to purchase. (2)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (3)Previously Paid. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. Table of Contents arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, profit for the period or cash flows from operating activities as determined in accordance with IFRS or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure and significant and/or recurring write-offs, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. For a reconciliation of Adjusted EBITDA to the IFRS financial measure of profit for the period/year, see "Prospectus summary Summary historical financial data." We have also included pro forma Adjusted EBITDA in this prospectus to show our Adjusted EBITDA after giving pro forma effect to our recent acquisitions. For a reconciliation of pro forma Adjusted EBITDA to the IFRS financial measure of pro forma profit for the period/year, see "Unaudited Condensed Combined Pro Forma Financial Data Note 6 Reconciliations." Oil and gas reserves and production information D&M 2012 Year-end Reserves Report The information included in this prospectus regarding estimated quantities of proved reserves, the future net revenues from those reserves and their present value in Chile, Colombia and Argentina is derived, in part, from estimates of the proved reserves and present values of proved reserves as of December 31, 2012. The reserves estimates are derived from the report prepared by DeGolyer and MacNaughton, or D&M, independent reserves engineers, or the D&M 2012 Year-end Reserves Report, included as an exhibit to the registration statement of which this prospectus forms a part, prepared by D&M. The D&M 2012 Year-end Reserves Report was prepared by D&M for us and presents an appraisal as of December 31, 2012 of oil and gas reserves located in the Fell Block in Chile, the Del Mosquito, Cerro Do a Juana and Loma Cortaderal Blocks in Argentina and the La Cuerva, Llanos 32, Llanos 34 and Yam Blocks in Colombia. We have also included a third-party summary report prepared by D&M pertaining to these blocks as an exhibit to the registration statement of which this prospectus forms a part. D&M Brazil and Colombia Reserves Report The information included in this prospectus regarding estimated quantities of proved reserves, the future net revenues from those reserves and their present value for certain new discoveries in Colombia made since December 31, 2012, as of June 30, 2013, is derived, in part, from estimates of the proved reserves and present values of proved reserves as of June 30, 2013. The reserves estimates are derived from the report prepared by D&M, or the D&M Brazil and Colombia Reserves Report, included as an exhibit to the registration statement of which this prospectus forms a part. The information included in this prospectus regarding estimated quantities of proved reserves, the future net revenues from those reserves and their present value attributable to Rio das Contas in Brazil is derived from estimates of the proved reserves and present values of proved reserves as of June 30, 2013, also presented in the D&M Brazil and Colombia Reserves Report, included as an exhibit to the registration statement of which this prospectus forms a part, prepared by D&M. We have also included a third-party summary report prepared by D&M pertaining to these blocks as an exhibit to the registration statement of which this prospectus forms a part. Table of Contents The following table sets forth our net proved reserves and other data as of and for the year ended December 31, 2012. Country Oil (mmbbl) Gas (bcf) Oil equivalent (mmboe) % Oil Revenues (in thousands of US$) % of total revenues For the year ended December 31, 2012 Chile 5.3 29.6 10.2 52% 149,927 60% Colombia 6.6 6.6(1 ) 100% 99,501 40% Argentina 1,050 Total 11.9 29.6 16.8 71% 250,478 100% (1) According to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, our net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in an additional 2.4 mmboe of net proved reserves. As of June 30, 2013, according to the D&M Brazil and Colombia Reserves Report, the net proved reserves attributable to our pending Rio das Contas acquisition in Brazil were 8.1 mmboe (composed of approximately 98% natural gas), which generated revenues of US$36.7 million for the nine-month period ended September 30, 2013. Our commitment to growth has translated into a strong compounded annual growth rate, or CAGR, of 51.3% for production in the period from 2007 to 2012, as measured by boepd in the table below. For the year ended December 31, 2012 2011 2010 2009 2008 2007 Average net production (mboepd) 11.3 7.6 6.9 6.3 3.4 1.4 % oil 66.3% 33.0% 28.4% 19.5% 9.8% 12.0% During the year ended December 31, 2012, Rio das Contas produced 3.7 mboepd. The following table sets forth our production of oil and natural gas in the blocks in which we have a working interest and/or economic interest as of September 30, 2013. Average daily production For the nine-month period ended September 30, 2013 Chile Colombia Argentina Oil production Total crude oil production (bopd) 4,703 6,066 46 Average sales price of crude oil (US$/bbl) 83.7 81.7 68.6 Natural gas production Total natural gas production (mcf/day) 13,858 53 82 Average sales price of natural gas (US$/mcf) 4.6 4.2 1.2 Oil and natural gas production cost Weighted average production cost (US$/boe) 26.0 48.1 11.2 For the nine-month period ended September 30, 2013, Rio das Contas produced an average of 3,721 boepd (including 98% natural gas and 2% oil), with an average sales price of US$40.2/boe and an average production cost of US$27.8/boe. Table of Contents SUBJECT TO COMPLETION, DATED FEBRUARY 6, 2014 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Preliminary Prospectus 13,500,000 Common Shares GeoPark Limited (an exempted company incorporated under the laws of Bermuda) US$ per common share This is an initial public offering in the United States of common shares, par value US$0.001 per share, of GeoPark Limited. We are offering 13,500,000 common shares. We expect the public offering price of our common shares to be between US$7.00 and US$8.00 per common share. Our common shares have been approved for listing on the New York Stock Exchange, or NYSE, under the symbol "GPRK." Prior to this offering, our common shares have traded, and immediately subsequent to this offering will continue to trade, on the Alternative Investment Market of the London Stock Exchange, or the AIM, under the symbol "GPK" and on the Santiago Offshore Stock Exchange under the symbol "GPK." Conditional upon the listing of our common shares on the NYSE, we intend to cancel the admission of our common shares to trading on AIM at 7:00 am GMT on February 19, 2014. We also intend to de-register from the Santiago Offshore Stock Exchange as soon as practicable following the listing of our common shares on the NYSE. We are an emerging growth company, as defined in Section 2(a) of the United States Securities Act of 1933, as amended, or the Securities Act, and, as such, may elect to comply with certain reduced United States public company reporting requirements. Investing in our common shares involves risks. See "Risk factors" beginning on page 34 of this prospectus. Per common share Total Public offering price US$ US$ Underwriting discounts and commissions(1) US$ US$ Proceeds to us, before expenses US$ US$ (1)See "Underwriting Underwriting discounts and commissions" for a description of the compensation payable to the underwriters. We have received the following indications of interest to purchase in this offering, at the public offering price, an aggregate of US$60.0 million (or 8,000,000 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus): (i) Mr. James F. Park (or any of his affiliates), our Chief Executive Officer, one of our principal shareholders and a member of our board of directors: US$2.0 million (or 266,667 of our common shares, at the midpoint of the range set forth above); (ii) Mr. Juan Cristobal Pavez (or any of his affiliates), one of our principal shareholders and a member of our board of directors: US$5.0 million (or 666,666 of our common shares, at the midpoint of the range set forth above); (iii) certain private investment funds managed and controlled by Cartica Management, LLC: US$33.0 million (or 4,400,000 of our common shares, at the midpoint of the range set forth above). Mr. Steven Quamme, one of our principal shareholders and a member of our board of directors, is the Senior Managing Director of Cartica Management, LLC, and therefore may be deemed to have voting and investment power over the common shares of GeoPark Limited held by Cartica Management, LLC; and (iv) certain members of Mr. Gerald E. O'Shaughnessy's family (or any of their respective affiliates that do not include Mr. Gerald E. O'Shaughnessy): US$20.0 million (or 2,666,667 of our common shares, at the midpoint of the range set forth above). Because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these individuals or private investment funds and any of these individuals or private investment funds could determine to purchase more, less or no shares in this offering. The underwriters will not receive any underwriting discount or commissions in connection with the sale of our common shares, to the extent they are purchased pursuant to these indications of interest. Following the completion of this offering, and assuming the purchase of all of the common shares described above, our board of directors and senior management will be deemed to beneficially own, in the aggregate approximately 48.8% of our outstanding common shares (and assuming no exercise of the underwriters' over-allotment option). See "Underwriting." We have granted the underwriters an option, exercisable at any time in whole, or from time to time in part, on or before the thirtieth day following the date of this prospectus, upon written notice from J.P. Morgan Securities LLC to us, with a copy to the other underwriters, to purchase up to 800,000 additional common shares, at the public offering price less an amount per common share equal to any dividends or distributions, if any, declared by us and payable on our common shares but not payable on these additional common shares, to cover over-allotments, if any, provided that the decision to over-allocate the common shares is made jointly by the underwriters at the time the price per common share is determined. See "Underwriting Over-allotment option." Delivery of our common shares will be made on or about , 2014. Neither the United States Securities and Exchange Commission, or 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. J.P. Morgan BTG Pactual Ita BBA Scotiabank / Howard Weil The date of this prospectus is , 2014. Table of Contents The reserves information presented in this prospectus based on the D&M Reserves Reports only presents reserves estimates for our working interests in the blocks covered by such reports as of the respective dates of such reports. We refer to the D&M 2012 Year-end Reserves Report and the D&M Brazil and Colombia Reserves Report collectively as the D&M Reserves Reports. These estimates and the D&M Reserves Reports are included in this prospectus in reliance upon the authority of such firm as an expert in these matters. Market share and other information Market data, other statistical information, information regarding recent developments in Chile, Colombia, Brazil and Argentina and certain industry forecast data used in this prospectus were obtained from internal reports and studies, where appropriate, as well as estimates, market research, publicly available information (including information available from the SEC website) and industry publications. Industry publications generally state that the information they include has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal reports and studies, estimates and market research, which we believe to be reliable and accurately extracted by us for use in this prospectus, have not been independently verified. However, we believe such data is accurate and agree that we are responsible for the accurate extraction of such information from such sources and its correct reproduction in this prospectus. Measurements, oil and natural gas terms and other data In this prospectus, we use the following measurements: "m" or "meter" means one meter, which equals approximately 3.28084 feet; "km" means one kilometer, which equals approximately 0.621371 miles; "sq km" means one square kilometer, which equals approximately 247.1 acres; "bbl" "bo," or "barrel of oil" means one stock tank barrel, which is equivalent to approximately 0.15898 cubic meters; "boe" means one barrel of oil equivalent, which equals approximately 160.2167 cubic meters, determined using the ratio of 6,000 cubic feet of natural gas to one barrel of oil; "cf" means one cubic foot; "m," when used before bbl, boe or cf, means one thousand bbl, boe or cf, respectively; "mm," when used before bbl, boe or cf, means one million bbl, boe or cf, respectively; "b," when used before bbl, boe or cf, means one billion bbl, boe or cf, respectively; and "pd" means per day. In addition, we have provided definitions for certain industry terms used in this prospectus in the "Glossary of oil and natural gas terms" included as Appendix A to this prospectus. Rounding We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. Table of Contents Our assets According to the D&M 2012 Year-end Reserves Report, as of December 31, 2012, the blocks in Chile, Colombia and Argentina in which we have a working interest had 16.8 mmboe of net proved reserves, with 61%, or 10.2 mmboe, and 39%, or 6.6 mmboe, of such net proved reserves located in Chile and Colombia, respectively. According to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in an additional 2.4 mmboe of net proved reserves, and net proved reserves attributable to our pending Rio das Contas acquisition in Brazil were 8.1 mmboe. For the nine-month period ended September 30, 2013, we produced an average of 13,148 boepd, 53% of which, or 7,013 boepd, was produced in the Fell Block, 46% of which, or 6,075 boepd, was produced in the Colombian blocks and 0.5%, or 60 boepd, was produced in the Argentine blocks. We are the operator of a majority of the blocks in which we have a working interest. The following table summarizes certain information about our Chilean, Colombian and Argentine blocks as of September 30, 2013, except as otherwise indicated. Country Block Operator Working interest (1)(2) Basin Gross area (thousand acres)(3) Net proved reserves (mmboe)(4) % Oil Net production (boepd)(6) % Oil Concession expiration year Chile Fell GeoPark 100% Magallanes 367.8 10.2 52% 7,013 67% Exploitation: 2032 Chile Tranquilo GeoPark 29% Magallanes 92.4 Exploitation: 2043 Chile Otway GeoPark 100% Magallanes 49.4(8 ) Exploitation: 2044 Chile Isla Norte GeoPark 60%(7 ) Magallanes 130.2 Exploration: 2019 Exploitation: 2044 Chile Campanario GeoPark 50%(7 ) Magallanes 192.2 Exploration: 2020 Exploitation: 2045 Chile Flamenco GeoPark 50%(7 ) Magallanes 141.3 Exploration: 2019 Exploitation: 2044 Subtotal Chile 973.3 10.2 52% 7,013 67% Colombia La Cuerva GeoPark 100% Llanos 47.8 2.2 100% 2,026 100% Exploration: 2014 Exploitation: 2038 Colombia Llanos 34 GeoPark 45% Llanos 82.2 3.9(5) 100% 3,002 100% Exploration: 2015 Exploitation: 2039 Colombia Llanos 62 GeoPark 100% Llanos 44.0 Exploration: 2017 Exploitation: 2041 Colombia Yam GeoPark 54.5/75%(9 ) Llanos 11.2 0.4(5) 100% 573 100% Exploration: 2013 Exploitation: 2036 Colombia Llanos 17 Parex 36.8%(10 ) Llanos 108.8 Exploration: 2015 Exploitation: 2039 Colombia Llanos 32 P1 Energy 0%(11 ) Llanos 100.3 0.02 100% 202 100% Exploration: 2015 Exploitation: 2039 Colombia Jag eyes 3432A Columbus 5% Llanos 61.0 Exploration: 2014 Exploitation: 2038 Colombia Arrendajo Pacific 0%(12 ) Llanos 78.1 169 100% Exploration: 2017 Production: 2041 Colombia Abanico Pacific 0%(12 ) Magdalena 32.1 94 100% Production: 2022 Colombia Cerrito Pacific 0%(12 ) Catatumbo 10.2 9 0% Production: 2028 Subtotal Colombia 575.7 6.6 100% 6,075 100% Argentina Del Mosquito GeoPark 100% Austral 17.3 60 77% Exploitation: 2016 Argentina Cerro Do a Juana GeoPark 100% Neuqu n 19.6 Exploitation: 2017 Argentina Loma Cortaderal GeoPark 100% Neuqu n 28.3 Exploitation: 2017 Subtotal Argentina 65.2 60 77% Total GeoPark 1,691.9 16.8 71% 13,148 82% (1) Working interest corresponds to the working interests held by our respective subsidiaries in such block, net of any working interests and/or economic interests held by other parties in such block. (2) As of the date of this prospectus, LGI has a 20% equity interest in our Chilean operations through GeoPark Chile and a 20% equity interest in our Colombian operations through GeoPark Colombia. (3) Gross area refers to the total acreage of each block. (4) Reflects net proved reserves as of December 31, 2012. (5) According to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, our net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in the addition of 2.4 mmboe, composed of 2.2 mmboe in the Llanos 34 Block and 0.2 mmboe in the Yam Block, to our net proved reserves. Table of Contents We expect to further expand our footprint in Brazil following the closing of our pending Rio das Contas acquisition and the award to us of two new concessions by the ANP subject to confirmation of qualification requirements. See "Prospectus summary Recent developments." Table of Contents (6) Reflects net average production for the first nine months of 2013. Net production refers to average production for each block, net of any working interests or economic interests held by others in such block but gross of any royalties due to others. (7) LGI has a 14% direct equity interest in our Tierra del Fuego operations through GeoPark TdF and a 20% direct equity interest in GeoPark Chile, for a total 31.2% effective equity interest in our Tierra del Fuego operations. See "Business Our operations Operations in Chile Tierra del Fuego Blocks (Isla Norte, Campanario and Flamenco Blocks)." (8) In April 2013, we voluntarily relinquished to the Chilean government all of our acreage in the Otway Block, except for 49,421 acres. In May 2013, our partners under the joint operating agreement governing the Otway Block decided to withdraw from such joint operating agreement, and applied for an assignment of rights permit on August 5, 2013. On August 26, 2013, the Ministry of Energy granted this permit, such that, upon execution of a deed of assignment of rights containing the as-approved terms, we will be the sole participant, and have a 100% working interest, in our two remaining areas under the Otway Block CEOP. See "Business Our operations Operations in Chile Otway and Tranquilo Blocks." (9) Although we are the sole title holder of the working interest in the Yam Block, other parties have been granted economic interests in fields in this block. Taking those other parties' interests into account, we have a 54.5% interest in the Carupana Field and a 75% interest in the Yam and Potrillo Fields, both located in the Yam Block. (10) We currently have a 40% working interest in the Llanos 17 Block, although we have assigned a 3.2% economic interest to a third party. We expect to apply to formalize this assignment with the ANH so that it will be recognized as a working interest. (11) We currently have a 10% economic interest in the Llanos 32 Block, although we have applied to the ANH to recognize this as a working interest in the block, and expect to receive the ANH's authorization in the first half of 2014. (12) We do not have a working interest in those blocks, though we have a 10% economic interest in the net revenues of each of these blocks pursuant to various partnership interests agreements. See "Business Our operations Operations in Colombia." Additionally, according to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, the net proved reserves attributable to our pending Rio das Contas acquisition in Brazil were 8.1 mmboe. The table below summarizes information as of September 30, 2013 regarding the concessions in Brazil in which we currently have, and expect to further have, following the completion of our pending Rio das Contas acquisition and Round 12 concessions, a working interest. Concession Gross acres (thousand acres) Working interest(1) Partners Operator Net proved reserves (mmboe) Production (boepd) Basin Concession expiration year BCAM-40 22.8 10% Petrobras; QGEP; Brasoil Petrobras 8.1 3,721 Camamu-Almada Exploitation: 2029(2)-2034(3 ) REC-T 94 7.7 100% GeoPark Rec ncavo Exploration: 2018 Exploitation: 2045 REC-T 85 7.7 100% GeoPark Rec ncavo Exploration: 2018 Exploitation: 2045 POT-T 664 7.9 100% GeoPark Potiguar Exploration: 2018 Exploitation: 2045 POT-T 665 7.9 100% GeoPark Potiguar Exploration: 2018 Exploitation: 2045 POT-T 619 7.9 100% GeoPark Potiguar Exploration: 2018 Exploitation: 2045 POT-T 620 7.9 100% GeoPark Potiguar Exploration: 2018 Exploitation: 2045 POT-T 663 7.9 100% GeoPark Potiguar Exploration: 2018 Exploitation: 2045 PN-T-597(4) 188.7 100%(5) (5 ) GeoPark Parna ba (4 ) SEAL-T-268(4) 7.8 100% GeoPark Sergipe Alagoas (4 ) Total Brazil 274.2 8.1 3,721 (1) Working interest corresponds to the working interests we expect to hold in such concession, net of any working interests held by other parties in such concession, following the completion of our pending Rio das Contas acquisition and Round 12 concessions. (2) Corresponds to the Manati Field. (3) Corresponds to the Camar o Norte Field. (4) Round 12 concessions are subject to confirmation of qualification requirements by the ANP. (5) We expect to jointly develop this concession with Tecpetrol and assign 50% of our working interest in this concession to Tecpetrol. Table of Contents Our strengths We believe that we benefit from the following competitive strengths: High quality and diversified asset base built through a successful track record of organic growth and acquisitions Our assets include a diverse portfolio of oil- and natural gas-producing reserves, operating infrastructure, operating licenses and valuable geological surveys. According to the D&M 2012 Year-end Reserves Report, as of December 31, 2012, we had 16.8 mmboe of net proved reserves in Chile and Colombia, of which 71%, or 11.9 mmboe, was in oil, and 29%, or 4.9 mmboe, was in gas, and of which 37%, or 6.2 mmboe, was net proved developed reserves. Throughout our history, we have delivered continuous growth in our production, and our management team has been able to identify under-exploited assets and turn them into valuable, productive assets. For example, in 2002, we acquired a non-operating working interest in the Fell Block in Chile, which at the time had no material oil and gas production or reserves despite having been actively explored and drilled over the course of more than 50 years. Since 2006, when we became the operator of the Fell Block, through September 30, 2013, we have invested more than US$410 million and drilled approximately 92 wells in the block, with 72% of such wells becoming productive during that period. Currently, we are the operator and sole concessionaire of the Fell Block, which, during the nine-month period ended September 30, 2013, produced approximately 7,013 boepd from 61 active wells. As of September 30, 2013, we generated 67% of Chile's total oil production and 17% of its gas production, according to information provided by the Chilean Ministry of Energy. The acquisitions of Winchester, Luna and Cuerva in Colombia in the first quarter of 2012 gave us access to an additional 574,979 of gross exploratory and productive acres across 10 blocks in what we believe to be one of South America's most attractive oil and gas geographies. According to the D&M 2012 Year-end Reserves Report, as of December 31, 2012, the blocks in Colombia in which we have a working interest had 6.6 mmboe of net proved reserves, all of which were in oil. Additionally, according to the D&M Brazil and Colombia Reserves Report, as of June 30, 2013, our net proved reserves for certain new discoveries made in Colombia since December 31, 2012 resulted in the addition of 2.4 mmboe to our net proved reserves. Since we acquired Winchester, Luna and Cuerva, we were able to increase average production to 6,075 boepd in Colombia in the first nine months of 2013, an increase of 89% (on a pro forma basis, giving effect to our Colombian acquisitions) as compared to the first nine months of 2012. Also, we have been able to leverage our technical expertise and have made several discoveries in the Llanos Basin, including a discovery of oil located in the hanging wall of a normal fault in our Llanos 34 Block. In addition, in line with our growth strategy, we announced the expansion of our footprint to Brazil. See " Recent developments." Significant drilling inventory and resource potential from existing asset base Our portfolio includes large land holdings in high-potential hydrocarbon basins and blocks with multiple drilling leads and prospects in different geological formations, which provide a number of attractive opportunities with varying levels of risk. Our drilling inventory consists of over 200 identified drilling locations, and our development plans target locations that we believe are low-cost, provide attractive economics and support a predictable production profile. Currently, we are executing our most significant exploration and drilling plan to date: In Chile, we recently completed a 3D seismic survey covering approximately 315,000 gross acres, or 68% of the gross acres in our Tierra Del Fuego Blocks. Part of the survey took place in the Flamenco Block, where we drilled our first successful exploratory well (Cherc n 1), which resulted in our first oil and gas Table of Contents discovery in Tierra del Fuego. We have completed the construction of a flowline to connect this well to existing infrastructure, and the well is currently producing approximately 3,250 mcfpd and 30 bopd under a long-term production test. We subsequently drilled two additional exploratory wells in the Flamenco Block (Omeling 1 and Yakamush 1). Our Tierra del Fuego Blocks have similar geological characteristics to the Fell Block, and we intend to replicate the exploration and development strategy we successfully executed in the Fell Block in these blocks. In 2011, we expanded into a new play concept following our first oil discovery in the Konawentru well in the Tob fera formation, a volcaniclastic reservoir that lies below the Springhill formation, the traditional sandstone of the Magallanes Basin. Since then, we have significantly increased our oil production from the drilling of additional wells in the formation and we plan to continue to explore this formation, which has been the focus of our drilling plan. See " Recent developments Fourth quarter 2013 operational highlights." We have also initiated a technical assessment of the oil and gas shale potential in the Estratos con Favrella shale formation in some of our blocks in Chile. In Colombia, following our identification of several leads and prospects in our Llanos 34 Block, our most prospective Colombian block, we completed a 3D seismic survey on most of the remaining 50% of the acreage that had not been previously surveyed. Furthermore, in the second quarter of 2013, we successfully put into production our third discovery, the Potrillo 1 well in the Yam Block, and our fourth discovery, the Tarotaro 1 well in the Llanos 34 Block. In addition, in the fourth quarter of 2013, we drilled and tested the Tigana 1 exploration well in the Mirador and Guadalupe formations, our fifth new oil field discovery, and the Tigana Sur 1 exploration well in the Guadalupe formation, our sixth new oil field discovery in Colombia, both in the Llanos 34 Block. See " Recent developments Fourth quarter 2013 operational highlights." Our geoscience team continues to identify new potential accumulations and expand our inventory of prospects and drilling opportunities, including the seven new exploratory concessions that we entered into with the ANP. Strong liquidity and financial flexibility to fund expansion We benefit from both historically consistent cash flows and access to debt and equity capital markets, as well as other funding sources, which have provided us with strong liquidity and the financial flexibility to finance our organic growth and the pursuit of potential new opportunities. We generated US$98.3 million and US$131.8 million in cash from operations in the nine-month period ended September 30, 2013 and the year ended December 31, 2012, respectively, and had US$104.8 million and US$38.3 million in cash and cash equivalents as of September 30, 2013 and December 31, 2012, respectively. In February 2006, the IFC became a significant shareholder by contributing US$10 million. Later that year, we entered into a loan agreement for US$20 million with the IFC, which we have since fully repaid, to partially finance our investment program. In 2006, we completed an initial public offering of our common shares outside the United States on AIM and, in 2008 and 2009, we issued and sold additional common shares outside the United States. In 2007, we obtained financing from Methanex Chile S.A., or Methanex, the Chilean subsidiary of the Methanex Corporation, a leading global methanol producer, in an amount of US$40 million, structured as a gas pre-sale agreement with a six-year term at an interest rate equal to the six-month LIBOR. In 2010, we issued US$133.0 million aggregate principal amount of 7.75% senior secured notes in the international markets, or the Notes due 2015, which were redeemed following our issuance in 2013 of Table of Contents US$300.0 million aggregate principal amount of 7.50% senior secured notes due 2020, or the Notes due 2020. Highly committed founding shareholders and technical and management teams with proven industry expertise and technically-driven culture Our founding shareholders, management and operating teams have significant experience in the oil and gas industry and a proven technical and commercial performance record in onshore fields, as well as complex projects in South America and around the world, including expertise in identifying acquisition and expansion opportunities. Moreover, we differentiate ourselves from other E&P companies through our technically-driven culture, which fosters innovation, creativity and timely execution. Our geoscientists, geophysicists and engineers are pivotal to the success of our business strategy, and we have created an environment and supplied the resources that enable our technical team to focus its knowledge, skills and experience on finding and developing oil and gas fields. In addition, we strive to provide a safe and motivating workplace for employees in order to attract, protect, retain and train a quality team in the competitive marketplace for capable energy professionals. Our CEO, Mr. James Park, has been involved in E&P projects in South America since 1978. He has been closely involved in grass-roots exploration activities, drilling and production operations, surface and pipeline construction, legal and regulatory issues, crude oil marketing and transportation and capital raising for the industry. As of the date of this prospectus, Mr. Park held 16.32% of our outstanding common shares. Our Chairman, Mr. Gerald O'Shaughnessy, has been actively involved in the oil and gas business internationally and in North America since 1976. As of the date of this prospectus, Mr. O'Shaughnessy held 17.18% of our outstanding common shares. Our management and operating team has an average experience in the energy industry of approximately 25 years in companies such as Chevron, San Jorge, Petrobras, Total, Pluspetrol, ENAP and YPF, among others. Throughout our history, our management and operating team has had success in unlocking unexploited value from previously underdeveloped assets. In addition, on a fully diluted basis, as of the date of this prospectus, our executive directors, management and employees (excluding our founding shareholders, Mr. Gerald E. O'Shaughnessy and Mr. James F. Park) owned 6.3% of our outstanding common shares, aligning their interests with those of our shareholders and helping retain the talent we need to continue to support our business strategy. See "Management Compensation." Our founding shareholders are also involved in our daily operations and strategy. Long-term strategic partnerships and strong strategic relationships, such as with LGI, provide us with additional funding flexibility to pursue further acquisitions We benefit from a number of strong partnerships and relationships. In March 2010, we entered into a framework agreement with LGI to establish a strategic growth partnership to jointly acquire and invest in oil and natural gas projects throughout South America. In May 2011, our partnership with LGI was strengthened by LGI's acquisition of a 10% equity interest in our existing Chilean operations. In October 2011, LGI acquired an additional 10% equity interest in GeoPark Chile and a 14% equity interest in GeoPark TdF, and agreed to provide additional financial support for the further development of the Tierra del Fuego Blocks. Our relationship with LGI continues to grow. In December 2012, LGI acquired a 20% equity interest in our Colombian business. We also agreed with LGI to extend our strategic partnership in order to build a portfolio of upstream oil and gas assets throughout South America through 2015. We are currently the only Table of Contents independent E&P company in which LGI has equity investments in South America. See "Business Significant agreements Agreements with LGI" for additional information relating to these agreements. In addition, the IFC has been one of our shareholders since 2006, holding an 8% equity interest in us. In Chile, we have strong long-term commercial relationships with Methanex and ENAP, and in Colombia, through our acquisitions of Winchester, Luna and Cuerva, we have inherited a strong relationship with Ecopetrol, the Colombian state-owned oil and gas company. In Brazil, following the closing of our pending Rio das Contas acquisition, we expect to benefit from Rio das Contas's long-term relationship with Petrobras. Additionally, we have entered into a strategic alliance with Tecpetrol S.A., or Tecpetrol, to jointly identify, study and potentially acquire upstream oil and gas opportunities in Brazil. See "Recent developments Strategic alliance with Tecpetrol." Our strategy Continue to grow a risk-balanced asset portfolio We intend to continue to focus on maintaining a risk-balanced portfolio of assets, combining cash flow-generating assets with upside potential opportunities, and on increasing production and reserves through finding, developing and producing oil and gas reserves in the countries in which we operate. For example, in our recently announced expansion into Brazil, we have secured steady cash flows through our pending acquisition of Rio das Contas, as well as exploratory potential through our success in two ANP international bidding rounds in which we were awarded a total of nine concessions in Brazil. See " Recent developments." We believe this approach will allow us to sustain continuous and profitable growth and also participate in higher-risk growth opportunities with upside potential. Maintain conservative financial policies We seek to maintain a prudent and sustainable capital structure and a strong financial position to allow us to maximize the development of our assets and capitalize on business opportunities as they arise. We intend to remain financially disciplined by limiting substantially all our debt incurrence to identified projects with repayment sources. We expect to continue benefiting from diverse funding sources such as our partners and customers in addition to the international capital markets. Pursue strategic acquisitions in South America We have historically benefited from, and intend to continue to grow through, strategic acquisitions. Our recent Colombian acquisitions highlight our ability to identify and execute opportunities at what we believe to be attractive prices. These acquisitions have provided us with, and we expect that our Brazil Acquisitions will provide us with, attractive platforms in those countries. Our enhanced regional portfolio, primarily in investment-grade countries, and strong partnerships position us as a regional consolidator. We intend to continue to grow through strategic acquisitions and potentially in other countries in South America, including Peru which has an investment-grade rating. Our acquisition strategy is aimed at maintaining a balanced portfolio of lower-risk cash flow-generating properties and assets that have upside potential, keeping a balanced mix of oil- and gas-producing assets (though we expect to remain weighted toward oil) and focusing on both assets and corporate targets. Continue to foster a technically-driven culture and to capitalize on local knowledge We intend to continue to build and strengthen an environment that will allow us to fully consider and understand risk and reward and to deliberately and collectively pursue strategies that maximize value. For this purpose, we intend to continue expanding our technical teams and to foster a culture that rewards talent according to results. For example, we have been able to maintain the technical teams we inherited Table of Contents through our Colombian acquisitions and intend to do so in Brazil following the closing of our pending Rio das Contas acquisition. We believe local technical and professional knowledge is key to operational and long-term success and intend to continue to secure local talent as we grow our business in different locations. Maintain a high degree of operatorship We currently are, and intend to continue to be, the operator of a majority of the blocks and concessions in which we have working interests. Operating the majority of our blocks and concessions gives us the flexibility to allocate our capital and resources opportunistically and efficiently. We believe that this strategy has allowed, and will continue to allow, us to leverage our unique culture and our talented technical, operating and management teams. As of December 31, 2012, 99.9% of our net proved reserves and 97% of our production came from blocks in which we are the operator. On a pro forma basis, accounting for our pending Rio das Contas acquisition, approximately 75% of our production as of September 30, 2013 would have come from blocks that we operate. Maintain our commitment to environmental and social responsibility A major component of our business strategy is our focus on our environmental and social responsibility. We are committed to minimizing the impact of our projects on the environment. We also aim to create mutually beneficial relationships with the local communities in which we operate in order to enhance our ability to create sustainable value in our projects. In line with the IFC's standards, our commitment to our environmental and social responsibilities is a major component of our business strategy. These commitments are embodied in our in-house designed Environmental, Health, Safety and Security management program, which we refer to as "S.P.E.E.D." (Safety, Prosperity, Employees, Environment and Community Development). Our S.P.E.E.D. program was developed in accordance with several international quality standards, including ISO 14001 for environmental management issues, OHSAS 18001 for occupational health and safety management issues, SA 8000 for social accountability and workers' rights issues, and applicable World Bank standards. See "Business Health, safety and environmental matters." Our corporate structure We are an exempted company incorporated pursuant to the laws of Bermuda. We operate and own our assets directly and indirectly through a number of subsidiaries. Table of Contents The following chart shows our corporate structure as of the date of this prospectus. Following the completion of our Brazil Acquisitions, we expect that GeoPark Brasil Explorac o e Produc o de Petr leo e G s Ltda. (Brazil), or GeoPark Brazil, will hold the assets we acquire in Brazil. Recent developments Fourth quarter 2013 operational highlights In the fourth quarter of 2013, our average oil and gas production totaled 14,548 boepd, a 37% increase as compared to our average oil and gas production for the fourth quarter of 2012 of 10,627 boepd, with oil and liquids representing 82% of our total production as compared to 75% for the fourth quarter of 2012. Oil production increased by 50% to 11,938 bopd (consisting of 4,160 bopd, 7,717 bopd and 61 bopd in Chile, Colombia and Argentina, respectively) for the three months ended December 31, 2013, as compared to 7,939 bopd for the three months ended December 31, 2012. Gas production increased to 15,662 mcfpd (consisting of 15,526 mcfpd, 48 mcfpd and 88 mcfpd in Chile, Colombia and Argentina, respectively) for the three months ended December 31, 2013. Oil production increased by 7% and 92% in Chile and Colombia, respectively, for the fourth quarter of 2013 as compared to the fourth quarter of 2012. For the year ended December 31, 2013, our average oil and gas production totaled 13,517 boepd, a 20% increase as compared to our average oil and gas production for the year ended December 31, 2012 of 11,292 boepd. Oil and liquids represented 82% and 66% of our total oil and gas production for the years ended December 31, 2013 and 2012, respectively. Oil production increased by 48% to 11,113 bopd (consisting of 4,581 bopd, 6,482 bopd and 50 bopd in Chile, Colombia and Argentina, respectively) for the year ended December 31, 2013, as compared to 7,491 bopd for the year ended December 31, 2012. Gas Table of Contents production increased to 14,419 mcfpd (consisting of 14,283 mcfpd, 52 mcfpd and 84 mcfpd in Chile, Colombia and Argentina, respectively) for the year ended December 31, 2013. The increase in oil production for the quarter and year ended December 31, 2013 was mainly due to the development of and new discoveries made in the Llanos 34 and Yam Blocks in Colombia, as well as to the continuing development of the Tob fera formation in the Fell Block in Chile. In the fourth quarter of 2013, we installed the first electrical submersible pump, or ESP, in Chile, in the Yagan Norte 2 development well in the Fell Block in the Tertiary formation, reaching production of 560 bopd. Additionally, we tested the Punta Delgada Norte 4 well in the Fell Block at a depth of 2,198 feet, with gas flow at a rate of approximately 1.8 mmcfpd, representing a new gas field discovery. In Colombia, in the Llanos 34 Block, we drilled and tested the Tigana 1 exploration well in the Mirador formation. The well is currently producing at a rate of approximately 2,126 bopd. In addition, we tested the Guadalupe formation, with production at a rate of approximately 1,465 bopd. We also drilled and tested the Tigana Sur 1 well in the Llanos 34 Block in the Guadalupe formation, which is currently producing approximately 1,598 bopd. The Tigana 1 and Tigana Sur 1 wells represent our fourth and fifth new oil field discoveries, respectively, in the Llanos 34 Block since 2012. Oil production increased by 14% and 89% in Chile and Colombia, respectively, for the year ended December 31, 2013 as compared to the same period in 2012. In Chile, gas production decreased by 37% from 22,804 mcfpd for the year ended December 31, 2012 to 14,419 mcfpd for the year ended December 31, 2013, mainly due to the temporary shut-down of the Methanex plant from April to September of 2013. On a pro forma basis, accounting for our pending Rio das Contas acquisition, our average oil and gas production for the year ended December 31, 2013 reached 17,098 boepd (consisting of 11,173 bopd of oil and 35,539 mcfpd of gas), with oil and liquids representing 65% of total production. For the quarter ended December 31, 2013, our pro forma production reached 18,212 boepd (consisting of 12,002 bopd of oil and 37,263 mcfpd of gas). Award of two licenses in the Parna ba and Sergipe Alagoas Basins in Brazil On November 28, 2013, the ANP awarded us two new concessions in a new international bidding round, Round 12, in the following basins: Parna ba Basin in the State of Maranh o: PN-T-597 Concession; and Sergipe Alagoas Basin in the State of Alagoas: SEAL-T-268 Concession. Our winning bids are subject to confirmation of qualification requirements. For our winning bids on these two concessions, we have committed to invest a minimum of US$4.0 million (including bonus and work program commitments) during the first exploratory period. These two new concessions cover an area of approximately 196,500 acres. Award of seven licenses in the Rec ncavo and Potiguar Basins in Brazil On May 14, 2013, the ANP awarded us seven new concessions in Brazil in an international bidding round, Round 11, in the following basins: the Rec ncavo Basin in the State of Bahia: REC T 94 and REC T 85 Concessions; and the Potiguar Basin in the State of Rio Grande do Norte: POT-T 664, POT-T 665, POT-T 619, POT-T 620 and POT-T 663 Concessions. Table of Contents We entered into seven concession agreements with the ANP on September 17, 2013 for the right to exploit the oil and natural gas in these seven new license areas. For our winning bids on these seven concessions, we committed to invest a minimum of US$15.3 million (including bonuses and work program commitment) during the first three years of the exploratory period for the concessions, and expect to begin seismic work in the first half of 2014. These seven new concessions cover an area of approximately 54,850 gross acres. Acquisition of Rio das Contas On May 14, 2013, we agreed to acquire Rio das Contas, which holds a 10% working interest in the BCAM-40 Concession in the shallow-depth offshore Manati Field in the Camamu Almada Basin, from Panoro. The total cash consideration for the acquisition is US$140.0 million, subject to certain purchase price and easement adjustments. The Manati Field, which is in the production phase, is operated by Petr leo Brasileiro S.A. Petrobras, or Petrobras (with a 35% working interest), the Brazilian national company and the largest oil and gas operator in Brazil, in partnership with Queiroz Galv o Explora o e Produ o, or QGEP (with a 45% working interest), and Brasoil Manati Explora o Petrol fera S.A., or Brasoil (with a 10% working interest). If the acquisition is completed, we believe the Manati Field will provide us with a strategically important upstream asset in Brazil. The shallow offshore Manati Field is the largest non-associated gas field in Brazil, which produced, in the year ended December 31, 2012, approximately 8.7% of the gas produced in Brazil. During the year ended December 31, 2012 and the first nine months of 2013, net production attributable to Rio das Contas in the Manati Field was approximately 3,677 boepd and 3,721 boepd, respectively. We expect that our pending Rio das Contas acquisition in Brazil will provide us with a long-term off-take contract with Petrobras that covers approximately 74% of net proved gas reserves in the Manati Field, a valuable relationship with Petrobras and an established geoscience and administrative team to manage our Brazilian assets and to seek new growth opportunities. In the year ended December 31, 2012, Rio das Contas generated net income of approximately US$23.2 million and revenues of approximately US$51.1 million. In addition to the closing purchase price, the purchase agreement also provides that for each year from 2013 to and including 2017, we will make annual earn out payments to Panoro in an amount equal to 45% of net cash flow, calculated as EBITDA less the aggregate of capital expenditures and corporate income taxes, with respect to the BCAM-40 Concession of any amounts in excess of US$25.0 million, up to a maximum cumulative earn out amount of US$20.0 million. The acquisition is subject to the approval of the ANP, among other regulatory authorities, and we expect to complete the acquisition in the first quarter of 2014. See "Risk factors Risks relating to our business Our pending acquisition of Rio das Contas is subject to ANP approvals" and "Business Significant agreements Brazil Rio das Contas Quota Purchase Agreement." Strategic alliance with Tecpetrol On September 30, 2013, we entered into a strategic alliance with Tecpetrol to jointly identify, study and potentially acquire upstream oil and gas opportunities in Brazil, with a specific focus on the Parna ba, Sao Francisco, Rec ncavo, Potiguar and Sergipe-Alagoas basins. Tecpetrol (the oil and gas subsidiary of the Techint Group) has an extensive track record as an oil and gas explorer and operator throughout the Americas, with a portfolio of assets in Argentina, Peru, Colombia, Ecuador, Mexico, Bolivia, Venezuela and the United States and current net production of over 85,000 barrels of oil equivalent per day. As part of our strategic alliance with Tecpetrol, we expect to enter into an agreement with Tecpetrol to jointly develop, by assigning to Tecpetrol 50% of our working interest in, the PN-T-597 concession in the Parna ba Table of Contents Basin in the State of Maranh o, which we were awarded by the ANP, subject to confirmation of qualification requirements. Implications of being an emerging growth company As a company with less than US$1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or 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 management's discussion and analysis of financial condition and results of operations disclosure; an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; and an exemption from any Public Accounting Oversight Board, or PCAOB, rules mandating independent audit firm rotation or auditor discussion and analysis. We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. If during that five-year period: our annual gross revenue exceeds US$1.0 billion during any fiscal year; the aggregate amount of debt securities we issue during any three-year period exceeds US$1.0 billion; or the market value of our common stock that is held by non-affiliates exceeds US$700 million as of June 30 of any year, we would cease to be an emerging growth company as of the following December 31. We may choose to take advantage of some but not all of these reduced burdens. If we choose to take advantage of any of these reduced reporting burdens, the information that we provide shareholders may be different than you might receive from other public companies in which you hold investments. Corporate information We were incorporated as an exempted company pursuant to the laws of Bermuda as GeoPark Holdings Limited in February 2006. On July 30, 2013, our shareholders approved a change in our name to GeoPark Limited, effective from July 31, 2013. We maintain a registered office in Bermuda at Cumberland House, 9th Floor, 1 Victoria Street, Hamilton HM 11, Bermuda. Our principal executive offices are located at Nuestra Se ora de los ngeles 179, Las Condes, Santiago, Chile, telephone number +562-2242-9600, and Florida 981, 1st floor, Buenos Aires, Argentina, telephone number +5411-4312-9400. Our website is www.geo-park.com. The information on our website does not constitute part of this prospectus. Table of Contents The offering Issuer GeoPark Limited Underwriters J.P. Morgan Securities LLC, Banco BTG Pactual S.A. Cayman Branch, Itau BBA USA Securities, Inc. and Scotia Capital (USA) Inc. Offering We are offering 13,500,000 common shares. Offering price range We expect the public offering price will be between US$7.00 and US$8.00 per common share. Underwriters' over-allotment option 800,000 common shares. See "Underwriting Over-allotment option." Share capital before and after offering As of the date of this prospectus, our share capital consists of 43,861,614 issued and outstanding common shares. Immediately after the offering, we will have 57,361,614 common shares issued and outstanding, assuming no exercise of the underwriters' over-allotment option. Listing Our common shares have been approved for listing on the NYSE under the symbol "GPRK." Prior to this offering, our common shares have traded, and immediately subsequent to this offering, our common shares will continue to trade, on AIM under the symbol "GPK" and on the Santiago Offshore Stock Exchange under the symbol "GPK." Conditional upon the listing of our common shares on the NYSE, we intend to cancel the admission of our common shares to trading on AIM at 7:00 am GMT on February 19, 2014. We also intend to de-register from the Santiago Offshore Stock Exchange as soon as practicable following the listing of our common shares on the NYSE. Use of proceeds We estimate that the net proceeds from this offering will be approximately US$93.9 million, based on the midpoint of the range set forth on the cover page of this prospectus after deducting underwriting discounts and commissions and estimated expenses of the offering that are payable by us. Each US$1.00 increase (decrease) in the public offering price per common share would increase (decrease) our net proceeds, after deducting estimated underwriting discounts and commissions and estimated expenses of the offering that are payable by us, by approximately US$13.1 million. Table of Contents The principal purposes of this offering are to create a public market for our common shares in the United States and to facilitate our future access to the U.S. public equity markets, as well as to obtain additional capital and enhance our financial flexibility. We may use a portion of the proceeds from this offering to finance or accelerate the growth of our operations in our current asset base, which we refer to as our organic expansion, and, following the completion of our Brazil Acquisitions, our Brazilian assets, or use the proceeds for general corporate purposes. In addition, we may use a portion of the proceeds from this offering for opportunistic acquisitions in Chile, Colombia and Brazil, as well as in other countries in South America, which may include Peru, though we currently do not have definitive plans or arrangements with respect to any potential investment in South America. Pending their use, we intend to invest the proceeds in a variety of capital preservation investments, which may include interest-bearing securities. In addition to being focused on the geographies mentioned above, our acquisition strategy is aimed at maintaining a balanced portfolio of lower-risk cash flow-generating properties and assets that have upside potential, as well as at keeping a balanced mix of oil- and gas-producing assets, though we expect to remain weighted toward oil. See "Use of proceeds." Voting rights Subject to Bermuda law, holders of our common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares. See "Description of share capital." Dividend policy Holders of common shares will be entitled to receive dividends, if any, paid on the common shares. The amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and shareholders. We have never paid, and do not intend to pay in the foreseeable future, cash dividends on our common shares. At the present time, we intend to retain all of our future earnings, if any, generated by our operations for the development and growth of our business. Table of Contents Additionally, we are subject to Bermuda legal constraints that may affect our ability to pay dividends on our common shares and make other payments. Under the Bermuda Companies Act 1981, as amended, or the Bermuda Companies Act, we may not declare or pay a dividend if there are reasonable grounds for believing that we are, or would after the payment be, unable to pay our liabilities as they become due or that the realizable value of our assets would thereafter be less than our liabilities. See "Dividend policy" and "Description of share capital." Lock-up agreements Subject to certain exceptions, we, our directors, executive officers and certain of our shareholders, collectively holding 26,115,962 of our common shares, or 59.5% of our common shares outstanding immediately prior to this offering, have entered into lock-up agreements with J.P. Morgan Securities LLC for a period of 180 days after the date of this prospectus. See "Underwriting Lock-up agreements." Material tax considerations For certain U.S. federal income tax consequences with respect to the acquisition, ownership and disposition of our common shares, see "Material tax considerations Material U.S. federal income tax considerations." Indication of interest We have received the following indications of interest to purchase in this offering, at the public offering price, an aggregate of US$60.0 million (or 8,000,000 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus): (i) Mr. James F. Park (or any of his affiliates), our Chief Executive Officer, one of our principal shareholders and a member of our board of directors: US$2.0 million (or 266,667 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus); (ii) Mr. Juan Cristobal Pavez (or any of his affiliates), one of our principal shareholders and a member of our board of directors: US$5.0 million (or 666,666 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus); (iii) certain private investment funds managed and controlled by Cartica Management, LLC: US$33.0 million (or 4,400,000 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus). Mr. Steven Quamme, one of our principal shareholders and a member of our board of directors, is the Senior Managing Director of Cartica Management, LLC, and therefore may be deemed to have voting and investment power over the common shares of GeoPark Limited held by Cartica Management, LLC; and (iv) certain members of Mr. Gerald E. O'Shaughnessy's family (or any of their respective affiliates that do not include Mr. Gerald E. Table of Contents In 2014, we expect our total capital expenditures, excluding the purchase price for our pending Rio das Contas acquisition, to be between US$220 million to US$250 million, of which approximately 62%, 32% and 5% will be in Chile, Colombia and Brazil, respectively. These capital expenditures will include the drilling of 50 to 60 new wells (approximately 40% of which we expect will be exploratory wells), as well as workovers, seismic surveys and new facility construction. In Brazil, we expect our capital expenditures will consist of between US$5 million to US$7.5 million to finance in part the construction of a gas compression plant in the Manati Field following the closing of our pending Rio das Contas acquisition and approximately US$0.45 million in license fee payments to the ANP relating to our Round 12 concessions, with the remainder for seismic surveys in exploration blocks in the Potiguar and Rec ncavo Basins. In addition, in Brazil, we expect to spend US$140 million, subject to certain adjustments, to acquire Rio das Contas, which we intend to finance through the incurrence of a loan of approximately US$70.5 million and cash on hand. The following map shows the countries in which we have blocks with working and/or economic interests and includes our Brazil Acquisitions. For information on our working interests in each of these blocks, see " Our assets" below. Table of Contents O'Shaughnessy): US$20.0 million (or 2,666,667 of our common shares, at the midpoint of the range set forth on the cover page of this prospectus). Any shares acquired by Mr. Gerald E. O'Shaughnessy's family are not expected to be subject to the 180 day lock-up restrictions described in this prospectus. Mr. Gerald E. O'Shaughnessy, our Executive Chairman, a member of our board of directors and one of our principal shareholders is not expected to have a beneficial interest in the common shares that may be acquired by his family members. Because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these individuals or private investment funds and any of these individuals or private investment funds could determine to purchase more, less or no shares in this offering. The underwriters will not receive any underwriting discount or commissions in connection with the sale of our common shares, to the extent they are purchased pursuant to these indications of interest. Following the completion of this offering, and assuming the purchase of all of the common shares described above, our board of directors and senior management will be deemed to beneficially own, in the aggregate approximately 48.8% of our outstanding common shares (assuming no exercise of the underwriters' over-allotment option).
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus carefully, including the Risk Factors section and the other documents we refer to and incorporate by reference, in order to understand this offering fully. In particular, we incorporate important business and financial information into this prospectus by reference. See the heading Incorporation of Certain Information by Reference for information on how you can obtain a copy of the information that has been incorporated by reference but not delivered with this prospectus.
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+Table of Contents AUDITORS Effective February 1, 2010, the Company's former auditors, Lo Porter H tu ("LPH") (which subsequently changed its name to Thompson Penner & Lo LLP), resigned at the request of the Company and the Company appointed MNP LLP, an independent registered public accounting firm, as its new auditor. MNP LLP has offices at Suite 1500, 640 5th Avenue S.W., Calgary, Alberta T2P 3G4. Their telephone number is 877-500-0792. The former auditors' report on the financial statements for the Company's fiscal year ended December 31, 2009, 2008 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles. The decision to change auditors was recommended and approved by the Company's Audit Committee and approved by the Board of Directors. During the 2009 and 2008 fiscal years and the subsequent interim period that preceded the former auditors' dismissal, there was no disagreement with the former auditors on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the former auditors, would have caused them to make reference to the subject matter of the disagreement in connection with their report. Without qualifying their opinion, the former auditors included an explanatory paragraph in their report on the Company's financial statements for the 2009 and 2008 fiscal years which referenced a footnote in the financial statements disclosing conditions and matters indicating the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. The Company provided its former auditors with a copy of this disclosure, which had previously appeared in Amendment No. 2 to the Company's registration statement on Form F-1 (as filed with the Commission on December 20, 2012), and requested that the former auditors furnish the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether they agree with the above statements, and if not, stating the respects in which they do not agree. A copy of that letter from the former auditor dated July 24, 2012 was previously filed as Exhibit No. 16.1 to Amendment No. 2 to the Company's registration statement on Form F-1. Prior to February 10, 2010, the date that MNP LLP was retained as the auditors of the Company: (a) the Company did not consult MNP LLP regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements; or (ii) any matter that was either the subject of a disagreement or a reportable event; and (b) the Company did not receive either a written report or oral advice from MNP LLP with respect to any matter that was considered by the Company as an important factor in reaching a decision as to accounting, auditing or financial reporting. SELLING STOCKHOLDER The following table presents information regarding HuntMountain, the selling stockholder, and the common shares of Hunt Mining proposed for distribution by HuntMountain to its common stockholders by way of a dividend in kind, without the payment of any consideration. Name Number of Common Shares Beneficially Owned Prior to Offering Number of Common Shares Being Offered Percentage of Shares Owned Prior to Offering Percentage of Shares Owned After the Offering HuntMountain Resources Ltd. 50,000,000(1)(2) 50,000,000(1)(2) 41.2%(3) Nil(4) Table of Contents Notes: (1) Includes 20,881,493 common shares issued on April 9, 2013 upon conversion of 19,837,418 convertible preferred shares of Hunt Mining held by HuntMountain and 1,044,075 convertible preferred shares of Hunt Mining held by HuntMountain's wholly-owned subsidiary, HuntMountain Investments. Each preferred share was convertible at any time, at the option of the holder, into common shares of Hunt Mining on the basis of one common share for each preferred share held, provided that such conversion did not result in the public float (as defined in the policies of the TSX Venture Exchange) being less than 20% of the total issued common shares of Hunt Mining. The conversion of the Hunt Mining convertible preferred shares was subject to the approval of the TSXV, which was obtained on April 5, 2013. (2) Also includes 2,500,001 Hunt Mining common shares registered in the name of HuntMountain Investments (including 1,044,075 Hunt Mining common shares that were issued to HuntMountain Investments upon conversion of its convertible preferred shares of Hunt Mining). It is anticipated that these Hunt Mining common shares will be transferred to HuntMountain by way of an inter-corporate dividend in kind immediately prior to the distribution of up to 50,000,000 Hunt Mining common shares to the holders of record of HuntMountain's common stock pursuant to this prospectus. (3) Beneficial ownership is determined in accordance with the rules of the SEC. In computing the percentage of shares beneficially owned by the selling stockholder, common shares subject to options, warrants or other rights to acquire common shares (such as the conversion right attaching to convertible preferred shares) held by the selling stockholder that are exercisable on or within 60 days, are deemed outstanding for the purpose of computing the percentage ownership of the selling stockholder. The ownership percentage is calculated based on the 121,494,823 common shares that were outstanding as of December 31, 2013. (4) Tim Hunt, Darrick Hunt and the Hunt Family Limited Partnership (an entity controlled by Tim Hunt and his wife Resa Hunt) own approximately 95.0% of the shares of HuntMountain common stock. Therefore, it is anticipated that Tim Hunt, Darrick Hunt and the Hunt Family Limited Partnership will receive up to an aggregate of 95.0% of the common shares proposed for distribution under this prospectus.
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus and does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully, including the Risk Factors section and our consolidated financial statements and related notes. On May 22, 2014, we converted from a limited liability company to a corporation as discussed below in Reorganization Transactions. Unless the context requires otherwise, as used in this prospectus, the terms we, us, our, the Company, our company, and similar references refer to Heritage Insurance Holdings, LLC, together with its subsidiaries, prior to our conversion to a corporation and Heritage Insurance Holdings, Inc. and its consolidated subsidiaries on and after such conversion. References in this prospectus to stockholders and stockholders equity refer to members and members equity, respectively, prior to our conversion to a corporation. References to pro forma stockholders equity or after giving effect to this offering and the Concurrent Private Placement mean after giving effect to this offering, assuming the sale of 6,000,000 shares at a public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after giving effect to the Concurrent Private Placement, assuming the sale of 666,666 shares at an offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, in each case after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Our Business We are a property and casualty insurance holding company headquartered in Clearwater, Florida and, through our subsidiary, Heritage Property & Casualty Insurance Company ( Heritage P&C ), we provide personal residential insurance for single-family homeowners and condominium owners in Florida. We are vertically integrated and control or manage substantially all aspects of insurance underwriting, actuarial analysis, distribution and claims processing and adjusting. We are led by an experienced senior management team with an average of 26 years of insurance industry experience. We began operations in August 2012, and in December 2012 we began selectively assuming policies from Citizens Property Insurance Corporation ( Citizens ), a Florida state-supported insurer, through participation in a legislatively established depopulation program designed to reduce the state s risk exposure by encouraging private companies to assume insurance policies from Citizens. We also write policies outside the Citizens depopulation program, which we refer to as voluntary policies. Heritage P&C is currently rated A ( Exceptional ) by Demotech, Inc. ( Demotech ), a rating agency specializing in evaluating the financial stability of insurers. As of March 31, 2014, we had approximately 140,000 policies in force, approximately 89% of which were assumed from Citizens. For the three months ended March 31, 2014 and the year ended December 31, 2013, we had gross premiums written of $68.9 million and $218.5 million, respectively, and net income of $7.9 million and $34.2 million, respectively. At March 31, 2014, we had total assets of $286.1 million, total stockholders equity of $110.1 million and pro forma stockholders equity, after giving effect to this offering and the Concurrent Private Placement, of $224.6 million. As of March 31, 2014, Citizens had approximately 940,000 insurance policies, of which approximately 690,000 were personal residential policies. We selectively assumed personal residential policies from Citizens in nine separate assumption transactions between December 2012 and April 2014, and a substantial portion of our revenue since our inception has come from these policies. We intend to continue assuming policies from Citizens that meet our assumption strategy and underwriting criteria. In order to assume a policy from Citizens, we must obtain the prior approval of the insurance agent that wrote the policy. With respect to policies written by agents that are affiliated with an insurance company or agency, we must also obtain the approval of the insurance company or agency. Currently, four large national Table of Contents The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 22, 2014 PRELIMINARY PROSPECTUS 6,000,000 Shares Heritage Insurance Holdings, Inc. Common Stock $ per share This is the initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. We are selling 6,000,000 shares of our common stock. We currently expect the initial public offering price to be between $14.00 and $16.00 per share of our common stock. We have granted the underwriters an option to purchase up to 900,000 additional shares of our common stock to cover over-allotments. Ananke Ltd. ( Ananke ), an affiliate of Nephila Capital Ltd, has agreed to purchase $10.0 million of our common stock in a separate private placement (the Concurrent Private Placement ) concurrent with, and subject to, the closing of this offering at a price per share equal to the public offering price (but not to exceed $16.00, the highest point of the price range set forth above). Poseidon Re Ltd., another affiliate of Nephila Capital Ltd, is currently a participating reinsurer in our reinsurance program. The sale of such shares will not be registered under the Securities Act of 1933, as amended (the Securities Act ), and will be conducted in accordance with Section 4(a)(2) of the Securities Act. The closing of this offering is not conditioned upon the closing of the Concurrent Private Placement. Our shares of common stock have been approved for listing on the New York Stock Exchange under the symbol HRTG. We are an emerging growth company as defined under the federal securities laws and are eligible for reduced public company reporting requirements. Investing in our common stock involves risks. See Risk Factors beginning on page 14. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Per Share Total Public Offering Price $ $ Underwriting Discount (1) $ $ Proceeds to Us (before expenses) $ $ (1) Exclusive of the placement fee payable in connection with the Concurrent Private Placement. See Underwriting. The underwriters expect to deliver the shares to purchasers on or about , 2014 through the book-entry facilities of The Depository Trust Company. Sole Book-Running Manager Citigroup Joint Lead Managers SunTrust Robinson Humphrey Sandler O Neill + Partners, L.P. Co-Managers Dowling & Partners Securities LLC JMP Securities Willis Capital Markets & Advisory , 2014 Table of Contents insurance companies or agencies permit us to assume policies from Citizens that have been written by their agents State Farm, Allstate, Brown & Brown and AAA (formerly the American Automobile Association). In an effort to increase the pool of Citizens policies that we may assume, we are seeking similar advance approvals from other insurance companies and agencies. We currently have advance approvals covering more than 4,500 agents. These agents were responsible for writing more than 93% of the approximately 690,000 personal residential insurance policies held by Citizens as of March 31, 2014. We market and write voluntary policies through a network of approximately 1,100 independent agents. Of these agents, approximately 46% are affiliated with nine large agency networks with which we have entered into master agency agreements. We recently entered into an agreement with FAIA Member Services ( FMS ), the in-house, for-profit managing general agency division of the Florida Association of Insurance Agents, which gives us access to several hundred additional agents throughout the state. We intend to pursue additional voluntary business from agents in our existing independent agent network, expand our independent agent network and seek additional opportunities to use insurer-affiliated agents to offer our personal residential policies in Florida. While we had 15,417 voluntary policies (11% of our total policies in force) as of March 31, 2014, during the three months ended March 31, 2014, we wrote an average of 1,870 new voluntary policies per month. The voluntary market is a significant component of our growth strategy. We seek to underwrite a diverse mix of geographic risks within Florida to manage the potential impact of a catastrophic event and reduce our per policy reinsurance costs. As of March 31, 2014, the geographic distribution of our policies in force and total insured values were as follows (figures may not sum to totals due to rounding): As of March 31, 2014 (Total Insured Value in Millions) Policy Count % Total Insured Value % South Florida Counties Broward 17,903 12.8% $ 4,623 12.6% Miami-Dade 11,742 8.4% 3,297 9.0% Palm Beach 16,856 12.1% 3,945 10.7% South Florida exposure 46,501 33.2% $ 11,865 32.3% Other Significant Counties(1) Pinellas 23,997 17.2% $ 6,478 17.6% Hillsborough 18,068 12.9% 5,332 14.5% Pasco 14,220 10.2% 3,746 10.2% Hernando 4,873 3.5% 1,465 4.0% Lee 4,148 3.0% 1,076 2.9% Total other significant counties 65,306 46.7% $ 18,097 49.2% Summary for all of Florida South Florida exposure 46,501 33.2% $ 11,865 32.3% Total other significant counties 65,306 46.7% 18,097 49.2% Other Florida counties 28,072 20.1% 6,812 18.5% Total 139,879 100.0% $ 36,774 100.0% (1) Significant counties are defined as those counties with a policy count or total insured value greater than 2.5% of our 139,879 total policy count or $36.8 billion total insured value as of March 31, 2014. In order to limit our potential exposure to individual risks and catastrophic events, we purchase significant reinsurance from third party reinsurers. Purchasing reinsurance is an important part of our risk strategy, and Table of Contents premiums paid (or ceded) to reinsurers is our single largest cost. We have strong relationships with reinsurers which we believe are a result of our management s industry experience and reputation for selective underwriting. For the twelve months ending May 31, 2014, we purchased reinsurance from the following sources: (i) the Florida Hurricane Catastrophe Fund, a state-mandated catastrophe reinsurance fund ( FHCF ), (ii) 13 private reinsurers, all of which were rated A- or higher by A.M. Best Company, Inc. ( A.M. Best ) or Standard & Poor s Financial Services LLC ( S&P ), (iii) two private reinsurers that have provided collateral to fully cover their exposure, and (iv) our wholly-owned reinsurance subsidiary, Osprey Re Ltd. ( Osprey ). We are in the process of finalizing our reinsurance program for the 2014 hurricane season, which will be effective from June 1, 2014 through May 31, 2015, and expect to purchase reinsurance from a similarly diverse and highly-rated group of third-party reinsurers as those participating in our 2013-2014 reinsurance program. See Business Reinsurance 2014-2015 Reinsurance Program. The Florida Office of Insurance Regulation ( FLOIR ) requires all insurance companies, like us, to have a certain amount of capital reserves and reinsurance coverage in order to cover losses upon the occurrence of a catastrophic event. Our reinsurance program for the twelve months ending May 31, 2014, as well as our expected program for the twelve months ending May 31, 2015, provide reinsurance in excess of FLOIR s requirements, which are based on the probable maximum loss that we would incur from an individual catastrophic event estimated to occur once every 100 years based on our portfolio of insured risks. We also purchase reinsurance coverage to protect against the potential for multiple catastrophic events occurring in the same year. In placing our 2014-2015 reinsurance program, we sought to obtain multiple years of coverage for certain layers of the program through multi-year commitments. We believe these arrangements allow us to capitalize on favorable pricing and contract terms and conditions and allow us to mitigate uncertainty surrounding the price of our future reinsurance coverage, our single largest cost. In the aggregate, we anticipate that multi-year coverage will account for approximately 88% of our expected purchases of private reinsurance for the 2014 hurricane season. We test the sufficiency of our reinsurance program by subjecting our personal residential exposures to statistical testing using the AIR U.S. Hurricane Model, which replicates the most severe hurricanes to have occurred historically in Florida, individual storms of severity in excess of such historical levels, and the historical calendar years in which the most severe multiple catastrophic events occurred in Florida. In this regard, the 2004 calendar year, in which four large catastrophic hurricanes made landfall in Florida, is considered to be the worst catastrophic year in Florida s recorded history. Assuming the reoccurrence of the 2004 calendar year events, the probable maximum net loss to us in 2014, assuming the expected coverage for our 2014-2015 reinsurance program, would be $16.3 million (after tax, net of all reinsurance recoveries and including our retention through Osprey). See Business Reinsurance 2014-2015 Reinsurance Program. This loss would have represented 14.8% of our stockholders equity at March 31, 2014 and 7.3% of our pro forma stockholders equity at March 31, 2014, after giving effect to this offering and the Concurrent Private Placement. We closely manage all aspects of our claims adjustment process. Claims are initially reviewed by our managers and staff adjusters, who determine the extent of the loss and the resources needed to adjust each claim. In the case of a catastrophic event, we have contracted with four large national claims adjusting firms to assist our adjusters with the increased volume of claims and ensure timely responses to our policyholders. We utilize our wholly-owned subsidiary, Contractors Alliance Network, LLC ( Contractors Alliance ), to manage mitigation and restoration services for our customers. Contractors Alliance primarily handles water damage-related claims, which comprised approximately 68% of our losses and loss adjustment expenses through March 31, 2014. In March 2014, we completed the acquisition of the assets and personnel of our main water mitigation services vendor. We believe this acquisition will allow us to better service our customers and expand our mitigation and restoration services. In addition, all of our voluntary policies and renewed Citizens policies are enrolled in our Platinum Preferred Savings Program (the Platinum Program ). Under the Platinum Program, Table of Contents customers receive a 10% discount on their claim deductible, and we obtain control over inspection, claims adjusting and repair services. We believe our approach to claims handling results in a higher level of customer service and reduces our losses and loss adjustment expenses. As a result of our efforts, our gross loss ratio, which expresses our losses and loss adjustment expenses as a percentage of gross earned premiums, was 33.8% and 27.5% for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively. Our Market According to the U.S. Census Bureau, at July 1, 2013, Florida was the fourth largest U.S. state with an estimated population of approximately 20 million people. The University of Florida Bureau of Economic and Business Research estimates that Florida is expected to reach a population of approximately 26 million people by 2040, an increase of 36% percent from 2010. Property ownership and development represent key drivers of the Florida economy. Because of its location, Florida is exposed to an increased risk of hurricanes during the entire six months of Atlantic hurricane season, which spans from June 1 through November 30. While a significant hurricane has not made landfall in Florida since 2005, eight hurricanes in 2004 and 2005, including Hurricanes Charley, Katrina, Rita and Wilma, caused a combined estimated property damage of over $110 billion, a significant portion of which occurred in Florida. As a result, personal residential insurance and claims servicing are vitally important to Florida residents. The Florida personal residential insurance market is highly fragmented and dominated by in-state insurance companies, including Citizens. Significant dislocation in the Florida property insurance market began following Hurricane Andrew in 1992 and accelerated following the 2004 and 2005 hurricane seasons. In total, national and regional insurers reduced their share of the market in Florida from 84% in 1999 to 26% in 2012. As national and regional insurance companies reduced their exposure in Florida, Citizens increased efforts to provide affordable personal residential insurance to those residents unable to obtain coverage in the private market. As a result, Citizens policy count grew from roughly 726,000 policies in 2005 to a peak level of approximately 1.5 million policies in late 2011. To reduce Citizens risk exposure, beginning in 2010, Florida elected officials encouraged Citizens to focus on reducing the size of its portfolio by returning policies to the private market. In response, Citizens instituted a number of measures to incentivize the private sector to participate in the depopulation program. Some of these initiatives include increased inspections, improved underwriting, reductions in coverage and annual rate increases. In May 2013, Florida passed legislation to facilitate the reduction of Citizens policy count and establish the Property Insurance Clearinghouse (the Clearinghouse ), which launched in January 2014. The Clearinghouse makes new and renewal business ineligible for Citizens if a participating insurance company is willing to extend comparable coverage at prescribed rates. On March 31, 2014, Heritage P&C was approved to participate in the Clearinghouse. According to data compiled by FLOIR, Citizens was the largest personal residential insurance carrier in Florida for the year ended December 31, 2013, with a market share of approximately 19.8% based on total in force direct premiums written for personal and commercial residential insurance. As of the same date, we ranked 15th in Florida within this market, with a market share of approximately 1.8%. Assuming further access to capital and reinsurance support, we believe we have the opportunity to significantly expand the size of our personal residential insurance business in Florida and explore the expansion of our business into other complementary business lines and states. In recent years, the property and casualty insurance market has experienced a substantial increase in the availability of property catastrophe reinsurance resulting from the increased supply of capital from non-traditional insurance providers, including private capital and hedge funds. This increased capital supply, coupled Table of Contents with a lack of recent significant catastrophic storm activity in Florida, has reduced the cost of property catastrophe reinsurance, directly benefitting purchasers of this reinsurance, including us. We believe this market trend will continue for the foreseeable future. Our Strategy Since our inception, a substantial portion of our revenue has come from policies we assumed from Citizens, with the balance of our revenue generated from renewal of these assumed policies and from voluntary policies. Building on these successful transactions, we intend to continue to grow profitably by undertaking the following: Increase Our Policies in Force in Florida Through Strategic Policy Assumptions and Expansion of Our Voluntary Market Share We intend to continue assuming policies from Citizens that meet our assumption strategy and underwriting criteria. We may also pursue opportunities to acquire policies from private insurers. Additionally, we intend to increase our policy count by participating in the Clearinghouse. We will also pursue opportunities to increase the number of our voluntary policies by expanding our independent agent distribution network, as well as obtaining approval from national insurance companies to allow their agents to offer our personal residential policies in Florida. Our recent affiliation with FMS gives us access to several hundred additional agents throughout the state and should assist us in our effort to attract high-quality agents. We also intend to increase our advertising, which we believe will allow us to more effectively penetrate areas of the state where we are not currently writing significant new business. Opportunistically Diversify Product Offerings We will continue to focus on writing personal residential policies, but will opportunistically expand into complementary product lines we believe we can effectively and profitably underwrite. New product lines may include commercial residential and manufactured housing policies, as well as additional non-residential coverage, such as general liability insurance. In January 2014, we hired two individuals with significant experience in Florida commercial residential insurance sales and underwriting, who will assist us in developing this new product line. Optimize Our Reinsurance Program We will continue to obtain what we believe to be the most appropriate levels and sources of reinsurance. We believe that the significant additional capital entering portions of the reinsurance market provides us with the opportunity to obtain favorable pricing and contract terms and conditions, including the potential for multi-year commitments, which we expect to comprise a significant portion of our 2014 2015 reinsurance program. See Business Reinsurance 2014 2015 Reinsurance Program. In April 2014, we entered into two fully collateralized catastrophe reinsurance agreements funded through the issuance of $200.0 million principal amount of catastrophe bonds, and we will continue evaluating such cost-efficient alternatives to traditional reinsurance. See Recent Developments. Additionally, we will continue to meet certain of our reinsurance needs through the use of our reinsurance subsidiary, Osprey, which mitigates our reinsurance expense and reduces our reliance on third party reinsurance. Efficiently Manage Losses and Loss Adjustment Expenses We are committed to proactively managing our losses and loss adjustment expenses through prudent underwriting and the use of internal claims adjustment and repair services. In March 2014, we acquired the largest vendor in the Contractors Alliance network, which we believe will allow us to expand our in-house mitigation and restoration services. We also intend to license our Contractors Alliance employees as adjusters, which we believe will reduce our loss adjustment expenses and shorten the length of time required to resolve claims. Table of Contents Expand to New Geographic Markets We intend to explore opportunities to enter other coastal states where we believe the market opportunity is most similar to Florida and where we can utilize our underwriting and claims expertise to attract and manage profitable business. We believe further increasing our geographic diversification is an important factor in reducing our potential risk of loss from any catastrophic event, reducing our per policy reinsurance costs and providing an additional area for future growth beyond our expansion in Florida. Our Competitive Strengths We believe that our rapid growth to date and our ability to capitalize on our future growth prospects are a result of the following competitive strengths of our business: Experienced Management Team With a Long History in the Florida Personal Residential Insurance Market We have a deep and experienced management team led by Bruce Lucas, Chairman and Chief Executive Officer, Richard Widdicombe, President, Stephen Rohde, Chief Financial Officer, Melvin Russell, Chief Underwriting Officer, Kent Linder, Chief Operating Officer, Ernesto Garateix, Executive Vice President, Paul Nielsen, Vice President of Claims, and Joseph Peiso, Vice President of Compliance, most of whom have been with Heritage since inception. Our management team, which averages 26 years of insurance industry experience, has extensive experience in the Florida personal residential insurance market, has built longstanding relationships with key participants in the insurance industry and is supported by a group of highly qualified individuals with industry expertise, including a Chief Actuary with more than 34 years of industry experience. Strong, Conservative Capital Structure As of March 31, 2014, we had stockholders equity of $110.1 million and pro forma stockholders equity, after giving effect to this offering and the Concurrent Private Placement, of $224.6 million. As of March 31, 2014, Heritage P&C had policyholder surplus, as defined by statutory accounting principles, of $67.8 million. We believe that this level of surplus places us among the best capitalized insurance companies focusing primarily on the Florida personal residential insurance market and is significantly in excess of the minimum capital levels required by FLOIR and Demotech for similarly rated in-state insurance companies. In addition, unlike many of our in-state competitors, we have relied almost exclusively upon common equity to provide our capital. Selective Underwriting and Policy Acquisition Criteria We believe our proprietary data analytics capabilities and underwriting processes allow us to better select the insurance policies we are willing to assume from the Citizens depopulation program, leading to strong profitability and reduced risk. In addition, we choose to minimize our exposure to or avoid certain types of coverage if we believe there is significant risk of loss, including coverage for sink-hole related losses in high-risk areas. As a result of our efforts, our gross loss ratio was 33.8% and 27.5% for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively. Unique Claims Servicing Model and Superior Customer Service We believe that the vertical integration of our claims adjustment and repair services provides us with a competitive advantage. Because we manage both claims adjusting and repair services, we are generally able to begin the adjustment and mitigation process much earlier than our competitors, thus reducing our loss adjustment expenses and ultimate loss payouts. We expect that, in the near future, a significant number of our repair technicians will participate in training and certification programs to become licensed claims adjusters, allowing us to capture additional efficiencies. We also believe our unique model provides a superior level of customer Table of Contents service for our policyholders, enhancing our reputation and increasing the likelihood that our policyholders will renew their policies with us. Relationships with Highly Rated Reinsurers We manage our exposure to catastrophic events through, among other things, the purchase of reinsurance. Our relationships with highly rated reinsurers have been developed as a result of our management team s industry experience and reputation for selective underwriting. Our financial strength, underwriting results and the long-term relationships between our management team and our reinsurance partners help improve the cost-effectiveness of our reinsurance program. Relationships with Independent Agents and National Underwriters We have developed relationships with a network of approximately 1,100 independent insurance agents. We believe we have been able to build this network due to our reputation for financial stability, commitment to the Florida market and integrity in the underwriting and claims process. We are also exploring relationships with additional large national insurers and agencies that no longer write substantial personal residential insurance in Florida, which would give us access to their network of Florida agents. Risks Associated with Our Business As part of your evaluation of our company, you should take into consideration the following risks that we face in implementing or executing our growth strategies and maintaining our profitability: We have an operating history of less than two years, which makes it difficult to evaluate our business and prospects. If claims exceed our loss reserves, our financial results could be adversely affected. Our only line of business is personal residential insurance in Florida, which exposes us to a significant risk of loss from hurricanes and other catastrophic events, which typically occur from June 1 through November 30 each year. A single catastrophic event or series of catastrophic events or other conditions effecting losses in Florida could adversely affect our financial condition and results of operations because our business is concentrated in Florida. Our results of operations may fluctuate significantly due to the cyclical nature of the insurance business and our participation in the Citizens depopulation program. To date, we have been dependent on the Citizens depopulation program for the majority of our business and we may be unable to assume further policies from Citizens on attractive terms. In the event that the reinsurance we purchase is inadequate or a reinsurer is unable or unwilling to make timely payments, our operating results would be adversely affected. We compete with large, well-established insurance companies, as well as other specialty insurers, some of which possess greater financial resources, larger agency networks and greater name recognition than we do. If we are unable to underwrite and set premium rates accurately, our results of operations and financial condition will be adversely affected. A failure to effectively manage and remediate claims could lead to material litigation, undermine our reputation in the marketplace and negatively affect our financial results. Table of Contents If we are unable to maintain our financial stability rating, which is important in establishing our competitive position, the marketability of our product offerings, and our liquidity, operating results and financial condition may be materially adversely affected. We do not anticipate paying any dividends on our common stock in the foreseeable future. The insurance industry is highly regulated and our failure to fully comply with these regulations could have an adverse effect on our business. Changes to the statutes and rules governing the insurance industry could have an adverse effect on our business. See Risk Factors beginning on page 14 of this prospectus for a more detailed discussion of these and other risks we face. Recent Developments On April 17, 2014, Heritage P&C entered into a catastrophe reinsurance agreement with Citrus Re Ltd., a newly-formed Bermuda special purpose insurer. The agreement provides for three years of coverage from catastrophe losses caused by certain named storms, including hurricanes, beginning on June 1, 2014. The limit of coverage of $150 million is fully collateralized by a reinsurance trust account for the benefit of Heritage P&C. Heritage P&C pays a periodic premium to Citrus Re during this three-year risk period. Citrus Re Ltd. issued $150 million of principal-at-risk variable notes due April 18, 2017 to fund the reinsurance trust account and its obligations to Heritage P&C under the reinsurance agreement. The maturity date of the notes may be extended up to two additional years to satisfy claims for catastrophic events occurring during the three-year term of the reinsurance agreement. On April 24, 2014, Heritage P&C entered into a second catastrophe reinsurance agreement with Citrus Re Ltd. providing for $50 million of coverage on substantially similar terms as the agreement described above. Citrus Re Ltd. issued an additional $50 million of principal-at-risk variable notes due April 24, 2017 to fund its obligations under the reinsurance agreement. We are in the process of finalizing the remainder of our 2014-2015 reinsurance program. See Business Reinsurance 2014-2015 Reinsurance Program. Reorganization Transactions Warrant Exercise. Certain of our current stockholders also hold warrants to purchase an aggregate of 7,716,300 shares of the Company at an exercise price of $5.88 per share. On May 22, 2014, warrants to purchase an aggregate of 7,685,700 shares were exercised (the Warrant Exercise and, together with the Conversion, the Reorganization Transactions ), including warrants to purchase an aggregate of 3,873,450 shares exercised on a cashless basis. Pursuant to the cashless exercise provisions of the warrants, each warrant holder will pay the exercise price by surrendering to the Company an amount of shares having a value equal to the aggregate exercise price of the warrants being exercised. The terms of the warrants provide that the value ascribed to each share that will be surrendered to the Company as payment for the exercise price will be equal to the initial public offering price per share of our common stock in this offering. As a result, the actual number of shares that will be issued upon the Warrant Exercise is dependent upon the initial public offering price per share of our common stock in this offering. Assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover of this prospectus, an aggregate of 6,166,700 shares will be issued in connection with the Warrant Exercise. A $1.00 increase in the assumed initial public offering price of $15.00 per share would increase the number of shares that will be issued in connection with the Warrant Exercise by 94,937 shares and a $1.00 decrease in the assumed initial public offering price would Table of Contents decrease the number of shares that will be issued in connection with the Warrant Exercise by 108,500 shares. Following the Warrant Exercise, we expect that there will remain outstanding warrants to purchase an aggregate of 30,600 shares at an exercise price of $5.88 per share. Conversion. On May 22, 2014, we converted from a Delaware limited liability company into a Delaware corporation (the Conversion ), and all outstanding shares of the limited liability company were converted into shares of common stock of the Company on a one-for-one basis and all outstanding warrants to purchase shares of the limited liability company were converted into warrants to purchase shares of common stock of the Company on a one-for-one basis. We expect that the tax effects of the Conversion will be immaterial. Concurrent Private Placement Ananke, an affiliate of Nephila Capital Ltd, has agreed to purchase $10.0 million of our common stock in the Concurrent Private Placement at a price per share equal to the public offering price (but not to exceed $16.00). Poseidon Re Ltd., another affiliate of Nephila Capital Ltd, is currently a participating reinsurer in our reinsurance program. The sale of such shares will not be registered under the Securities Act and will be conducted in accordance with Section 4(a)(2) of the Securities Act. The Concurrent Private Placement is conditioned upon the closing of this offering. The closing of this offering is not conditioned upon the closing of the Concurrent Private Placement. As a condition to the Concurrent Private Placement, Ananke will be subject to a 180-day lock-up period, as described in Shares Eligible for Future Sale Lock-Up Agreements. In addition, in connection with the Concurrent Private Placement, a reinsurer affiliated with or designated by Nephila Capital Ltd will be provided with a right of first refusal to participate in our future reinsurance programs, subject to certain exceptions. The right of first refusal terminates on May 31, 2019, subject to certain conditions. See Business Reinsurance 2014-2015 Reinsurance Program. Corporate Information Our principal executive offices are located at 2600 McCormick Drive, Suite 300, Clearwater, Florida 33759, and our telephone number is 727-362-7200. Our website is www.heritagepci.com. Information contained on our website is not incorporated by reference into this prospectus, and such information should not be considered to be part of this prospectus. Table of Contents THE OFFERING Common Stock Offered 6,000,000 shares Common Stock Offered in the Concurrent Private Placement 666,666 shares Common Stock to be Outstanding After This Offering and the Concurrent Private Placement 29,196,716 shares Underwriters Option to Purchase Additional Shares We have granted the underwriters the right to purchase up to 900,000 additional shares of common stock within 30 days of the date of this prospectus. Use of Proceeds We estimate that our net proceeds from the sale of the common stock in this offering and the Concurrent Private Placement will be approximately $92.0 million, assuming an initial public offering price of $15.00 per share, which is the midpoint of the price range on the cover page of this prospectus, and after deducting underwriting discounts and commissions and offering expenses payable by us. We intend to use $55.0 million of the net proceeds from this offering and the Concurrent Private Placement to increase our statutory capital and surplus to enable us to write additional policies and $25.0 million of the net proceeds to fund collateralized reinsurance through Osprey, our reinsurance subsidiary. We intend to use the remainder of the net proceeds to fund the growth of our business and for general corporate purposes. See Use of Proceeds. New York Stock Exchange Symbol We have been approved to list our common stock on the New York Stock Exchange ( NYSE ) under the symbol HRTG.
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+PROSPECTUS SUMMARY This summary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our common stock. You should carefully read this prospectus and the registration statement of which this prospectus is a part in their entirety before investing in our common stock, including the information discussed under Risk Factors beginning on page 10 and our financial statements and notes thereto that appear elsewhere in this prospectus. As used in this prospectus, the terms we, our, us, Vital Therapies, or the Company refer to Vital Therapies, Inc. and its subsidiaries, taken as a whole, unless the context otherwise requires it. Overview We are a biotherapeutic company focused on developing a cell-based therapy targeting the treatment of all forms of acute liver failure. Our product candidate, the ELAD System, is a human cell-based bio-artificial liver support system that operates outside the body, or extracorporeal, and is designed to allow the patient s own liver to regenerate to a healthy state, or to stabilize the patient until transplant. We believe the ELAD System has the potential to be a life-saving therapy in patients suffering from acute liver failure. The ELAD System has received orphan designation in the United States and Europe for the treatment of patients with acute liver failure. This designation provides tax credits for qualified clinical testing, seven years of market exclusivity in the United States, and ten years of market exclusivity in Europe for the first orphan drug approved for a given indication. However, orphan designation does not alter the standard regulatory requirements or the process for obtaining marketing approval. Acute liver failure, including acute-on-chronic, surgically-induced and fulminant liver failures, represents a serious unmet medical need affecting at least an estimated 40,000 patients annually in the United States with similar incidence rates in Europe. Except for liver transplant, which is limited by a shortage of donor organs, standard of care treatment focuses on the management of disease complications, does not restore lost liver function, and is associated with high mortality. We believe the ELAD System holds considerable therapeutic promise because it has shown trends indicating the potential to increase survival rates in patients with acute liver failure. Prior to the initiation of our ongoing Phase 3 clinical trial program discussed below, more than 145 subjects have received the ELAD System therapy in seven clinical trials and through a compassionate use program, which we believe collectively show a promising therapeutic profile. The ELAD System is an allogeneic cellular therapy system incorporating our human liver-derived cells, or VTL C3A cells, contained in four hollow fiber cartridges that are combined with single use customized disposable sets and a reuseable bedside unit to provide extracorporeal circulation of blood plasma to the VTL C3A cells and the return of treated plasma back to the patient. The VTL C3A cells remain within these four ELAD cartridges during the treatment session and only the treated plasma, which is later reconstituted with the patient s blood cells, is returned to the patient. We have customized our human liver-derived C3A cell line to create an optimized bank of cells for use in the ELAD System that we culture and expand using proprietary techniques. These cells have been shown to retain many key synthetic and metabolic processes of normal human hepatocytes, the primary functional cell of the liver. The four ELAD cartridges collectively contain 440 grams, or approximately one pound, of VTL C3A cells. The patient s blood plasma is treated by our VTL C3A cells in a single session of continuous therapy lasting between three and ten days. We believe that the ELAD System therapy facilitates the recovery of liver function and has the potential to improve clinical outcomes and increase the likelihood of survival in patients with acute liver failure. We are currently enrolling subjects in one Phase 3 clinical trial, have regulatory allowance and sites open for enrollment in a second Phase 3 trial, and also have initiated a Phase 2 clinical trial, each in forms of acute liver failure. In March 2013, we initiated VTI-208, a Phase 3 randomized, controlled clinical trial in 200 subjects with alcohol-induced liver decompensation, or AILD. As of September 29, 2014, 158 subjects had been enrolled in this trial and 51 clinical sites were open for enrollment. In addition, we have obtained regulatory allowance in the United States, United Kingdom, Spain and Australia to begin enrolling subjects in our second Phase 3 randomized, controlled clinical trial, VTI-210, in subjects with severe acute alcoholic hepatitis, or AAH. We recently requested Table of Contents The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated September 30, 2014 P R O S P E C T U S 2,500,000 Shares Common Stock We are selling 2,500,000 shares of our common stock. Our common stock trades on the NASDAQ Global Market under the symbol VTL. On September 29, 2014, the last reported sale price of our common stock on the NASDAQ Global Market was $20.08 per share. We are an emerging growth company under applicable Securities and Exchange Commission rules and we have elected to comply with reduced public company reporting requirements.
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+PROSPECTUS SUMMARY This summary highlights selected information contained in this prospectus and may not contain all of the information that you need to consider in making your investment decision. To understand this offering fully, you should read the entire prospectus carefully, including the section titled Risk Factors and our consolidated financial statements. Unless we state otherwise or the context otherwise requires, references in this prospectus to we, our, us, and the Company refer to Investar Holding Corporation, a Louisiana corporation, and our consolidated subsidiary, Investar Bank, a Louisiana-chartered bank, and references to the Bank refer to Investar Bank. Overview We are a bank holding company headquartered in Baton Rouge, Louisiana, offering a wide range of commercial banking products tailored to meet the needs of individuals and small to medium-sized businesses through Investar Bank, our Louisiana-chartered commercial bank subsidiary. We serve our primary markets of Baton Rouge, New Orleans, Lafayette and Hammond, Louisiana, and their surrounding metropolitan areas from our main office located in Baton Rouge and from nine additional full-service branches located throughout our market area. We have experienced significant growth since the Bank was chartered as a de novo commercial bank by John J. D Angelo, our President and Chief Executive Officer, in 2006 and believe we will have continuing opportunities to grow, both organically and through strategic acquisitions. With an experienced management team that has successfully executed two acquisitions since 2011, excellent credit quality, high levels of capital, and an infrastructure capable of accommodating our growing franchise, we believe that we are positioned to take advantage of market opportunities in the future. As of March 31, 2014, we had consolidated total assets of approximately $673.9 million, total loans (excluding loans held for sale) of $528.2 million, total deposits of $564.2 million and total stockholders equity of $56.5 million. The largest component of our loan portfolio at March 31, 2014 was our commercial real estate loans, which totaled $185.4 million, or 35.1% of our total loans, followed by consumer loans and one-to-four family mortgage loans, which were 25.0% and 21.6% of total loans, respectively, at March 31, 2014. Construction and development loans and commercial and industrial loans, which totaled 11.9% and 6.4%, respectively, of our total loans at March 31, 2014, constituted the remaining significant components of our loan portfolio. We generate a substantial portion of our revenue from our lending activities, in the form of both interest income and loan-related fees. Loan interest income, on a tax-equivalent basis, was $7.0 million for the three months ended March 31, 2014 and $22.7 million for the year ended December 31, 2013, comprising substantially all of our interest income for both periods. Fee income charged in connection with our mortgage loans held for sale, the largest component of our non-interest income, was $0.5 million, or 49.3% of our total non-interest income, for the three months ended March 31, 2014, and $2.8 million, or 53.1% of our total non-interest income, for the year ended December 31, 2013. Our History and Growth Led by Mr. D Angelo and a team of experienced bankers, we first achieved profitability in 2008 and have accomplished significant milestones including: June, 2006 Chartered with an initial capitalization of $10.1 million from local investors. October, 2011 Expanded our presence in the Baton Rouge market with the acquisition of South Louisiana Business Bank, which contributed approximately $50.9 million in assets, $38.6 million in deposits, $12.0 million in capital and one branch located in Prairieville, a suburb of Baton Rouge. December, 2012 Entered the New Orleans market through de novo branching by purchasing two closed branch locations of another bank in suburban New Orleans. Table of Contents TABLE OF CONTENTS Page Prospectus Summary 3
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/KPTI_karyopharm_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/KPTI_karyopharm_prospectus_summary.txt
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated by reference into this prospectus from our Annual Report on Form 10-K for the year ended December 31, 2013, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and our other filings with the Securities and Exchange Commission listed in the section of this prospectus entitled "Incorporation of Documents by Reference" and is qualified in its entirety by the more detailed information and consolidated financial statements included or incorporated by reference elsewhere in this prospectus. This summary does not contain all of the information that may be important to you. You should read and carefully consider the following summary together with the entire prospectus and the documents included herein by reference, including our consolidated financial statements and the notes thereto incorporated herein by reference and the matters discussed under "Risk Factors," "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in each case appearing elsewhere in this prospectus or in our Annual Report on Form 10-K for the year ended December 31, 2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 incorporated by reference herein before deciding to invest in our common stock. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements." Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in "Risk Factors" and other sections of this prospectus and the documents incorporated herein by reference. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to "Karyopharm" "the Company," "we," "us" and "our" refer to Karyopharm Therapeutics Inc. and, where appropriate, its consolidated subsidiaries. Karyopharm Therapeutics Inc. Overview We are a clinical-stage pharmaceutical company founded in December 2008 by Dr. Sharon Shacham. We are focused on the discovery and development of novel first-in-class drugs directed against nuclear transport targets for the treatment of cancer and other major diseases. Our scientific expertise is focused on the understanding of the regulation of intracellular transport between the nucleus and the cytoplasm. We have discovered and are developing wholly-owned, novel, small molecule, Selective Inhibitors of Nuclear Export, or SINE, compounds that inhibit the nuclear export protein XPO1. We have worldwide rights to these SINE compounds. Our lead drug candidate, Selinexor (KPT-330), is an XPO1 inhibitor being evaluated in multiple open-label Phase 1 and Phase 2 clinical trials in patients with heavily pretreated relapsed and/or refractory hematological and solid tumor malignancies. To date, we have administered Selinexor to over 330 patients across Phase 1 and Phase 2 clinical trials in hematologic and solid tumor indications. Evidence of anti-cancer activity has been observed in some patients and Selinexor has been sufficiently well-tolerated to allow many of these patients to remain on therapy for prolonged periods, including several who have remained on study for over 12 months. During 2014, we plan to initiate registration-directed clinical trials in three different hematological malignancy indications. We plan to initiate up to two additional registration-directed trials in hematological or solid tumor indications in late 2014 or early 2015. These registration-directed trials are designed to serve as the basis for an application seeking regulatory approval for Selinexor in such indications. To our knowledge, no other XPO1 inhibitors are in clinical development at the present time. One of the ways in which the cell regulates the function of a particular protein is by controlling the protein's location within the cell, as a specific function may only occur within a particular location in the cell. In healthy cells, nuclear transport, both into and out of the nucleus, is a normal and regular occurrence that is tightly regulated and requires specific carrier proteins to occur. XPO1 mediates the export of approximately 220 different mammalian cargo proteins, including the vast majority of tumor Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents suppressor proteins. Moreover, XPO1 appears to be the only nuclear exporter for most of these tumor suppressor proteins. Cancer cells have increased levels of XPO1, causing the increased export of these tumor suppressor proteins from the nucleus. Since the tumor suppressor proteins need to be located in the nucleus to promote programmed cell death, or apoptosis, XPO1 overexpression in cancer cells counteracts the natural apoptotic process that protects the body from cancer. Due to XPO1 inhibition by our SINE compounds, the export of tumor suppressor proteins is prevented, thereby leading to their accumulation in the nucleus. This subsequently reinitiates and amplifies their natural apoptotic function in cancer cells with minimal effects on normal cells. The figure below depicts the process by which our SINE compounds inhibit the XPO1 nuclear export of tumor suppressor proteins. Transient XPO1 Inhibition by SINE Compounds We are currently conducting multiple open-label clinical trials of Selinexor, including three Phase 1 clinical trials, the first in patients with various advanced hematological malignancies, the second in patients with various advanced or metastatic solid tumor malignancies and the third, a food effect study, in patients who have metastatic, locally advanced or locally recurrent soft tissue or bone sarcomas. In these trials, we have observed evidence of anti-cancer activity of Selinexor across a spectrum of patients with advanced cancers who had received multiple previous treatments and, despite these treatments, had disease that was progressing at the time of enrollment in our clinical trials. Our hematological malignancy trial consists of six arms, in which Selinexor is administered as a monotherapy in Arms 1-5 and in combination in Arm 6. Arm 1 includes patients with certain chronic B-cell malignancies, including non-Hodgkin's lymphoma, or NHL, chronic lymphocytic leukemia, or CLL, multiple myeloma, or MM and Waldenstr m's Macroglobulinemia, or WM; Arm 2 includes patients with acute myeloid leukemia, or AML; Arm 3 includes patients with T-cell lymphomas; Arm 4 includes patients with chronic myeloid leukemia, or CML; Arm 5 includes patients with acute lymphocytic leukemia, or ALL; and Arm 6 includes patients on combination therapy who have MM and are taking low-dose dexamethasone (20mg) in combination with each biweekly dose of Selinexor. Of the patients evaluated in our hematological malignancy trial as of May 13, 2014, we have observed complete responses or remissions, partial responses or remissions, minimal responses or stable disease in a number of these patients, all as determined in accordance with commonly accepted evaluation criteria for the specific indication. Partial or minimal responses or stable disease have been observed in 70% of patients with relapsed and/or refractory chronic B-cell malignancies. In patients KARYOPHARM THERAPEUTICS INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2834 (Primary Standard Industrial Classification Code Number) 26-3931704 (I.R.S. Employer Identification No.) 2 Mercer Road Natick, MA 01760 (508) 975-4820 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Michael G. Kauffman, M.D., Ph.D. Chief Executive Officer Karyopharm Therapeutics Inc. 2 Mercer Road Natick, MA 01760 (508) 975-4820 (Name, address, including zip code, and telephone number, including area code, of agent for service) Table of Contents with relapsed and/or refractory acute myeloid leukemia, or AML, as of May 13, 2014, we have observed complete remissions, partial remissions, morphologic leukemia-free state or stable disease in 49% of patients, some for longer than three months. Among eight patients with multiple myeloma treated with Selinexor in combination with low-dose dexamethasone (20mg twice weekly), complete, partial or minor responses were observed in 75% of patients as of June 5, 2014. Of the patients in the solid tumor malignancy trial evaluated as of May 13, 2014, we have observed partial responses or stable disease in 49%, all as determined in accordance with Response Evaluation Criteria In Solid Tumors, or RECIST. We have initiated Phase 2 studies of Selinexor in several indications, including prostate cancer, gynecologic malignancies (ovarian, cervical and uterine cancers) and glioblastoma and we expect initial data during 2015. In addition, we expect to initiate a Phase 2 clinical trial in squamous head, neck or lung cancers during 2014. We have also initiated a Phase 1/2 study of Selinexor in combination with decitabine (Dacogen) in patients with AML and additional combination studies are expected to begin in 2014 and 2015. We have initiated one registration-directed clinical trial and, assuming positive results from our ongoing clinical trials and pending regulatory feedback, we plan to initiate registration-directed clinical trials of Selinexor in two additional hematological malignancy indications during 2014. We refer to these trials as registration-directed because they are designed to serve as the basis for an application seeking regulatory approval of Selinexor. On June 24, 2014, we announced the initiation of a registration-directed clinical trial for Selinexor in older patients with relapsed refractory AML. We expect to initiate registration-directed clinical trials in Richter's Syndrome (also called Richter's Transformation) during the middle of 2014 and in diffuse large B-cell lymphoma, or DLBCL, in the second half of 2014. Moreover, we plan to initiate up to two additional registration-directed trials in hematological or solid tumor indications, potentially including multiple myeloma, in late 2014 or early 2015. We plan to seek regulatory approvals of Selinexor in North America and Europe in each such indication with respect to which we receive positive results and positive regulatory feedback. We may seek such approvals in other geographies as well. We believe that the XPO1-inhibiting SINE compounds that we have discovered and developed to date, including Selinexor, have the potential to provide a novel targeted therapy that enables tumor suppressor proteins to remain in the nucleus and promote apoptosis of cancer cells. Moreover, our SINE compounds spare normal cells, which, unlike cancer cells, do not have significant damage to their genetic material, and we believe this selectivity for cancer cells minimizes side effects. We believe that the oral administration of Selinexor and the lack of cumulative or major organ toxicities observed to date in patients treated with Selinexor in clinical trials create the potential for its broad use across many cancer types, including both hematological and solid tumor malignancies. We believe that no currently approved cancer treatments or current clinical-stage cancer drug candidates are selectively targeting the restoration and increase in the levels of multiple tumor suppressor proteins in the nucleus. Another SINE compound, Verdinexor (KPT-335), which is closely related to Selinexor, is being developed for the treatment of pet dogs with lymphomas. The approval of drugs to treat animals is based on a New Animal Drug Application, or NADA, reviewed by the FDA's Center for Veterinary Medicine. Three of the four technical sections of the NADA for Verdinexor have been approved by the FDA, including Effectiveness, Safety and Environmental Impact. We anticipate obtaining a marketing collaborator to complete the final major technical section of the NADA, the Chemicals/Manufacturing/Controls section, which covers the commercial-scale manufacturing, or CMC. of Verdinexor. We believe that the approval of the effectiveness and safety sections of the NADA for Verdinexor for the treatment of dogs with lymphoma helps confirm the activity and tolerability of our novel SINE compounds for the treatment of cancers. We are focused on building a leading oncology business. Karyopharm was founded by Sharon Shacham, Ph.D., M.B.A., our President and Chief Scientific Officer. We are led by Dr. Shacham and Copies to: Steven D. Singer, Esq. Joshua D. Fox, Esq. Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109 Telephone: (617) 526-6000 Christopher B. Primiano, Esq. Vice President, General Counsel Karyopharm Therapeutics Inc. 2 Mercer Road Natick, MA 01760 Telephone: (508) 975-4820 Patrick O'Brien, Esq. Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, MA 02199 Telephone: (617) 951-7000 Table of Contents Dr. Michael Kauffman, our Chief Executive Officer. Dr. Kauffman played a leadership role in the development and approval of Velcade at Millennium Pharmaceuticals, and of Kyprolis while serving as Chief Medical Officer at Proteolix and then Onyx Pharmaceuticals. Dr. Shacham has played a leadership role in the discovery and development of many novel drug candidates, which have been or are being tested in human clinical trials, prior to her founding of Karyopharm and while at Karyopharm. In addition to cancer, we believe that our SINE compounds have the potential to provide therapeutic benefit in a number of additional indications, including autoimmune and inflammatory diseases, wound healing, HIV and influenza. We have discovered and are developing a pipeline of SINE compounds that have shown evidence of activity in preclinical models of inflammation, wound healing and viral infection. We may seek to enter into development, marketing and commercialization collaboration arrangements for our SINE compounds other than Selinexor in non-oncology indications globally. The table below summarizes the current stages of development of our key human drug candidates and indications that we expect to initially focus on for each candidate. We expect to initiate the planned clinical trials of Selinexor described below assuming positive results from our ongoing clinical trials and pending regulatory feedback. We also expect a number of investigator-sponsored trials, or ISTs, to be initiated for Selinexor in a variety of cancer indications over the next year. These ISTs could consist of single agent or combination studies with other agents in both hematological and solid tumor malignancies. Recent Developments We recently presented updated data from our ongoing Phase 1 clinical trials of Selinexor in patients with various advanced hematological malignancies and in patients with various advanced or metastatic solid tumor malignancies. All patients entering these trials have progressive disease upon enrollment that is relapsed after and/or refractory to all available classes of anti-cancer agents, typically Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Table of Contents after multiple approved therapies and often after one or more experimental therapies. Anti-cancer activity has been observed with tumor reductions and durable disease control across many hematologic and solid tumor malignancies. Several patients have remained on single-agent oral Selinexor for over one year. Adverse events observed in our most recent patient data are generally mild, responsive to standard supportive care and consistent with those previously reported in patients in our Phase 1 clinical trials. Response data presented herein are interim unaudited data based on reports by physicians at the clinical trial sites. Responses in the hematological trial are measured using commonly accepted evaluation criteria for the specific indication. Responses in the sold tumor trial are measured using RECIST. Responses include: sCR stringent complete response; CR complete response; CR(i/p) complete response without hematological recovery; PR partial response; MLFS morphological leukemia free state; MR minor response; SD stable disease; PD progressive disease; WC withdrew consent; or NE non-evaluable, meaning the patient's response could not be evaluated due to a number of potential factors, including when a patient withdraws consent or fails to comply with the therapeutic protocol for the trial. Disease control rate, or DCR, refers to the percentage of responses that are SD or better (MR or better in the case of MM) and overall response rate, or ORR, refers to the percentage of responses that are PR or better. Advanced Hematological Malignancies We recently reported data from patients with non-Hodgkin's lymphoma, including diffuse large B-cell lymphoma and Richter's syndrome/transformation (Richter's), acute myeloid leukemia and multiple myeloma as part of our ongoing Phase 1 clinical trial of Selinexor in patients with various advanced hematological malignancies. The primary objectives of the Phase 1 trial are to determine the safety, tolerability and recommended Phase 2 dose of orally administered Selinexor. Patients were dosed 3 - 80mg/m2 of Selinexor orally over a four-week cycle, with lower doses initially given ten times per cycle and higher doses given twice weekly. Responses were evaluated every one to two cycles. Non-Hodgkin's Lymphoma Fifty-one heavily pretreated patients with relapsed and/or refractory NHL, including DLBCL and Richter's, and mean prior treatment regimens of 4.1 were enrolled in this arm of the Phase 1 clinical trial as of May 13, 2014. Of this group, 43 patients were evaluable, five patients had tumors deemed non-evaluable and three patients had tumors pending evaluation. Among the 43 evaluable patients, the DCR was 74% across all doses of Selinexor and the ORR was 28%. Responses were observed across all subtypes of NHL, independent of genetic abnormalities, with durable cancer control observed across several patients who remained on study for longer than nine months. Responses in 43 evaluable patients are shown below. CALCULATION OF REGISTRATION FEE Class of Securities to be Registered Number of Shares to be Registered(1) Proposed Maximum Offering Price Per Share(2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee(3) Common Stock, par value $0.0001 per share 2,530,000 $43.20 $109,296,000 $14,077.32 (1)Includes shares that the underwriters have the option to purchase. (2)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and based on the average of the high and low sales price of the registrant's common stock as reported on the NASDAQ Global Select Market on June 18, 2014. (3)$14,812 previously paid on June 19, 2014. Table of Contents Table of Contents Best Responses in NHL Patients as of May 13, 2014 Cancer N DCR (%) ORR(%) CR (%) PR (%) SD (%) PD (%) WC (%) DLBCL 21 15 (70%) 6 (29%) 1 (5%) 5 (25%) 9 (40%) 5 (25%) 1 (5%) Follicular 7 6 (86%) 1 (14%) 1 (14%) 5 (71%) 1 (14%) Mantle Cell 3 2 (67%) 1 (33%) 1 (33%) 1 (33%) 1 (33%) Transformed 3 1 (33%) 1 (33%) 1 (33%) 2 (67%) T-Cell 4 3 (75%) 1 (25%) 1 (25%) 2 (50%) 1 (25%) Richter's Syndrome 5 5 (100%) 2 (40%) 2 (40%) 3 (60%) Total 43 32 (74%) 12 (28%) 2 (5%) 10 (23%) 20 (47%) 7 (16%) 4 (9%) The following chart indicates the maximum percentage shrinkage of tumors across various subtypes of NHL relative to baseline scans for the patients depicted. Among the 21 patients with heavily pretreated DLBCL, ORR and DCR were nearly identical across all subtypes of DLBCL. There are two major subtypes of DLBCL, namely Germinal Center B-Cell, or GCB and Activated B-Cell, or ABC, also called non-GCB. Many targeted therapies such as ibrutinib or lenalidomide show activity primarily against the ABC subtype. However, as detailed in the table below and consistent with the broadly applicable mechanism of action of Selinexor, Selinexor shows activity across both major subtypes. Best Responses in Diffuse Large B-Cell Patients as of May 13, 2014 Type N DCR (%) ORR (%) CR (%) PR (%) SD (%) PD (%) WC (%) GCB 11 8 (72%) 3 (27%) 1 (9%) 2 (18%) 5 (45%) 2 (18%) 1 (9%) non-GCB 4 3 (75%) 1 (25%) 1 (25%) 2 (50%) 1 (25%) Unknown 6 4 (67%) 2 (33%) 2 (33%) 2 (33%) 2 (33%) The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Table of Contents In addition, a minority of DLBCL patients have "double-hit" disease because these tumors over-express the two oncogenes MYC and BCL2 (or BCL6). Double-hit DLBCL is particularly difficult to treat due in part to its resistance to multi-agent immunochemotherapy and many targeted agents. Of four patients with double-hit DLBCL, there was one CR, two patients with SD (with 43% and 45% lymph node reductions, respectively), and one PD. We believe, together, these data and the consistent data across DLBCL subtypes indicate that Selinexor has the potential to treat a broad range of subtypes of DLBCL, largely independent of the cell of origin or oncogenic drivers. Among all NHL patients, Grade 3/4 adverse events occurring in more than three patients included thrombocytopenia (20%), neutropenia (16%) and hyponatremia (6%). The most common Grade 1/2 adverse events were nausea (51%), anorexia (41%) and fatigue (36%). There have been no dose limiting toxicities among NHL patients as of May 13, 2014. The maximum tolerated dose was not reached, but based on biological activity and data from additional studies, the intended Phase 2 or Phase 3 trial dose of oral Selinexor for NHL is 60mg/m2 twice weekly. Acute Myeloid Leukemia Sixty-five heavily pretreated patients with progressive, relapsed and/or refractory AML, most with three or more prior treatment regimens, were enrolled in this arm of the Phase 1 clinical trial as of May 13, 2014. These patients were dosed 16.8 - 70mg/m2 in a four-week cycle, with lower doses initially given ten times per cycle and higher doses given twice weekly. Of these 65 patients, two patients had tumors pending evaluation, and among the 63 other patients, the complete response rate with or without full hematologic recovery was 11%, the ORR was 16% and the DCR was 49%; 16 (25%) of the 63 patients with AML were non-evaluable but were included in the AML response rate calculation. Responses were observed across multiple genetic subtypes of AML. Higher doses of Selinexor were associated with greater reductions in bone marrow blast counts, which were also observed across different AML subtypes. Responses in 63 patients are shown below. Two patients had tumors pending evaluation. Best Responses in AML Patients as of May 13, 2014 N DCR (%) ORR (%) CR (%) CR(i/p) (%) PR (%) MLFS (%) SD (%) PD (%) NE (%) 63 31 (49%) 10 (16%) 5 (8%) 2 (3%) 1 (2%) 2 (3%) 21 (33%) 16 (25%) 16 (25%) Grade 3/4 adverse events occurring in more than three patients included fatigue (18%), thrombocytopenia (15%), neutropenia (11%), and nausea (8%). The most common Grade 1/2 adverse events were diarrhea (82%), anorexia (78%), nausea (74%), and fatigue (65%). There have been no dose limiting toxicities in AML patients as of May 13, 2014 and the maximum tolerated dose is 70mg/m2 twice weekly. The intended Phase 2 or Phase 3 trial dose of oral Selinexor for AML is 55mg/m2 twice weekly. Multiple Myeloma As part of our Phase 1 clinical trial of Selinexor in patients with advanced hematological malignancies, patients with multiple myeloma were treated with either single-agent Selinexor or Selinexor in combination with "low-dose" (20mg) dexamethasone, all dosed twice weekly. Forty-four patients with multiple myeloma whose disease was relapsed and/or refractory to all available classes of approved therapies, with a mean of 5.7 prior therapies, and progressing on study entry have been enrolled in this trial as of June 5, 2014. Of these 44 patients, 34 received single-agent Selinexor therapy and eight patients were treated with Selinexor in combination with dexamethasone. Among the 34 patients receiving single-agent Selinexor therapy, including six patients who were non-evaluable, best responses include one PR (3%), five MRs (15%), 16 SDs (47%) and six PDs (18%). It should also be noted that some patients treated with single agent Selinexor receive very low doses of dexamethasone Table of Contents ( 12mg with each dose of selinexor) or another steroid as part of supportive care. These very low doses of steroids are not known to have any anti-myeloma activity, particularly in the patients enrolled in this study, whose disease is refractory to steroids and multiple other agents. Eight patients were treated with 45mg/m2 of oral Selinexor and 20mg of dexamethasone, each dosed twice weekly. Two additional patients have been treated with combination therapy but had not yet completed the first treatment cycle as of June 5, 2014. This dose of dexamethasone is the standard low dose dexamethasone (40mg weekly or 20mg twice weekly) used with other anti-myeloma drugs including lenalidomide or pomalidomide. The patients enrolled in this study had received a median of 5.5 prior lines of therapy. All had received prior therapy with a proteasome inhibitor, such as Kyprolis or Velcade, and an immunomodulatory agent, such as pomalidomide, steroids (typically two or more times) while seven of the eight patients also received stem cell transplantations. As of June 5, 2014, the best responses among the eight patients were one stringent complete response (sCR) (12.5%), three PRs (37.5%), two MRs (25%), one PD (12.5%) and one NE (12.5%). The clinical benefit response rate (sCR+PR+MR) was 75% and the ORR was 50%. Five of the six responding patients remain on study as of June 5, 2014. Approximately 12 additional patients with multiple myeloma may be dosed with Selinexor in combination with dexamethasone in this ongoing Phase 1 study. Responses in these eight patients are described below. Patients with Relapsed/Refractory MM Treated with Twice Weekly Oral Selinexor 45mg/m2 + Dexamethasone 20mg MM Type Number of Prior therapies Maximal Change Response Study Days IgG-k 7 -73% PR 122+ FLC-l 5 * NE 15 FLC-k 3 -53% PR 45 FLC-k 5 -98% sCR 107+ IgG-k 7 -81% PR 81+ IgG-k 4 * PD 38 IgA-k 6 -48% MR 51+ IgG-k Table of Contents The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated June 25, 2014 PROSPECTUS 2,200,000 Shares Common Stock *Patients did not undergo post-cycle 1 scan. Adverse events in patients receiving single-agent Selinexor were generally low-grade, consistent with events observed in patients with other hematological malignancies and responsive to standard supportive care. Compared with Selinexor given alone, fewer adverse events in patients receiving Selinexor in combination with dexamethasone were reported, particularly levels of nausea, consistent with dexamethasone's reduction in Selinexor's main side effects of nausea, anorexia, and fatigue. In addition to patients with multiple myeloma achieving durable responses and disease control on Selinexor single-agent therapy, Selinexor with low dose dexamethasone showed activity with rapid M-protein reductions and good tolerability, even in patients with disease refractory to pomalidomide and/or carfilzomib. We believe that Selinexor may have synergistic potential with other therapies. Advanced or Metastatic Solid Tumor Malignancies We recently reported data from our ongoing Phase 1 clinical trial of Selinexor in patients with advanced or metastatic solid tumor malignancies. All patients entered the study with advanced or We are offering 2,000,000 shares of our common stock and the selling stockholders are offering 200,000 shares of our common stock. We will not receive any proceeds from the sale of shares by the selling stockholders. Our common stock is listed on The NASDAQ Global Select Market under the symbol "KPTI." The last reported sale price of our common stock on The NASDAQ Global Select Market on June 24, 2014 was $41.37 per share. We are an "emerging growth company" under federal securities laws and are subject to reduced public company disclosure standards. See "Prospectus Summary Implications of Being an Emerging Growth Company." Investing in the common stock involves risks that are described in the "Risk Factors" section beginning on page 15 of this prospectus. Table of Contents metastatic solid tumor cancers relapsed or refractory after multiple previous treatments and objectively progressing on study entry. The primary objectives of the Phase 1 dose escalation trial are to determine the safety, tolerability and recommended Phase 2 dose of orally administered Selinexor. These patients were dosed 3 - 85mg/m2 of oral Selinexor over a four-week cycle, with lower doses initially given ten times per cycle and higher doses given twice weekly. Response evaluation was done every two cycles in accordance with RECIST. As of May 13, 2014, 129 patients were enrolled in this Phase 1 clinical trial. Enrolled patients had received a mean of 3.7 prior therapies. Of these patients, 106 were evaluable and 23 patients were non-evaluable or pending evaluation as of May 13, 2014. Of these evaluable patients, the DCR was 49%. PRs were observed in four patients, one each with colorectal cancer (KRAS mutant), melanoma (BRAFwt), ovarian adenocarcinoma and cervical cancer. SD was noted in 47 patients, with 17 patients (16%) experiencing SD for six months or longer. Eight of nine evaluable patients with hormone and chemotherapy refractory prostate cancer achieved stable disease and have remained on study for between 70 and 317 days. Among 14 evaluable patients with head and neck cancer, nine achieved stable disease with eight on study for 75 to over 401 days. Responses in 106 evaluable patients are shown below. Best Responses in Solid Tumor Patients as of May 13, 2014 Cancer Type N DCR (%) PR (%) SD (%) PD (%) Colorectal 39 14 (36%) 1 (3%) 13 (33%) 25 (64%) Head & Neck 14 9 (64%) 9 (64%) 5 (36%) Prostate 8 7 (88%) 7 (88%) 1 (12%) Cervical 5 4 (80%) 1 (20%) 3 (60%) 1 (20%) Ovarian 5 3 (60%) 1 (20%) 2 (40%) 2 (40%) GBM 5 5 (100%) Melanoma 3 2 (67%) 1 (33%) 1 (33%) 1 (33%) Sarcoma 8 7 (88%) 7 (88%) 1 (12%) Other 19 6 (32%) 6 (32%) 13 (68%) Total 106 52 (49%) 4 (4%) 48 (45%) 54 (51%) Side effects were generally low grade and typically gastrointestinal in nature, or fatigue. These common side effects decreased over time, in part due to prophylactic use of standard supportive care. Two DLTs were observed in solid tumor patients receiving 85 mg/m2 dosed twice weekly. Grade 3/4 adverse events occurring in six or more patients in the first cycle included fatigue hyponatremia (8%), fatigue (7%), and thrombocytopenia (7%). The most common Grade 1/2 adverse events in the first cycle were nausea (62%), fatigue (52%), anorexia (48%) and vomiting (35%). One was Grade 3 asymptomatic hyponatremia and the other was acute cerebellar syndrome that reversed over several weeks with markedly improving ataxia and dysarthria. No additional central nervous system toxicities were observed in any other patients receiving Selinexor to date. Major organ dysfunction or clinically significant cumulative toxicities have not been observed. The intended Phase 2 or Phase 3 trial dose of oral Selinexor in solid tumors is 65mg/m2 twice weekly. Registration-Directed Trial Design On June 24, 2014, we announced the initiation of our Phase 2 study of Selinexor in patients 60 years of age or older with relapsed or refractory acute myeloid leukemia (AML) who are ineligible for intensive chemotherapy and/or transplantation. We have titled this trial the Selinexor in Older Patients with Relapsed/Refractory AML, or SOPRA, study. We also expect to initiate registration- Per Share Total Public offering price $ $ Underwriting discount(1) $ $ Proceeds, before expenses, to us $ $ Proceeds, before expenses, to selling stockholders $ $ Table of Contents directed clinical trials for Selinexor in Richter's Syndrome during the middle of 2014 and in DLBCL in the second half of 2014. In SOPRA, 150 patients with AML which has relapsed after, or was refractory to, first line therapy will be randomized in a 2:1 fashion to Selinexor provided orally twice per week at a dose of 55mg/m2 versus one of four physician choices. Physician choices include best supportive care, or BSC, alone, or BSC plus either azacytidine (Vidaza), decitabine (Dacogen), or low dose cytosine arabinoside (LD-AraC). Overall survival is the primary endpoint. SOPRA was designed based on data from the ongoing Phase 1 study of Selinexor in patients with advanced hematologic malignancies, including AML. SOPRA is expected to take approximately two years to complete. Our registration-directed trial in Richter's Syndrome is designed as a single-arm trial in patients with CLL who experienced a transformation to Richter's Syndrome and subsequently relapsed after chemotherapy. The primary endpoint of this trial is ORR and the trial is expected to enroll approximately 50 patients who will be treated with Selinexor given at a dose of 60mg/m2, administered orally two times per week. Our registration-directed trial in DLBCL is designed as a single-arm trial in patients that are relapsed and/or refractory to two lines of chemotherapy. The primary endpoint of this trial is ORR and the trial is expected to enroll approximately 150 patients who will be treated with Selinexor given at a dose of 60mg/m2 in combination with low dose dexamethasone (12mg), each administered orally two times per week. Our Strategy As a clinical-stage pharmaceutical company focused on the discovery and development of orally available, novel first-in-class drugs directed against nuclear transport targets for the treatment of cancer and other major diseases, the critical components of our business strategy are to: Develop and seek regulatory approval of Selinexor, our novel lead drug candidate, in North America and Europe. Maximize the commercial value of Selinexor. Maintain our competitive advantage and scientific expertise in the field of nuclear transport. Develop novel drug candidates by leveraging our proprietary drug discovery and optimization platform and our understanding of nuclear transport. Collaborate with key opinion leaders to conduct investigator-sponsored trials of Selinexor. Maximize the value of our other SINE compounds in non-oncology indications and veterinary oncology through collaborations. Risks Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary and in our Annual Report on Form 10-K for the year ended December 31, 2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 incorporated by reference herein. These risks include the following: We depend heavily on the success of Selinexor, our lead drug candidate, which is currently in Phase 1 and Phase 2 clinical trials, and we cannot be certain that we will receive regulatory approval for Selinexor or will successfully commercialize Selinexor even if we receive such regulatory approval. (1)We refer you to "Underwriting" on page 36 for additional information regarding total underwriting compensation. The underwriters may also exercise their option to purchase up to an additional 330,000 shares from us at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The shares will be ready for delivery on or about , 2014. Table of Contents Our approach to the discovery and development of drug candidates that target Exportin 1, or XPO1, is unproven, and we do not know whether we will be able to develop any drugs of commercial value. If clinical trials of our drug candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our drug candidates; to date, both adverse and serious adverse events have been experienced by patients in our clinical trials of Selinexor, including several which have been determined to relate to Selinexor. We cannot be certain that, even if successful, our registration-directed trials will be sufficient to allow us to file for, or receive approval for, Selinexor. We have incurred significant losses since inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. As of March 31, 2014, we had an accumulated deficit of $76.3 million. Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability. We will need substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our research and drug development programs or commercialization efforts. We expect to depend on third parties for the development, marketing and/or commercialization of our drug candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these drug candidates. We have applied for, but not yet received, patent protection for our key drug candidates and if we are unable to obtain and maintain patent protection for our drug candidates and other discoveries, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize drugs and other discoveries similar or identical to ours, and our ability to successfully commercialize our drug candidates and other discoveries may be adversely affected. Our Corporate Information We were incorporated under the laws of the State of Delaware in December 2008. Our executive offices are located at 2 Mercer Road, Natick, MA 01760, and our telephone number is (508) 975-4820. Our website address is www.karyopharm.com. The information contained in, or accessible through, our website does not constitute part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. The trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Implications of Being an Emerging Growth Company As a company with less than $1 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: reduced disclosure about our executive compensation arrangements; exemption from holding the non-binding advisory votes on executive compensation, including golden parachute arrangements; and BofA Merrill Lynch Leerink Partners Table of Contents exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting. Generally, we may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates or we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of certain reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. JMP Securities Wedbush PacGrow Life Sciences Oppenheimer & Co. The number of shares of our common stock to be outstanding after this offering is based on 29,762,499 shares of our common stock issued and outstanding as of March 31, 2014, including 143,620 shares of unvested restricted stock subject to repurchase by us, and excludes: 2,505,749 shares of our common stock issuable upon exercise of stock options outstanding as of March 31, 2014 at a weighted-average exercise price of $9.21 per share; and 1,722,111 and 242,424 additional shares of our common stock available for future issuance, as of March 31, 2014, under our 2013 stock incentive plan and our 2013 employee stock purchase plan, respectively. Unless otherwise indicated, this prospectus reflects and assumes the following: no exercise of the outstanding options described above; no exercise by the underwriters of their option to purchase up to 330,000 additional shares of our common stock; and no purchases of shares of our common stock by our existing stockholders in this offering. The date of this prospectus is , 2014. (1)The as adjusted balance sheet data give effect to our issuance and sale of 2,000,000 shares of common stock in this offering at an assumed public offering price of $41.37 per share, which is the last reported sale price of our common stock on The NASDAQ Global Select Market on June 24, 2014, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Table of Contents
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+S-1/A 1 d615256ds1a.htm S-1/A S-1/A Table of Contents As filed with the Securities and Exchange Commission on January 17, 2014 Registration No. 333-191895 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Pre-Effective Amendment No. 1 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MIDDLEFIELD BANC CORP. (Exact name of registrant as specified in its charter) Ohio 34-1585111 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 15985 East High Street Middlefield, Ohio 44062-0035 (440) 632-1666 (Address, including zip code, and telephone number, including area code of registrant s principal executive offices) James R. Heslop, II Executive Vice President and COO Middlefield Banc Corp. 15985 East High Street Middlefield , Ohio 44062-0035 (440) 632-1666 With a copy to: Francis X. Grady, Esq. Grady & Associates 20220 Center Ridge Road, Suite 300 Rocky River, Ohio 44116-3501 (440) 356-7255 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. 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 registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See 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 CALCULATION OF REGISTRATION FEE Title of each class of securities to be registered Amount to be registered (1) Proposed maximum offering price per share (2) Proposed maximum aggregate offering price Amount of registration fee common stock, no par value 196,635 $26.12 $5,136,106 $661.53 (3) (1) This registration statement also covers any additional shares of common stock that may be offered and sold on account of stock splits, stock dividends, and similar changes in outstanding common stock, consistent with Rule 416(a) under the Securities Act of 1933. (2) Estimated solely for purposes of calculating the registration fee, in accordance with Rule 457(c) the price is based on the $26.12 average of the high and low prices of Middlefield Banc Corp common stock on October 21, 2013. (3) Previously paid The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine. Table of Contents The information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities or a solicitation of offers to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JANUARY 17, 2014 PROSPECTUS Middlefield Banc Corp. 196,635 shares of Common Stock This prospectus has to do with 196,635 shares of our common stock, without par value, that may be offered for sale from time to time by the selling stockholder named in this prospectus. The shares of common stock may be sold at a fixed price or prices, at the prevailing market price at the time of sale, at a price related to the prevailing market price, at varying prices determined at the time of sale, or at a negotiated price or prices. The shares of common stock offered by this prospectus and any prospectus supplement may be offered by the selling stockholder directly to investors or to or through underwriters, dealers, or other agents. We will not receive any of the proceeds from the selling stockholder s sale of shares. Registration of the shares of common stock offered by this prospectus does not necessarily mean that any of the shares will be sold by the selling stockholder. References in this prospectus to the selling stockholder shall be deemed to include permitted transferees of the selling stockholder as well. Our common stock trades on the OTC Bulletin Board (OTCQB) under the ticker symbol MBCN. The last reported sale price of our common stock was $ on January , 2014. Our principal executive offices are located at 15985 East High Street, Middlefield, Ohio 44062-0035. THE MIDDLEFIELD BANC CORP. COMMON STOCK OFFERED HEREBY IS NOT THE OBLIGATION OF OR GUARANTEED OR ENDORSED BY ANY BANK. IT DOES NOT CONSTITUTE A BANK ACCOUNT OR DEPOSIT. IT IS NOT FEDERALLY INSURED OR PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN MIDDLEFIELD BANC CORP. COMMON STOCK INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. BEFORE INVESTING IN OUR COMMON STOCK YOU SHOULD READ CAREFULLY THE INFORMATION SET FORTH UNDER THE HEADING RISK FACTORS, WHICH APPEARS ON PAGE 2, AS WELL AS THE
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY The following is a summary of this Prospectus, and while it contains material information about the Merk Gold Trust (Trust) and the shares it issues, it does not contain or summarize all of the information about the Trust and the shares contained in this Prospectus that is material and that may be important to you. You should read this entire Prospectus, including Risk Factors beginning on page 12, and the material incorporated by reference herein before making an investment decision about the shares. Capitalized terms not defined in this section have the meaning set forth in the Glossary beginning on page 70 of this Prospectus. Overview of the Trust Structure, the Sponsor, the Trustee and the Custodian The Trust was formed pursuant to the Depositary Trust Agreement (Trust Agreement) on May 6, 2014 under New York State law. The Trust s primary objective is to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold bullion (physical gold) in exchange for those shares. The Trust s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust s operations. Each share represents a fractional undivided beneficial interest in the Trust s net assets. The Trust s assets consist principally of gold held on the Trust s behalf in financial institutions for safekeeping. Physical gold that the Trust will hold includes London Bars and, for the limited purposes described herein, other gold bars and coins, without numismatic value, having a minimum fineness (or purity) of 995 parts per 1,000 (99.5%) or, for American Gold Eagle gold coins, with a minimum fineness of 91.67% (American Gold Eagle Coins). The sponsor of the Trust is Merk Investments LLC (Sponsor). The Sponsor is a Delaware limited liability company. The shares are neither interests in or obligations of, and are not guaranteed by, the Sponsor, its member(s), or any of its affiliates. The shares provide investors with the opportunity to access the gold market though a traditional brokerage account. The Sponsor believes that investors will be able to more effectively implement strategic and tactical asset allocation strategies that use gold by investing in the shares than by purchasing, holding and trading gold directly. The Trust is one of several exchange-traded products that seek to track the price of physical gold. Certain other financial products may gain exposure to physical gold through the use of derivatives that may be subject to counterparty and credit risks. The Trust will not hold or employ derivatives. Gold also is not subject to borrowing arrangements with third parties. Accordingly, the Trust s allocated gold will not be subject to counterparty or credit risks. The value of Gold will be reported on the Trust s website daily. See Business of the Trust The Trust s Guiding Principles. Shares are issued by the Trust only in blocks of 50,000 shares called Baskets in exchange for gold from certain registered broker-dealers or other securities market participants (Authorized Participants). See Creation and Redemption of Shares by Authorized Participants for requirements to qualify as an Authorized Participant. Baskets may be redeemed by the Trust in exchange for the amount of gold corresponding to their redemption value. The Trust issues and redeems Baskets on an ongoing basis at net asset value to Authorized Participants who have entered into a contract with the Sponsor and the Trustee (as described below). Individual shares will not be redeemed by the Trust but are listed and trade on NYSE Arca under the symbol OUNZ. SM A Delivery Applicant may deliver shares to the Trust in exchange for physical gold after submitting to the Sponsor a qualifying document that expresses the Delivery Applicant s non-binding intention to exchange shares for physical gold on the Share Submission Day (Delivery Application) along with the applicable processing fees. See Taking Delivery of Physical Gold. The number of shares to be delivered must correspond in value to the Fine Ounce content of physical gold requested. To meet its primary objective to provide investors with an opportunity to invest in gold through the shares and to be able to take delivery of physical gold in exchange for their shares, the Trust is committed to its guiding principles. See Business of the Trust The Trust s Guiding Principles. The material terms of the Trust are discussed in greater detail under the section Description of the Trust. The Trust is not an investment company registered under the Investment Company Act of 1940, as amended (1940 Act), and is not required to register with the Securities and Exchange Commission thereunder. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ Amendment No. 6 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ________________ Merk Gold Trust (Exact name of Registrant as specified in its charter) New York (State or Other Jurisdiction of Incorporation or Organization) 1040 (Primary Standard Industrial Classification Code Number) 46-6582016 (I.R.S. Employer Identification No.) 2 Hanson Place Brooklyn, NY 11217 (Address, including zip code, and telephone number, including area code, of Registrant s principal executive offices) ________________ Axel Merk President and Chief Investment Officer Merk Investments LLC 960 San Antonio Road, Suite 201 Palo Alto, California 94303 Telephone: (650) 323-4341 (Name, address, including zip code, and telephone number, including area code, of agent for service) ________________ Copies to Shoshannah D. Katz, Esq. K&L Gates LLP 1 Park Plaza, 12th Floor Irvine, CA 92614 Telephone: (949) 253-0900 Facsimile: (949) 253-0902 Stacy L. Fuller, Esq. K&L Gates LLP 1601 K Street, NW Washington, DC 20006 Telephone: (202) 778-9000 Facsimile: (202) 778-9100 ________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement is declared effective. The Sponsor arranged for the creation of the Trust, the registration of the shares for their public offering in the United States and the listing of the shares on NYSE Arca. The Sponsor generally oversees the performance of the Trustee and the Trust s principal service providers, but does not exercise day-to-day oversight of the Trustee or such service providers. The Sponsor may remove the Trustee and appoint a successor trustee under certain circumstances. The Sponsor also has the right to direct the Trustee to appoint any new or additional custodian of the Trust s gold that the Sponsor selects. The Sponsor: (1) will develop a marketing plan for the Trust on an ongoing basis; (2) will prepare marketing materials regarding the shares; (3) will maintain the Trust s web site; (4) may engage in over-the-counter transactions with a precious metals dealer to exchange the Trust s gold for gold of different specifications as requested by a Delivery Applicant in a Delivery Application; (5) may provide instructions for assaying gold, and other instructions relating to the custody of Gold, as necessary; (6) may request the Trustee to order Custodian audits (to the extent permitted under the Custody Agreement); and (7) will review Delivery Applications from Delivery Applicants who want to take delivery of physical gold for their shares and coordinate the delivery of physical gold to the Delivery Applicants. Pursuant to a services agreement, Foreside Fund Services, LLC assists the Sponsor by providing training to and oversight of certain of the Sponsor s employees concerning the preparation of marketing material and regulatory requirements for such material, reviewing such material when requested and making other educational programs available to the Sponsor s employees. In addition, the Sponsor maintains a public website on behalf of the Trust, containing information about the Trust and the shares, including a listing of gold held by the Trust. The internet address of the Trust s website is www.merkgold.com. This internet address is only provided here as a convenience, and the information contained on or connected to the Trust s website is not considered part of this Prospectus. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee s monthly fee and out-of-pocket expenses; the Custodian s fee; the marketing support fees and expenses; expenses reimbursable under the Custody Agreement; the precious metals dealer s fees and expenses reimbursable under its agreement with the Sponsor; exchange listing fees; SEC registration fees; printing and mailing costs; maintenance expenses for the Trust s website; audit fees; and up to $100,000 per annum in legal expenses. The Sponsor also will pay the costs of the Trust s organization and the initial sale of the shares, including applicable SEC registration fees. See The Sponsor. The Trustee is The Bank of New York Mellon. The Trustee is responsible for the day-to-day administration of the Trust. The Trustee s responsibilities include: (1) valuing the Trust s gold and calculating the net asset value per share of the Trust; (2) supplying inventory information to the Sponsor for the Trust s website; (3) receiving and processing orders from Authorized Participants for the creation and redemption of Baskets; (4) coordinating the processing of orders from Authorized Participants with the Custodian and The Depository Trust Company (DTC), including coordinating with the Custodian the receipt of unallocated gold transferred to the Trust in connection with each issuance of Baskets; (5) cooperating with the Sponsor, the precious metals dealer and the Custodian in connection with the delivery of physical gold to Delivery Applicants in exchange for their shares; (6) issuing and allocating shares to the Sponsor in lieu of paying the fee to compensate the Sponsor (Sponsor s Fee) in cash; (7) issuing and allocating shares to the Sponsor to reimburse cash payments owed by the Trust, but undertaken by the Sponsor; (8) selling gold pursuant to the Sponsor s direction or otherwise as needed to pay any extraordinary Trust expenses that are not assumed by the Sponsor; (9) holding the Trust s cash and other financial assets, if any; (10) when appropriate, making distributions of cash or other property to investors; and (11) receiving and reviewing reports on the custody of and transactions in gold from the Custodian and taking such other actions in connection with the custody of gold as the Sponsor instructs. The Custodian is JPMorgan Chase Bank, N.A. The Custodian is responsible for the safekeeping of the Trust s allocated gold and supplying inventory information to the Trustee and the Sponsor. The Custodian also is responsible for facilitating the transfer of gold in and out of the Trust and facilitating the shipment of London Bars to Delivery Applicants. The Custodian will deposit into the Trust Unallocated Account gold received from an Authorized Participant in exchange for Baskets. The Custodian will promptly convert the deposit to allocated London Bars. At the end of each business day, the Custodian may hold no more than 430 Fine Ounces of unallocated gold, which corresponds to the maximum weight of a London Bar, in the Trust Unallocated Account. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered Amount to be Registered(1) Proposed Maximum Offering Price Per Share(1) Proposed Maximum Aggregate Offering Price(1) Amount of Registration Fee Merk Gold Shares 57,416,000 $13.0625 $750,000,000 $85,950 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(d) under the Securities Act of 1933. The initial Baskets of Shares will be offered at a per Share price equal to the value of the gold underlying the shares held by the Trust immediately prior to issuance. (2) $85,950 was previously paid in the initial filing of the registration statement on Form S-1, filed on April 20, 2012. 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. Unless otherwise agreed between the Trustee (as instructed by the Sponsor) and the Custodian, physical gold must be held by the Custodian at its London vault premises. The Trust s gold holdings are subject to periodic audits and, under the Custody Agreement, the Custodian has agreed to permit physical gold auditors access to its premises during normal business hours to examine the gold held for the Trust and such records as they reasonably require. Detailed descriptions of certain specific rights and duties of the Trustee and the Custodian are set forth in Description of the Trust, The Trustee and The Custodian. Trust Objectives The primary objective of the Trust is to provide investors with an opportunity to invest in gold through shares, and be able to take delivery of physical gold in exchange for their shares. The Trust s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust s operations. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to compensate investors for losses caused by, changes in the price of gold. The Trust holds London Bars and, in connection with a Delivery Applicant s exchange of shares for physical gold, physical gold of other specifications as requested by the Sponsor. The Trust receives gold deposited by Authorized Participants in exchange for the creation of Baskets and delivers gold to Authorized Participants in exchange for Baskets surrendered to it for redemption. Upon the delivery of shares by a Delivery Applicant as described below, the Sponsor may engage in over-the-counter transactions with a precious metals dealer to exchange gold for physical gold of different specifications. Investors may contact their broker-dealer to purchase and sell shares. An investor who would like to take delivery of physical gold for its shares is referred to as a Delivery Applicant: A Delivery Applicant wishing to deliver shares of the Trust in exchange for physical gold must submit to the Sponsor a Delivery Application and payment for (1) the applicable processing fees, and (2) the applicable delivery fees to cover the cost of preparing and transporting physical gold from the Custodian or the precious metals dealer from which they were obtained to the location specified by the Delivery Applicant in the Delivery Application. The number of shares to be delivered must (i) correspond to at least one Fine Ounce of gold and (ii) have a minimum dollar value in an amount that is specified by the Sponsor from time to time on the Trust s website. Taking delivery of physical gold is subject to guidelines intended to minimize the amount of cash that will be distributed with physical gold. The Delivery Application is not binding until shares are delivered to the Trust. Upon pre-approval of the Delivery Application by the Sponsor, a Delivery Applicant shall instruct its broker dealer to submit the Delivery Application and transfer shares to the Trustee; the submission and transfer by the broker-dealer will be a binding and irrevocable request to take delivery of physical gold in exchange for shares based on instructions in the Delivery Application (Share Submission). Once the Trustee has received a Delivery Applicant s Share Submission, a number of Fine Ounces of physical gold not exceeding the Fine Ounces represented by the shares surrendered will be delivered to the Delivery Applicant based on instructions in the Delivery Application. To the extent a Delivery Application specifies London Bars, physical gold will be delivered by the Custodian; to the extent the Delivery Application specifies physical gold other than London Bars, if available, gold held by the Trust will be exchanged with the help of a precious metals dealer and delivered to the Delivery Applicant. The Delivery Application process is designed to keep the Fine Ounces represented by the Share Submission as close as possible to the Fine Ounces of the gold delivered. Any excess Fine Ounces included in the Share Submission will be sold by the Custodian and the Trustee will deliver proceeds to DTC with instructions to credit the Delivery Applicant s brokerage account. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 13, 2014 57,416,000 Merk Gold Shares MERK GOLD TRUST The Merk Gold Trust (Trust) issues Merk Gold shares (shares), which represent units of fractional undivided beneficial interest in the Trust. The Trust s primary objective is to provide investors with an opportunity to invest in gold through the shares and be able to take delivery of physical gold bullion (physical gold) in exchange for their shares. The Trust s secondary objective is for the shares to reflect the performance of the price of gold less the expenses of the Trust s operations. The Trust is not actively managed. Merk Investments LLC is the Trust s sponsor; The Bank of New York Mellon is the trustee of the Trust; and JPMorgan Chase Bank, N.A. is the Trust s custodian. Physical gold that the Trust will hold includes London Bars and, for the limited purposes described herein, other gold bars and coins, without numismatic value, having a minimum fineness (or purity) of 995 parts per 1,000 (99.5%) or, for American Gold Eagle gold coins, with a minimum fineness of 91.67%. Shares are issued by the Trust in blocks of 50,000 shares called Baskets in exchange for gold from certain registered broker-dealers or other securities market participants (Authorized Participants). The Trust issues and redeems Baskets on an ongoing basis at net asset value to and from Authorized Participants who have entered into a contract with the Sponsor and the Trustee. Investors who would like to take delivery of physical gold in exchange for their shares (Delivery Applicants) may submit shares to the Trust in exchange for physical gold. See Taking Delivery of Physical Gold. Shares will be offered to the public from time to time at prices that will reflect, among other things, the price of gold and the trading price of the shares on NYSE Arca at the time of the offer. Prior to this offering, there has been no public market for the shares. The shares trade on NYSE Arca under the symbol OUNZ. The market price of the shares may be different from the net asset value per share. Investing in the shares involves significant risks. See Risk Factors starting on page 12. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus (Prospectus), or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Trust is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act (the JOBS Act ). However, the Trust will not take advantage of any exemptions or other relief provided to emerging growth companies under the JOBS Act. The shares are neither interests in nor obligations of either the Sponsor or the Trustee. The shares are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. The Trust is not an investment company registered under the Investment Company Act of 1940, as amended. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended, and the Sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor. On May 6, 2014, an initial purchaser, subject to conditions, has deposited gold for the purchase of two initial Baskets totaling 100,000 shares, as described in Plan of Distribution. Delivery of the initial Baskets will be made on or about the date of this prospectus, upon condition of effectiveness of the related registration statement. The Trust received all proceeds from the offering of the initial Baskets in gold in an amount equal to the full price for the initial Baskets. The shares are intended to constitute a cost-efficient mechanism for investors to make an investment in gold. Although the shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market. The shares are: Listed and trade on NYSE Arca like other exchange-traded securities under the symbol OUNZ. Easily accessible to investors through traditional brokerage accounts. Backed by allocated gold held by the Custodian and no more than 430 Fine Ounces of unallocated gold held with the Custodian. The shares differ from other financial products that gain exposure to gold in that other financial products may use derivatives to gain exposure to the price of gold. Cost efficient because the expenses involved in an investment in physical gold are dispersed among all investors in the shares. Structure of the Trust The following chart shows the relationship of the Trust and other parties following the closing of this offering. Summary Risk Factors An investment in the Trust involves significant risks and uncertainties described in the section below entitled Risk Factors and elsewhere in this Prospectus. Some of these risks include: Per Share(1) Per Basket Public offering price for initial Baskets(2) $13.0625 $653,125 (1) The initial Baskets were created at a per share price equal to the value of 1/100th of a Fine Ounce of gold on the date of formation of the Trust. (2) The initial purchaser may receive commissions/fees from investors who purchase shares from the initial Baskets through their commission/fee-based brokerage accounts. The price per basket that will be paid in the future by the Authorized Participants may be different than the initial Basket price. The date of this Prospectus is [ ], 2014. fluctuations in the value of shares based upon the price of the gold held by the Trust, which could create the potential for losses, regardless of the period of time that shares are held; substantial sales of gold by central banks, governmental agencies and multi-lateral institutions, which could adversely affect an investment in the shares; the fact that the Trust does not actively trade gold to take advantage of short-term market fluctuations in the price of gold; the fact that each sale of gold by the Trust will be a taxable event for investors; the fact that any gain recognized by a U.S. investor who or that is an individual, estate or trust attributable to a sale or exchange of shares held for more than one year, or attributable to the Trust s sale of any gold that the investor is treated (through his, her or its ownership of shares) as having held for more than one year, generally will be subject to federal income tax at a maximum rate of 28% rather than the lower maximum rates applicable to most other long-term capital gains such an investor recognizes; and counterparty risks associated with the Trust s transactions with precious metals dealers to exchange the Trust s gold for physical gold of different specifications. Principal Offices The offices of the Trust and the Trustee are located at 2 Hanson Place, Brooklyn, New York 11217. The Sponsor is located at 960 San Antonio Road, Suite 201, Palo Alto, California 94303 and its telephone number is (650) 323-4341. The Custodian is located at 1 Chase Manhattan Plaza, New York, New York 10005. Emerging Growth Company Status The Trust is an emerging growth company, as defined in the JOBS Act, and is 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 and reduced disclosure obligations that are not otherwise applicable to the Trust. 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. However, the Trust is choosing to opt out of such extended transition period, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. TABLE OF CONTENTS STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 1 PROSPECTUS SUMMARY 2
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+PROSPECTUS SUMMARY This summary highlights information that we present more fully in the rest of this prospectus and does not contain all of the information you should consider before investing in our securities. This summary contains forward-looking statements that involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements. You should read the entire prospectus carefully, including the Risk Factors section and our consolidated financial statements and related notes. Except as otherwise indicated, the market data and industry statistics in this prospectus are based upon independent industry publications and other publicly available information. Unless the context requires otherwise, as used in this prospectus, the terms Oxbridge, we, us, our, the Company, our company, and similar references refer to Oxbridge Re Holdings Limited and its wholly owned subsidiary Oxbridge Reinsurance Limited, unless the context dictates otherwise. References in this prospectus to our Articles refer to the Second Amended and Restated Memorandum and Articles of Association of Oxbridge Re Holdings Limited as the same shall be in effect upon completion of this offering. For your convenience, we have included a glossary beginning on page G-1 of selected reinsurance terms. All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. Oxbridge Re Holdings Limited Company Overview We are a Cayman Islands exempted company that was organized in April 2013 to provide reinsurance business solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. Through our licensed reinsurance subsidiary, Oxbridge Reinsurance Limited, we write fully collateralized policies to cover property losses from specified catastrophes. We intend to specialize in underwriting medium-frequency, high-severity risks, where we believe sufficient data exists to analyze effectively the risk/return profile of reinsurance contracts. Our company was formed by investors with significant experience in the U.S. property and casualty insurance market who saw an opportunity to provide more competitive reinsurance products to property and casualty insurance providers in the Gulf Coast region. Oxbridge Reinsurance Limited, our reinsurance subsidiary, was approved by the Cayman Islands Monetary Authority as a licensed Class C insurance company under Cayman Islands law in April 2013. In June 2013, we completed a private placement in the amount of $6.7 million. Following the private placement, in June 2013 we entered into our initial reinsurance contracts with Claddaugh Casualty Insurance Company, Ltd. ( Claddaugh ), a captive reinsurance company and a subsidiary of HCI Group, Inc., a Florida-based, publicly traded holding company that is a related party through common directors. We have since entered into an additional reinsurance contract with another party in January 2014. Following our initial reinsurance contracts, our core business will be focused on the provision of property catastrophe reinsurance coverage to a broad range of select insurance companies and potentially other reinsurers. We intend to underwrite reinsurance contracts on a selective and opportunistic basis as opportunities arise based on our goal of achieving favorable long-term returns on equity for our shareholders. Our goal is to achieve long-term growth in book value per share by writing business that will generate attractive underwriting profits relative to the risk we bear. Unlike other insurance and reinsurance companies, we do not intend to pursue an aggressive investment strategy and instead will focus our business on underwriting profits rather than investment profits. Our initial business focus will be on fully collateralized reinsurance contracts for property catastrophes in the Gulf Coast region of the United States, with an initial emphasis on Florida, and within that market and risk category, we will attempt to select the most economically attractive opportunities across a variety of property and Table of Contents The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 18, 2014 Oxbridge Re Holdings Limited Maximum of 4,250,000 Units Minimum of 1,700,000 Units Each Unit Consisting of One Ordinary Share and One Warrant Oxbridge Re Holdings Limited is offering for sale up to 4,250,000 units, with each unit consisting of one ordinary share, $0.001 (USD) par value, and one warrant. Each warrant may be exercised to acquire one ordinary share at an exercise price equal to $ per share (which is 125% of the public offering price). You may exercise your warrants at any time after the closing of this offering until the five year anniversary of the closing of this offering. We may cancel the warrants at any time following the six month anniversary of the closing of this offering if the closing price per ordinary share exceeds $ (which is 125% of the exercise price of the warrant) for at least ten trading days within any period of twenty consecutive trading days. This prospectus also covers the offer of our ordinary shares upon exercise of the warrants. Our placement agent, Capitol Securities Management, Inc., is selling the units on a minimum/maximum best efforts basis. The placement agent is not required to sell any specific dollar amount of securities but will use its best efforts to sell the securities offered. Our placement agent will receive a fee with respect to such sales. Subscriptions for the units will be deposited into escrow with SunTrust Bank, N.A. until a minimum of 1,700,000 units have been sold. In the event we do not sell a minimum of 1,700,000 units by , 2014, escrowed funds will be promptly returned to investors without interest or deduction. In the event that a minimum of 1,700,000 units are sold by , 2014, we will close on those funds received and promptly issue the units. Prior to this offering, there has been no public market for our units, ordinary shares or warrants. We anticipate that the initial public offering price of the units will be between $5.00 and $7.00 per unit. Our units, ordinary shares, and warrants have been approved for listing on The NASDAQ Capital Market under the symbols OXBRU, OXBR and OXBRW, respectively. We expect that the ordinary shares and warrants comprising the units will begin separate trading, and that the units will cease trading, on or about the 45th day following the date of this prospectus. We are an emerging growth company under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves significant risks. See Risk Factors beginning on page 10. Price to Public Placement Agent Fees(1) Proceeds, Before Expenses, to Oxbridge Re Holdings Limited(2) Per Unit $ $ $ Total if minimum sold $ $ $ Total if maximum sold $ $ $ (1) Payable to Capitol Securities Management, Inc., our placement agent. The terms of our arrangement with Capitol Securities Management, Inc. are described under the caption Plan of Distribution on page 91. (2) We expect total cash expenses for this offering to be approximately $ . Delivery of the units will be made on or about , 2014. None of the Securities and Exchange Commission, any state securities commission, the Cayman Islands Monetary Authority nor any other governmental or regulatory body in the Cayman Islands 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. Capitol Securities Management, Inc. Henley & Company LLC IAA Financial, LLC International Assets Advisory, LLC The date of this prospectus is , 2014. Table of Contents casualty insurers. As our capital base grows, however, we expect that we will consider growth opportunities in other geographic areas and risk categories. We have no current intention to become rated, so we will be required to collateralize our obligations under our reinsurance contracts. Our Business Strategy Our goal is to achieve attractive risk-adjusted returns for our shareholders through the prudent management of underwriting risks relative to our capital base. To achieve this objective, the following are the principal elements of our business strategy: Maintain a Commitment to Disciplined Underwriting. We will use a disciplined and data-driven underwriting approach to select a diversified portfolio of risks that we believe will generate an attractive return on capital over the long term. Neither our underwriting nor our investment strategies are designed to generate smooth or predictable quarterly earnings, but rather to optimize growth in book value per share over the long term. Focus on Risk Management. We will treat risk management as an integral part of our underwriting and business management processes. We expect that substantially all of our reinsurance contracts will contain loss limitation provisions that limit our losses to the value of the assets collateralizing our reinsurance contracts. Partial Deployment of Capital. In order to eliminate the possibility of complete losses, we intend to place only a portion of our total capital at risk in any single year. This means that we expect lower returns than some of our competitors in years where there are lower than average catastrophe losses but that our capital will be better protected in the event of large losses. We are committed to maintaining our capitalization and financial strength over the long term and to develop a history of paying a consistent dividend on our ordinary shares. Take Advantage of Market Opportunities. Although our business will be initially focused on catastrophe coverage for Gulf Coast insurers with an emphasis on Florida, we intend to continuously evaluate various market opportunities in which our business may be strategically or financially expanded or enhanced in the future. Such opportunities could take the form of diversifying our business into other geographic or market areas. Such opportunities could also include quota share reinsurance contracts, joint ventures, renewal rights transactions, corporate acquisitions of another insurer or reinsurer, or the formation of insurance or reinsurance platforms in new markets. We believe the environment in the reinsurance and insurance markets will continue to produce opportunities for us, through organic expansion or through acquisitions. Risks That Could Impact Our Ability to Implement Our Business Strategy We face the following risks that could impact our business strategy: We do not have an operating history or established reputation in the reinsurance industry. We were incorporated in April 2013, and did not begin underwriting reinsurance transactions until June 2013. As a result, we do not have an operating history on which you can base an estimate of our future earnings prospects. We also do not have an established reputation in the reinsurance industry, which may adversely affect our ability to acquire and retain new business. Our results of operations will fluctuate from period to period and may not be indicative of our long-term prospects. We anticipate that the performance of our reinsurance operations and our future investment portfolio will fluctuate from period to period. In addition, because we plan to underwrite products and make investments to achieve favorable return on equity over the long term, our short-term results of operations may not be indicative of our long-term prospects. Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY This summary does not contain all of the information you should consider before buying our ordinary shares. You should read the entire prospectus carefully, especially the "Risk Factors" section beginning on page 15, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section beginning on page 64 and our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our ordinary shares. Overview We are a leader in the field of gene therapy and have developed the first and currently the only gene therapy product to receive regulatory approval in the European Union. Gene therapy offers the prospect of long-term and potentially curative benefit to patients with genetic or acquired diseases by directing the expression of a therapeutic protein or restoring the expression of a missing protein through a single administration. Our first product, Glybera, was approved by the European Commission in October 2012 under exceptional circumstances for the treatment of a subset of patients with lipoprotein lipase deficiency, or LPLD, a potentially life-threatening, orphan metabolic disease. We expect to launch Glybera commercially in selected European countries in the first half of 2014 through our collaboration with Chiesi Farmaceutici S.p.A., or Chiesi, which we entered into in April 2013. We retain full commercial rights to Glybera in the United States. In August and December 2013, we met with the Food and Drug Administration, or FDA, to discuss the regulatory pathway for Glybera in the United States, and we plan to file an Investigational New Drug application, or IND, with the FDA for Glybera in the first half of 2014. We are developing a pipeline of additional gene therapies through multiple collaborations that are designed to accelerate the development and commercialization of these programs. We deliver our gene therapies through a delivery system, or vector, based on an engineered, non-replicating version of the adeno-associated virus, or AAV, one of several viruses commonly used as a vector in gene therapy. We develop our gene therapies using our innovative, modular technology platform, which consists of a suite of components that may be applied to multiple gene therapies and includes our proprietary, cost-effective manufacturing process. Our pipeline includes product candidates targeting diseases for which either the efficacy of existing treatments is limited or the administration regimen is burdensome, such as hemophilia B, as well as diseases for which there are currently no treatments, such as Sanfilippo B syndrome. We initially intend to focus on orphan diseases but believe that we will also be able to leverage our technology to develop gene therapies targeting chronic and degenerative diseases that affect larger populations. Through our gene delivery know-how, our proprietary manufacturing process, the state-of-the-art facility we are building out in the United States, and our experience in developing and obtaining regulatory approval for Glybera in the European Union, we believe we will be able to develop and commercialize additional gene therapies more efficiently than our competitors. Our Gene Therapy Platform Our gene therapy approach seeks to treat the causes of genetic diseases by enabling patients to effectively express a missing or deficient protein. To accomplish this, Glybera and our product candidates are designed to deliver a functional gene, or transgene, through a delivery system called a vector. Our approach is designed to be modular, in that it may allow us to efficiently develop, manufacture and seek regulatory approval for multiple gene therapies generally using the same principal components. The key components of our gene therapy approach are: Therapeutic genes. We design our gene therapies to deliver into the body's cells a transgene that encodes, or provides the blueprint for the expression of, a therapeutic protein. The transgene is carried in a gene cassette, or DNA sequence that encodes the specific gene, that includes DNA promoters that direct expression in specific tissues. We either develop our own gene cassettes or in-license them, often as part of our collaborations with academic research institutions and biotechnology and pharmaceutical companies. In-licensing gene cassettes provides us access to key Amendment No. 4 Form F-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents intellectual property and allows us to build upon our collaborators' scientific expertise and financial investment, as well as their preclinical and, in some cases, clinical development efforts. AAV-based vector delivery system. We deliver the gene cassette to the target tissue using an engineered, non-replicating viral vector delivery system based on AAV, a common virus that affects humans but does not cause disease. We believe that AAV is the vector of choice for most in vivo gene therapy applications, such as ours, in which the functional gene is introduced directly into the patient's body. We use different variants, or serotypes, of AAV, including AAV1, AAV2 and AAV5, each of which selectively targets particular tissues. In the case of diseases for which relatively modest levels of gene expression may result in therapeutic benefit, we expect that we will be able to achieve adequate levels of expression using existing, naturally derived AAV serotypes. In the case of diseases for which higher levels of gene expression may be required for therapeutic benefit, however, we believe we may need access to more potent vectors than are currently available. To complement our internal development efforts in this regard, in January 2014 we entered into a collaboration and license agreement with 4D Molecular Therapeutics, or 4D, a recently formed, private biotechnology company with a team that we believe is a leader in AAV vector discovery and optimization. 4D uses directed evolution techniques, which involve an iterative selection process in which researchers screen libraries of mutant AAV variants to identify those that are expected to have optimal properties for achieving higher levels of gene expression. In more than 80 gene therapy clinical studies conducted by us or third parties, AAV-based vectors raised no material safety concerns. AAV-based vectors have also demonstrated sustained expression in target tissue in non-human primates for more than five years. In the hemophilia B Phase I/II clinical trial described below, St. Jude Children's Research Hospital in Memphis, Tennessee, or St. Jude, has reported expression in target tissue in humans for more than three years after a single treatment. Administration technologies. We and our collaborators are developing expertise in utilizing a variety of administration technologies to optimize the introduction of our gene therapy vectors to effectively deliver the transgene into the tissues and organs relevant to the indications we are targeting. Scalable, proprietary manufacturing process. We produce our AAV-based vectors in our own facilities with our proprietary manufacturing process, which uses insect cells and baculoviruses, a common family of viruses found in invertebrates. We believe that our manufacturing facility in Amsterdam, which the European Medicines Agency, or EMA, has approved for clinical and commercial grade production, and our facility near Boston, Massachusetts, which we are currently building out and equipping, will enable us to produce Glybera and other gene therapies cost-effectively at commercial scale. Our Competitive Strengths Gene therapy has historically confronted a number of significant challenges, including safety concerns, limited efficacy, lack of commercially viable manufacturing technology and difficulties with effective administration. We believe we have overcome many of these challenges and have established integrated capabilities to support the clinical development and potential commercialization of our gene therapies. We believe that our key competitive strengths are the following: A modular approach designed to enable us to develop gene therapies targeting multiple orphan diseases cost-effectively and on relatively short development timelines. We expect that our modular approach will allow us to use the same building blocks to efficiently develop, manufacture and seek regulatory approval for multiple new gene therapies. In some cases, we believe that the disease-specific gene cassette will be the only component we need to change to target a new disease. As a result, we may be able to reduce the overall preclinical and potentially clinical development activities required to obtain regulatory approval, which may allow us to significantly reduce overall development risk, time and cost. LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS DERIVATIVES USED FOR HEDGING OTHER FINANCIAL LIABILITIES AT AMORTIZED COST TOTAL ( in thousands) Liabilities as per balance sheet Debt to related party 2 4,542 4,544 Finance lease liabilities 221 221 Trade and other payables 3,632 3,632 Total UNIQURE B.V.* (Exact Name of Registrant as Specified in Its Charter) N/A (Translation of Registrant's Name into English) Table of Contents Experienced gene therapy research, clinical development and regulatory team. We are applying the specialized research, clinical development and regulatory expertise we have acquired in developing and obtaining marketing authorization in the European Union for Glybera to develop additional gene therapies and navigate the complex regulatory process for gene therapies in other countries and for other product candidates. We have a team of more than 60 scientists and other experts, including 27 with Ph.D. or M.D. degrees or the foreign equivalent, with extensive experience in AAV-based gene therapy research and development. Scalable, proprietary manufacturing process and facilities. Our manufacturing process, which uses insect cells, is designed to produce higher yields of vectors more cost-effectively and efficiently than the mammalian cell-based approaches that many of our competitors utilize. We hold a non-exclusive license from the NIH for the use of baculoviruses and insect cells in the production of AAV-based vectors and have augmented this licensed technology with patented improvements to the replication process designed to allow us to produce gene therapies at commercial scale. We have begun the build out of our 53,000 square foot manufacturing facility near Boston, Massachusetts, which we believe will be the world's largest dedicated, advanced production facility for AAV-based vectors. We believe that our manufacturing capabilities position us as a partner of choice for academic research institutions and biotechnology and pharmaceutical companies looking to bring AAV-based therapies into larger, late-stage clinical trials that require commercial scale processes. Pioneering experience in gene therapy commercialization. Gene therapy represents a potential shift in the paradigm of medical care, with the commercialization challenges that often accompany a new approach. With our collaborator Chiesi, we are the first to initiate the market roll-out of an approved gene therapy in the European Union, including designing new models for product pricing and reimbursement based on a one-time intervention, expanding key opinion leader relationships, identifying centers of excellence, and developing physician and patient education and patient access programs. We believe our experience with Glybera in the European Union will facilitate our future efforts, subject to obtaining marketing approval, to commercialize Glybera and additional gene therapies in the United States and elsewhere. Glybera Glybera is indicated for the treatment of adult patients diagnosed with familial LPLD confirmed by genetic testing and suffering from severe or multiple pancreatitis attacks despite dietary fat restrictions. We and our collaborator Chiesi are working to launch Glybera commercially in the European Union in the first half of 2014. We and Chiesi are developing a gene therapy pricing and business model for Glybera that is designed to capture the significant value we believe Glybera delivers to patients. LPLD is a serious, debilitating disease caused by mutations in the lipoprotein lipase, or LPL, gene, resulting in significantly diminished or absent activity of the LPL protein and, as a consequence, severe hypertriglyceridemia. Severe hypertriglyceridemia results in hyper-chylomicronemia, or dramatic and potentially life-threatening increases in the level of fat-carrying particles, called chylomicrons, in the blood after eating. In many cases, LPLD and the associated elevated levels of chylomicrons can cause acute and potentially life-threatening inflammation of the pancreas, known as pancreatitis, thus leading to frequent hospitalizations. Recurrent pancreatitis can lead to chronic abdominal pain, pancreatic insufficiency, which is an inability to properly digest food due to a lack of digestive enzymes made by the pancreas, and diabetes. Prior to Glybera, there was no approved therapy for LPLD. Patients are required to adhere to a strict low-fat diet and to abstain from alcohol. These restrictions, as well as the need for frequent hospitalizations and the constant fear of pancreatitis attacks, have a significant negative impact on the daily activity level of LPLD patients and on their quality of life. Glybera is designed to restore the LPL enzyme activity required by tissues of the body to clear, or process, the fat-carrying chylomicron particles that are formed in the intestine and transported via the blood to the muscle after a fat-containing meal. The product consists of an engineered copy of the human LPL gene (1)Depiction of mean levels of newly formed chylomicrons using a radiolabeled tracer measured by tritium activity (in centimorgans). Participants consumed a standardized meal containing tritium-marked particles, which were measured in newly formed chylomicrons in the 24-hour period after the meal. The case note review also provided evidence of clinical benefit in the form of a reduction of pancreatitis events and severity of attacks. Although these observations were made in a small number of patients for varying pre-treatment observation periods, and subject to statistical limitations, they suggested that Glybera leads to a clinically relevant reduction of pancreatitis risk in patients with severe or multiple pancreatitis attacks. Recognizing that LPLD is an orphan condition, the EMA evaluated the totality of available quality, safety and efficacy data in considering our marketing authorization application for Glybera, including reviewing individual patient profiles. On the basis of that review, the EMA concluded that the benefit-risk balance of Glybera is favorable in the treatment of adult patients with familial LPLD diagnosed by genetic testing, with Philip Astley-Sparke, President U.S. Operations uniQure, Inc. 113 Hartwell Avenue Lexington, MA 02421 Tel: +31 20 566 7394 (Name, Address, Including ZIP Code, and Telephone Number, Including Area Code, of Agent for Service) Table of Contents detectable levels of LPL protein and suffering from severe or multiple pancreatitis episodes despite dietary fat restrictions, and, therefore, recommended granting marketing authorization under exceptional circumstances. Marketing authorization under exceptional circumstances in the European Union is available for products for which the target indications are so rare that comprehensive data on efficacy and safety cannot reasonably be expected to be available prior to commercial launch. Prior to receiving this approval, our initial application for marketing approval for Glybera in the European Union was rejected in June 2011. We requested a re-examination and, following further review, the EMA ultimately considered clinical benefit to be sufficiently established to allow for a positive benefit-risk estimation in an exceptional circumstances setting using a totality of the evidence approach. To fulfill the key conditions of the approval of Glybera by the EMA, we are required to implement a patient registry prior to commercial launch and to complete an additional, post-approval clinical trial of Glybera, which we intend to commence in the second half of 2014. The principal goal of these programs will be to obtain additional data regarding the safety, efficacy and clinical benefit of Glybera. We also believe that these programs will help us to better define and target the LPLD patient population, as well as to raise awareness of LPLD and of Glybera in the clinician community. In the European Union, we have been granted orphan drug exclusivity for Glybera for treatment of LPLD until October 2022, subject to the conditions applicable to orphan drug exclusivity. The FDA has also granted orphan drug designation to Glybera for treatment of LPLD. We met with the FDA in August and December 2013 to discuss the regulatory pathway in the United States for Glybera. In contrast with the European Union, the United States does not have a process to approve marketing of a drug under exceptional circumstances. In our meetings, the FDA advised that it would require data in addition to what we had submitted to obtain marketing approval for Glybera in the European Union. The FDA advised that severe hypertriglyceridemia is currently considered a hallmark of LPLD, and agreed that changes in chylomicron metabolism following a meal may provide data to support the bioactivity of Glybera. However, the FDA also advised that changes in chylomicron metabolism following a meal alone would not be adequate for obtaining marketing approval in the United States at this stage, since it is not yet sufficiently understood how this biological effect translates into clinical meaningfulness. The FDA recommended that we identify the clinical manifestations of LPLD for which Glybera might have the best prospects for demonstrating a meaningful impact in designing an adequate and appropriately controlled trial. We plan to discuss the details of the EU post-approval trial and patient registry with the FDA, and if applicable to seek to amend the protocols for the post-approval trial and patient registry so that they could also serve as a clinical program with a design that addresses the FDA's requirements. We also plan to file an IND with the FDA for Glybera in the first half of 2014 so that we can include U.S. LPLD patients in the post-approval trial and registry. We believe the patient registry will provide valuable data for the FDA to consider as part of the totality of our U.S. regulatory submissions. Our current expectation, subject to satisfactory completion of regulatory discussions with the FDA, is to have sufficient data from a further clinical trial of Glybera and the patient registry to file a BLA for Glybera with the FDA in 2017. We have begun preliminary preparations for a potential launch in the United States, including commissioning a third party pricing and reimbursement study and have conducted two market research studies directed at key opinion leaders. We have also initiated the development of a diagnostic referral program, engaged in key opinion leader and patient identification efforts and begun networking with key patient organizations in the United States. Copies to: David E. Redlick, Esq. Timothy J. Corbett, Esq. WilmerHale LLP 10 Noble Street London EC2V 7QJ United Kingdom +44 20 7645 2400 Eric W. Blanchard, Esq. Brian K. Rosenzweig, Esq. Covington & Burling LLP The New York Times Building 620 Eighth Avenue New York, New York 10018 +1 212 841 1000 (1)hFIX, GDNF and PBGD transgenes have been exclusively licensed to uniQure. (2)The trial commenced in May 2013; gene therapy was produced using mammalian-cell based process. Below we provide further detail on our most advanced pipeline programs: Internal program: AMT-060 for hemophilia B. In collaboration with Chiesi, we are developing AMT-060, a gene therapy for the treatment of hemophilia B, which is a severe blood clotting disorder that can lead to repeated and sometimes life-threatening episodes of external and internal bleeding. The current standard of care for the treatment of hemophilia B is prophylactic protein replacement therapy, requiring frequent intravenous administrations of human Factor IX, or hFIX, often costing approximately $220,000 to $340,000 per patient per year in the United States. We believe that the approximately 60% to 70% of the hemophilia B patient population who have either severe or moderately severe hemophilia would be eligible for treatment with gene therapy. AMT-060 consists of an AAV5 vector carrying an hFIX transgene that we have exclusively licensed from St. Jude. We are currently conducting pre-IND toxicology animal studies of this product candidate. We plan to file an IND with the FDA and an Investigational Medicinal Product Dossier, or IMPD, with the EMA and then to initiate a Phase I/II, open label, dose escalation clinical trial of this product candidate in the second half of 2014 in 13 to 16 patients in Europe. We expect data from our clinical trial to be available in the second half of 2015. Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE CLASS OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED(1) PROPOSED MAXIMUM OFFERING PRICE PER ORDINARY SHARE PROPOSED MAXIMUM AGGREGATE OFFERING PRICE(1)(2) AMOUNT OF REGISTRATION FEE(3) Ordinary shares, par value 0.05 per share 5,290,000 $15.00 $79,350,000 $10,221 (1)Includes 690,000 ordinary shares that may be purchased by the underwriters pursuant to their option to purchase additional shares. (2)Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. (3)Previously paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. *We intend to convert the legal form of our company under Dutch law from a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) to a public company with limited liability (naamloze vennootschap) and to change our name from uniQure B.V. to uniQure N.V. prior to the consummation of this offering. Table of Contents St. Jude is currently conducting a Phase I/II, open label, dose escalation clinical trial in this indication with a gene therapy consisting of an AAV8 vector carrying the same therapeutic hFIX gene that we are using in AMT-060. In an article published in the New England Journal of Medicine in December 2011 reviewing interim data from six patients in the St. Jude clinical trial, the principal investigators reported that the vector used in the trial consistently led to long-term expression of the hFIX transgene at therapeutic levels in patients with severe hemophilia B, without acute or long-lasting toxicity. We understand from public presentations by the principal investigators for this trial that two additional patients at the highest dose level in this clinical trial have now also demonstrated such long-term expression. We believe that the interim results from this clinical trial constitute proof of concept of the use of this therapeutic gene in treating hemophilia B and may reduce the risks involved in our development of AMT-060. Collaborator-sponsored programs. We are also collaborating with third parties that are sponsoring early-stage clinical trials of gene therapy product candidates to which we hold certain rights. We believe that this approach enables us to cost-effectively obtain access to preclinical and early-stage clinical results without expending significant resources of our own. These programs utilize either clinical materials that we have manufactured as part of our collaborations or gene cassettes that we have licensed. We generally have the rights to the data generated in these collaborator-sponsored clinical development programs, but do not control their design or timing. If we decide to progress any of these programs internally, we may need to develop or in-license additional technology. The most advanced of these programs are the following: AMT-021 for Acute Intermittent Porphyria. We and our collaborator Digna Biotech are developing AMT-021 as a gene therapy for acute intermittent porphyria, or AIP, a severe liver disorder. AMT-021 consists of an AAV5 vector carrying a therapeutic porphobilinogen deaminase, or PBGD, gene that we exclusively license from Applied Medical Research Center of the University of Navarra in Spain. Our collaborator Digna Biotech is currently conducting a Phase I clinical trial of AMT-021 in eight patients in Spain. We have manufactured the gene therapy being used in this clinical trial. We understand that, to date, Digna has not observed a reduction in the urinary levels of toxic metabolites in trial participants that might have served as a surrogate marker for efficacy. We understand from Digna Biotech that clinical outcomes data are expected in the second half of 2014. Under an agreement with Digna Biotech, we have an exclusive right to use all preclinical and Phase I clinical trial data from this program. AMT-110 for Sanfilippo B Syndrome. We and our collaborator Institut Pasteur are developing AMT-110 as a gene therapy for Sanfilippo B syndrome, a potentially fatal lysosomal storage disease that results in serious brain degeneration in children. This gene therapy consists of an AAV5 vector carrying a therapeutic a-N-acetylglucosaminidase, or NaGLU, gene. Our collaborator Institut Pasteur is currently conducting a Phase I/II clinical trial of AMT-110 in four patients in France. We have manufactured the gene therapy being used in this clinical trial. We have an agreement in principle with Institut Pasteur to acquire the clinical results and commercial rights under this program following completion of this Phase I/II clinical trial, and are currently in negotiations with Institut Pasteur regarding the terms of a definitive agreement in this regard. We understand from Institut Pasteur that data are expected in the first half of 2015. We believe that if the results of this clinical trial are positive, it will constitute proof of concept of the administration to the brain of a gene therapy for lysosomal storage diseases. AAV2/GDNF for Parkinson's Disease. We and our collaborator the University of California at San Francisco, or UCSF, are developing a gene therapy for Parkinson's disease, a progressive neurodegenerative disorder. UCSF is collaborating with the NIH to conduct a Phase I clinical trial of a gene therapy in this indication consisting of an AAV2 vector carrying a therapeutic gene we have exclusively licensed in the gene therapy field from Amgen, Inc., or Amgen, that expresses a protein called glial cell line-derived neurotrophic factor, or GDNF. This clinical trial is being funded and sponsored by the NIH and will involve 24 patients. UCSF's product candidate has been manufactured by a third party using a mammalian cell-based process. In this clinical trial, the NIH is administering the gene therapy using convection enhanced delivery, which is a process developed by UCSF with the Table of Contents The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED FEBRUARY 3, 2014 PRELIMINARY PROSPECTUS 4,600,000 Shares Ordinary Shares We are offering 4,600,000 ordinary shares. This is our initial public offering, and no public market currently exists for our ordinary shares. We expect the initial public offering price to be between $13.00 and $15.00 per ordinary share. uniQure B.V. is a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands. On or prior to completion of this offering, we intend to convert into a public company with limited liability (naamloze vennootschap), and our legal name will be uniQure N.V. Our ordinary shares have been approved for listing on The NASDAQ Global Select Market under the symbol "QURE." We are an "emerging growth company" as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Investing in our ordinary shares involves a high degree of risk. Please read "Risk Factors" beginning on page 15 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Table of Contents goal of achieving more precisely targeted administration than the methods used in earlier approaches, which may result in improved efficacy. We have a license under UCSF's rights to use all preclinical and clinical data from the UCSF program for any future development program. Based on the results of the UCSF program, we may decide to develop an AAV2-based gene therapy containing the GDNF gene manufactured with our insect cell-based manufacturing process. Potential Additional Pipeline Programs. We are also conducting early-stage preclinical research into a number of other potential applications of our technologies. Currently these programs focus on utilizing AAV5 in liver and CNS indications. Based on defined criteria for indications that we believe most likely to be well suited to our gene therapy approach, we have prioritized approximately ten additional target diseases. We may seek to develop these programs either independently or with collaborators who are already working in the relevant disease area, including collaborators that may have already conducted pre-clinical or clinical studies. Our Collaboration with Chiesi We have entered into two agreements with Chiesi, a family-owned Italian pharmaceutical company with 2012 worldwide revenues of approximately 1.1 billion. One is an agreement for the commercialization of Glybera for LPLD and the second is an agreement for the co-development and commercialization of our hemophilia B program. We have retained full rights in the United States, Canada and Japan under both agreements. We have received 17.0 million in aggregate upfront payments as well as a 14.0 million investment in our ordinary shares. In addition, these agreements provide us with research funding for further development of our hemophilia B product candidate, as well as the potential for commercial milestone payments of up to 42.0 million for Glybera for LPLD. Under our Glybera commercialization agreement, we will receive payments from Chiesi for the quantities of Glybera we manufacture and supply to them. We are required to pay the cost of goods sold, including royalty and other payments to third parties in connection with the sale of Glybera. Based on our estimates, we anticipate we will retain in the range of 20% to 30% of the net sales of Glybera by Chiesi in the European Union and other countries under our agreement, net of the cost of goods sold, including the royalties and other obligations we owe to third parties. In addition, we are required to repay 20% of the gross amount received from Chiesi related to Glybera sales in repayment of a technical development loan from the Dutch government, which has a current outstanding balance of 5.4 million. Under our hemophilia B co-development agreement, we will also receive payments from Chiesi for any commercial quantities of our hemophilia B product candidate we manufacture and supply to them, if we receive regulatory approval for such product candidate. We estimate that the amount we would retain, net of cost of goods sold, including third party royalties and related amounts, will be between 25% and 35% of the revenues from sales of such product by Chiesi, varying by country of sale. Our Strategy Our strategic goal is to transform the paradigm of care for many severe and chronic diseases by moving from the short-term management of symptoms to the potentially curative resolution of the disease through sustained therapeutic gene expression in target tissues. We are building on the capabilities that have enabled us to obtain the first regulatory approval of a gene therapy in the European Union to address a range of diseases for which we believe we can reach the market with a gene therapy ahead of our competitors. We seek to achieve our goal by pursuing the following key objectives: Maximize the value of Glybera. Exploit the potential of our gene therapy platform to develop AAV-based gene therapies for additional orphan monogenic diseases and selected chronic degenerative diseases. Leverage our competitive strengths to retain our position as a leading gene therapy company and establish additional collaborations. Continue to invest in our technology platform and expand our modular capabilities. STUDY: NO. OF PATIENTS OBJECTIVES DURATION OF FOLLOW-UP Retrospective Analysis: Case Note Review AMT-011-03 17 Effect on frequency and severity of pancreatitis in patients treated with Glybera in prior clinical trials Retrospective case note review of patients through 2010 Clinical Trials: Phase II/III trial AMT-011-02 5 Primary: Effect on fasting triglyceride levels at 12 weeks Secondary: Effect on chylomicron metabolism at 14 and 52 weeks 1 year LPL activity at 3 months Safety Phase II/III trial 14 Safety 5 years AMT-011-01 Effect on triglyceride levels at 12 weeks LPL activity in the muscle at 6 months Phase I/II trial PER ORDINARY SHARE TOTAL Public Offering Price $ $ Underwriting Discounts and Commissions(1) Proceeds to uniQure before Expenses Table of Contents Our Corporate Information Our business was founded in 1998 and was initially operated through our predecessor company, Amsterdam Molecular Therapeutics (AMT) Holding N.V, or AMT. Following the initial rejection of our marketing authorization for Glybera in 2011, we undertook a corporate reorganization, pursuant to which the newly formed uniQure B.V. acquired the entire business and assets of AMT and completed a share-for-share exchange with the shareholders of AMT in the first half of 2012. We intend to re-register as a public limited company in the Netherlands in connection with this offering. Our executive offices are located at Meibergdreef 61, Amsterdam 1105 BA, the Netherlands, and our telephone number is +31 20 566 7394. Our website address is www.uniqure.com. The information contained on, or accessible through, our website is not a part of this prospectus. Reverse Share Split On January 31, 2014, we effected a 5-for-1 consolidation of our shares, which had the effect of a reverse share split. We are issuing cash in lieu of fractional shares in connection with this reverse split. All references to ordinary shares, options and warrants, as well as share, per share data and related information in this prospectus have been retroactively adjusted, where applicable, to reflect the reverse share split as if it had occurred at the beginning of the earliest period presented. Risk Associated with Our Business Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus. These risks include the following: We have a history of operating losses and anticipate that we will continue to incur losses for the foreseeable future. As of September 30, 2013, we had an accumulated deficit of 138.0 million. We will likely need additional funding, and such funding may cause substantial dilution to our shareholders. Our financial prospects and ability to generate revenues for the next several years depend heavily on the successful commercialization of Glybera in the European Union in collaboration with our partner Chiesi, and upon our ability to obtain additional marketing approvals and ultimately commercialize Glybera in the United States and other countries, which will not occur for several years, if ever. To obtain marketing approval for Glybera in the United States, we will need to successfully conduct an adequate and appropriately controlled clinical trial, either as part of the EMA-mandated post-approval clinical trial or separately, to obtain data needed to file a BLA for Glybera with the FDA. As gene therapies, Glybera and our product candidates are novel technologies and face uncertainty in the regulatory review and approval process. We cannot predict when or if we will obtain marketing approval to commercialize a product candidate, and any approval we may receive may be for a narrower indication than we expect or may be subject to costly post-approval requirements, which could restrict or eliminate the potential commercial success of the product candidate. Our product candidates are in early clinical or preclinical development and there is significant risk of failure or delay in these programs. We rely on our collaborators for important aspects of our development program and in many cases we have limited or no control over the design and conduct of the trials our collaborators conduct, or the efforts and resources our collaborators expend. The future growth of our business depends in significant part on our ability to enter into in-licenses or acquire rights to new product candidates and technologies, and to enter into additional collaborations in the future. If we are unable to attract collaborators or successfully identify or compete for the rights to new technologies, our prospects for growth could suffer. (1)The underwriters will also be reimbursed for certain expenses incurred in this offering. See "Underwriting" for details. Certain of our existing investors and their affiliated entities have indicated an interest in purchasing an aggregate of up to approximately $20 million of our ordinary shares in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, these entities may determine to purchase fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. It is also possible that these entities could indicate an interest in purchasing more of our ordinary shares. In addition, the underwriters could determine to sell fewer shares to any of these entities than the entities indicate an interest in purchasing or not to sell any shares to these entities. The underwriters will receive the same underwriting discount on any shares purchased by these entities as they will on any other shares sold to the public in this offering. Delivery of the ordinary shares is expected to be made on or about , 2014. We have granted the underwriters an option for a period of 30 days to purchase an additional 690,000 ordinary shares. If the underwriters exercise their option in full, the total underwriting discounts and commissions payable by us will be $ , and the total proceeds to us, before expenses, will be $ . Jefferies Leerink Partners Piper Jaffray & Co. Prospectus dated , 2014. Table of Contents If we fail to obtain or sustain adequate prices and reimbursement for Glybera and other product candidates for which we may receive marketing approval, our ability to market and sell our products would be adversely affected and our financial position would suffer. We may be unable to obtain, maintain and protect necessary intellectual property assets, which could harm our ability to compete and impair our business. We are heavily reliant upon licenses of proprietary technology from third parties and these licenses may not provide adequate rights, we may lose or be unable to protect these rights, or we may be unable to acquire additional intellectual property required for our development programs. We face substantial competition, and others may discover, develop or commercialize products before or more successfully than we do. Implications of Being an Emerging Growth Company We qualify as an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012, or 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. As an emerging growth company, we are electing to take advantage of the following exemptions: providing two years rather than three years of audited financial statements in this prospectus; not providing an auditor attestation report on our system of internal control over financial reporting; and not complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis). The JOBS Act permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are irrevocably electing not to avail ourselves of this extended transition period for complying with new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not "emerging growth companies." We may take advantage of these exemptions for up to five years following completion of this offering or such earlier time as we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. Table of Contents TABLE OF CONTENTS Table of Contents THE OFFERING Ordinary shares offered by us: 4,600,000 ordinary shares Ordinary shares to be outstanding immediately after this offering: 16,794,906 ordinary shares Offering price The initial public offering price per ordinary share is expected to be between $13.00 and $15.00. Listing Our ordinary shares have been approved for listing on The NASDAQ Global Select Market under the symbol "QURE." Option to purchase additional shares We have granted to the underwriters an option, which is exercisable within 30 days from the date of this prospectus, to purchase an aggregate of up to an additional 690,000 ordinary shares. See "Underwriting" for more information. Use of proceeds We currently estimate that we will use the net proceeds from this offering, together with our cash on hand, as follows: to complete the building out and equipping of our manufacturing facility in Lexington, Massachusetts; to support our further clinical development of Glybera, and our application for marketing approval of Glybera and preparation for potential commercial launch in the United States; to fund our share of the costs of our planned Phase I/II clinical trial of AMT-060 in hemophilia B; to advance the development of our other product candidates and research activities, including our collaboration with 4D Molecular Therapeutics; for working capital and for general corporate purposes, including the costs of operating our facilities in Amsterdam and in Lexington, Massachusetts, service on our indebtedness and possibly acquisitions or investments in other businesses, technologies or product candidates. See "Use of Proceeds" for additional information.
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+PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus before making an investment decision. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those discussed in the Risk Factors and other sections of this prospectus. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus to Ryerson Holding, the Company, we, our, and us refer to Ryerson Holding Corporation and its direct and indirect subsidiaries (including Ryerson Inc.). The term Ryerson refers to Ryerson Inc., a direct wholly owned subsidiary of Ryerson Holding, together with its subsidiaries on a consolidated basis. Platinum refers to Platinum Equity, LLC and its affiliated investment funds, certain of which are our principal stockholders, and Platinum Advisors refers to Platinum Equity Advisors, LLC. We refer to the issuance of our common stock being offered hereby as the offering. Our Company We believe we are one of the largest processors and distributors of metals in North America measured in terms of sales, with global operations in North America, China and Brazil. Our industry is highly fragmented with the largest companies accounting for only a small percentage of total market share. Our customer base ranges from local, independently owned fabricators and machine shops to large, international original equipment manufacturers. We process and distribute a full line of over 70,000 products in stainless steel, aluminum, carbon steel and alloy steels and a limited line of nickel and red metals in various shapes and forms. More than one-half of the products we sell are processed to meet customer requirements. We use various processing and fabricating techniques to process materials to a specified thickness, length, width, shape and surface quality pursuant to customer orders. For the year ended December 31, 2013, we purchased 2.1 million tons of materials from suppliers throughout the world. For the three months ended March 31, 2014, our revenue was $874.4 million, Adjusted EBITDA, excluding last-in, first-out ( LIFO ) income was $53.2 million and net income was $1.4 million. See note 4 in Summary Historical Consolidated Financial and Other Data for a reconciliation of Adjusted EBITDA to net income. We operate over 90 facilities across North America, six facilities in China and one in Brazil. Our service centers are strategically located in close proximity to our customers, which allows us to quickly process and deliver our products and services, often within the next day of receiving an order. We own, lease or contract a fleet of tractors and trailers, allowing us to efficiently meet our customers delivery demands. In addition, our scale enables us to maintain low operating costs. Our operating expenses as a percentage of sales for the years ended December 31, 2012 and 2013 were 12.6% and 14.2%, respectively. In addition to providing a wide range of flat and long metals products, we offer numerous value-added processing and fabrication services such as sawing, slitting, blanking, cutting to length, leveling, flame cutting, laser cutting, edge trimming, edge rolling, roll forming, tube manufacturing, polishing, shearing, forming, stamping, punching, rolling shell plate to radius and beveling to process materials to a specified thickness, length, width, shape and surface quality pursuant to specific customer orders. Our value proposition also includes providing a superior level of customer service and responsiveness, technical services and inventory management solutions. Our breadth of services allows us to create long-term partnerships with our customers and enhances our profitability. Table of Contents The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to Completion Preliminary Prospectus dated August 7, 2014 PROSPECTUS 11,000,000 Shares Ryerson Holding Corporation Common Stock We are selling 11,000,000 shares of our common stock. The selling stockholders identified in this prospectus have granted the underwriters an option to purchase up to 1,650,000 additional shares of common stock to cover over-allotments. We will not receive any proceeds from the sale of shares by the selling stockholders. This is the initial public offering of our common stock. We currently expect the initial public offering price to be between $11.00 and $12.00 per share. Our common stock has been approved for listing on the New York Stock Exchange under the symbol RYI. Investing in our common stock involves a high degree of risk. See Risk Factors beginning on page 19. Per Share Total Public Offering Price $ $ Underwriting Discount(1) $ $ Proceeds, before expenses, to us $ $ (1) See Underwriting for a description of the compensation payable to the underwriters. The underwriters may also purchase up to an additional 1,650,000 shares from the selling stockholders, at the public offering price, less the underwriting discount, within 30 days of the date of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The underwriters expect to deliver the shares to purchasers on or about , 2014. BofA Merrill Lynch Deutsche Bank Securities BMO Capital Markets J.P. Morgan Jefferies Wells Fargo Securities KeyBanc Capital Markets Citigroup Stephens Inc. Macquarie Capital Evercore The date of this prospectus is , 2014 Table of Contents We serve approximately 40,000 customers across a wide range of manufacturing end markets. We believe our diverse end market exposure reduces the volatility of our business in the aggregate. Our geographic network and broad range of products and services allow us to serve large, international manufacturing companies across multiple locations. Following this offering, because Platinum will control more than 50% of the voting power of our common stock, we will be considered a controlled company under the New York Stock Exchange rules. As such, we are permitted, and have elected, to opt out of compliance with certain NYSE corporate governance requirements. Accordingly, stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements. See Risk Factors We are exempt from certain corporate governance requirements because we are a controlled company within the meaning of the NYSE rules for a summary of the effects of a controlled company on investors. We are broadly diversified in our end markets and product lines in North America, as detailed below. 2013 Sales by End Market 2013 Sales by Product (1) Other includes copper, brass, nickel, pipe, valves and fittings. Industry and End Market Outlook Ryerson participates in the metals service center industry providing steel, aluminum and other metals products across a wide range of industrial manufacturing end markets. Our business performance is therefore impacted by a number of factors tied to industrial activity, including economic growth, end market demand and metals pricing. Steel products are the largest driver of our business and accounted for 75% of 2013 sales. The balance of our business is comprised of aluminum products, accounting for 22% of our 2013 sales, and other metals. Macroeconomic Outlook. Steel is utilized in a diverse range of manufacturing and fabrication applications with a variety of end market demand drivers. The primary drivers of demand for the steel industry are the construction, automotive, machinery and equipment, and energy end markets, which, according to the American Iron and Steel Institute, account for approximately 85% of shipments collectively. As evidenced by our end market sales segmentation, we are not reliant on a single specific sector, but rather broader diversified industrial activity. Our primary end markets include industrial equipment and fabrication, transportation equipment, heavy equipment, electrical machinery and oil and gas. We believe that we are well positioned in these markets and that Table of Contents Table of Contents they are poised for growth as the broader industrial sectors continue to grow. The charts below, which reflect the most recently available data from AISI, show our end market exposure as well as the broader steel market. 2013 Steel Shipments by Market Classification (AISI) 2013 Ryerson Sales by End Market Source: American Iron and Steel Institute Source: Company estimates While some of the key end market drivers of steel industry demand do not directly overlap with our end markets, they do impact broader steel demand and pricing, which can impact our business. Recently, leading indicators in the key steel industry end markets referenced above have begun to show sustained growth and continue to build positive momentum. For example, housing starts have shown stable growth over the last 24 months, while non-residential construction, which typically lags housing, is starting to show signs of sustained improvement as well. Additionally, U.S. automotive sales continue to rise according to the Bureau of Economic Analysis, reaching 17.3 million vehicles on a seasonally adjusted annualized rate basis in June 2014 versus 16.2 million for June of 2013. Machinery and equipment, a key end market for us, includes a variety of industrial manufacturing end markets, many of which are showing signs of significant growth. This is evidenced by the Institute for Supply Management s ( ISM ) Purchasing Managers Index ( PMI ), which reached 55.3 in June 2014. The United States Federal Reserve midpoint GDP growth estimates of 2.2% and 3.1% for 2014 and 2015, respectively. Finally, the oil and gas end market continues to be a long-term growth market in steel. Much of this growth is attributable to growth in North American drilling and refining, substantially impacted by activity in United States shale oil and gas and the Canadian oil sands. Additionally, investment in new petrochemical production capacity in the United States as a result of relatively low domestic natural gas prices may further bolster steel demand. The following chart shows the historical movements of the Purchasing Managers Index. ISM Purchasing Managers Index Table of Contents According to MSCI, total inventory levels of carbon steel, stainless steel and aluminum at U.S. service centers reached a trough in August 2009 and bottomed at the lowest levels since the data series began in 1977. Although industry demand recovered in 2010, 2011 and 2012, shipments and inventory are still well below pre-downturn averages, which we believe suggests long-term growth potential that may be realized if these metrics return to, or exceed, their historical averages. North American Monthly Service Center Shipments North American Monthly Service Center Inventory Ryerson End Market Outlook. Although our revenue for 2013 decreased 14.0% compared to 2012 due to weaker economic conditions in the metals market, according to the latest Livingston Survey, published by the Federal Reserve Bank of Philadelphia, U.S. industrial production is expected to grow by 3.8% and 3.6% in 2014 and 2015, respectively. Two of our largest end markets, industrial equipment and fabrication, include numerous diversified industrial manufacturing markets which, along with the broader economy, are showing signs of sustained growth. For example, in the U.S. major appliances and Heating Ventilation and Air Conditioning ( HVAC ) equipment, both markets we serve, are projected to grow at even higher rates. Specifically, major appliances are expected to grow 4.9% and 4.8% in 2014 and 2015, respectively, according to Euromonitor. According to IBIS Worldwide, HVAC is expected to grow 1.4% and 3.8% over the same periods. In addition, we also serve the transportation equipment, heavy equipment and electrical equipment markets which are expected to show significant growth in the coming years. Transportation equipment, including commercial vehicle production, represents 20% of our sales and is expected to grow 6.1% per year in the U.S. between 2013 and 2015 according to LMC Automotive. Machinery and heavy equipment, including construction and agricultural equipment, represents 11% of our end-market sales and is projected to grow 7.1% per year in the U.S. between 2012 and 2016 according to MarketLine. Metals Pricing. Along with improvements in volume, as indicated by demand trends in the end markets, movements in the price of steel will also impact our business. Steel prices are driven by a number of factors, including input prices, capacity utilization and foreign imports. Currently, input costs are providing support for steel pricing, as they flow directly through the pricing of the mills steel output. Additionally, we believe that recent closings of mills, including the Sparrows Point steel mill, among others, that have been dismantled, combined with continued growth in the global economy and end market demand, should ultimately result in increased capacity utilization. The U.S. steel industry production capacity utilization rate increased to 77.0% by the beginning of July 2014 from a low of 34% in December 2008, according to AISI. North American production capacity utilization levels remain below the 85% average utilization level observed in the post- consolidation restructured steel industry from 2002 to 2008. Although our average selling price decreased 9.3% in 2013 compared to 2012 due to decreases in metals prices across all of our products, with some of the largest decreases in our carbon plate, stainless steel plate and stainless steel long product lines, we believe that the combination of higher input prices, increased global demand and increased capacity utilization will support steel price increases in the near future, positively impacting our business. Table of Contents INDUSTRY AND MARKET DATA In this prospectus, we rely on and refer to information and statistics regarding the steel processing industry and our market share in the sectors in which we compete. We obtained this information and these statistics from sources other than us, which we have supplemented where necessary with information from publicly available sources, discussions with our customers and our own internal estimates. References in this prospectus to: American Iron and Steel Institute ( AISI ) refer to its SteelWorks website from February 2014, or its Steel Production Capacity Utilization index from July 2014; The Institute for Supply Management refer to its June 2014 Manufacturing ISM Report on Business ; United States Federal Reserve refer to its June 2014 Summary of Economic Projections ; The Metals Service Center Institute ( MSCI ) refer to its June 2014 edition of MSCI Metal Activity Report ; The Federal Reserve Bank of Philadelphia refer to its June 2014 issue of The Livingston Survey ; Euromonitor refer to its May 2014 Consumer Appliances in the U.S. report; IBIS Worldwide refer to its May 2014 Heating & Air Conditioning Manufacturing Equipment in the U.S. report; LMC Automotive refer to its Q2 2014 data; MarketLine refer to its May 2013 Machinery in the United States report; Wood Mackenzie refer to its June 2014 Aluminium Monthly Update reports; Bureau of Economic Analysis refer to its June 2014 Auto and Truck Seasonal Adjustment data; and Metal Center News refer to its September 2013 Service Center Top 50 report. We use these sources and estimates and believe them to be reliable, but we cannot give you any assurance that any of the projected results will be achieved. Table of Contents Aluminum pricing also remains well below pre-downturn levels but has stabilized recently. Global output of aluminum is projected to increase 6.4% in 2014 according to Wood Mackenzie, fueled by factors including the rebound in U.S. construction and increased demand from the transportation and infrastructure markets in China. Industry Consolidation. The United States service center industry is a highly fragmented market with the top 50 service centers controlling approximately 27% of industry sales, according to Metal Center News, only 15 of which have sales over $1 billion. Such fragmentation has historically resulted in the smaller service centers having less negotiating leverage with both the larger consolidated steel mills, as well as larger customers. In recent years there has been increased consolidation among larger players resulting in fewer customers of size for the mills and greater purchasing power for service centers. A recent example is the acquisition of Metals USA Holding Corp. by Reliance Steel & Aluminum Co. We believe that there is significant opportunity for consolidation and we expect the trend will continue. Our Competitive Strengths Leading Market Position in North America. We believe we are one of the largest service center companies for carbon and stainless steel as well as aluminum based on sales in the North American market where we have a broad geographic presence with over 90 locations. Our service centers are located near our customer locations, enabling us to provide timely delivery to customers across numerous geographic markets. Additionally, our widespread network of locations in the United States, Canada and Mexico helps us to utilize our expertise to more efficiently serve customers with complex supply chain requirements across multiple manufacturing locations. We believe this is a key differentiator among customers who need a supplier that can reliably and consistently support them. Our ability to transfer inventory among our facilities better enables us to more timely and profitably source and process specialized items at regional locations throughout our network than if we were required to maintain inventory of all products and specialized equipment at each location. We believe with our significant footprint in the North American market, combined with our significant scale and operating leverage, a cyclical recovery of the service center industry supported by long-term growth trends in our end-markets should allow us to experience higher growth rates relative to North American economic improvement, but there can be no guarantee that we will experience such higher growth rates. Broad Geographic Reach across Attractive End Markets. Our operations cover a diverse range of industries, including industrial equipment, industrial fabrication, electrical machinery, transportation equipment, heavy equipment and oil and gas. Manufacturing growth has accelerated since November 2012 as shown by the ISM index (as described in the Industry and End Market Outlook), and we believe industries we serve will provide strong demand for our products and services as the North American manufacturing economy continues to recover. We also believe that the continued trend of moving manufacturing to the United States from overseas should benefit us with our broad North American platform. In addition, we expect to benefit from continued growth in international markets that will help spur demand at domestic manufacturing facilities that sell into the global market. We believe that our ability to quickly adjust our offering based on regional and industry specific trends creates stability while also providing the opportunity to access specific growth markets. Established Platform for Organic and Acquisition Growth. Since 2011, we have opened eight new service centers in previously underserved North American regions. We have acquired another ten facilities to complement our existing locations and expanded the product offering in many Table of Contents locations based on customer demand. Over the last three years, a significant portion of our capital expenditures have been made to expand our long and plate processing capabilities at 15 existing locations. We believe that our expanded presence in select regions and products positions us well to capture further growth in these regions and products. Although there can be no guarantee of growth, we believe a number of our other strategies, such as improving our product mix, pricing our products and services based on the value we provide our customers, growing our large national network, and expanding our diverse operating capabilities, will provide us with growth opportunities. In addition, we have utilized our leadership and experience in the North American markets to establish operations in China, the largest and one of the highest growth metals markets in the world, as well as in Brazil. Given the highly fragmented nature of the service center industry, we believe there are numerous additional opportunities to acquire businesses and incorporate them into our existing infrastructure. Given our large scale and geographic reach, we believe we can add value to these businesses in a number of ways, including providing greater purchasing power, access to additional end markets and broadening product mix. Although we do not have any current plans to engage in any specific acquisitions, from time to time and in the ordinary course of business, we regularly evaluate potential acquisition opportunities. Lean Operating Structure Providing Operating Leverage. Since the acquisition by Platinum, we have transformed our operating model by decentralizing our operations and reducing our cost base. Decentralization has improved our customer service by moving key functions such as procurement, credit and operations support to our regional offices. From 2007 through the end of 2009, we engaged in a number of cost reduction initiatives that included a headcount reduction of approximately 1,700, representing 33% of our workforce, and the closure of 14 redundant or underperforming facilities in North America. Furthermore, in 2011, we also completed the decentralization of credit, operations, and procurement and reduced field staffing levels. In that overall period, we believe that we have generated annual fixed cost savings of approximately $200 million since 2007. We believe this reduction has improved our operating efficiency while also providing the flexibility for further growth in our targeted markets. We have also focused on process improvements in inventory management. Despite an increase in average inventory days from 74 days in 2011 to 84 days in 2013, our average inventory days have improved on an overall basis from 100 days in 2006. This reduction has decreased our exposure to metals price movements as well as increased capacity in our facilities to devote to higher margin products. These organizational and operating changes have improved our operating structure, working capital management and efficiency. As a result of our initiatives, we have increased our financial flexibility and believe we have a favorable cost structure compared to many of our peers. This will provide significant operating leverage. Extensive Breadth of Products and Services for Diverse Customer Base. We carry a full range of over 70,000 products, including aluminum, carbon, stainless and alloy steels and a limited line of nickel and red metals. In addition, we provide a broad range of processing and fabrication services to meet the needs of our 40,000 customers and fulfill more than 1,000,000 orders per year. We also provide supply chain solutions, including just-in-time delivery, and value-added components to many original equipment manufacturers. We have recently introduced Ryerson Direct, a new online purchasing and service solution which allows us to be available 24/7. We believe our broad product mix and marketing approach provides customers with a one-stop shop solution few other service center companies are able to offer. Table of Contents For the year ended December 31, 2013, no single customer accounted for more than 2% of our sales, and our top 10 customers accounted for less than 11% of sales. Strong Relationships with Suppliers. We are among the largest purchasers of metals in North America and have long-term relationships with many of our North American suppliers. We believe we are frequently one of the largest customers of our suppliers and that concentrating our orders among a core group of suppliers is an effective method for obtaining favorable pricing and service. We believe we have the opportunity to further leverage this strength through continued focus on price and volume using an analytics-driven approach to procurement. In addition, we view our strategic suppliers as supply chain partners. Our coordinated effort focused on logistics, lead times, rolling schedules, and scrap return programs ultimately results in value-based buying that is advantageous for us. Metals producers worldwide are consolidating, and large, geographically diversified customers, such as Ryerson, are desirable partners for these larger suppliers. Our relationships with suppliers often provides us with access to metals when supply is constrained. Through our knowledge of the global metals marketplace and capabilities of specific mills we believe we have developed a global purchasing strategy that allows us to secure favorable prices across our product lines. Experienced Management Team with Deep Industry Knowledge. Our senior management team has extensive industry and operational experience and has been instrumental in optimizing and implementing our strategy in the last three years. Our senior management has an average of more than 20 years of experience in the metals or service center industries. The senior executive team s extensive experience in international markets and outside the service center industry provides perspective to drive profitable growth. Our CEO, Mr. Michael Arnold, joined the Company in January 2011 and has 35 years of diversified industrial experience. Mr. Edward Lehner, who has been our CFO since August 2012, has 24 years of experience, predominantly in the metals industry. Under their leadership, we have increased our focus on positioning the Company for growth and enhanced profitability. Our Strategy Expand Margins. We are actively pursuing strategies to achieve increased gross margins. We believe this will allow our profitability to accelerate as volumes in our industry improve. Although net sales in 2013 decreased by 14.0% as compared to 2012, we have employed and continue to employ the initiatives below, which have resulted in an increase in our gross margins as a percentage of sales, excluding LIFO expense, by 90 basis points, from 17.0% in Q1 2013 to 17.9% in Q1 2014. We have excluded LIFO expense from the gross margin as a percentage of sales metric in order to provide a means of comparison amongst our competitors who may not use the same basis of accounting for inventories. Optimize Product Mix. We see significant opportunity to improve margins by increasing long and plate products sales as these products are typically higher margin than flat products. We have established regional long product inventory to provide a broad line of stainless, aluminum, carbon and alloy long products as well as the necessary processing equipment to meet demanding requirements of these customers. We expect to continue to optimize product mix as we expand our long product inventory and processing capability. Optimize Customer Mix. We have increased our focus on serving a diversified group of industrial customers that value our customized processing services which we price on a transaction-by-transaction basis as opposed to larger volume program account customers who typically have fixed pricing arrangements over varying time Table of Contents periods. Our sales to customers using transactional pricing arrangements typically generate higher margins and require less working capital investment. We have re-evaluated and re-priced many of our lower margin program accounts which has resulted in an increase in our margins, as evidenced above. Expand Value-added Processing Services. We seek to continue to improve our margins by complementing our products with first stage manufacturing and other processing capabilities that add value for our customers. Additionally, for certain customers we have assumed the management and responsibility for complex supply chains involving numerous suppliers, fabricators and processors. We leverage our capabilities to deliver the highest value proposition to our customers by providing a wide breadth of competitive products and services, as well as superior customer service and product quality. Improve Supply Chain and Procurement Management. As a large purchaser of metals we continue to use analytic-driven processes to develop supply chains which lower our procured costs, shorten our lead times, improve our working capital management and decrease our exposure to commodity price fluctuations. Improve Operating Efficiency. We are committed to improving our operating capabilities through continuous business improvements and cost reductions. We have made, and continue to make, improvements in a variety of areas, including operations, sales, delivery, administration and working capital management. Furthermore, we continue to focus on better customer service and the hiring, retention and promotion of high performing employees as well as place greater emphasis on working capital efficiencies. In particular with respect to inventory, our goal of maintaining approximately 75-80 days of sales on hand reduces our exposure to metals prices and increases capacity in facilities to devote to higher margin products. Our streamlined organizational structure improves efficiency by combining local decision making with regional and national sourcing capabilities. Pursue Profitable Growth Through Expansion and Value-Accretive Acquisitions. We are focused on increasing our sales to existing customers, as well as expanding our customer base globally, but there can be no guarantee we will be able to expand. We expect to continue increasing revenue through a variety of sales initiatives and by targeting attractive markets. In North America, we have expanded and continue to expand in markets that we believe are underserved. We opened eight new facilities in Texas, Georgia, Iowa, Illinois, Utah and Mexico since 2011 as well as expanded our higher-margin plate fabrication or long-product capabilities at many existing locations, where we have observed an opportunity to generate attractive returns. We are continuously monitoring opportunities for further expansion across the United States, Canada and Mexico. We expect to leverage our expertise in North America and selectively expand our business in China and Brazil as well as additional high growth emerging markets. Since 2010, we have completed five strategic acquisitions: Texas Steel Processing Inc., SFI-Gray Steel Inc., Singer Steel Company, Turret Steel and A ofran A os e Metais Ltda. These acquisitions have provided various opportunities for long-term value creation through the expansion of our product and service capabilities, geographic reach, operational distribution network, end markets diversification, cross-selling opportunities and the addition of transactional-based customers. Although we do not have any current plans to engage in any specific acquisitions, we regularly evaluate potential acquisitions of service center companies that complement our existing customer base and product offerings, and plan to continue pursuing our disciplined approach to such acquisitions. Table of Contents Maintain Flexible Capital Structure and Strong Liquidity Position. Our management team is focused on maintaining a strong level of liquidity that will facilitate our plans to execute our various growth strategies. Throughout the economic downturn, we maintained liquidity in excess of $300 million. Liquidity as of March 31, 2014 was approximately $426 million, comprised of $308 million of availability under our senior secured $1.35 billion asset-based revolving credit facility (the Ryerson Credit Facility ) and our foreign debt facilities, and $118 million of cash and cash equivalents and marketable securities. We have no financial maintenance covenants in our debt agreements unless availability under the Ryerson Credit Facility falls below $125 million. In addition, there are no significant debt maturities until the maturity of the Ryerson Credit Facility, which occurs on the earlier of (a) April 3, 2018 and (b) August 16, 2017 (60 days prior to the scheduled maturity date of the 9% Senior Secured Notes due 2017 issued by Ryerson and its wholly owned subsidiary, Joseph T. Ryerson & Son Inc. (the 2017 Notes )), if the 2017 Notes are then outstanding. Substantially all of the proceeds from this offering will be used to further reduce our outstanding indebtedness.
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+PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to purchase common stock in this offering. You should read the entire prospectus carefully, including the section titled "Risk Factors," our consolidated financial statements and the related notes thereto, and management s discussion and analysis of financial condition and results of operations, before making an investment decision. Unless we state otherwise or the context otherwise requires, references in this prospectus to "we," "our," "us," "the Company" and "ServisFirst" refer to ServisFirst Bancshares, Inc. and its subsidiaries, including ServisFirst Bank, which we sometimes refer to as "ServisFirst Bank," "the bank," "our bank subsidiary," or "our bank," except that such terms refer to only ServisFirst Bancshares, Inc. and not its subsidiaries in the section entitled "Description of Capital Stock." Overview We are a bank holding company, headquartered in Birmingham, Alabama. Our wholly-owned subsidiary, ServisFirst Bank, provides commercial banking services through 12 full-service banking offices located in Alabama and the panhandle of Florida, as well as a loan production office in Nashville, Tennessee. Through our bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions. As of March 31, 2014, our balance sheet was highlighted by total assets of approximately $3.6 billion, total loans of approximately $2.9 billion, total deposits of approximately $3.0 billion and total stockholders equity of approximately $312 million. We operate our bank using a simple business model based on organic loan and deposit growth, generated through high quality customer service, delivered by a team of experienced bankers focused on developing and maintaining long-term banking relationships with our target customers. We utilize a uniform, centralized back office risk and credit platform to support a decentralized decision-making process executed locally by our regional chief executive officers. This decentralized decision-making process allows individual lending officers varying levels of lending authority, based on the experience of the individual officer. When the total amount of loans to a borrower exceeds an officer s lending authority, further approval must be obtained by the applicable regional chief executive officer (G. Carlton Barker – Montgomery, Andrew N. Kattos – Huntsville, Ronald A. DeVane – Dothan, Rex D. McKinney – Pensacola or W. Bibb Lamar, Jr. – Mobile) and/or our senior management team. Our strategy focuses on operating a limited and efficient branch network with sizable aggregate balances of total loans and deposits housed in each branch office. We believe this approach more appropriately addresses our customers banking needs and reflects a superior delivery strategy for commercial banking services. Our strategy allows us to deliver targeted, high quality customer service, while achieving significantly lower efficiency ratios relative to the banking industry, as evidenced by our efficiency ratios of 45.54%, 41.54% and 38.78% for the years 2011, 2012 and 2013, respectively. We believe our balance sheet and business lines reflect our focus, and that the execution of our business model has driven our success, including, for the years ended December 31, 2011, 2012 and 2013, respectively: organic deposit growth of 21.90%, 17.15% and 20.23%; organic loan growth of 31.38%, 29.20% and 21.02%; earnings per share growth of 24.30%, 41.36% and 14.03%; and return on average common equity of 17.01%, 19.41% and 18.30%. Our disciplined and centralized risk and credit platform, we believe, has allowed us to achieve these levels of growth and financial performance, while maintaining exceptional asset quality, including, for the years ended December 31, 2011, 2012 and 2013, respectively: non-performing assets to total assets ratios of 1.06%, 0.69% and 0.64%; and net charge-offs to average loans ratios of 0.32%, 0.24% and 0.33%. The information in this prospectus is not complete and may be changed or supplemented. We may not sell any of the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell the securities described herein and we are not soliciting offers to buy the securities described herein in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 5, 2014 625,000 Shares PROSPECTUS Common Stock This prospectus relates to the initial public offering of ServisFirst Bancshares, Inc. s common stock. We are offering 625,000 shares of our common stock. Prior to this offering, there has been no established public market for our common stock. We currently estimate that the initial public offering price per share of our common stock will be between $91.00 and $93.00 per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol "SFBS". See "Risk Factors," beginning on page 19, for a discussion of certain risks that you should consider before making an investment decision to purchase our common stock. Per Share Total Initial public offering price $ $ Underwriting discount(1) $ $ Proceeds to us, before expenses $ $ (1) See "Underwriting" for additional information regarding the underwriting discount and certain expenses payable to the underwriters by us. We have granted the underwriters an option to purchase up to an additional 93,750 shares of our common stock at the initial public offering price less the underwriting discount, within 30 days from the date of this prospectus, to cover over-allotments. Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The shares of our common stock that you purchase in this offering will not be savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The underwriters expect to deliver the shares of our common stock against payment in New York, New York on , 2014. _________________________ Sandler O Neill + Partners, L.P. Raymond James _________________________ Prospectus dated , 2014 Recent Developments On April 25, 2014, we filed with the Securities and Exchange Commission (the "SEC") on Form 10-Q our unaudited financial results for the quarter ended March 31, 2014. We reported net income of $11.8 million and net income available to common stockholders of $11.7 million for the quarter, compared to net income of $9.3 million and net income available to common stockholders of $9.2 million for the same quarter in 2013. Basic and diluted earnings per common share were $1.58 and $1.52, respectively, for the first quarter of 2014, compared to $1.44 and $1.31, respectively, for the first quarter of 2013. Non-interest expense for the first quarter of 2014 increased $2.9 million, or 27%, to $13.7 million from $10.8 million in the first quarter of 2013. This increase consists primarily of a $1.3 million, or 23%, increase in salaries and employee benefits related to new hires to fill positions in our newer markets of Mobile, Alabama and Nashville, Tennessee, a $300,000 increase in equipment and occupancy expense in these markets attributable to such expansion and a non-routine expense of $703,000 resulting from an immaterial correction of our accounting for vested stock options previously granted to members of our advisory boards in our Dothan, Huntsville and Montgomery, Alabama markets. We historically accounted for these options under the provisions of FASB ASC 718-10, Compensation – Stock Compensation, and now have determined to recognize as an expense the fair value of these vested options in accordance with the provisions of FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees. This correction in accounting treatment is a non-cash item and does not impact our operating activities or cash from operations. For additional information regarding our financial results for the first quarter of 2014, see the section titled "Management s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments". We previously granted in December 2013 to our Pensacola, Florida and Mobile, Alabama advisory board members a total of 35,000 stock options, which vest on the fifth anniversary of the date of grant. Consistent with the correction of the accounting treatment for the options granted to our Dothan, Huntsville and Montgomery, Alabama advisory board members, we account for these options in accordance with FASB ASC Topic 505-50. FASB ASC Topic 505-50 requires that we recognize as an expense during each reporting period changes in the fair value of the unvested portion of such options, determined using a Black-Scholes option pricing model. In order to reduce the future uncertainty and variability of expense associated with these unvested options under FASB ASC Topic 505-50, on April 21, 2014, our compensation committee approved a modification to the 35,000 stock options to accelerate the vesting of these options. This modification will accelerate the five year vesting period of these stock options to the date on which we enter into an underwriting agreement with the underwriters named herein, or, alternatively, if we determine not to proceed with the offering, the date we make such a determination. The compensation committee determined that the appropriate calculation of the fair value of the accelerated options should be based on the initial public offering price of our common stock. Accordingly, if the initial public offering price of our common stock occurs at $93.00, which is the high end of the range set forth on the cover page of this prospectus, we anticipate recording a one-time expense of $1.78 million in the second quarter of 2014. We anticipate recognizing a tax benefit of approximately $623,000 in connection with this additional expense, and, accordingly, expect to record in the second quarter a net after tax expense increase of approximately $1.2 million with respect to this item. This correction in accounting treatment will be a non-cash item and will not impact our operating activities or cash from operations. Our History Our bank was founded by our President and Chief Executive Officer, Thomas A. Broughton, III, and commenced banking operations in May 2005 following an initial capital raise of $35 million, the largest capital raise by a de novo bank in the history of Alabama. We were incorporated as a Delaware corporation in August 2007 for the purpose of acquiring all of the common stock of our bank, and in November 2007 our holding company became the sole shareholder of the bank by virtue of a plan of reorganization and agreement of merger. In May 2008, following our filing of a registration statement on Form 10 with the SEC, we became a reporting company within the meaning of the Securities Exchange Act of 1934 (the "Exchange Act") and have been filing annual, quarterly, and current reports, proxy statements and other information with the SEC since 2008. Since inception, our bank has achieved significant growth, all of which has been generated organically. We achieved total asset milestones of $1 billion in 2008, $2 billion in 2011 and $3 billion in 2013. In addition to total asset milestones, we have opened offices in six new markets, and raised an aggregate of approximately $55.1 million to support our growth in these new locations through five separate private placements of our common stock to predominately local, individual investors. Our Business Strategy We are a full service commercial bank focused on providing competitive products, state of the art technology and quality service. Our business philosophy is to operate as a metropolitan community bank emphasizing prompt, personalized customer service to the individuals and businesses located in our primary markets. We aggressively market to our target customers, which include privately held businesses with $2 million to $250 million in annual sales, professionals and affluent consumers whom we believe are underserved by the larger regional banks operating in our markets. We also seek to capitalize on the extensive relationships that our management, directors, advisory directors and stockholders have with the businesses and professionals in our markets. We believe this philosophy has attracted, and will continue to attract, valuable customers and capture market share historically controlled by other financial institutions operating in our markets. Focus on Core Banking Business. We deliver a broad array of core banking products to our customers. While many large regional competitors and national banks have chosen to develop non-traditional business lines to supplement their net interest income, we believe our focus on traditional commercial banking products driven by a high margin delivery system is a superior method to deliver returns to our stockholders. We emphasize an internal culture of keeping our operating costs as low as practical, which in turn leads to greater operational efficiency. Additionally, our centralized technology and process infrastructure contribute to our low operating costs. We believe this combination of products, operating efficiency and technology make us attractive to customers in our markets. In addition, in 2011 we began providing correspondent banking services to various smaller community banks in our markets, and currently act as a correspondent bank to approximately 160 community banks located throughout the southeastern United States. We provide a source of clearing and liquidity to our correspondent bank customers, as well as a wide array of account, credit, settlement and international services. We believe this service is of a scale and quality that is unique for a bank our size and provides us with a solid revenue stream and supplemental low cost source of funds. Commercial Bank Emphasis. We have historically focused on people as opposed to places. This strategy translates into a smaller number of brick and mortar branch locations relative to our size, but larger overall branch sizes in terms of total deposits. As a result, our branches average approximately $253 million in total deposits, and our branches that have been open at least three years average approximately $341 million in total deposits. In the more typical retail banking model, branch banks continue to lose traffic to other banking channels which may prove to be an impediment to earnings growth for those banks that have invested in large branch networks. In addition, unlike many traditional community banks, we place a strong emphasis on originating commercial and industrial loans, which comprised approximately 44.5% of our total loan portfolio as of March 31, 2014. We believe our commercial and industrial lending expertise will fuel our continued loan growth in the future. Scalable, Decentralized Business Model. We emphasize local decision-making by experienced bankers supported by centralized risk and credit oversight. We believe that the delivery by our bankers of in-market customer decisions, coupled with risk and credit support from our corporate headquarters, allows us to serve our borrowers and depositors directly and in person, while managing risk centrally and on a uniform basis. We intend to continue our growth by repeating this scalable model in each market in which we are able to identify a strong banking team. Our goal in each market is to employ the highest quality bankers in that market. We then empower those bankers to implement our operating strategy, grow our customer base and provide the highest level of customer service possible. We focus on a geographic model of organizational structure as opposed to a line of business model employed by most regional banks. This structure assigns significant responsibility and accountability to our regional chief executive officers, who we believe will drive our growth and success. We have developed a business culture whereby our management team, from the top down, is actively involved in sales, which we believe is a key differentiator from our competition. Identify Opportunities in Vibrant Markets. Since opening our original banking facility in Birmingham in 2005, we have expanded into six additional markets. Our focus has been to expand opportunistically when we identify a strong banking team in a market with attractive economic characteristics and market demographics where we believe we can achieve a minimum of $300 million in deposits within five years of market entry. There are two primary factors we consider when determining whether to enter a new market: the availability of successful, experienced bankers with strong reputations in the market; and the economic attributes of the market necessary to drive quality lending opportunities coupled with deposit-related characteristics of the potential market. Prior to entering a new market, we identify and build a team of experienced, successful bankers with market-specific knowledge to lead the bank s operations in that market, including a regional chief executive officer. Generally, we or members of our senior management team are familiar with these individuals based on prior work experience and reputation, and strongly believe in the ability of such individuals to successfully execute our business model. We also assemble a non-voting advisory board of directors in each market, comprised of directors representing a broad spectrum of business experience and community involvement in the market. We currently have advisory boards in each of the Huntsville, Montgomery, Dothan, Mobile and Pensacola markets. While we currently have a loan production office in Nashville, Tennessee with three experienced bankers (one of whom was hired in January 2014), we anticipate expanding this office into a full-service branch in the future, assuming that we are able to identify and retain a full team of experienced bankers whom we believe can successfully effect our strategy. In connection with opening a full-service banking office in a new market, historically we have raised capital through private placements to investors in the local market, many of whom are also customers of our bank in such market. We believe that having many of our customers who are also stockholders provides us with a strong source of core deposits, aligns our and our customers interests, and fosters a platform for developing and maintaining the long-term banking relationships we seek. To date, we have not supplemented our organic deposit and loan growth with traditional mergers or acquisitions. However, we view our organic growth strategy as a form of acquisition strategy, insofar as we have successfully hired qualified teams of experienced bankers in each new market we have entered, and have built significantly sized franchises in those markets within a short time following our entry into the new market. We believe that our success in attracting these teams of bankers has allowed us to achieve growth attributes similar to competitors that have chosen to execute traditional mergers or acquisitions, but without the addition of goodwill and resulting capital pressures attendant to traditional merger and acquisition strategies. In addition to organic expansion, we may seek to expand through targeted acquisitions. Although we have not yet identified any specific acquisition opportunity that meets our strict requirements, including a limited number of branches serving a vibrant market with a strong deposit base, a premier banking team with individuals whom we believe can execute our business model, and available at a price that we believe provides attractive risk-adjusted returns, we routinely evaluate potential acquisition opportunities that we believe would be complementary to our business. We do not, however, have any immediate plans, arrangements or understandings relating to any acquisition, and we do not believe an acquisition is necessary to successfully execute our business model. About this Prospectus We and the underwriters have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. No action is being taken in any jurisdiction outside the United States to permit a public offering of our securities or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about, and to observe, any restrictions as to the offering and the distribution of this prospectus applicable to those jurisdictions. Unless otherwise expressly stated or the context otherwise requires, all information in this prospectus assumes that the underwriters have not exercised their option to purchase additional shares of common stock. Market Data Market data used in this prospectus has been obtained from independent industry sources and publications as well as from research reports prepared for other purposes. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified the data obtained from these sources. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus. Our Markets Our primary markets are broadly defined as the metropolitan statistical areas ("MSAs") of Birmingham-Hoover, Huntsville, Montgomery, Dothan and Mobile, Alabama, Pensacola-Ferry Pass-Brent, Florida, and Nashville, Tennessee. We draw most of our deposits from, and conduct most of our lending transactions in, these markets. Although we may in the future identify additional new markets to enter, we believe that the long-term growth potential of each of our current markets is substantial, and that we have the ability to continue to grow organically by increasing our market share in these markets. We further believe that many local affluent professionals and small business owners will prefer to conduct their banking with local, independent institutions that offer a higher level of personalized service. The following table illustrates our market share, by insured deposits as of the dates indicated, in our primary markets: Our Market Deposits Market(1) Date Opened Total Branches June 30, 2013(2) March 31, 2014 Total Market Deposits(2) Rank(2) Market Share %(2) (Dollars in millions) Alabama: Birmingham-Hoover May 2005 3 $1,217.3 $1,393.1(3) $30,175.1 5 4.03% Huntsville August 2006 2 540.8 569.1 6,805.7 5 7.95% Montgomery June 2007 2 374.2 397.9 7,810.1 7 4.79% Dothan September 2008 2 327.1 357.6 2,883.9 3 11.34% Mobile July 2012(4) 1 15.2 71.4 6,041.6 18 0.25% Florida: Pensacola-Ferry Pass-Brent April 2011 2 202.9 245.9 4,638.0 8 4.38% Tennessee: Nashville April 2013 —(5) —(5) —(5) 40,800.5 —(5) —(5) (1) Represents metropolitan statistical areas (MSAs). (2) As reported by the FDIC as of June 30, 2013. (3) Includes approximately $20.5 million in deposits attributable to our loan production office in Nashville, Tennessee. (4) Opened in July 2012 as a loan production office and in May 2013 converted to a full service branch. (5) Opened as a loan production office. Birmingham. Birmingham, the largest city in Alabama, is located in central Alabama 146 miles west of Atlanta, Georgia and 148 miles southwest of Chattanooga, Tennessee. The Birmingham-Hoover MSA s economy consists of a diverse mixture of traditional and emerging employment sectors. While metals manufacturing is an important historical sector, finance, insurance and healthcare services and distribution are the region s core economic sectors, and biological and medical technology, entertainment and diverse manufacturing have been identified as the region s emerging economic sectors. Large corporations headquartered or with a major presence in the region include Protective Life, HealthSouth Corporation, Vulcan Materials Company and AT&T. Additionally, The University of Alabama at Birmingham (UAB) is Alabama s largest single-site employer, and Birmingham is home to the largest nonprofit independent research laboratory in the southeastern United States, the Southern Research Institute. Huntsville. We believe that Huntsville, located in northern Alabama mid-way between Birmingham and Nashville, Tennessee, offers substantial growth as one of the strongest technology economies in the nation, with over 300 companies performing sophisticated government, commercial and university research. Huntsville has one of the highest concentrations of engineers and Ph.D. s in the United States and has a number of major government programs, including NASA and the U.S. Army. Huntsville also has one of the highest concentrations of Inc. 5000 companies in the United States and a number of offices of Fortune 500 companies. Major employers in Huntsville include the U.S. Army/Redstone Arsenal, the Boeing Company, NASA/Marshall Space Flight Center, Intergraph Corporation, ADTRAN, Inc., Northrop Grumman, Cinram, SAIC, DirecTV, Lockheed Martin and Toyota Motor Manufacturing of Alabama. Montgomery. Montgomery, which is Alabama s capital, is located in south central Alabama between Birmingham and Mobile, Alabama. In addition to housing many Alabama government agencies, Montgomery is also home to Maxwell Gunter Air Force Base, which employs more than 12,500 people and includes Air University, the Air Force s center for leadership and education. In 2005, Hyundai Motor Manufacturing Alabama opened its Montgomery manufacturing plant, which was built with an initial capital investment of over $1.4 billion, and has experienced subsequent expansions. The area has also benefited from Hyundai suppliers that have invested over $550 million, creating 6,000 additional jobs. Dothan. We believe that the Dothan MSA, which is located in the southeastern corner of Alabama near the Florida panhandle and Georgia state line, continues to hold great potential due to its position as a central agricultural trade hub, its accessibility to large distribution centers, it being home to several large corporations, and what we believe to be a low level of personalized banking services provided by other financial institutions in the area. The Dothan area is home to facilities of several large corporations, including Michelin, Pemco World Aviation, International Paper, Globe Motors and AAA Cooper Transportation. Additionally, the agriculture and agribusiness industries are thriving in the Dothan MSA, and the area is home to many successful farmers and related businesses. In addition, the nearby agricultural communities in northwest Florida and southwest Georgia often use Dothan as their agricultural trade hub. We believe the existence of these industries and the continuing growth in the area allows an opportunity for the bank to increase its presence and penetration in this market. Pensacola. In April 2011, we opened our first office outside of Alabama in Pensacola, Florida, which is located in the Florida panhandle approximately 50 miles east of Mobile, Alabama, and 40 miles west of Fort Walton, Florida. The Pensacola and northwest Florida economies are driven by the tourism, military, health services, and medical technology industries. Six major military bases are located in northwest Florida: Eglin Air Force Base, Hurlburt Field, Pensacola Whiting Field, Naval Air Station Pensacola, Naval Air Station Panama City and Tyndall Air Force Base. Other major employers in the area include Sacred Heart Health Systems, Baptist Healthcare, West Florida Regional Medical Center, Gulf Power Company (Southern Company), the University of West Florida, International Paper, Ascend Performance Materials (Solutia), GE Wind Energy, Armstrong World Industries and Wayne Dalton Corporation. The Pensacola Bay area is also home to the Andrews Institute for Orthopaedics and Sports Medicine, a world-leading surgical and research center for human performance enhancement. Although this market was negatively impacted by the recent economic downturn, we believe this area has significant long-term growth potential. Mobile. In July 2012, we opened a loan production office in Mobile, Alabama and, in May 2013, converted the location to a full-service banking office. The Mobile MSA is located in southwest Alabama approximately 31 miles from the Gulf of Mexico and is the largest metropolitan area along the Gulf between New Orleans, Louisiana and Tampa, Florida. The Mobile Bay region has over 23,000 businesses and is a center for finance, healthcare, education, manufacturing, transportation, construction, distribution, retail, trade and technology. With its strategic location, the Port of Mobile serves as a gateway between the southeastern United States and global destinations, and is served by 12 shipping lines offering service throughout the world. Virtually every service for the maritime industry can be found in this 310-plus-year old port city. The aviation/aerospace industry is another of the area s strong, growing industry sectors. A former U.S. Air Force base located on Mobile Bay near downtown Mobile, Brookley Aeroplex has been transformed into a leading 1,700-acre industrial and trade aeroplex with deepwater port access and the capability of landing the Space Shuttle on one of its runways. The Mobile area is also served by five national Class I railroads. Nashville. In April 2013, we opened a loan production office in Nashville, Tennessee, the state s capital. The Nashville MSA is located in central Tennessee and is home to over 1.8 million people and 40,000 businesses. Nashville, known as the "Music City" for its country music heritage, is also home to a diverse healthcare industry and is a center for manufacturing, transportation and technology in the area. Nashville has more than 250 healthcare companies headquartered in the region, including 16 publicly traded healthcare companies with combined employment of nearly 400,000 and $70 billion in global revenue. The Nashville area is also considered a transportation hub, as it is one of only 12 U.S. cities with three major intersecting interstate highways. Notable companies with corporate headquarters in Nashville include HCA Holdings, Nissan North America, Dollar General Corporation, Asurion and Community Health Systems. Although we only recently opened our loan production facility in Nashville, we believe the market has great potential. We compete with other retail and commercial banks and financial institutions in our markets. Although some of these institutions may attract customers and business by offering products at prices that do not achieve the returns we desire, we believe we can continue to compete effectively with these institutions by providing a wide array of financial products, depending on our reputation for greater personal service and flexibility, and making credit and other decisions promptly by utilizing our decentralized decision-making process. Our Management Team Led by Tom Broughton, our senior management team, board of directors and non-voting advisory boards have substantial business interests in the markets that we serve. We believe that our management and board s incentives are closely aligned with our stockholders through the ownership of a substantial amount of our stock. Our executive officers and board of directors own an aggregate of 1,141,296 shares of our common stock, including options to purchase shares of our common stock, or approximately 13.95% of the fully-diluted amount of our common stock outstanding, which percentage is not expected to materially change as a result of the offering. The combination of experienced leadership and stock ownership contribute to our culture of success, which we believe builds on itself and allows us to continue to attract and hire top-quality talent in each of our markets. The five members of our senior management team, each of whom is described in more detail below, have an average of 36 years of banking experience. Thomas "Tom" A. Broughton, III: President and Chief Executive Officer. Mr. Broughton has served as our President and Chief Executive Officer since 2007 and as President and Chief Executive Officer of the bank since 2005. Mr. Broughton has over 30 years of extensive banking experience in Alabama, particularly in Birmingham. In 1985, Mr. Broughton was an organizer and President of First Commercial Bank in Birmingham. First Commercial Bank was acquired by Synovus Financial in 1992. Mr. Broughton continued as President and was named Chief Executive Officer of First Commercial Bank following its acquisition by Synovus Financial. Starting in 1992, Mr. Broughton served in a number of positions at Synovus Financial, including as regional Chief Executive Officer for Alabama, Tennessee and parts of Georgia, until his retirement from Synovus Financial in 2004. Prior to founding First Commercial Bank, Mr. Broughton was a supervisor of several commercial lending departments of large banks in Birmingham. In 2009, Mr. Broughton was named American Banker s 2009 Community Banker of the Year. Clarence C. Pouncey, III: Executive Vice President and Chief Operating Officer. Mr. Pouncey has served as our Executive Vice President and Chief Operating Officer since 2007 and Executive Vice President and Chief Operating Officer of the bank since November 2006. Prior to joining the bank, Mr. Pouncey was employed by SouthTrust Bank (subsequently, Wachovia Bank and now Wells Fargo Bank) at its corporate headquarters in Birmingham, in various capacities from 1978 to 2006, most recently as the Senior Vice President and Regional Manager of Real Estate Financial Services. During his employment with SouthTrust, Mr. Pouncey oversaw various operational and production functions in its nine-state footprint of Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia, and while employed by Wachovia, Mr. Pouncey oversaw various operational and production functions in Alabama, Arizona, Tennessee and Texas. William "Bud" M. Foshee: Executive Vice President and Chief Financial Officer. Mr. Foshee has served as our Executive Vice President, Chief Financial Officer, Treasurer and Secretary since 2007 and as Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the bank since 2005. Mr. Foshee served as the Chief Financial Officer of Heritage Financial Holding Corporation, a publicly traded bank holding company headquartered in the Huntsville MSA, from 2002 until it was acquired in 2005. Mr. Foshee is a Certified Public Accountant. Rodney E. Rushing: Executive Vice President and Executive for Correspondent Banking. Mr. Rushing has served as the Executive Vice President and Executive for Correspondent Banking for us and the bank since 2011. Prior to joining us, Mr. Rushing was employed at BBVA Compass from 1982 to 2011, most recently serving as Executive Vice President of Correspondent Banking. At the time of his departure in March 2011, the correspondent banking division of BBVA Compass provided correspondent banking services to over 600 financial institutions with total fundings in excess of $2 billion. Don Owens: Senior Vice President and Chief Credit Officer. Mr. Owens has served as the Senior Vice President and Chief Credit Officer for us and the bank since 2012. Prior to joining us, Mr. Owens served as a retail branch manager of First Alabama Bank from 1973 to 1978, worked for C&I Bank (now Bank of America) from 1978 to 1982, including as a branch manager and commercial lender, worked for Republic Bank (now Bank of America) from 1982 to 1988, including as a commercial lender and credit administrator, and served as a Senior Vice President and Senior Loan Administrator for BBVA Compass from 1988 to 2012. In addition to our senior management team, our co-founder, Stanley "Skip" M. Brock, has served as our Chairman of the Board and a director since 2007 and has served as Chairman of the Board and a director of the bank since its inception in May 2005. He has served as President of Brock Investment Company, Ltd., a private venture capital firm, since its formation in 1995. Prior to 1995, Mr. Brock practiced corporate law for 20 years with one of the largest law firms based in Birmingham, Alabama. Mr. Brock also served as a director of Compass Bancshares, Inc., a publicly traded bank holding company, from 1992 to 1995. Mr. Brock s experience as a director of a public company, a corporate lawyer and private investor provides him with a background that we believe is valuable to our success. We also have hired key management employees for all of the bank s offices, whom we believe have substantial banking experience and strong relationships in their respective markets. As part of our operating strategy, we believe that it is vital to our growth and prospects that we hire the highest-quality bankers in each of our markets. Our regional chief executive officers are empowered to implement our business strategy and make many key business decisions without the need for approval from our senior management team. Our regional chief executive officers and other officers and employees are also incentivized with stock ownership in the Company. Our board is comprised of a number of business leaders in Alabama, including Messrs. Broughton and Brock. In addition to our and the bank s boards of directors, which are identical in composition, the bank also has a non-voting advisory board of directors in each of the Huntsville, Montgomery, Dothan and Mobile, Alabama and Pensacola, Florida markets. These directors and advisory directors represent a wide array of business experience and community involvement in the market areas where they live. As residents of our primary service areas, they are sensitive and responsive to the needs of our customers and potential customers. In addition, our directors and advisory directors bring substantial business and banking contacts to us. For additional information on our management team, see the section titled "Management" beginning on page 74. Our Financial Performance As a direct result of our simple community, commercial bank strategy, the quality and depth of our employee base, and the economic health and strength of our markets, we have consistently delivered some of the strongest performance metrics in community banking. We measure our success in three primary categories: growth attributes, balance sheet quality and return metrics. All three of these categories are interdependent and equally important in our view of building value for our stockholders. Within each focal category, we identify key drivers of performance and measure our results, which guide our views of success with respect to the implementation of our business plan. While we hold ourselves to high standards of performance with respect to stockholder returns, we also measure our performance against all community banks with total assets between $1 billion and $50 billion, a subset of high performing commercial banks determined by returns on average assets and average equity and asset quality, and a peer group comprised of commercial banks with similar lending focuses. More specifically, our comparative financial performance analysis described in this prospectus measures our results in relation to: The nationwide community commercial banking industry (defined as all publicly traded and privately held commercial bank holding companies with total assets between $1 billion and $50 billion)(1), A group of 10 high performing publicly traded community commercial bank holding companies in the U.S.(2) as measured by returns on average assets and average common equity, coupled with low ratios of non-performing assets to total assets, and A group of 10 publicly traded community commercial bank holding companies in the U.S. with high levels of commercial and industrial loans as a percentage of their total loan portfolios. (3) (1)Our selected nationwide community bank holding company group (Nationwide Community BHC) consists of the 437 commercial bank holding companies throughout the U.S. with total assets between $1 billion and $50 billion. (2)Our selected peer group of 10 high performing community commercial bank holding companies (High Performing Peer Group) consists of: Bank of the Ozarks, Inc. (OZRK), Wilshire Bancorp, Inc. (WIBC), City Holding Co. (CHCO), Westamerica Bancorp. (WABC), Eagle Bancorp, Inc. (EGBN), Lakeland Financial Corp. (LKFN), German American Bancorp. Inc. (GABC), Southside Bancshares, Inc. (SBSI), Bryn Mawr Bank Corp. (BMTC), S.Y. Bancorp, Inc. (SYBT). (3)Our selected group of 10 community commercial bank holding companies with high levels of commercial and industrial loans (High C&I Concentration Peer Group) consists of: City National Corp. (CYN), SVB Financial Group (SIVB), East West Bancorp, Inc. (EWBC), Cullen/Frost Bankers, Inc. (CFR), UMB Financial Corp. (UMBF), PrivateBancorp, Inc. (PVTB), Texas Capital Bancshares, Inc. (TCBI), Pinnacle Financial Partners (PNFP), First NBC Bank Holding Co. (NBCB), Lakeland Financial Corp. (LKFN). Growth Attributes: Since our inception, our business strategy has resulted in growth rates that outpace most of our competitors and peers. As shown in Table 1, our growth results have exceeded most of the broad banking industry as well as the results produced by our two selected peer groups. Some of the key growth attributes we follow closely in measuring our success include: Growth of deposits, especially growth of core deposits and, more specifically, growth of non-interest bearing deposits, Growth of loans, especially growth of our focus areas of lending such as commercial and industrial credit, Growth of net income, with an eye toward recurring earnings streams, rather than one-time or non-recurring income sources, and Growth of earnings per share, understanding the connection between our earnings per share results, our net income results and our capital needs. TABLE 1: Growth Attributes Nationwide High Performing High C&I ServisFirst Community Nationwide Peer Concentration Bancshares, Inc. BHC Rank(1) Group Median Peer Group Median Five Year Compounded Annual Growth Rate(2): Total Deposits 23.8% 10 9.7% 12.3% Non-interest Bearing Deposits 39.9% 18 17.7% 28.9% Gross Loans 24.2% 5 7.1% 7.5% Commercial & Industrial Loans 31.4% 8 2.5% 11.0% Net Income Available to Common Stockholders 42.5% 27 13.1% 13.6% Diluted Earnings Per Common Share 34.1% — 9.4% 7.1% Source: SNL Financial, Inc. (1)Rankings based on highest to lowest growth rates. (2)Five year period ended December 31, 2013. Balance Sheet Quality: Also since our inception, we have focused on building a high quality balance sheet capable of delivering strong earnings streams, while protecting and growing our stockholders equity. We have assembled a fulsome risk management function that allows us to monitor our balance sheet liquidity, loan quality and exposure to interest rates, while providing our regional chief executive officers and their lending teams latitude to grow customer relationships and deliver a competitive array of commercial banking services. As evidenced by our growth rates, we have succeeded in building both sides of our balance sheet, with loans and deposits garnering equal focus from our management team, resulting in a strong loan to deposit ratio. Since 2007 and throughout the economic downturn, even while operating as a smaller bank with a more limited geographic reach and greater pressure on operating expense levels due to size, our focus on credit quality and risk management allowed us to maintain profitability in every quarter. Our emphasis on gathering core deposits to fund our balance sheet growth drives, in large part, our success in delivering earnings alongside the expansion of our assets and liabilities. We closely measure and monitor our asset quality metrics and proactively manage our lending risk while providing appropriate loan loss reserves. Our historical loss experience in our lending businesses has been low and our ratios of allowance for loan losses as a percentage of our problem assets are in line with peers of similarly high quality lending institutions. Our expertise in commercial and industrial, or C&I, lending also has driven strong returns throughout the downturn in the national and regional economies. While many community banks have increased lending efforts in commercial and industrial areas, our company has always held this focus and expertise in C&I lending based on our bankers extensive experience. We believe this institutional knowledge and experience will continue to drive our ability to grow a high quality loan portfolio, and compete effectively against both larger and smaller banks. As shown in Table 2, our balance sheet strength is highlighted by our mix of stable and low cost funding sources, the composition of our loan portfolio and our low levels of troubled assets. Some of the key balance sheet quality metrics we follow closely in measuring our success include: Deposit composition, especially our success in building non-interest bearing deposits and our non-reliance on certificates of deposit as funding sources, Loan portfolio composition, especially our mix of commercial and industrial loans as a percentage of our total loans, and Asset quality metrics and coverage ratios, especially our non-performing asset levels as a percentage of our total assets and our allowance for loan losses as a percentage of our troubled loans. TABLE 2: Balance Sheet Quality Nationwide High Performing High C&I ServisFirst Community Nationwide Peer Concentration Bancshares, Inc. BHC Rank Group Median Peer Group Median As of December 31, 2013: Non-interest Bearing Deposits / Total Deposits (1) 21.5% 206 20.5% 27.5% Certificates of Deposit / Total Deposits (2) 13.7% 73 21.7% 11.0% Gross Loans / Total Deposits (1) 94.7% 61 90.6% 87.1% Commercial & Industrial Loans / Gross Loans (1) 44.7% 22 13.3% 37.6% Non-performing Assets / Total Assets (3) 0.64% 121 0.83% 0.50% Allowance for Loan Losses / Total Non-accrual Loans (1) 319% 94 170% 240% Source: SNL Financial, Inc. (1)Ranking for comparison to Nationwide Community BHC group based on highest to lowest percentages. (2)Ranking for comparison to Nationwide Community BHC group is based on lowest to highest percentages. (3)Ranking for comparison to Nationwide Community BHC group is based on lowest to highest percentages; non-performing assets are defined as non-accrual loans, plus loans 90-days past due, plus other real estate owned. Return Metrics: Since the founding of our bank, our Board of Directors and senior management team have strived to produce the highest return levels in our industry, while maintaining risk controls and superior balance sheet metrics. Many institutions have sacrificed returns on their capital for more aggressive growth metrics, either organically or through acquisitions. Conversely, many institutions have foregone growth opportunities to focus on what they believe to be attractive return metrics. We view our company as somewhat rare in our industry, having married the two concepts through the execution of our simple business model carried out by teams of the best bankers in our attractive markets. We have resisted the pressures to grow our loan portfolio at the expense of greater credit risk, or to support our asset growth with a less attractive funding mix. Our disciplined strategy is to compete aggressively for the top borrowers in our markets based on superior customer service and a full suite of commercial banking products, rather than to lend uneconomically from the standpoint of credit, loan structure or loan pricing. Our strategy has also fundamentally focused our bankers on gathering core deposit accounts and serving our deposit customers with tailored deposit products and state-of-the-art technology. While we routinely review opportunities to increase our non-interest and fee income, we continue to believe our capital is more effectively utilized in focusing our efforts on our core community, commercial bank products and services. We believe the efficiency of our business model has been, and will continue to be, one of our greatest strengths. With an average branch size of $253 million in deposits ($341 million for those that have been open at least three years) as of March 31, 2014, we are able to generate significant revenue relative to our employee base, while investing significantly in our support and operational systems, including our technology capabilities, our compliance and oversight capabilities and our lending and deposit services. As the community, commercial banking industry continues to evolve and embraces ongoing changes in technology and communications, we believe we are well positioned to continue to grow our high quality balance sheet and gather new customers while addressing the rapidly changing environment of regulatory and operational oversight. We believe our efficient model is scalable and will allow us to achieve strong financial performance metrics while increasing our stockholder value. As shown in Table 3, the efficiency of our business model has resulted in attractive financial performance results. Some of the key return metrics we follow closely in measuring our success include: Returns on average common equity and assets, which, alongside growth of earnings, we believe represent global measures of success in community banking, Efficiency measures, including our expense ratios and our revenue per full-time employee, and Net interest margin, with a focus on our cost of deposits. TABLE 3: Return Metrics Nationwide High Performing High C&I ServisFirst Community Nationwide Peer Concentration Bancshares, Inc. BHC Rank Group Median Peer Group Median For the Year Ended December 31, 2013 : Return on Average Common Equity (1) 18.30% 9 12.88% 9.96% 3-Year Average 18.24% 7 13.03% 9.83% Return on Average Assets (1) 1.32% 38 1.33% 0.99% 3-Year Average 1.25% 48 1.20% 1.00% Efficiency Ratio (2) 38.8% 9 54.0% 55.4% 3-Year Average 41.9% 11 54.2% 58.4% Non-interest Expense / Average Assets (3) 1.51% 12 2.68% 2.45% 3-Year Average 1.65% 13 2.66% 2.51% Revenue per FTE (4) $519.4 11 $217.7 $307.9 Cost of Total Deposits (5) 0.44% 284 0.30% 0.22% Net Interest Margin (6) 3.80% 146 3.80% 3.20% Source: SNL Financial, Inc. (1)Ranking for comparison to Nationwide Community BHC group is based on highest to lowest percentages. (2)Defined as total non-interest expense divided by the sum of non-interest income and net interest income; ranking for comparison to Nationwide Community BHC group is based on lowest to highest percentages. (3)Ranking for comparison to Nationwide Community BHC group is based on lowest to highest percentages. (4)Defined as the sum of interest income and non-interest income divided by the number of full time equivalent employees at period end; ranking for comparison to Nationwide Community BHC group is based on highest to lowest percentages; dollars in thousands. (5)Defined as total interest expense on deposits divided by average deposits for the period; ranking for comparison to Nationwide Community BHC group is based on lowest to highest percentages. (6)Defined as net interest income divided by average earning assets for the period; ranking for comparison to Nationwide Community BHC group is based on highest to lowest percentages. We believe the development of our efficient delivery system and our business model over the last nine years significantly benefits our ability to continue to produce high return growth metrics in the future. We believe our scalable business model and lack of legacy challenges faced by many of our older competitors and peers, including less efficient branch systems highlighted by smaller average deposit sizes per branch, will provide us opportunities to focus our efforts on continuing to outperform the broad community banking markets, positioning us as one of the best performing companies in our industry. Our Franchise Strengths and Competitive Position Experienced Board and Senior Management Team. Our senior management team, led by Mr. Broughton, is comprised of seasoned professionals, with an average of 36 years of banking experience. Many of our management team members have extensive experience working together at other financial institutions and have successfully executed operating business models similar to ours in the past. We believe that our management and board s incentives are closely aligned with our stockholders through the ownership of a substantial amount of our stock. The combination of experienced leadership and stock ownership contribute to our culture of success, which we believe builds on itself and allows us to continue to attract and hire top-quality talent in each of our markets. Significant Historical Growth Coupled with Strong Profitability. We have grown from total assets of approximately $1.6 billion as of December 31, 2009, to total assets of approximately $3.5 billion as of December 31, 2013. From our original location in Birmingham, we have grown to 13 locations in seven markets. At the same time, our focus on credit quality, customer service and operating efficiency has allowed us to increase our earnings per share from $1.02 as of December 31, 2009, to $5.69 as of December 31, 2013. Simple, Customer-Focused Business Model. Our principal business is to accept deposits from the public and make loans and other investments. We emphasize competitive products, state of the art technology and a focus on quality service. Our management and employees focus on recognizing customers needs and delivering products and services to meet those needs. While many large regional competitors and national banks have chosen to develop non-traditional business lines to supplement their net interest income, we believe our business model of focusing on traditional commercial banking products driven by a high margin delivery system is a superior method to drive returns to our stockholders. Efficient Operations and High-Capacity, Scalable Operating Platform. We have a corporate culture of expense control. At the same time, we have made significant investments in our infrastructure and technology that, when combined with our operating efficiency, create a scalable platform for future growth. Our core systems have significant capacity to deliver comprehensive commercial products and services. We have made other significant investments in financial reporting and servicing systems. We believe we have created a technology platform that will allow us to compete effectively with our competitors. Corporate Structure Designed With The Customer in Mind. We empower our local bankers to make local decisions, supported by centralized risk and credit technology and resources so that our bankers can focus on customer service. Our goal in each market is to employ the highest quality bankers to implement our operating strategy, grow our customer base and provide the highest level of customer service possible. We focus on an in-market geographic model of organizational structure as opposed to a line of business model employed by most regional banks. This structure gives significant responsibility and accountability to our regional chief executive officers, which we believe results in superior customer service. Additional Information Our principal executive office is located at 850 Shades Creek Parkway, Suite 200, Birmingham, Alabama 35209, and our telephone number is (205) 949-0302. Our website is www.servisfirstbank.com. The information contained on our website is not a part of, or incorporated by reference into, this prospectus. THE OFFERING Securities offered by us 625,000 shares of common stock. Underwriter purchase option 93,750 shares of common stock. Common shares outstanding after completion of the offering 8,174,812 shares of common stock, assuming the underwriters do not exercise their purchase option.(1) Securities owned by directors and executive officers Our directors and executive officers own 1,141,296 shares of our common stock, including options to purchase shares of our common stock, or 13.95% of the fully-diluted amount of our common stock outstanding. We expect that our directors and executive officers will purchase approximately 26,000 shares of our common stock in the offering. Use of proceeds Assuming an initial public offering price of $92.00 per share, which is the midpoint of the offering price set forth on the cover page of this prospectus, we estimate that the net proceeds to us from the sale of our common stock in this offering will be $53.1 million (or $61.2 million if the underwriters exercise in full their purchase option), after deducting estimated underwriting discounts and offering expenses. We intend to use the net proceeds to us generated by this offering for general corporate purposes. Although we may, from time to time in the ordinary course of business, evaluate potential acquisition opportunities that we believe are complementary to our business and provide attractive risk-adjusted returns, we do not have any immediate plans, arrangements or understandings relating to any material acquisition. For additional information, see "Use of Proceeds." Dividends We are a legal entity separate and distinct from our bank. Our principal source of revenue consists of dividends from our bank. The payment of dividends by our bank is subject to various regulatory requirements. On September 19, 2013, we announced the approval of the initiation of quarterly cash dividends beginning in 2014. The first quarterly cash dividend of $0.15 per share was paid on April 15, 2014 to stockholders of record as of April 8, 2014. Any future determination to pay dividends on our common stock will be made by our board of directors and will depend upon our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy and other factors that our board deems relevant. For additional information, see "Dividend Policy." Proposed Nasdaq Global Market symbol We have applied to list our common stock on the Nasdaq Global Market under the symbol "SFBS." Risk factors Investing in our common stock involves risks. See "Risk Factors," beginning on page 19, for a discussion of certain factors that you should carefully consider before making an investment decision. (1)References in this section to the number of shares of our common stock outstanding after this offering are based on 7,549,812 shares of our common stock issued and outstanding as of April 14, 2014. Unless otherwise noted, these references exclude: 614,500 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $26.50 per share (of which options to purchase 243,744 shares have vested); 198,170 shares of common stock reserved for issuance in connection with stock awards that remain available for issuance under our 2005 Amended and Restated Stock Incentive Plan and our 2009 Amended and Restated Stock Incentive Plan; and 15,000 shares of common stock issuable upon the exercise of warrants issued to certain accredited investors at a price of $25.00 per share in connection with issuance of our 8.25% subordinated note due June 1, 2016, which note has been paid off in full. SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION You should read the selected historical consolidated financial and operating data set forth below in conjunction with the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization," as well as the consolidated financial statements and the related notes included elsewhere in this prospectus. Except for the data under "Selected Performance Ratios," "Core Performance Data," "Asset Quality Ratios," "Selected Balance Sheet Ratios," "Capital Adequacy Ratios" and "Growth Ratios," the selected historical consolidated financial data, other than "Selected Balance Sheet Data," as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 is derived from our audited financial statements included elsewhere in this prospectus, the selected historical consolidated financial data, other than "Selected Balance Sheet Data," as of and for the quarters ended March 31, 2014 and 2013 is derived from our unaudited financial statements incorporated by reference in this prospectus, and the historical consolidated financial data as of and for the years ended December 31, 2010 and 2009 and the "Selected Balance Sheet Data"as of December 31, 2011 is derived from our audited financial statements not included in this prospectus. As of and for the years ended December 31, As of and for the quarters ended March 31, 2009 2010 2011 2012 2013 2013 2014 (Dollars in thousands except for share and per share data) Selected Balance Sheet Data: Total assets $ 1,573,497 $ 1,935,166 $ 2,460,785 $ 2,906,314 $ 3,520,699 $ 2,861,758 $ 3,572,914 Loans, net 1,192,173 1,376,741 1,808,712 2,336,924 2,828,205 2,434,475 2,906,069 Total securities 256,098 282,193 309,018 259,844 298,494 262,103 309,475 Deposits 1,432,355 1,758,716 2,143,887 2,511,572 3,019,642 2,423,534 3,031,041 Other borrowings 24,922 24,937 84,219 136,982 194,320 173,846 215,711 Subordinated debentures 15,228 30,420 30,514 15,050 - - - Stockholders equity 97,622 117,100 196,292 233,257 297,192 257,547 312,283 Selected Income Statement Data: Net interest income $ 43,860 $ 62,886 $ 75,331 $ 94,122 $ 112,462 $ 25,901 $ 30,849 Provision for loan losses 10,685 10,350 8,972 9,100 13,008 4,284 2,314 Net interest income after provision for loan losses 33,175 52,536 66,359 85,022 99,454 21,617 28,535 Non-interest income 4,413 5,169 6,926 9,643 10,010 2,797 2,175 Non-interest expense 28,930 30,969 37,458 43,100 47,489 10,752 13,723 Income before income taxes 8,658 26,736 35,827 51,565 61,975 13,662 16,987 Net income available to common stockholders 5,878 17,378 23,238 34,045 41,201 9,151 11,656 Per Common Share Data: Net income, basic $ 1.07 $ 3.15 $ 4.03 $ 5.68 $ 6.00 $ 1.44 $ 1.58 Net income, diluted 1.02 2.84 3.53 4.99 5.69 1.31 1.52 Tangible book value per share 17.71 21.19 26.35 30.84 35.00 31.54 36.19 Weighted average shares outstanding: Basic 5,485,972 5,519,151 5,759,524 5,996,437 6,869,071 6,341,605 7,399,992 Diluted 5,787,643 6,294,604 6,749,163 6,941,752 7,268,675 7,076,505 7,661,890 Actual common shares outstanding 5,513,482 5,527,482 5,932,182 6,268,812 7,350,012 6,897,812 7,524,812 Selected Performance Ratios: Return on average assets (1) 0.43 % 1.04 % 1.12 % 1.31 % 1.32 % 1.32 % 1.36 % Return on average stockholders' equity (2) 6.33 % 15.86 % 14.86 % 15.99 % 15.70 % 15.29 % 15.63 % Return on average common stockholders' equity 6.33 % 15.86 % 17.01 % 19.41 % 18.30 % 18.07 % 17.83 % Net interest margin (3) 3.31 % 3.94 % 3.79 % 3.80 % 3.80 % 3.92 % 3.80 % Non-interest income to average assets 0.32 % 0.31 % 0.33 % 0.37 % 0.32 % 0.40 % 0.25 % Non-interest expense to average assets 2.10 % 1.85 % 1.79 % 1.64 % 1.51 % 1.53 % 1.59 % Efficiency ratio (4) 59.93 % 45.51 % 45.54 % 41.54 % 38.78 % 37.47 % 41.56 % Core Performance Data (5): Core net income available to common stockholders $ 12,113 Core earnings per share, basic $ 1.64 Core earnings per share, diluted $ 1.58 Core return on average assets 1.42 % Core return on average stockholders equity 16.23 % Core return on average common stockholders equity 18.52 % Core non-interest expense to average assets 1.51 % Core efficiency ratio 39.43 % Asset Quality Ratios: Non-performing loans to total loans 1.01 % 1.03 % 0.75 % 0.44 % 0.34 % 0.99 % 0.31 % Non-performing assets to total assets (6) 1.57 % 1.10 % 1.06 % 0.69 % 0.64 % 1.13 % 0.53 % Allowance for loan losses to total gross loans 1.24 % 1.30 % 1.20 % 1.11 % 1.07 % 1.12 % 1.08 % Allowance for loan losses to total non-performing loans 120.91 % 126.00 % 159.96 % 253.50 % 314.94 % 114.07 % 345.09 % Net charge-offs to average loans outstanding 0.60 % 0.55 % 0.32 % 0.24 % 0.33 % 0.49 % 0.17 % Selected Balance Sheet Ratios: Gross loans to total deposits 84.27 % 79.31 % 85.39 % 94.09 % 94.68 % 101.59 % 96.92 % Non-interest bearing deposits to total deposits 14.75 % 14.24 % 19.54 % 21.71 % 21.54 % 20.95 % 21.87 % Certificates of deposit to total deposits 17.73 % 15.83 % 17.91 % 15.75 % 13.73 % 16.31 % 13.42 % Capital Adequacy Ratios: Tangible common equity to tangible assets 6.20 % 6.05 % 6.35 % 6.65 % 7.31 % 7.61 % 7.62 % Tangible equity to tangible assets 6.20 % 6.05 % 7.98 % 8.03 % 8.44 % 9.00 % 8.74 % Tier 1 leverage ratio (7) 6.97 % 7.77 % 9.17 % 8.43 % 8.48 % 8.80 % 8.81 % Tier 1 common capital ratio 7.69 % 8.06 % 7.76 % 7.63 % 8.64 % 8.35 % 8.89 % Tier 1 capital ratio (8) 8.89 % 10.22 % 11.39 % 9.89 % 10.00 % 9.93 % 10.22 % Total risk-based capital ratio (9) 10.48 % 11.82 % 12.79 % 11.78 % 11.73 % 11.82 % 11.94 % Growth Ratios: Percentage change in assets 35.38 % 22.99 % 27.16 % 18.11 % 21.14 % 13.05 % 24.85 % Percentage change in net loans 24.49 % 15.48 % 31.38 % 29.20 % 21.02 % 28.47 % 19.37 % Percentage change in deposits 38.08 % 22.78 % 21.90 % 17.15 % 20.23 % 10.70 % 25.07 % Percentage change in common equity 12.49 % 19.95 % 33.50 % 23.64 % 33.08 % 31.53 % 25.08 % Percentage change in net income (16.09 )% 195.64 % 34.87 % 46.96 % 20.82 % 12.05 % 27.10 % Percentage change in diluted net income per share (22.14 )% 178.43 % 24.30 % 41.36 % 14.03 % 9.17 % 16.03 % (1) Return on average assets is defined as net income divided by total average assets. (2) Return on average stockholders equity is defined as net income divided by average stockholders equity. (3) Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest earning assets and interest rate paid on interest bearing liabilities, divided by average earning assets. (4) Efficiency ratio is the result of non-interest expense divided by the sum of net interest income and non-interest income. (5) Core metrics exclude a non-routine expense in the first quarter of 2014 related to the correction to the accounting policy for options granted to our regional advisory boards. For a reconciliation of these non- GAAP measures to the most comparable GAAP measure, see "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures." None of the other periods included in our selected consolidated financial information are affected by this correction. (6) Non-performing assets are defined as non-accrual loans plus loans 90-days past due plus other real estate owned. (7) Total stockholders' equity excluding unrealized losses on securities available for sale, net of taxes, and intangible assets divided by average assets less intangible assets. (8) Total stockholders' equity excluding unrealized gains/(losses) on securities available for sale, net of taxes, and intangible assets divided by total risk-weighted assets. (9) Total stockholders' equity excluding unrealized gains/(losses) on securities available for sale, net of taxes, and intangible assets plus allowance for loan losses (limited to 1.25% of risk-weighted assets) divided by total risk-weighted assets. GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial data included in our selected consolidated financial information are not measures of financial performance recognized by generally accepted accounting principles in the United States, or GAAP. These non-GAAP financial measures are "tangible book value per share," "tangible common equity to tangible assets" and "tangible equity to tangible assets." Our management uses these non-GAAP financial measures in its analysis of our performance. "Tangible book value per share" is defined as total stockholders equity, excluding preferred stock, less intangible assets divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets. "Tangible common equity to tangible assets" – Tangible common equity is defined as total stockholders equity, excluding preferred stock, less intangible assets, and tangible assets are calculated as total assets less intangible assets. "Tangible equity to tangible assets" is defined as the ratio of stockholders equity reduced by goodwill divided by total assets reduced by goodwill. This measure is important to many investors who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures: December 31, March 31, 2009 2010 2011 2012 2013 2013 2014 Total stockholders' equity-GAAP $ 97,622 $ 117,100 $ 196,292 $ 233,257 $ 297,192 $ 257,547 $ 312,283 Adjustments: Preferred equity - - 39,958 39,958 39,958 39,958 39,958 Goodwill and other intangibles - - - - - - - Tangible common equity 97,622 117,100 156,334 193,299 257,234 217,589 272,325 Shares outstanding 5,513,482 5,527,482 5,932,182 6,268,812 7,350,012 6,897,812 7,524,812 Tangible book value per share $ 17.71 $ 21.19 $ 26.35 $ 30.84 $ 35.00 $ 31.54 $ 36.19 Total assets - GAAP $ 1,573,497 $ 1,935,166 $ 2,460,785 $ 2,906,314 $ 3,520,699 $ 2,861,758 $ 3,572,914 Adjustments: Goodwill and other intangibles - - - - - - - Tangible assets 1,573,497 1,935,166 2,460,785 2,906,314 3,520,699 2,861,758 3,572,914 Tangible common equity to tangible assets 6.20 % 6.05 % 6.35 % 6.65 % 7.31 % 7.61 % 7.62 % Total stockholders' equity-GAAP $ 97,622 $ 117,100 $ 196,292 $ 233,257 $ 297,192 $ 257,547 $ 312,283 Adjustments: Goodwill and other intangibles - - - - - - - Tangible equity 97,622 117,100 196,292 233,257 297,192 257,547 312,283 Tangible equity to tangible assets 6.20 % 6.05 % 7.98 % 8.03 % 8.44 % 9.00 % 8.74 % As discussed in more detail in the section titled "Management s Discussion and Analysis of Financial Condition and Results of Operations," we recorded a non-routine expense of $703,000 for the first quarter of 2014 resulting from a correction of our accounting for vested stock options previously granted to members of our advisory boards in our Dothan, Huntsville and Mobile, Alabama markets. This change in accounting treatment is a non-cash item and does not impact our operating activities or cash from operations. The non-GAAP financial measures included in our selected consolidated financial information for the quarter ended March 31, 2014 are "core net income available to common stockholders," "core earnings per share, basic," "core earnings per share, diluted," "core return on average assets," "core return on average stockholders equity," "core return on average common stockholders equity," "core non-interest expense to average assets" and "core efficiency ratio." Each of these eight core financial measures excludes the impact of the $703,000 non-routine expense attributable to the correction of our accounting for vested stock options. None of the other periods included in our selected consolidated financial information are affected by this correction. "Core net income available to common stockholders" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense. "Core earnings per share, basic" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense, divided by weighted average basic shares outstanding. "Core earnings per share, diluted" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense, divided by weighted average diluted shares outstanding. "Core return on average assets" is defined as net income, adjusted by the net effect of the non-routine expense, divided by average total assets. "Core return on average stockholders equity" is defined as net income, adjusted by the net effect of the non-routine expense, divided by average stockholders equity. "Core return on average common stockholders equity" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense, divided by average common stockholders equity. "Core non-interest expense to average assets" is defined as non-interest expense, adjusted by the non-routine expense, divided by average total assets. "Core efficiency ratio" is defined as non-interest expense, adjusted by the non-routine expense, divided by the sum of net interest income and non-interest income. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our first quarter 2014 financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures for the quarter ended March 31, 2014: For the quarter ended March 31, 2014 (Dollars in Thousands) Non-interest expense to average assets - GAAP 1.59 % Non-interest expense - GAAP $ 13,723 Adjustments: Adjustment for non-routine expense (703 ) Core non-interest expense $ 13,020 Average assets $ 3,500,257 Core non-interest expense to average assets 1.51 % Efficiency ratio - GAAP 41.56 % Net interest income $ 30,849 Non-interest income 2,175 Total net interest income and non-interest income $ 33,024 Core efficiency ratio 39.43 % Provision for income taxes - GAAP $ 5,229 Adjustments: Adjustment for non-routine expense 246 Core provision for income taxes $ 5,475 Return on average assets - GAAP 1.36 % Net income - GAAP $ 11,758 Adjustments: Adjustment for non-routine expense 457 Core net income $ 12,215 Average assets $ 3,500,257 Core return on average assets 1.42 % Return on average stockholders' equity - GAAP 15.63 % Average stockholders' equity $ 305,146 Core return on average stockholders' equity 16.23 % Return on average common stockholders' equity 17.83 % Net income available to common stockholders - GAAP $ 11,656 Adjustments: Adjustment for non-routine expense 457 Core net income available to common stockholders $ 12,113 Average common stockholders' equity $ 265,188 Core return on average common stockholders' equity 18.52 % Earnings per share, basic - GAAP $ 1.58 Weighted average shares outstanding, basic 7,399,992 Core earnings per share, basic $ 1.64 Earnings per share, diluted - GAAP $ 1.52 Weighted average shares outstanding, diluted 7,661,890 Core earnings per share, diluted $ 1.58 RISK FACTORS Investing in our common stock involves a significant degree of risk. You should carefully consider the following risk factors, in addition to the other information contained in this prospectus, before deciding to invest in our common stock. Any of the following risks, as well as risks that we do not know or currently deem immaterial, could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow. As a result, the trading price of our common stock could decline, and you could lose all or part of your investment. Further, to the extent that any of the information in this prospectus constitutes forward-looking statements, the risk factors below also are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. See "Cautionary Note Regarding Forward-Looking Statements" on page 37. Risks Related To Our Business As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions. Our businesses and operations, which primarily consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits and investing in securities, are sensitive to general business and economic conditions in the United States. If the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States. In addition, economic conditions in foreign countries, including uncertainty over the stability of the euro and other currencies, could affect the stability of global financial markets, which could hinder U.S. economic growth. Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines and lower home sales and commercial activity. The current economic environment is also characterized by interest rates at historically low levels, which impacts our ability to attract deposits and to generate attractive earnings through our investment portfolio. All of these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable. Our business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. We are dependent on the services of our management team and board of directors, and the unexpected loss of key officers or directors may adversely affect our business and operations. We are led by an experienced core management team with substantial experience in the markets that we serve, and our operating strategy focuses on providing products and services through long-term relationship managers. Accordingly, our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. If any of our or the bank s executive officers, other key personnel, or directors leaves us or the bank, our operations may be adversely affected. In particular, we believe that Thomas A. Broughton, III, Clarence C. Pouncey, III, and William M. Foshee are extremely important to our success and the success of our bank. Mr. Broughton has extensive executive-level banking experience and is the President and Chief Executive Officer of us and the bank. Mr. Pouncey has extensive operating banking experience and is an Executive Vice President and the Chief Operating Officer of us and the bank. Mr. Foshee has extensive financial and accounting banking experience and is an Executive Vice President and the Chief Financial Officer of us and the bank. If any of Mr. Broughton, Mr. Pouncey or Mr. Foshee leaves his position for any reason, our financial condition and results of operations may suffer. The bank is the beneficiary of a key man life insurance policy on the life of Mr. Broughton in the amount of $5 million. Also, we have hired key officers to run our banking offices in each of the Huntsville, Montgomery, Mobile and Dothan, Alabama markets and the Pensacola, Florida market, who are extremely important to our success in such markets. If any of them leaves for any reason, our results of operations could suffer in such markets. With the exception of the key officers in charge of our Huntsville and Montgomery banking offices, we do not have employment agreements or non-competition agreements with any of our executive officers, including Messrs. Broughton, Pouncey and Foshee. In the absence of these types of agreements, our executive officers are free to resign their employment at any time and accept an offer of employment from another company, including a competitor. Additionally, our directors and advisory board members community involvement and diverse and extensive local business relationships are important to our success. Any material change in the composition of our board of directors or the respective advisory boards of the bank could have a material adverse effect on our business, financial condition, results of operations and prospects. We may not be able to successfully expand into new markets. We have opened new offices and operations in three primary markets (Pensacola, Florida, Mobile, Alabama and Nashville, Tennessee) in the past four years. We may not be able to successfully manage this growth with sufficient human resources, training and operational, financial and technological resources. Any such failure could limit our ability to be successful in these new markets and may have a material adverse effect on our business, financial condition, results of operations and prospects. A prolonged downturn in the real estate market could result in losses and adversely affect our profitability. As of December 31, 2013, approximately 48.3% of our loan portfolio was composed of commercial and consumer real estate loans. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. The recent recession has adversely affected real estate market values across the country and values may continue to decline. A further decline in real estate values could further impair the value of our collateral and our ability to sell the collateral upon any foreclosure, which would likely require us to increase our provision for loan losses. In the event of a default with respect to any of these loans, the amounts we receive upon sale of the collateral may be insufficient to recover the outstanding principal and interest on the loan. If we are required to re-value the collateral securing a loan to satisfy the debt during a period of reduced real estate values or to increase our allowance for loan losses, our profitability could be adversely affected, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future. As a result of our growth over the past several years, approximately 56% of the loans in our loan portfolio were originated during the past two years. In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time, a process referred to as "seasoning." As a result, a portfolio of older loans will usually behave more predictably than a newer portfolio. Because a large portion of our portfolio is relatively new, the current level of delinquencies and defaults may not represent the level that may prevail as the portfolio becomes more seasoned. If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Our high concentration of large loans to certain borrowers may increase our credit risk. Our growth over the last several years has been partially attributable to our ability to originate and retain large loans. Many of these loans have been made to a small number of borrowers, resulting in a high concentration of large loans to certain borrowers. As of December 31, 2013, our 10 largest borrowing relationships ranged from approximately $17.2 million to $21.9 million (including unfunded commitments) and averaged approximately $19.0 million in total commitments. Along with other risks inherent in these loans, such as the deterioration of the underlying businesses or property securing these loans, this high concentration of borrowers presents a risk to our lending operations. If any one of these borrowers becomes unable to repay its loan obligations as a result of economic or market conditions, or personal circumstances, such as divorce or death, our non-performing loans and our provision for loan losses could increase significantly, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Our decisions regarding credit risk could be inaccurate and our allowance for loan losses may be inadequate, which could have a material adverse effect on our business, financial condition, results of operations and future prospects. Our earnings are affected by our ability to make loans, and thus we could sustain significant loan losses and consequently significant net losses if we incorrectly assess either the creditworthiness of our borrowers resulting in loans to borrowers who fail to repay their loans in accordance with the loan terms or the value of the collateral securing the repayment of their loans, or we fail to detect or respond to a deterioration in our loan quality in a timely manner. Management makes various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We maintain an allowance for loan losses that we consider adequate to absorb losses inherent in the loan portfolio based on our assessment of the information available. In determining the size of our allowance for loan losses, we rely on an analysis of our loan portfolio based on historical loss experience, volume and types of loans, trends in classification, volume and trends in delinquencies and non-accruals, national and local economic conditions and other pertinent information. We target small and medium-sized businesses as loan customers. Because of their size, these borrowers may be less able to withstand competitive or economic pressures than larger borrowers in periods of economic weakness. Also, as we expand into new markets, our determination of the size of the allowance could be understated due to our lack of familiarity with market-specific factors. Despite the effects of sustained economic weakness, we believe our allowance for loan losses is adequate. Our allowance for loan losses as of December 31, 2013 was $30.7 million, or 1.07% of total gross loans. If our assumptions are inaccurate, we may incur loan losses in excess of our current allowance for loan losses and be required to make material additions to our allowance for loan losses, which could have a material adverse effect on our business, financial condition, results of operations and prospects. However, even if our assumptions are accurate, federal and state regulators periodically review our allowance for loan losses and could require us to materially increase our allowance for loan losses or recognize further loan charge-offs based on judgments different than those of our management. Any material increase in our allowance for loan losses or loan charge-offs as required by these regulatory agencies could have a material adverse effect on our business, financial condition, results of operations and prospects. If we fail to design, implement and maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Effective internal control over financial reporting is necessary for us to provide reliable reports and prevent fraud. We believe that a control system, no matter how well designed and managed, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We may not be able to identify all significant deficiencies and/or material weaknesses in our internal control in the future, and our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") could have a material adverse effect on our business, financial condition, results of operations and prospects. Our corporate structure provides for decision-making authority by our regional chief executive officers and banking teams. Our business, financial condition, results of operations and prospects could be negatively affected if our employees do not follow our internal policies or are negligent in their decision-making. We attract and retain our management talent by empowering them to make certain business decisions on a local level. Lending authorities are assigned to regional chief executive officers and their banking teams based on their experience. Additionally, all loans in excess of $1.0 million are reviewed by our centralized credit administration department in Birmingham. Moreover, for decisions that fall outside of the assigned authorities, our regional chief executive officers are required to obtain approval from our senior management team. Our local bankers may not follow our internal procedures or otherwise act in our best interests with respect to their decision-making. A failure of our employees to follow our internal policies, or actions taken by our employees that are negligent could have a material adverse effect on our business, financial condition, results of operations and prospects. Our business strategy includes the continuation of our growth plans, and our business, financial condition, results of operations and prospects could be negatively affected if we fail to grow or fail to manage our growth effectively. We intend to continue pursuing our growth strategy for our business through organic growth of our loan portfolio. Our prospects must be considered in light of the risks, expenses and difficulties that can be encountered by financial service companies in rapid growth stages, which include the risks associated with the following: maintaining loan quality; maintaining adequate management personnel and information systems to oversee such growth; maintaining adequate control and compliance functions; and securing capital and liquidity needed to support anticipated growth. We may not be able to expand our presence in our existing markets or successfully enter new markets, and any expansion could adversely affect our results of operations. Our ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth. Failure to manage our growth effectively could adversely affect our ability to successfully implement our business strategy, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Our continued pace of growth may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect our growth and/or our financial condition and results of operations. We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. To support our recent and ongoing growth, we have completed a series of capital transactions during the past three years, including: the sale of 40,000 shares of our senior non-cumulative perpetual preferred stock, Series A, par value $.001 per share (or "Series A Preferred Stock") to the United States Department of the Treasury ("Treasury") in connection with the Treasury s Small Business Lending Fund program, for gross proceeds of $40,000,000 on June 21, 2011; the sale of an aggregate of 340,000 shares of our common stock at $30 per share, or $10,200,000, in a private placement completed on June 30, 2011; the sale of $20,000,000 in 5.5% subordinated notes due November 9, 2022 to accredited investor purchasers in November 2012, the proceeds of which were used to pay off $15,000,000 in our 8.5% subordinated debentures; and the sale of an aggregate of 250,000 shares of our common stock at $41.50 per share, or $10,375,000, in a private placement completed on December 2, 2013. After giving effect to these transactions and this offering, we believe that we will have sufficient capital to meet our capital needs for our immediate growth plans. However, we will continue to need capital to support our longer-term growth plans. If capital is not available on favorable terms when we need it, we will have to either issue common stock or other securities on less than desirable terms or reduce our rate of growth until market conditions become more favorable. Either of such events could have a material adverse effect on our business, financial condition, results of operations and prospects. Competition from financial institutions and other financial service providers may adversely affect our profitability. The banking business is highly competitive, and we experience competition in our markets from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other community banks and super-regional and national financial institutions that operate offices in our service areas. We compete with these other financial institutions both in attracting deposits and in making loans. In addition, we must attract our customer base from other existing financial institutions and from new residents. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to successfully compete with an array of financial institutions in our service areas. Our ability to compete successfully will depend on a number of factors, including, among other things: our ability to build and maintain long-term customer relationships while ensuring high ethical standards and safe and sound banking practices; the scope, relevance and pricing of products and services that we offer; customer satisfaction with our products and services; industry and general economic trends; and our ability to keep pace with technological advances and to invest in new technology. Increased competition could require us to increase the rates that we pay on deposits or lower the rates that we offer on loans, which could reduce our profitability. Our failure to compete effectively in our market could restrain our growth or cause us to lose market share, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Unpredictable economic conditions or a natural disaster in the state of Alabama, the panhandle of the state of Florida or the Nashville, Tennessee MSA may have a material adverse effect on our financial performance. Substantially all of our borrowers and depositors are individuals and businesses located and doing business in our markets within the state of Alabama, the panhandle of the state of Florida and the Nashville, Tennessee MSA. Therefore, our success will depend on the general economic conditions in these areas, and more particularly in Birmingham, Huntsville, Dothan, Montgomery and Mobile, Alabama, Pensacola, Florida and Nashville, Tennessee, which we cannot predict with certainty. Unlike with many of our larger competitors, the majority of our borrowers are commercial firms, professionals and affluent consumers located and doing business in such local markets. As a result, our operations and profitability may be more adversely affected by a local economic downturn or natural disaster in Alabama, Florida or Tennessee, particularly in such markets, than those of larger, more geographically diverse competitors. For example, a downturn in the economy of any of our MSAs could make it more difficult for our borrowers in those markets to repay their loans and may lead to loan losses that we cannot offset through operations in other markets until we can expand our markets further. Our entry into the Pensacola, Florida and Mobile, Alabama markets increased our exposure to potential losses associated with hurricanes and similar natural disasters that are more common on the Gulf Coast than in our other markets. Accordingly, any regional or local economic downturn, or natural or man-made disaster, that affects Alabama, the panhandle of Florida or the Nashville, Tennessee MSA, or existing or prospective property or borrowers in Alabama, the panhandle of Florida or the Nashville, Tennessee MSA may affect us and our profitability more significantly and more adversely than our more geographically diversified competitors, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We encounter technological change continually and have fewer resources than many of our competitors to invest in technological improvements. The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. In addition to serving customers better, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our success will depend in part on our ability to address our customers needs by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we have. We may not be able to implement new technology-driven products and services effectively or be successful in marketing these products and services to our customers. As these technologies are improved in the future, we may, in order to remain competitive, be required to make significant capital expenditures, which may increase our overall expenses and have a material adverse effect on our net income. We depend on our information technology and telecommunications systems and third-party servicers, and any systems failures or interruptions could adversely affect our operations and financial condition. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We outsource many of our major systems, such as data processing, loan servicing and deposit processing systems. For example, Jack Henry & Associates, Inc. provides our entire core banking system through a service bureau arrangement. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. We may bear costs associated with the proliferation of computer theft and cybercrime. We necessarily collect, use and hold data concerning individuals and businesses with whom we have a banking relationship. Threats to data security, including unauthorized access and cyber attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with customer expectations and statutory and regulatory requirements. It is difficult and near impossible to defend against every risk being posed by changing technologies as well as criminals intent on committing cyber-crime. Increasing sophistication of cyber-criminals and terrorists make keeping up with new threats difficult and could result in a breach of our data security. Patching and other measures to protect existing systems and servers could be inadequate, especially on systems that are being retired. Controls employed by our information technology department and third-party vendors could prove inadequate. We could also experience a breach by intentional or negligent conduct on the part of our employees or other internal sources. Our systems and those of our third-party vendors may become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses and malware. A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition and prospects. Our recent results may not be indicative of our future results, and may not provide guidance to assess the risk of an investment in our common stock. We may not be able to sustain our historical rate of growth and may not even be able to expand our business at all. In addition, our recent growth may distort some of our historical financial ratios and statistics. In the future, we may not have the benefit of several factors that were favorable until late 2008, such as a rising interest rate environment, a strong residential housing market or the ability to find suitable expansion opportunities. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. As a small commercial bank, we have different lending risks than larger banks. We provide services to our local communities; thus, our ability to diversify our economic risks is limited by our own local markets and economies. We lend primarily to small to medium-sized businesses, which may expose us to greater lending risks than those faced by banks lending to larger, better-capitalized businesses with longer operating histories. We manage our credit exposure through careful monitoring of loan applicants and loan concentrations in particular industries, and through our loan approval and review procedures. Our use of historical and objective information in determining and managing credit exposure may not be accurate in assessing our risk. Our failure to sustain our historical rate of growth or adequately manage the factors that have contributed to our growth could have a material adverse effect on our business, financial condition, results of operations and prospects. Our directors and executive officers own a significant portion of our common stock and can exert influence over our business and corporate affairs. Our directors and executive officers, as a group, beneficially owned approximately 14.11% of our outstanding common stock as of April 14, 2014. As a result of their ownership, our directors and executive officers will have the ability, by voting their shares in concert, to influence the outcome of all matters submitted to our stockholders for approval, including the election of directors. We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs associated with the ownership of the real property. Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we are exposed to the risks inherent in the ownership of real estate. As of December 31, 2013, we held $12.7 million in other real estate owned. The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to: general or local economic conditions; environmental cleanup liability; neighborhood assessments; interest rates; real estate tax rates; operating expenses of the mortgaged properties; supply of and demand for rental units or properties; ability to obtain and maintain adequate occupancy of the properties; zoning laws; governmental and regulatory rules; fiscal policies; and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate could have a material adverse effect on our business, financial condition, results of operations and prospects. Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability. The federal bank regulatory agencies have indicated their view that banks with high concentrations of loans secured by commercial real estate are subject to increased risk and should hold higher capital than regulatory minimums to maintain an appropriate cushion against loss that is commensurate with the perceived risk. Because a significant portion of our loan portfolio is dependent on commercial real estate, a change in the regulatory capital requirements applicable to us as a result of these policies could limit our ability to leverage our capital, which could have a material adverse effect on our business, financial condition, results of operations and prospects. The dividend rate on our Series A Preferred Stock fluctuates based on the changes in our "qualified small business lending" and other factors and may increase, which could adversely affect income to common stockholders. We issued $40.0 million in Series A Preferred Stock to the Treasury on June 21, 2011 in connection with the Treasury s Small Business Lending Fund program. Dividends on each share of our Series A Preferred Stock are payable on the liquidation amount at an annual rate calculated based upon the "percentage change in qualified lending" of the bank between each dividend period and the "baseline" level of "qualified small business lending" of the bank. Such dividend rate may vary from 1% per annum to 7% per annum for the eleventh through the eighteenth dividend periods and that portion of the nineteenth dividend period ending on the four and one-half year anniversary of the date of issuance of the Series A Preferred Stock (or, the dividend periods from October 1, 2013 through and including December 20, 2015). The dividend rate increases to a fixed rate of 9% after 4.5 years from the issuance of our Series A Preferred Stock (or, on December 21, 2015), regardless of the previous rate, until all of the preferred shares are redeemed. If we are unable to maintain our "qualified small business lending" at certain levels, if we fail to comply with certain other terms of our Series A Preferred Stock, or if we are unable to redeem our Series A Preferred Stock within 4.5 years following issuance, the dividend rate on our Series A Preferred Stock could result in materially greater dividend payments, which in turn could have a material adverse effect on our business, financial condition, results of operations and prospects. We are subject to interest rate risk, which could adversely affect our profitability. Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest bearing liabilities, such as deposits and borrowings. We have positioned our asset portfolio to benefit in a higher or lower interest rate environment, but this may not remain true in the future. Our interest sensitivity profile was somewhat asset sensitive as of December 31, 2013, meaning that our net interest income and economic value of equity would increase more from rising interest rates than from falling interest rates. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System (or, the "Federal Reserve"). Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could also affect our ability to originate loans and obtain deposits, the fair value of our financial assets and liabilities, and the average duration of our assets. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations. These circumstances could not only result in increased loan defaults, foreclosures and charge-offs, but also necessitate further increases to the allowance for loan losses which could have a material adverse effect on our business, results of operations, financial condition and prospects. Liquidity risk could impair our ability to fund operations and meet our obligations as they become due. Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. In particular, approximately 74.0% of the bank s liabilities as of December 31, 2013 were checking accounts and other liquid deposits, which are payable on demand or upon several days notice, while by comparison, 81.2% of the assets of the bank were loans, which cannot be called or sold in the same time frame. Our access to funding sources in amounts adequate to finance our activities or on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our ability to meet deposit withdrawals and other customer needs, which could have a material adverse effect on our business, financial condition, results of operations and prospects. The fair value of our investment securities can fluctuate due to factors outside of our control. As of December 31, 2013, the fair value of our investment securities portfolio was approximately $297.5 million. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, and changes in market interest rates and continued instability in the capital markets. Any of these factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects. The process for determining whether impairment of a security is other-than-temporary usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Our failure to assess any currency impairments or losses with respect to our securities could have a material adverse effect on our business, financial condition, results of operations and prospects. Deterioration in the fiscal position of the U.S. federal government and downgrades in Treasury and federal agency securities could adversely affect us and our banking operations. The long-term outlook for the fiscal position of the U.S. federal government is uncertain, as illustrated by the 2011 downgrade by certain rating agencies of the credit rating of the U.S. government and federal agencies. However, in addition to causing economic and financial market disruptions, any future downgrade, failure to raise the U.S. statutory debt limit, or deterioration in the fiscal outlook of the U.S. federal government, could, among other things, materially adversely affect the market value of the U.S. and other government and governmental agency securities that we hold, the availability of those securities as collateral for borrowing, and our ability to access capital markets on favorable terms. In particular, it could increase interest rates and disrupt payment systems, money markets, and long-term or short-term fixed income markets, adversely affecting the cost and availability of funding, which could negatively affect our profitability. Also, the adverse consequences of any downgrade could extend to those to whom we extend credit and could adversely affect their ability to repay their loans. Any of these developments could have a material adverse effect on our business, financial condition, results of operations and prospects. We may be adversely affected by the soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships. We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. These losses or defaults could have a material adverse effect on our business, financial condition, results of operations and prospects. We are subject to environmental liability risk associated with our lending activities. In the course of our business, we may purchase real estate, or we may foreclose on and take title to real estate. As a result, we could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination or may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. Any significant environmental liabilities could have a material adverse effect on our business, financial condition, results of operations and prospects. Risks Related to Our Industry We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, which limitations or restrictions could have a material adverse effect on our profitability. We operate in a highly regulated industry and are subject to examination, supervision and comprehensive regulation by various federal and state agencies including the Federal Reserve, the Federal Deposit Insurance Corporation ("FDIC") and the Alabama State Banking Department (the "Alabama Banking Department"). Regulatory compliance is costly and restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, and interest rates paid on deposits. We are also subject to capitalization guidelines established by our regulators, which require us to maintain adequate capital to support our growth. Violations of various laws, even if unintentional, may result in significant fines or other penalties, including restrictions on branching or bank acquisitions. Recently, banks generally have faced increased regulatory sanctions and scrutiny particularly with respect to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act ("USA Patriot Act") and other statutes relating to anti-money laundering compliance and customer privacy. The recent recession had major adverse effects on the banking and financial industry, during which time many institutions saw a significant amount of their market capitalization erode as they charged off loans and wrote down the value of other assets. As described above, recent legislation has substantially changed, and increased, federal regulation of financial institutions, and there may be significant future legislation (and regulations under existing legislation) that could have a further material effect on banks and bank holding companies like us. In July 2013, the U.S. federal banking authorities approved the implementation of the Basel III regulatory capital reforms and issued rules effecting certain changes required by the Dodd-Frank Act (the "Basel III Rules"). The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements as well as to bank and saving and loan holding companies, other than "small bank holding companies" (generally bank holding companies with consolidated assets of less than $500 million). The Basel III Rules not only increase most of the required minimum regulatory capital ratios, they introduce a new common equity Tier 1 capital ratio and the concept of a capital conservation buffer. The Basel III Rules also expand the current definition of capital by establishing additional criteria that capital instruments must meet to be considered additional Tier 1 capital (that is, Tier 1 capital in addition to common equity) and Tier 2 capital. A number of instruments that now generally qualify as Tier 1 capital will not qualify or their qualifications will change when the Basel III Rules are fully implemented. However, the Basel III Rules permit banking organizations with less than $15 billion in assets to retain, through a one-time election, the existing treatment for accumulated other comprehensive income, which currently does not affect regulatory capital. The Basel III Rules have maintained the general structure of the current prompt corrective action thresholds while incorporating the increased requirements, including the common equity Tier 1 capital ratio. In order to be a "well-capitalized" depository institution under the new regime, an institution must maintain a common equity Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and a leverage ratio of 5% or more. Institutions must also maintain a capital conservation buffer consisting of common equity Tier 1 capital. Generally, financial institutions will become subject to the Basel III Rules on January 1, 2015 with a phase-in period through 2019 for many of the changes. The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the related rules and regulations promulgated by the SEC. These laws and regulations increase the scope, complexity and cost of corporate governance, reporting and disclosure practices over those of non-public or non-reporting companies. Despite our conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we experienced prior to becoming a reporting company. Our expenses related to services rendered by our accountants, legal counsel and consultants have increased in order to ensure compliance with these laws and regulations that we became subject to as a reporting company and may increase further as we become a public company and grow in size. These provisions, as well as any other aspects of current or proposed regulatory or legislative changes to laws applicable to us may impact the profitability of our business activities and may change certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings. The Federal Reserve, the FDIC and the Alabama Banking Department periodically examine our business, including our compliance with laws and regulations. If, as a result of an examination, a federal or state banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin "unsafe or unsound" practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship. Any regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects. Our FDIC deposit insurance premiums and assessments may increase. The deposits of the bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. The bank s regular assessments are determined by its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses. High levels of bank failures since the beginning of the financial crisis and increases in the statutory deposit insurance limits have increased resolution costs to the FDIC and put significant pressure on the Deposit Insurance Fund. In order to maintain a strong funding position and restore the reserve ratios of the Deposit Insurance Fund, the FDIC increased deposit insurance assessment rates and charged a special assessment to all FDIC-insured financial institutions. Further increases in assessment rates or special assessments may occur in the future, especially if there are significant additional financial institution failures. Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. A successful regulatory challenge to an institution s performance under the Community Reinvestment Act or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition, results of operations and prospects. We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The Bank Secrecy Act, the USA Patriot, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The Federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control ("OFAC"). If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition, results of operations and prospects. Financial reform legislation will, among other things, tighten capital standards, create a new Consumer Financial Protection Bureau and result in new regulations that are likely to increase our costs of operations. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was signed into law. As final rules and regulations implementing the Dodd-Frank Act are adopted, this law is significantly changing the current bank regulatory structure and affecting the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations and to prepare numerous studies and reports for Congress. The federal agencies are given significant discretion in drafting the implementing rules and regulations, and consequently, many of the details and much of the impact of the Dodd-Frank Act may not be known for many years. The Dodd-Frank Act eliminated the federal prohibitions on paying interest on demand deposits effective one year after the date of its enactment, thus allowing businesses to have interest bearing checking accounts. Depending on competitive responses, this significant change to existing law could have an adverse impact on our interest expense. The Dodd-Frank Act also broadens the base for FDIC insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution. The Dodd-Frank Act permanently increases the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor. Non-interest bearing transaction accounts and certain attorney s trust accounts had unlimited deposit insurance through December 31, 2012. The Dodd-Frank Act requires publicly traded companies to give stockholders a non-binding vote on executive compensation and golden parachute payments. In addition, the Dodd-Frank Act authorizes the SEC to promulgate rules that would allow stockholders to nominate their own candidates using a company s proxy materials and directs the federal banking regulators to issue rules prohibiting incentive compensation that encourages inappropriate risks. The Dodd-Frank Act created a new Consumer Financial Protection Bureau with broad powers to supervise and enforce consumer protection laws. The Bureau now has broad rule-making authority for a wide range of consumer protection laws that apply to all banks, including the authority to prohibit "unfair, deceptive or abusive" acts and practices. The Bureau has examination and enforcement authority over all banks with more than $10 billion in assets. Institutions with less than $10 billion in assets will continue to be examined for compliance with consumer laws by their primary bank regulator. As noted above, many aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on us. However, compliance with this new law and its implementing regulations will result in additional operating and compliance costs that could have a material adverse effect on our business, financial condition, results of operations and prospects. Additional regulatory requirements especially those imposed under ARRA, EESA or other legislation intended to strengthen the U.S. financial system, could adversely affect us. Recent government efforts to strengthen the U.S. financial system, including the implementation of the American Recovery and Reinvestment Act ("ARRA"), the Emergency Economic Stabilization Act ("EESA"), the Dodd-Frank Act, and special assessments imposed by the FDIC, subject us, to the extent applicable, to additional regulatory fees, corporate governance requirements, restrictions on executive compensation, restrictions on declaring or paying dividends, restrictions on stock repurchases, limits on tax deductions for executive compensation and prohibitions against golden parachute payments. These fees, requirements and restrictions, as well as any others that may be imposed in the future, may have a material adverse effect on our business, financial condition, results of operations and prospects. Recent market conditions have adversely affected, and may continue to adversely affect, us, our customers and our industry. Because our business is focused exclusively in the southeastern United States, we are particularly exposed to downturns in the U.S. economy in general and in the southeastern economy in particular. Beginning with the economic recession in 2008 and continuing through 2010, falling home prices, increasing foreclosures, unemployment and under-employment, have negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities as well as major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to credit default swaps and other derivative and cash securities, in turn, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit has led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The resulting economic pressure on consumers and businesses and lack of confidence in the financial markets may adversely affect our customers and thus our business, financial condition, and results of operations. A return of these conditions in the near future would likely exacerbate the adverse effects of these difficult market conditions on us and others in the financial institutions industry and have a material adverse effect on our business, financial condition, results of operations and prospects. Current market volatility and industry developments may adversely affect our business and financial results. The volatility in the capital and credit markets, along with the housing declines over the past years, has resulted in significant pressure on the financial services industry. We have experienced a higher level of foreclosures and higher losses upon foreclosure than we have historically. If current volatility and market conditions continue or worsen, we may have further increases in loan losses, deterioration of capital or limitations on our access to funding or capital, if needed, which could have a material adverse effect on our business, financial condition, results of operations and prospect. Further, if other, particularly larger, financial institutions continue to fail to be adequately capitalized or funded, it may negatively impact our business and financial results. We routinely interact with numerous financial institutions in the ordinary course of business and are therefore exposed to operational and credit risk to those institutions. Failures of such institutions may significantly adversely impact our operations and have a material adverse effect on our business, financial condition, results of operations and prospects. Our profitability is vulnerable to interest rate fluctuations. As a financial institution, our earnings can be significantly affected by changes in interest rates, particularly our net interest income, the rate of loan prepayments, the volume and type of loans originated or produced, the sales of loans on the secondary market and the value of our mortgage servicing rights. Our profitability is dependent to a large extent on our net interest income, which is the difference between our income on interest-earning assets and our expense on interest bearing liabilities. We are affected by changes in general interest rate levels and by other economic factors beyond our control. Changes in interest rates also affect the average life of loans and mortgage-backed securities. The relatively lower interest rates in recent periods have resulted in increased prepayments of loans and mortgage-backed securities as borrowers have refinanced their mortgages to reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk to the extent that we are not able to reinvest such prepayments at rates which are comparable to the rates on the prepaid loans or securities. Our inability to manage interest rate risk and fluctuations could have a material adverse effect on our business, financial condition, results of operations and prospects. Changes in monetary policies may have a material adverse effect on our business. Like all regulated financial institutions, we are affected by monetary policies implemented by the Federal Reserve and other federal instrumentalities. A primary instrument of monetary policy employed by the Federal Reserve is the restriction or expansion of the money supply through open market operations. This instrument of monetary policy frequently causes volatile fluctuations in interest rates, and it can have a direct, material adverse effect on the operating results of financial institutions including our business. Borrowings by the United States government to finance government debt may also cause fluctuations in interest rates and have similar effects on the operating results of such institutions. We do not have any control over monetary policies implemented by the Federal Reserve or otherwise and any changes in these policies could have a material adverse effect on our business, financial condition, results of operations and prospects. Risks Related to Our Common Stock and the Offering The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired. The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: actual or anticipated fluctuations in our operating results, financial condition or asset quality; changes in economic or business conditions; the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; operating and stock price performance of companies that investors deemed comparable to us; future issuances of our common stock or other securities; additions to or departures of key personnel; proposed or adopted changes in laws, regulations or policies affecting us; perceptions in the marketplace regarding our competitors and/or us; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry. The stock market and, in particular, the market for financial institution stocks, have experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired. An active, liquid market for our common stock may not develop or be sustained following the offering, which may impair your ability to sell your shares. Before this offering, there has been no established public market for our common stock. Although we have applied to list our common stock on the Nasdaq Global Market, our application may not be approved. Even if approved, an active, liquid trading market for our common stock may not develop or be sustained following the offering. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace and independent decisions of willing buyers and sellers of our common stock, over which we have no control. Without an active, liquid trading market for our common stock, stockholders may not be able to sell their shares at the volume, prices and times desired. Moreover, the lack of an established market could materially and adversely affect the value of our common stock. The market price of our common stock could decline significantly due to actual or anticipated issuances or sales of our common stock in the future. Actual or anticipated issuances or sales of additional amounts of our common stock following this offering could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. In addition, 27,000 shares that are owned by Mr. Broughton, our President and Chief Executive Officer, are pledged as collateral to secure a line of credit, 36,662 shares that are owned by Mr. Foshee, our Chief Financial Officer, are pledged to First National Bankers Bank, 145,000 shares that are owned by Mr. Fuller, one of our directors, are pledged to us as security for a loan, and 87,922 shares that are owned by Mr. Cashio, one of our directors, have been placed in a margin account, and may be sold by the pledgees under certain circumstances. The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by stockholders prior to such issuance. All 625,000 of the shares of common stock sold in this offering (or 718,750 shares if the underwriters exercise in full their purchase option) will be freely tradable, except that any shares purchased by "affiliates" (as that term is defined in Rule 144 under the Securities Act of 1933 (the "Securities Act")) may be sold publicly only in compliance with the limitations described under "Shares Eligible For Future Sale." Other than certain of the shares we previously issued under our Amended and Restated 2009 Stock Incentive Plan or 2005 Amended and Restated Stock Incentive Plan (or, "stock incentive plans"), the remaining 7,549,812 outstanding shares of our common stock, or 92.35% of our outstanding shares, will be deemed to be "restricted securities" or "control securities" as those terms are defined in Rule 144, and may be sold in the market over time in private transactions or future public offerings. We have filed a registration statement on Form S-8 under the Securities Act to register an aggregate of 1,450,000 shares of common stock for issuance under our stock incentive plans, of which 614,500 shares are subject to outstanding options to purchase such shares and 198,170 are reserved for future issuance. We may issue all of these shares without any action or approval by our stockholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described above, if applicable, for affiliate holders. Securities analysts may not initiate or continue coverage on our common stock, which could adversely affect the market for our common stock. The trading market for our common stock will depend in part on the research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts, and they may not cover our common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect its market price. If we are covered by securities analysts, and our common stock is the subject of an unfavorable report, the price of our common stock may decline. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. Investors in this offering will experience immediate and substantial dilution. The initial public offering price is expected to be substantially higher than the net tangible book value per share of our common stock immediately following this offering. Therefore, if you purchase shares in this offering, you will experience immediate and substantial dilution in net tangible book value per share in relation to the price that you paid for your shares. We expect the dilution as a result of the offering to be $52.08 per share, based on an assumed initial public offering price of $92.00 per share (the midpoint of the range set forth on the cover page of this prospectus), and our pro forma net tangible book value of $39.92 per share as of March 31, 2014. Accordingly, if we were liquidated at our pro forma net tangible book value, you would not receive the full amount of your investment. We have broad discretion in the use of the net proceeds from this offering, and our use of those proceeds may not yield a favorable return on your investment. We expect to use the net proceeds of this offering for general corporate purposes, which may include, among other things, acquisitions, capital expenditures, investments, and the repayment, redemption or refinancing of all or a portion of any indebtedness or other securities outstanding at a particular time. Although we may, from time to time, in the ordinary course of our business, evaluate potential acquisition opportunities that we believe are complementary to our business and provide attractive risk-adjusted returns, we do not have any immediate plans, arrangements or understandings relating to any material acquisition. Our management has broad discretion over how these proceeds are used and could spend the proceeds in ways with which you may not agree. In addition, we may not use the proceeds of this offering effectively or in a manner that increases our market value or enhances our profitability. We have not established a timetable for the effective deployment of the proceeds, and we cannot predict how long it will take to deploy the proceeds. Investing the offering proceeds in securities until we are able to deploy the proceeds will provide lower margins that we generally earn on loans, potentially adversely affecting stockholder returns, including earnings per share, return on assets and return on equity. The rights of our common stockholders are subordinate to the rights of the holders of our Series A Preferred Stock and any debt securities that we may issue and may be subordinate to the holders of any other class of preferred stock that we may issue in the future. We have issued 40,000 shares of our Series A Preferred Stock to the Treasury in connection with our participation in the Small Business Lending Fund program. These shares have certain rights that are senior to our common stock. As a result, we must make payments on the preferred stock before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the Series A Preferred Stock must be satisfied in full before any distributions can be made to the holders of our common stock. Our board of directors has the authority to issue in the aggregate up to one million shares of preferred stock, and to determine the terms of each issue of preferred stock, without stockholder approval. Accordingly, you should assume that any shares of preferred stock that we may issue in the future will also be senior to our common stock. Because our decision to issue debt or equity securities or incur other borrowings in the future will depend on market conditions and other factors beyond our control, the amount, timing, nature or success of our future capital raising efforts is uncertain. Because our ability to pay dividends on our common stock in the future will depend on our and our bank s financial condition as well as factors outside of our control, our common stockholders bear the risk that no dividends will be paid on our common stock in future periods or that, if paid, such dividends will be reduced or eliminated, which may negatively impact the market price of our common stock. We and our banking subsidiary are subject to capital and other requirements which restrict our ability to pay dividends. On September 19, 2013, we announced the approval of the initiation of quarterly cash dividends beginning in 2014. Future declarations of quarterly dividends will be subject to the approval of our board of directors, subject to limits imposed on us by our regulators. In order to pay any dividends, we will need to receive dividends from our bank or have other sources of funds. Under Alabama law, a state-chartered bank may not pay a dividend in excess of 90% of its net earnings until the bank s surplus is equal to at least 20% of its capital (our bank s surplus currently exceeds 20% of its capital). Moreover, our bank is also required by Alabama law to obtain the prior approval of the Superintendent of Banks (the "Superintendent") for its payment of dividends if the total of all dividends declared by our bank in any calendar year will exceed the total of (1) our bank s net earnings (as defined by statute) for that year, plus (2) its retained net earnings for the preceding two years, less any required transfers to surplus. In addition, the bank must maintain certain capital levels, which may restrict the ability of the bank to pay dividends to us and our ability to pay dividends to our stockholders. As of December 31, 2013, our bank could pay approximately $110.9 million of dividends to us without prior approval of the Superintendent. However, the payment of dividends is also subject to declaration by our board of directors, which takes into account our financial condition, earnings, general economic conditions and other factors, including statutory and regulatory restrictions. There can be no assurance that dividends will in fact be paid on our common stock in future periods or that, if paid, such dividends will not be reduced or eliminated. Alabama and Delaware law limit the ability of others to acquire the bank, which may restrict your ability to fully realize the value of your common stock. In many cases, stockholders receive a premium for their shares when one company purchases another. Alabama and Delaware law make it difficult for anyone to purchase the bank or us without approval of our board of directors. Thus, your ability to realize the potential benefits of any sale by us may be limited, even if such sale would represent a greater value for stockholders than our continued independent operation. Our Certificate of Incorporation, as amended, authorizes the issuance of preferred stock which could adversely affect holders of our common stock and discourage a takeover of us by a third party. Our certificate of incorporation, as amended (or, our "charter") authorizes our board of directors to issue up to 1,000,000 shares of preferred stock without any further action on the part of our stockholders. In 2011, we issued 40,000 shares of our Series A Preferred Stock with certain rights and preferences set forth in the certificate of designation for such preferred stock. Our board of directors also has the power, without stockholder approval, to set the terms of any series of preferred stock that may be issued, including voting rights, dividend rights, and preferences over our common stock with respect to dividends or in the event of a dissolution, liquidation or winding up and other terms. In the event that we issue preferred stock in the future that has preference over our common stock with respect to payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of the holders of our common stock or the market price of our common stock could be adversely affected. In addition, the ability of our board of directors to issue shares of preferred stock without any action on the part of the stockholders may impede a takeover of us and prevent a transaction favorable to our stockholders. An investment in our common stock is not an insured deposit and is subject to risk of loss. Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any deposit insurance fund or by any other public or private entity. Investment in our common stock is inherently risky for the reasons described in this "Risk Factors" section and is subject to the same market forces that affect the price of common stock in any company. As a result, an investor may lose some or all of such investor s investment in our common stock. Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult. Certain provisions of our charter and bylaws, as amended, and corporate and federal banking laws, could make it more difficult for a third party to acquire control of our organization, even if those events were perceived by many of our stockholders as beneficial to their interests. These provisions, and the corporate and banking laws and regulations applicable to us: provide that special meetings of stockholders may be called at any time by the Chairman of our board of directors, by the President or by order of the board of directors; enable our board of directors to issue preferred stock up to the authorized amount, with such preferences, limitations and relative rights, including voting rights, as may be determined from time to time by the board; enable our board of directors to increase the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at the meeting; enable our board of directors to amend our bylaws without stockholder approval; and do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose). These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our stockholders might otherwise receive a premium over the market price of our shares. Incorporation of Certain Information by Reference We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC allows us to "incorporate by reference" certain information that we file with it into this prospectus. This means we can disclose important information to you by referring you to those documents, which we filed separately with the SEC. The information we incorporate by reference is an important part of this prospectus and should be reviewed by you. We incorporate herein by reference the documents listed below, except to the extent that any information contained therein is deemed "furnished" in accordance with SEC rules: Our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 7, 2014, as amended by our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2013, filed with the SEC on March 17, 2014; Our Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 18, 2014; Our Current Reports on Form 8-K, filed with the SEC on March 20, 2014, April 4, 2014 and April 28 2014; and Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the SEC on April 25, 2014. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded. Upon request, we will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus but not delivered with this prospectus. You may request a copy of any of these filings at no cost, by writing or telephoning us at the following address or telephone number: ServisFirst Bancshares, Inc. 850 Shades Creek Parkway, Suite 200 Birmingham, Alabama 35209 Attention: Chief Financial Officer Telephone: (205) 949-0302 These filings may also be accessed through our website at http://www.servisfirstbank.com or as described under the section titled "Where You Can Find More Information." The contents of our website are not incorporated by reference herein or otherwise a part of this prospectus. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS When used in this prospectus and the documents incorporated herein the words or phrases "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," or similar expressions are intended to identify "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties, including, without limitation, changes in economic conditions in the market areas of the bank, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the market areas of the bank, borrowers defaulting on the repayment of loans and competition. These risks could cause actual results to differ materially from what we have anticipated or projected. These risk factors and uncertainties should be carefully considered by potential investors. See the "Risk Factors" section of this prospectus and Part I, Item 1.A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, as well as elsewhere in our periodic and current reports filed with the SEC, for discussion relating to risk factors impacting us. Investors should not place undue reliance on any forward-looking statement, which speaks only as of the date on which it was made. The factors described in this prospectus could affect our financial performance and could cause actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods. The safe harbor provided by the Private Litigation Reform Act of 1995 does not apply to statements made in connection with an initial public offering. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while our management believes such assumptions or bases are reasonable and are made in good faith, assumed facts or bases can vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, an expectation or belief is expressed as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished. We do not intend to, and specifically disclaim any obligation to, update any forward-looking statements. USE OF PROCEEDS We estimate that the net proceeds to us from the sale of our common stock in this offering will be approximately $53.1 million, or approximately $61.2 million if the underwriters elect to exercise in full their purchase option, assuming an initial public offering price of $92.00 per share, the midpoint of the price range set forth on the cover of this prospectus, and after deducting estimated underwriting discounts and offering expenses. Each $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us of this offering by $587,500, or $675,625 if the underwriters elect to exercise in full their purchase option, after deducting estimated underwriting discounts and offering expenses. We intend to use the net proceeds to us generated by this offering for general corporate purposes, which may include acquisitions, capital expenditures, investments, and the repayment, redemption or refinancing of all or a portion of any indebtedness or other securities outstanding at a particular time. Although we may, from time to time in the ordinary course of our business, evaluate potential acquisition opportunities that we believe are complementary to our business and provide attractive risk-adjusted returns, we do not have any immediate plans, arrangements or understandings relating to any material acquisition. Pending the application of the net proceeds, we expect to invest the proceeds in short-term, interest bearing instruments or other investment-grade securities. The information above is for illustrative purposes only and is subject to the actual offering price and the actual number of shares issued at pricing. DIVIDEND POLICY Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends. We paid a special cash dividend of $0.50 per common share on each of December 31, 2012 and December 16, 2013. On September 19, 2013, we announced the approval of the initiation of quarterly cash dividends beginning in 2014. The first quarterly cash dividend of $0.15 per share was paid on April 15, 2014 to stockholders of record as of April 8, 2014, and future declarations of quarterly dividends will be subject to the approval of our board of directors, subject to limits imposed on us by our regulators. In order to pay any dividends, we will need to receive dividends from our bank or have other sources of funds. Under Alabama law, our bank is subject to restrictions on the payment of dividends to us, which are similar to those applicable to national banks. Pursuant to Alabama law, our bank may not, without the prior consent of the Superintendent of the Alabama Banking Department, pay any dividends to us in a year in excess of the total of (i) the bank s net earnings (as defined by statute) for that year, plus (ii) the retained net earnings for the preceding two years, less any required transfers to surplus. As of December 31, 2013, our bank could pay approximately $110.9 million of dividends to us without prior approval of the Superintendent. Our ability to pay dividends to our stockholders in the future will depend on our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, our ability to service any equity or debt obligations senior to our common stock and other factors deemed relevant by our board of directors. For additional information, see "Supervision and Regulation — Bank Regulation and Supervision — Payment of Dividends." CAPITALIZATION The following table shows our capitalization, including regulatory capital ratios, on a consolidated basis, as of March 31, 2014, on an actual basis and on an as adjusted basis after giving effect to the net proceeds from the sale by us of 625,000 shares of common stock in this offering (assuming the underwriters do not exercise their purchase option) at an assumed initial public offering price of $92.00 per share, the midpoint of the price range on the cover of this prospectus, after deducting estimated underwriting discounts and offering expenses. You should read
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+Prospectus Summary 1
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+PROSPECTUS SUMMARY The following is a summary of some of the information contained or incorporated by reference in this prospectus which we believe to be important. We have selected highlights of material aspects of our business to be included in this summary. You should read this entire prospectus, including the information incorporated by reference in this prospectus, which includes the description of our business and the information provided under the heading "Management s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended March 2, 2013, in our Quarterly Reports on Form 10-Q for the quarter ended June 1, 2013, the quarter ended August 31, 2013 and the quarter ended November 30, 2013. Investing in our common
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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+PROSPECTUS SUMMARY 1
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diff --git a/parsed_sections/prospectus_summary/2014/WK_workiva_prospectus_summary.txt b/parsed_sections/prospectus_summary/2014/WK_workiva_prospectus_summary.txt
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+EXECUTIVE COMPENSATION We are providing compensation disclosure that satisfies the requirements applicable to emerging growth companies, as defined in the JOBS Act. As an emerging growth company, we have opted to comply with the executive compensation rules applicable to smaller reporting companies, as such term is defined under the Securities Act. These rules require compensation disclosure for our principal executive officer and the two most highly compensated executive officers other than our principal executive officer. Prior to the corporate conversion, we have been a private limited liability company, and we have not been subject to exchange listing requirements requiring us to have a majority independent board or to exchange or SEC rules relating to the formation and functioning of board committees, including audit, nominating and compensation committees. As a result, our compensation policies and determinations applicable to our executive officers have been the product of negotiation between our executive officers and our managing directors. Following this offering, we will have a compensation committee that will be responsible for making all compensation-related determinations applicable to our executive officers. The table below sets forth the annual compensation earned during fiscal 2013 by our principal executive officer and our next two most highly-compensated executive officers, or our Named Executive Officers (NEOs). Summary Compensation Table Name and Principal Position Year Salary ($) Bonus ($) All Other Compensation ($) Total ($) Matthew M. Rizai, Ph.D. Chairman and Chief Executive Officer 2013 360,000 290,000 111,047 (1) 761,047 Martin J. Vanderploeg, Ph.D. President and Chief Operating Officer 2013 360,000 290,000 20,198 (2) 670,198 Jeffrey D. Trom, Ph.D. Executive Vice President and Chief Technology Officer 2013 225,000 150,000 11,685 (3) 386,685 (1) The amount reported consists of (i) $102,290 of estate planning and other personal legal fees paid on behalf of Mr. Rizai during 2013 and (ii) $8,757 of taxes paid on Mr. Rizai s behalf directly associated with taxable income in various states caused by the flow-through structure of Workiva LLC. (2) The amount reported consists of $20,198 of taxes paid on Mr. Vanderploeg s behalf during 2013 directly associated with taxable income in various states caused by the flow-through structure of Workiva LLC. (3) The amount reported consists of $11,685 of taxes paid on Mr. Trom s behalf during 2013 directly associated with taxable income in various states caused by the flow-through structure of Workiva LLC. Employment Agreements Mr. Rizai, Mr. Vanderploeg and Mr. Trom are our NEOs. We have entered into employment agreements with all of our executive officers, including the NEOs. These agreements provide for at-will employment and generally include an initial base salary, an indication of eligibility for an annual cash incentive award opportunity, and equity awards at the discretion of our board of directors. These agreements also contain restrictions on non-competition and non-solicitation for the six-month period following termination. In addition, each of our executive officers, including the NEOs, has executed our standard confidential information and invention assignment agreement. Potential Payments upon Termination or Change in Control The employment agreements with our NEOs provide that certain payments and benefits would be due upon a termination of employment or a change in control. If the employment of any NEO is terminated by us for cause or by the NEO without good reason, we will pay him (i) accrued but unpaid salary and benefits and (ii) any earned but unpaid bonus from the prior year. If the employment of any NEO is terminated due to his death or disability we will pay to him (i) accrued but unpaid salary and benefits, (ii) any earned but unpaid bonus from the prior year, (iii) a pro-rated bonus for the current year and (iv) a lump-sum payment equal to his annual base salary plus his target bonus for the current year. If the employment of any NEO is terminated by us without cause or by the NEO for good reason, we will pay to him (i) accrued but unpaid salary and benefits, (ii) any earned but unpaid bonus from the prior year, (iii) a pro-rated bonus for the current year and (iv) a severance payment equal to two times (three times in the case of Mr. Rizai and Mr. Vanderploeg) his annual base salary plus his target bonus for the current year. In addition, the vesting of the NEO s outstanding equity awards will be accelerated, and he will be released from his non-competition and non-solicitation restrictions. If the employment of any NEO is terminated by us without cause or by the NEO for good reason in the three months prior to or twelve months following a change in control, we will pay to him (i) accrued but unpaid salary and benefits, (ii) any earned but unpaid bonus from the prior year, (iii) the NEO s target bonus for the year in which the termination occurs (or if greater, the year in which the change in control occurs) and (iv) a severance payment equal to three times his annual base salary plus target bonus. In addition, the vesting of the officer s outstanding equity awards will be accelerated, and he will be released from his non-competition and non-solicitation restrictions. Outstanding Equity Awards at Fiscal Year-End December 31, 2013 As of December 31, 2013, there were no outstanding equity awards to our NEOs. In August 2014, Mr. Rizai, Mr. Vanderploeg and Mr. Trom were each granted options to purchase 450,000 common units at an exercise price of $6.27 per common unit as part of a broader grant of options to employees under the 2009 Unit Incentive Plan. Employee Benefit Plans The principal features of our equity incentive plans and our 401(k) plan are summarized below. These summaries are qualified in their entirety by reference to the actual text of the plans, which, other than the 401(k) plan, are filed as exhibits to the registration statement of which this prospectus is a part. 2014 Equity Incentive Plan We anticipate that our board of directors and stockholders will adopt and approve our 2014 Equity Incentive Plan (the Plan), which will become effective immediately prior to this offering. The purpose of the Plan is to enable us to grant equity-based incentive awards intended to attract, motivate and retain qualified employees, non-employee directors and consultants, and to align their financial interests with those of our stockholders. The following is a brief summary of the anticipated material terms of our Plan, which will be subject to the actual terms of the Plan. Eligibility. The Plan will permit the grant of incentive stock options (ISOs), within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (Code), to our and any of our subsidiaries employees, and the grant of nonqualified stock options (NQSOs), stock appreciation rights (SARs), restricted stock, restricted stock units, unrestricted stock grants, performance stock, performance stock units and other forms of equity-based awards to our and any of our affiliates (or, if necessary to avoid the imposition of additional taxes under Section 409A of the Code, our subsidiaries ) employees, non-employee directors and consultants. Authorized Shares. After giving effect to the corporate conversion, we expect to reserve 3,960,000 shares of our Class A common stock for issuance under the Plan (which is also the maximum aggregate number of shares that may be issued under the Plan through ISOs). If any award expires, terminates or is cancelled or forfeited or is settled in cash rather than shares of our common stock, the number of shares with respect to which such award expired or was terminated, cancelled, forfeited or settled in cash shall again be available for awards under the Plan. If an award is exercised by surrendering shares of our common stock or by withholding shares subject to the award as full or partial payment, or if tax withholding requirements are met by surrendering our common stock or withholding shares of our common stock subject to the award, only the net number of shares issued will be considered delivered under the Plan for purposes of the number of shares available for awards under the Plan. Section 162(m). When Section 162(m) of the Code becomes applicable to us, after giving effect to the corporate conversion, we expect that the maximum aggregate number of shares of our Class A common stock subject to awards that may be granted during any calendar year to any employee will be 1,000,000 shares and the maximum amount payable in cash to certain of our executive officers for any calendar year may not exceed the fair market value (determined as of the date of vesting or payout, as applicable) of 1,000,000 shares of our Class A common stock. Administration. In general, the Plan will be administered by our Compensation Committee. Subject to the discretion of the board of directors, our Compensation Committee will consist of not fewer than two directors, taking into consideration the outside director rules under Section 162(m) of the Code, the non-employee director requirements of Section 16(b) of the Exchange Act, and the rules regarding independent directors of the New York Stock Exchange. Our Compensation Committee has delegated to our chief executive officer the authority to grant awards to employees, non-employee directors and consultants, other than individuals subject to Section 16 of the Exchange Act, and to determine the terms and conditions of those awards, subject to the limitations of the Plan and such other limitations and guidelines as our Compensation Committee may deem appropriate. Subject to the terms of the Plan, our Compensation Committee may select the persons who will receive awards, the types of awards to be granted, the purchase price (if any) to be paid for shares covered by the awards, and the vesting (including acceleration of vesting), forfeiture and other terms and conditions of the awards, and will have the authority to make all other determinations necessary or advisable for administration of the Plan. Our Compensation Committee will also have the ability to construe and interpret the terms and provisions of the Plan and any award agreement relating to the Plan. Stock Options. We may issue NQSOs and ISOs under the Plan. The terms and conditions of any options granted to a participant will be set forth in an award agreement and, subject to the terms of the Plan, will be determined by our Compensation Committee. The exercise price of any option granted under the Plan must be at least equal to the fair market value of our common stock on the date the option is granted (110% of fair market value in the case of ISOs granted to 10% stockholders). The maximum term of an option granted under the Plan is ten years. Subject to the terms of the Plan, our Compensation Committee will determine the vesting and other terms and conditions of options granted under the Plan, and our Compensation Committee will have the authority to accelerate the vesting of any option in its sole discretion. Unless the applicable option award agreement provides otherwise, in the event of an optionee s termination of employment or service for any reason other than for cause, disability or death, the optionee s options (to the extent exercisable at the time of termination) generally will remain exercisable until 90 days after such termination (in the case of an ISO) or such longer period of time as may be determined by the Plan administrator (in the case of an NQSO) and will then expire. Unless the applicable option agreement provides otherwise, in the event of an optionee s termination of employment or service due to disability or death, such optionee s options (to the extent exercisable at the time of termination) generally will remain exercisable until one year after such termination and will then expire. Options that were not exercisable on the date of termination for any reason other than for cause will expire at the close of business on the date of such termination. In the event of an optionee s termination of employment or service for cause, the optionee s outstanding options will expire at the commencement of business on the date of such termination. In no event may an option be exercised after the expiration of its term. Stock Appreciation Rights. A SAR allows its holder to receive payment from us equal to the amount by which the fair market value of a share of our common stock on the exercise date exceeds the fair market value of our common stock on the date of grant of the SAR. The terms and conditions of SARs granted to a participant will be determined by our Compensation Committee and will be set forth in an award agreement. Under the Plan, our Compensation Committee may grant SARs in conjunction with the grant of options or on a stand-alone basis. If our Compensation Committee grants a SAR with an option award, then the holder can exercise the SAR at any time during the life of the related option, but the exercise will proportionately reduce the number of shares covered by the related option. The holder can exercise stand-alone SARs during the period determined by our Compensation Committee in the award agreement. Upon the exercise of a SAR, the holder receives cash or shares of our common stock, or a combination thereof, in the discretion of our Compensation Committee. In the event of a holder s termination of employment or service, free-standing SARs will be exercisable at such times and subject to such terms and conditions determined by our Compensation Committee on or after the date of grant, while SARs granted in conjunction with the grant of an option will be exercisable at such times and subject to terms and conditions applicable to the related option. Restricted Stock and Restricted Stock Units. The terms and conditions of any restricted stock awards or restricted stock units granted to a participant will be set forth in an award agreement and, subject to the terms of the Plan, will be determined by our Compensation Committee. Under a restricted stock award, we issue shares of our common stock to the recipient of the award, subject to any vesting conditions and transfer restrictions that lapse over time or upon achievement of performance conditions. Restricted stock units represent the right to receive shares of our Class A common stock, or an equivalent value in cash, in the future, with the right to the future delivery of the shares or cash subject to any vesting conditions that lapse over time or other restrictions that will lapse upon satisfaction of specified conditions. Our Compensation Committee will determine the vesting schedule and performance objectives, if any, applicable to each restricted stock award and restricted stock unit award. Subject to the terms of the Plan and the applicable award agreement, our Compensation Committee has the sole discretion to provide for the lapse of restrictions in installments or the acceleration or waiver of restrictions (in whole or part) under certain circumstances including, without limitation, the attainment of certain performance goals, a participant s termination of employment or service or a participant s death or disability. The recipient of an award of restricted stock under the Plan may vote and receive dividends on the shares of restricted stock covered by the award. The recipient of a restricted stock unit award under the Plan will have no rights as a stockholder until share certificates are issued by us, but, at the discretion of our Compensation Committee, will have the right to receive a dividend equivalent (generally a credit equal to the cash or stock dividends paid on the number of shares subject to the award). Any dividend equivalents will be deemed re-invested in additional restricted stock units based on the fair market value of a share of our Class A common stock on the dividend payment date and rounded down to the nearest whole share. Generally, if the recipient of a restricted stock or restricted stock unit award terminates employment or service, any unvested shares will be forfeited by the holder of the award. If specifically provided for by our Compensation Committee in an award agreement, the Plan permits the deferral of Class A common stock issuable upon the lapse of the restrictions applicable to restricted stock or restricted stock units, subject to such rules and procedures as our Compensation Committee may establish. Additionally, our Compensation Committee may grant restricted stock units with a deferral feature, whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in the award agreement. Performance Stock Units/Performance Stock. Performance stock units and performance stock are awards that are payable in cash or shares of our common stock upon the achievement of specified performance goals established in advance by our Compensation Committee. Performance stock is an award that has an initial value equal to one share of our Class A common stock. A performance stock unit is an award that has an initial value equal to a specified dollar amount. The value of performance stock or performance stock units at the end of the applicable performance period will depend on whether and the extent to which the specified performance goals are achieved. Stock Grants. Our Compensation Committee may make a grant of unrestricted Class A common stock to employees, non-employee directors and consultants. Performance Goals. Our Compensation Committee may grant awards of performance stock units or performance stock that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code. These awards may be granted, vest and be paid based upon the attainment of specified performance goals established by our Compensation Committee. Any one or more of the following performance factors may be used by our Compensation Committee in establishing performance goals for awards intended to qualify as performance-based compensation : (i) net earnings or net income (before or after taxes); (ii) basic or diluted earnings per share (before or after taxes); (iii) pre- or after-tax income (before or after allocation of corporate overhead and bonus); (iv) operating income (before or after taxes); (v) net sales or net sales growth; (vi) gross profit or gross profit growth; (vii) net operating profit (before or after taxes); (viii) earnings, including earnings before or after taxes, interest, depreciation and/or amortization; (ix) return measures (including, but not limited to, return on assets, net assets, capital, total capital, tangible capital, invested capital, equity, sales, or total stockholder return); (x) cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on capital, cash flow return on investment, and cash flow per share (before or after dividends); (xi) margins, gross or operating margins, or cash margins; (xii) share price (including, but not limited to, growth measures and total stockholder return); (xiii) expense or cost targets; (xiv) objective measures of customer satisfaction; (xv) working capital targets; (xvi) measures of economic value added, or economic value-added models or equivalent metrics; (xvii) debt targets; (xviii) stockholder equity; or (xix) implementation, completion or attainment of measurable objectives with respect to business development, acquisitions and divestitures, and recruiting and maintaining personnel. To the extent permitted by law, our Compensation Committee may also exclude the impact of an event or occurrence that our Compensation Committee determines should be appropriately excluded, such as: (i) restructurings, discontinued operations, extraordinary items and other unusual or non-recurring charges; (ii) an event either not directly related to our operations or not within the reasonable control of management; or (iii) a change in tax law or accounting standards required by generally accepted accounting principles. Performance goals may also be based on an individual participant s performance goals, as determined by our Compensation Committee. In addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary, division or other operational unit, under one or more of the measures described above relative to the performance of other corporations. Our Compensation Committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend those criteria in accordance with the requirements of Section 162(m). Award Agreements. Awards granted under the Plan will be evidenced by award agreements, which need not be identical, that provide terms, conditions, restrictions or limitations covering the grant of the award, including, without limitation, terms providing for the acceleration of exercisability or vesting of awards in the event of a change in control or conditions regarding the participant s employment or service, as determined by our Compensation Committee in accordance with the Plan. Transferability of Awards. In general, awards granted under the Plan may not be transferred or assigned, except as may be permitted by our Compensation Committee in accordance with applicable law. Capital Changes. In the event of certain changes in our capitalization, such as a reorganization, stock split, merger or similar change in our corporate structure or the number of outstanding shares of our common stock, our Compensation Committee will make appropriate adjustments to the aggregate and individual share limits and to the number, class and/or exercise price under outstanding awards in order to prevent undue diminution or enlargement of the benefits or potential benefits available under the Plan. Our Compensation Committee may also provide, in its sole discretion, for the cancellation of any outstanding award in exchange for a payment in cash or other property having an aggregate fair market value of the shares of common stock covered by such award, reduced by the aggregate exercise price or purchase price thereof, if any. Change in Control; Corporate Transactions. Regardless of the vesting requirements that otherwise apply to an award under the Plan, unless our Compensation Committee determines otherwise in an award agreement, all outstanding awards will fully vest, any restrictions on outstanding awards will lapse and any performance conditions will be deemed to be fully achieved upon a change in control (as defined in the Plan). In the event of a corporate transaction (such as, for example, a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation), our Compensation Committee has the discretion to take any of the following actions with respect to awards granted under the Plan without the consent of any participant: accelerate the date on which awards vest or become exercisable; terminate all or a portion of outstanding awards after providing participants an opportunity to exercise, in the case of an outstanding option or SAR; convert awards to awards of the surviving corporation; or change the terms of any outstanding award in order to reflect the corporate transaction. The completion of this offering will not be a change in control or a corporate transaction under the Plan. Amendment and Termination. Our board of directors has the authority to amend or terminate the Plan, provided such action does not adversely affect then outstanding awards without the consent of the affected participant. Amendments to the Plan will be subject to stockholder approval if such approval is necessary in order to satisfy applicable legal or stock exchange listing requirements. Unless sooner terminated, the Plan will automatically terminate on the tenth anniversary of its effective date. We intend to file with the SEC a registration statement on Form S-8 covering the shares issuable under the Plan. Federal Income Tax Consequences Relating to Awards Granted Pursuant to the Plan The following discussion summarizes certain federal income tax consequences of the issuance, receipt and exercise of stock options and the granting and vesting of restricted stock and restricted stock units, in each case under the Plan. The summary does not cover federal employment tax or other federal tax consequences that may be associated with the Plan, nor does it cover state, local or non-U.S. taxes. Incentive Stock Options. There are no federal income tax consequences associated with the grant or exercise of an ISO, so long as the holder of the option was our employee at all times during the period beginning on the grant date and ending on the date three months before the exercise date. The spread between the exercise price and the fair market value of our common stock on the exercise date, however, is an adjustment for purposes of the alternative minimum tax. The holder of an ISO defers income tax on the stock s appreciation until he or she sells the shares. Upon a sale of the shares, the holder realizes a long-term capital gain (or loss) if he or she sells the shares at least two years after the ISO grant date and has held the shares for at least one year. The capital gain (or loss) equals the difference between the sales price and the exercise price of the shares. If the holder disposes of the shares before the expiration of these periods, then he or she recognizes ordinary income at the time of the sale (or other disqualifying disposition) equal to the lesser of (i) the gain he or she realized on the sale, and (ii) the difference between the exercise price and the fair market value of the shares on the exercise date. This ordinary income is treated as compensation for tax purposes. The holder will treat any additional gain as short-term or long-term capital gain, depending on whether he or she has held the shares for at least one year from the exercise date. If the holder does not satisfy the employment requirement described above, then he or she recognizes ordinary income (treated as compensation) at the time he or she exercises the ISO under the tax rules applicable to the exercise of a nonqualified stock option. We are entitled to an income tax deduction to the extent that an option holder realizes ordinary income. Nonqualified Stock Options. In general, in the case of a NQSO, the participant has no taxable income at the time of grant but realizes income in connection with exercise of the option in an amount equal to the excess (at the time of exercise) of the fair market value of the shares acquired upon exercise over the exercise price assuming the exercise price is not less than the fair market value of the shares at the date of grant. Income and payroll tax withholding will be due at that time. A corresponding deduction is available to us. Any gain or loss recognized upon a subsequent sale or exchange of the shares is treated as capital gain or loss for which we are not entitled to a deduction. Restricted Stock. Unless a participant makes an election to accelerate the recognition of income to the date of grant as described below, the participant will not recognize income, and we will not be allowed a tax deduction, at the time a restricted stock award is granted. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of our common stock as of that date, less any amount paid for the stock, and we will be allowed a corresponding tax deduction at that time and income and payroll tax withholding may be due. If the participant files an election under Section 83(b) of the Code within 30 days after the date of grant of the restricted stock, the participant will recognize ordinary income as of the date of grant equal to the fair market value of the common stock as of that date, less any amount the participant paid for the common stock and income and tax withholding may be due, and we will be allowed a corresponding tax deduction at that time. Any future appreciation in the common stock would then be taxable to the participant at capital gains rates, provided the stock is held for more than one year. However, if the restricted stock award is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the participant s Section 83(b) election. Restricted Stock Units. A participant does not recognize income, and we will not be allowed a tax deduction, at the time a restricted stock unit is granted. When the restricted stock units vest and are settled for cash or stock, the participant generally will be required to recognize as income an amount equal to the amount of cash or the fair market value of the shares received on the date of settlement. Any gain or loss recognized upon a subsequent sale or exchange of the stock (if settled in stock) is treated as capital gain or loss for which we are not entitled to a tax deduction. Such gain will be long-term capital gain or loss if the stock is held for more than one year. Stock Appreciation Rights. A participant does not recognize income, and we will not be allowed a tax deduction, at the time SARs are granted. Upon exercise of a SAR, the holder of the SAR recognizes ordinary income in the amount of the appreciation paid to him or her. This ordinary income is treated as compensation to the recipient for tax purposes and may be subject to income and payroll tax withholding. We receive a corresponding tax deduction in the same amount that the individual recognizes as income. Performance Stock and Performance Stock Units. A participant does not recognize income, and we will not be allowed a tax deduction, at the time performance stock or performance stock units are granted. The holder recognizes ordinary income (treated as compensation to him or her) upon a payment on the performance stock or the performance stock units in amount equal to the payment received and income and payroll tax withholding may be due, and we receive a corresponding tax deduction. Code Section 162(m). Section 162(m) of the Code denies a federal income tax deduction for certain compensation in excess of $1,000,000 per year paid to the chief executive officer and the three other most highly-paid executive officers of a publicly traded corporation (other than the chief financial officer). Certain types of performance-based compensation are excluded from the deduction limit if certain requirements are met. Awards of stock options and stock appreciation rights under the Plan are intended to be exempt from the deduction limits under Section 162(m) of the Code. At the discretion of our Compensation Committee, performance stock and performance stock units may be granted under the Plan in a manner that exempts them from Section 162(m) of the Code. Code Section 409A. Section 409A of the Code provides for the imposition of an excise tax on participants in nonqualified deferred compensation arrangements where those arrangements are not not in compliance with Section 409A. Generally, Section 409A will not apply to awards granted under the Plan but may apply in some cases to restricted stock, restricted stock units, performance stock and performance stock units. For awards subject to Section 409A, there may be a delay of up to six months in the settlement of the awards for certain of our officers. 2009 Unit Incentive Plan We have adopted the 2009 Unit Incentive Plan, as amended in July 2010 and October 2012 (the 2009 Plan). At September 30, 2014, there were outstanding options to purchase 15,095,225 common units, and the remaining number of common and appreciation units authorized to be granted was 1,365,038. All outstanding options to purchase common units under the 2009 Plan will automatically be converted into options to purchase 5,977,709 shares of Class A common stock following the corporate conversion. Following the effectiveness of the 2014 Equity Incentive Plan, we intend to amend the 2009 Plan to provide that no further awards will be issued thereunder. 401(k) Plan We sponsor a defined contribution plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, containing a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. U.S. employees are generally eligible to participate in the plan on their hire date. Participants may make pre-tax contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax contributions under the Code. Pre-tax contributions by participants and the income earned on those contributions are generally not taxable to participants until withdrawn. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee s interest in his or her pre-tax deferrals is 100% vested when contributed. The plan allows us to make, in our discretion, employer matching or non-elective contributions on behalf of employees who complete at least 1,000 hours of service during a plan year and who are employed by us on the last day of that plan year. Discretionary employer matching and non-elective contributions become 25% vested after one year of service, and continue vesting thereafter at 25% per year until 100% vested following four years of service. Limitations on Liability and Indemnification Matters Our certificate of incorporation that will become effective upon the corporate conversion contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the Delaware General Corporation Law (DGCL). Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: any breach of the director s duty of loyalty to us or our stockholders; any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or any transaction from which the director derived an improper personal benefit. Our bylaws that will become effective upon the corporate conversion require us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject to certain limitations, our bylaws will also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted. In addition, under the DGCL, we may be required to indemnify our directors and officers under certain circumstances. We intend to enter into separate indemnification agreements with our directors and executive officers, in addition to the indemnification under our certificate of incorporation and bylaws. These agreements, among other things, will provide that we will indemnify our directors and executive officers for certain expenses (including attorneys fees), judgments, fines, penalties and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person s services as one of our directors or executive officers, or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS We have not been a party to any transactions since January 1, 2011 in which the amount involved exceeded the lesser of $120,000 or one percent of the average of our total assets at the end of the last two recent fiscal years and in which any of our executive officers, directors or beneficial holders of more than five percent of our capital stock had or will have a direct or indirect material interest, other than the arrangements described below or under the section of this prospectus entitled Executive Compensation. Conversion to a Corporation Prior to the issuance of any of our shares of common stock in this offering, we will convert from a Delaware limited liability company into a Delaware corporation and change our name from Workiva LLC to Workiva Inc. In order to consummate the corporate conversion, a certificate of conversion will be filed with the Secretary of State of the State of Delaware prior to the effectiveness of the registration statement of which this prospectus is a part. In conjunction with the corporate conversion, all of our outstanding equity units will automatically be converted into shares of our common stock and all of our outstanding options to purchase equity units will be converted into options to purchase shares of our Class A common stock. The ratio at which each class of outstanding equity units will be converted into shares of our common stock and the ratio at which outstanding options to purchase equity units will be converted into options to purchase shares of our Class A common stock will be determined using a formula based on the midpoint of the price range set forth on the cover page of the last preliminary prospectus filed prior to the completion of the corporate conversion. For more detailed information, we refer you to the form of the plan of conversion that is filed as an exhibit to the registration statement of which this prospectus is a part. The shares of our common stock issued upon the corporate conversion that will be beneficially owned by our executive officers who were our managing directors immediately prior to the corporate conversion will comprise our Class B common stock. All other shares of our common stock issued upon the corporate conversion will consist of our Class A common stock. See Description of Capital Stock for additional information regarding the terms of our common stock following the corporate conversion. Upon completion of the corporate conversion and this offering, and based on an assumed initial public offering price of $14.00 per share (the midpoint of the price range set forth on the cover page of this prospectus), the former holders of equity units will beneficially own an aggregate of approximately 81.8% of our common stock (or 79.6% if the underwriters option to acquire additional shares of common stock is exercised in full) and will control an aggregate of approximately 95.2% of the combined voting power of our Class A and Class B common stock (or 94.6% if the underwriters option to acquire additional shares of common stock is exercised in full). Employment Agreements We have entered into agreements containing compensation, termination and change of control provisions, among others, with certain of our executive officers as described in Executive Compensation Employment Agreements and Executive Compensation Potential Payments upon Termination or Change-In-Control. Loan Agreement; Personal Guarantee In August 2011, we borrowed $1,000,000 from Mr. Vanderploeg, our Chief Operating Officer and a Managing Director, at an interest rate of 7%. This loan was repaid in full in August 2012. The total amount of interest paid to Mr. Vanderploeg under this loan was $75,833. Mr. Vanderploeg also provided a personal guarantee of the non-interest bearing loan we obtained from the Iowa Economic Development Authority in May 2010. See Note 7 to the Consolidated Financial Statements Debt. The initial principal amount of the loan was $500,000. We are required to make monthly payments of $8,333 until maturity in August 2015. As of September 30, 2014, the outstanding balance of the loan was $92,000. Issuance of Series C Preferred Units From November to December 2011, we issued 7% convertible notes due December 2016 in an aggregate original principal amount of $10.1 million. As part of this financing, we sold notes in the principal amount of $100,000, $500,000 and $1,250,000, respectively, to Robert H. Herz, a nominee for director, David S. Mulcahy, a nominee for director, and several funds affiliated with Bluestem Capital Company, L.L.C. (Bluestem), which following the corporate conversion will be the beneficial owner of more than five percent of our Class A common stock. In multiple closings from October to December 2012, the total outstanding principal and interest of $107,575, $532,986 and $1,332,466 due to Mr. Herz, Mr. Mulcahy and Bluestem, respectively, was converted at the rate of $4.50 per unit into 23,905, 118,441 and 296,102 Series C preferred units, respectively. In addition, from October 2012 to February 2013, we sold an aggregate of 7,479,945 Series C preferred units at a purchase price of $5.00 per unit for an aggregate purchase price of $37.4 million. As part of this financing, we sold 20,000, 140,000 and 2,213,000 Series C preferred units at a purchase price of $5.00 per unit to Mr. Herz, Mr. Mulcahy and Bluestem, respectively. Consulting Services Robert H. Herz LLC, a consulting company that is wholly-owned by Robert H. Herz, a nominee for director, has provided us with consulting services on financial reporting and other matters since 2012. We have paid Robert H. Herz LLC aggregate consulting fees of $173,700, $352,200 and $146,575 in 2012, 2013 and 2014 (year-to-date), respectively. Separation Agreements Jerome Behar, who was one of our founders and following the corporate conversion will be the beneficial owner of more than five percent of our Class A common stock, resigned as a Managing Director of Workiva in March 2013. At that time, we entered into a Separation Agreement and General Release with Mr. Behar pursuant to which we agreed to pay Mr. Behar severance equal to his monthly base compensation of $18,750 for a period of twenty-four months. In addition, we agreed to maintain Mr. Behar on our medical and dental plans through March 2015 and provide him with a complimentary license to use our products. In addition, Mr. Behar agreed to certain restrictive covenants, including non-competition, the breach of which would result in the termination of the payments and benefits under the agreement. Daniel J. Murray, who was one of our founders and following the corporate conversion will be the beneficial owner of more than five percent of our Class A common stock, resigned as a Managing Director of Workiva in April 2013. At that time, we entered into a Separation Agreement and General Release with Mr. Murray pursuant to which we agreed to pay Mr. Murray severance equal to his monthly base compensation of $18,750 for a period of twenty-four months. In addition, we agreed to maintain Mr. Murray on our medical and dental plans through April 2015. In addition, Mr. Murray agreed to certain restrictive covenants, including non-competition, the breach of which would result in the termination of the payments and benefits under the agreement. Convertible Note In July 2014, we issued a subordinated promissory note totaling $5.0 million with a 7% coupon rate and maturing January 31, 2016 to a fund affiliated with Bluestem, which following the corporate conversion will be the beneficial owner of more than five percent of our Class A common stock. The note contains an option to convert outstanding principal and paid-in-kind interest into our Class A common stock upon successful completion of an initial public offering at a 10% discount to the offering price. If Bluestem does not elect to convert prior to the consummation of this offering, it loses the right to convert, and the coupon rate will adjust to 10%, payable monthly in arrears, for the remainder of the term. In the event that, prior to the consummation of our initial public offering, we experience a change of control of the company or we issue securities with an aggregate offering amount greater than $20 million in a private offering, we will be required to redeem the note for an amount equal to 110% of the aggregate of the outstanding principal amount and accrued interest on the note. Indemnification Agreements with our Directors and Officers We intend to enter into indemnification agreements, effective upon the corporate conversion, with each of our directors and executive officers. The indemnification agreements and our bylaws will require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. Subject to certain limitations, the indemnification agreements and our bylaws will also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see Executive Compensation Limitations on Liability and Indemnification Matters. Procedures for Approval of Related-Party Transactions In connection with this offering, we will adopt a written policy relating to the approval of related-party transactions. We will review all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our legal staff will be primarily responsible for the development and implementation of processes and controls to obtain information from our directors and executive officers with respect to related-party transactions and for determining, based on the facts and circumstances, whether we or a related person have a direct or indirect material interest in the transaction. In addition, our Audit Committee will review and approve or ratify any related-party transaction reaching a certain threshold of significance. In approving or rejecting any such transaction, we expect that our Audit Committee will consider the relevant facts and circumstances available and deemed relevant to the Audit Committee. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote on approval or ratification of the transaction. PRINCIPAL STOCKHOLDERS There are no selling stockholders in this offering. The following table sets forth certain information with respect to the beneficial ownership of our common stock as of September 30, 2014 referred to in the table below as the Beneficial Ownership Date, and as adjusted to reflect the automatic conversion of all outstanding equity units into Class A or Class B common stock upon the corporate conversion, and the sale of shares of our Class A common stock offered by this prospectus, by: each beneficial owner of 5% or more of the outstanding shares of our Class A or Class B common stock; each of our directors and director nominees; each of our named executive officers; and all directors, director nominees and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or issuable under convertible securities held by that person that are currently exercisable or exercisable within 60 days of the Beneficial Ownership Date are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 19,897,876 shares of Class A common stock and 12,426,947 shares of Class B common stock outstanding as of the Beneficial Ownership Date and 27,097,876 shares of Class A common stock and 12,426,947 shares of Class B common stock outstanding after this offering, assuming the completion of the corporate conversion and the conversion of a convertible promissory note issued in July 2014 in an aggregate principal amount of $5.0 million plus accrued interest into 407,183 shares of Class A common stock (based on an assumed closing date for this offering of December 17, 2014), and assuming an offering price of $14.00 per share, the midpoint of the price range set forth on the cover of this prospectus. The percentage of beneficial ownership assuming the underwriters exercise their option in full to purchase additional shares of common stock is based on 28,177,876 shares of Class A common stock and 12,426,947 shares of Class B common stock outstanding after the offering and exercise of such option. To our knowledge, except as set forth in the footnotes to this table and subject to any applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person s name. Except as otherwise indicated, the address of each of the persons in this table is c/o Workiva Inc., 2900 University Blvd., Ames, IA 50010. Common stock owned before the offering % of total voting power before the offering Common stock owned after the offering if underwriters option is not exercised(1) % total voting power after the offering if under- writers option is not exercised(1) Class A Class B Class A Class B Name of Beneficial Owner Number % Number % Number % Number % Named Executive Officers and Directors: Matthew M. Rizai, Ph.D.(2) 3,054,612 24.6 21.2 3,054,612 24.6 20.2 Martin Vanderploeg, Ph.D.(3) 5,165,222 41.6 35.8 5,165,222 41.6 34.1 Jeffrey Trom, Ph.D.(4) 2,770,553 22.3 19.2 2,770,553 22.3 18.3 Michael M. Crow, Ph.D.(5) 58,000 * * 58,000 * * Robert H. Herz(6) 54,512 * * 54,512 * * Eugene S. Katz 87,700 * * 87,700 * * David S. Mulcahy 170,293 * * 170,293 * * Suku Radia All executive officers, directors and director nominees as a group (12 persons) 397,525 2.0 12,426,947 100.0 86.5 397,525 1.5 12,426,947 100.0 82.4 5% Stockholders: Joseph H. Howell(7) 798,234 6.4 5.5 798,234 6.4 5.3 Michael S. Sellberg(8) 638,326 5.1 4.4 638,326 5.1 4.2 The Behar Living Trust(9) 4,372,268 22.0 3.0 4,372,268 16.1 2.9 Daniel Murray(10) 1,674,775 8.4 1.2 1,674,775 6.2 1.1 Bluestem Funds(11) 1,514,039 7.6 1.1 1,514,039 5.6 1.0 (*) Represents beneficial ownership of less than 1% of class. (1) If the over-allotment option is exercised in full, the common stock owned after the offering will be as follows: Common stock owned after the offering if underwriters option is exercised in full % of total voting power after the offering if underwriters option is exercised in full Class A Class B Name of Beneficial Owner Number % Number % Named Executive Officers and Directors: Matthew M. Rizai, Ph.D.(2) 3,054,612 24.6 20.0 Martin Vanderploeg, Ph.D.(3) 5,165,222 41.6 33.9 Jeffrey Trom, Ph.D.(4) 2,770,553 22.3 18.2 Michael M. Crow, Ph.D.(5) 58,000 * * Robert H. Herz(6) 54,512 * * Eugene S. Katz 87,700 * * David S. Mulcahy 170,293 * * Suku Radia All executive officers, directors and director nominees as a group (12 persons) 397,525 1.4 12,426,947 100.0 81.8 5% Stockholders: Joseph H. Howell(7) 798,234 6.4 5.2 Michael S. Sellberg(8) 638,326 5.1 4.2 The Behar Living Trust(9) 4,372,268 15.5 2.9 Daniel Murray(10) 1,674,775 5.9 1.1 Bluestem Funds(11) 1,514,039 5.4 * (*) Represents beneficial ownership of less than 1% of class. (2) Shares owned consist of 2,077,058 shares owned directly by Mr. Rizai, 885,109 shares owned by Mr. Rizai and Svetlana Skopcenko as trustees u/a dated August 7, 2013 creating Marital Trust, of which Mr. Rizai has sole voting power and Mr. Rizai and Svetlana Skopcenko have shared dispositive power, and 92,445 shares owned by family trusts of which Barbara Schlaff is the trustee and has entered into an irrevocable proxy under which she has granted sole voting power to Mr. Rizai for so long as the family trusts hold such shares. Ms. Schlaff has sole dispositive power as to such shares. (3) Shares owned consist of 662,467 shares owned by the Matthew and Tonja Rizai Charitable Remainder Trust, of which Mr. Vanderploeg is trustee; 523,050 shares owned by the Jeffrey Dean Trom Charitable Remainder Trust, of which Mr. Vanderploeg is trustee; and 3,979,705 shares owned by the Martin J. Vanderploeg 2001 Revocable Living Trust, of which Mr. Vanderploeg is trustee. (4) Shares owned consist of 1,881,533 shares owned directly by Mr. Trom and 889,020 shares owned by the Martin J. Vanderploeg Charitable Remainder Trust, of which Mr. Trom is trustee. (5) Shares owned consist of 58,000 shares owned by the Michael M. Crow and Sybil Francis Family Trust, of which Dr. Crow and Mrs. Francis are trustees and have shared voting and investment power. (6) Shares owned consist of 17,387 shares owned directly and 37,125 shares subject to outstanding options that are exercisable within 60 days. (7) Shares owned consist of 798,234 shares owned by the Joseph H. and Patricia G. Howell Revocable Living Trust, of which Mr. and Mrs. Howell are trustees and have shared voting and investment power. (8) Shares owned consist of 319,163 shares owned directly by Mr. Sellberg and 319,163 shares held by Lorna Sellberg, as to which Mr. Sellberg has sole voting power for so long as Ms. Sellberg holds such shares. Ms. Sellberg has sole dispositive power as to such shares. (9) Jerome M. Behar and Leslie F. Behar are the settlors of The Behar Living Trust, over which Mr. and Dr. Behar have shared voting and investment power. (10) Shares owned consist of 1,555,975 shares owned directly by Mr. Murray and 118,800 shares owned by family trusts of which Mr. Murray is the trustee. (11) Shares owned before the offering consist of (i) 136,702 shares held of record by Bluestem Capital Company, L.L.C.; (ii) 163,548 shares held of record by Bluestem Capital Investments, LLC; (iii) 79,200 shares held of record by Bluestem Capital Appreciation Fund, LLC; (iv) 514,800 shares held of record by Bluestem Diversified Assets, LLC; and (v) 212,606 shares held of record by Bluestem Core Strategies Fund, L.L.C. Shares owned after the offering consist of (x) all shares owned before the offering and (y) 407,183 shares to be acquired upon the conversion upon completion of this offering of a convertible promissory note issued in July 2014 to Bluestem Capital Appreciation Fund, LLC in an aggregate principal amount of $5.0 million plus accrued interest (based on an assumed closing date for this offering of December 17, 2014 and an assumed initial public offering price of $14.00 per share, the midpoint of the range set forth on the cover of this prospectus). Bluestem Capital Company, L.L.C., as the managing member of each of Bluestem Capital Appreciation Fund, LLC, Bluestem Diversified Assets, LLC, and Bluestem Core Strategies Fund, L.L.C., has the sole voting and investment power with respect to the shares held by these entities. Bluestem Capital Company, L.L.C. is managed by its sole manager, Steven Kirby, who has the sole voting and investment power with respect to the shares beneficially owned by Bluestem Capital Company, L.L.C. All action relating to the disposition of the shares held by Bluestem Capital Investments, LLC requires the approval of three out of the four following individuals: Mr. Kirby, Tyler Stowater, Sandy Horst, and Nikole Mulder. Mr. Kirby, the managing member of Bluestem Capital Investments, LLC, has sole voting power with respect to the shares owned by Bluestem Capital Investments, LLC. Mr. Kirby, Ms. Horst and Joni Stowater, the spouse of Mr. Stowater, each own shares in their own name. Ms. Horst disclaims ownership of the shares held by all of the Bluestem Funds other than Bluestem Capital Investments, LLC. The address of the Bluestem funds is 122 S Phillips Ave, Suite 300 Sioux Falls, SD 57104. DESCRIPTION OF CAPITAL STOCK General The following is a summary of the rights of our common stock and preferred stock and related provisions of our certificate of incorporation and bylaws that will be in effect upon the corporate conversion. For more detailed information, we refer you to the forms of our certificate of incorporation and bylaws to be adopted upon the corporate conversion that are filed as exhibits to the registration statement of which this prospectus is a part. Under our certificate of incorporation, we will have two classes of common stock: Class A common stock, which will have one vote per share, and Class B common stock, which will have ten votes per share. The beneficial owners of our Class B common stock will be our executive officers who were our managing directors immediately prior to the corporate conversion. Any holder of Class B common stock may convert all or a portion of his shares at any time into shares of Class A common stock on a share-for-share basis. In addition, Class B common stock will convert automatically into Class A common stock upon the occurrence of specified events, including any transfer, except for certain permitted transfers described below. Except as specified below, the holders of Class A and Class B common stock will vote together as a single class. Except as expressly provided in our certificate of incorporation, including with respect to voting rights and conversion rights, the rights of the two classes of common stock will be identical. In addition, our certificate of incorporation will authorize shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our board of directors. Upon completion of this offering, our authorized capital stock will consist of 1,600,000,000 shares, each with a par value of $0.001 per share, of which: 1,000,000,000 shares are designated as Class A common stock; 500,000,000 shares are designated as Class B common stock; and 100,000,000 shares are undesignated preferred stock. As of September 30, 2014, after giving effect to the corporate conversion, we had outstanding 19,897,876 shares of Class A common stock held of record by 329 stockholders, 12,426,947 shares of Class B common stock held of record by 13 stockholders, and no shares of preferred stock, and 5,977,709 shares of our Class A common stock were subject to outstanding options. Common Stock Dividend Rights Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our board of directors may determine. See Dividend Policy for more information. Voting Rights The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one vote per share. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our certificate of incorporation or law. Delaware law could require either holders of our Class A common stock or our Class B common stock to vote separately as a single class in the following circumstances: If we were to seek to amend our certificate of incorporation to increase or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposed amendment; and If we were to seek to amend our certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment. In addition, the affirmative vote of the holders of the Class B common stock is required to amend the provisions of our certificate of incorporation that relate to our dual class structure. Under our certificate of incorporation, we will not be able to engage in certain mergers or other transactions in which the holders of Class A common stock and Class B common stock are not given the same consideration, without the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock, voting separately as a class, and Class B common stock, voting separately as a class. No such separate class vote will be required, however, if the holders of each class of common stock receive equity securities in the surviving entity with voting and related rights substantially similar to the rights of the class of common stock held by such holders prior to the merger or other transaction. In addition, following the corporate conversion we may not issue any shares of Class B common stock, other than shares issued in connection with stock dividends, stock splits, reclassifications and similar transactions. Stockholders do not have the ability to cumulate votes for the election of directors. Our certificate of incorporation that will be in effect after the corporate conversion will provide for a classified board of directors consisting of three classes of approximately equal size, each serving staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. No Preemptive or Similar Rights Our common stock is not entitled to preemptive rights and is not subject to redemption or sinking fund provisions. Right to Receive Liquidation Distributions Upon our dissolution, liquidation or winding-up, the assets legally available for distribution to our stockholders are distributable ratably among the holders of our common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock. Conversion Our Class A common stock is not convertible into any other shares of capital stock. Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon the occurrence of specified events, including any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation, including transfers to family members, trusts solely for the benefit of the stockholder or the stockholder s family members, and individuals or entities controlled by the stockholder or the stockholder s family members, and transfers by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement. Each share of Class B common stock will also convert automatically into one share of Class A common stock upon the death of a Class B common stockholder, except if such shares are transferred in accordance with the foregoing sentence. Further, each share of Class B common stock will convert into one share of Class A common stock if such conversion is approved by the holders of at least two-thirds of the then-outstanding shares of Class B common stock. Once converted into Class A common stock, a share of Class B common stock may not be reissued. Preferred Stock Upon the closing of our initial public offering, no shares of preferred stock will be outstanding, but our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions. Our board of directors also can increase or decrease the number of shares of any series, but not below the number of shares of that series then outstanding, without any further vote or action by our Class A stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Class A common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of our company and may adversely affect the market price of our Class A common stock and the voting and other rights of the holders of Class A common stock. We have no current plan to issue any shares of preferred stock. Options As of September 30, 2014, and after giving effect to the corporate conversion, we had outstanding options to purchase 5,977,709 shares of our Class A common stock. Anti-Takeover Provisions So long as the outstanding shares of our Class B common stock represent a majority of the combined voting power of common stock, our Class B holders will, if voting together, effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company, which could have the effect of delaying, deferring or discouraging another person from acquiring control of our company. In addition, the provisions of Delaware law, our certificate of incorporation and our bylaws may have the same effect. Section 203 of the Delaware General Corporation Law Following the corporate conversion, we will be governed by the provisions of Section 203 of the DGCL. Section 203 generally restricts Delaware corporations from engaging, under some circumstances, in a business combination, which includes certain mergers or sales of at least 10% of the corporation s assets, with any interested stockholder, which is generally defined to mean any person or entity that (i) is the owner of 15% or more of the corporation s outstanding voting stock, or (ii) or (y) is an affiliate or associate of the corporation and was the owner or 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder, and the affiliates and associates such person unless: prior to the time the stockholder became an interested stockholder, the board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction that resulted in the stockholder s becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or at or subsequent to the time that the stockholder became an interested stockholder the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders (and not by written consent) by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. A Delaware corporation may opt out of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from a stockholders amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or prevented. Certificate of Incorporation and Bylaw Provisions Following the corporate conversion, our certificate of incorporation and our bylaws will include a number of provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control of our management team, including the following: Dual Class Stock. As described above in Common Stock Voting Rights, our certificate of incorporation will provide for a dual class common stock structure, which gives the beneficial owners of our Class B common stock the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A and Class B common stock on a combined basis. These matters include the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. Supermajority Approvals. Our certificate of incorporation will provide that certain amendments to our certificate of incorporation or bylaws by stockholders will require the approval of two-thirds of the combined vote of our then-outstanding shares of Class A and Class B common stock. This will have the effect of making it more difficult to amend our certificate of incorporation or bylaws to remove or modify any existing provisions. Board of Directors Vacancies. Our certificate of incorporation and bylaws will authorize only our board of directors, and not our stockholders, to fill vacant directorships. These provisions could prevent a stockholder from increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its own nominees. Classified Board. Under our certificate of incorporation, our board of directors will be divided into three classes of directors, each of which will hold office for a three-year term. In addition, directors may only be removed from the board of directors for cause and only by the affirmative vote of the holders of at least a majority of the combined voting power of the then-outstanding shares of our Class A and Class B common stock. The existence of a classified board could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospect of that delay might deter a potential offeror. Stockholder Action; Special Meeting of Stockholders. Our certificate of incorporation will not permit our stockholders to take action by written consent following the closing of this offering, and as a result, they will only be able to take action at annual or special meetings of our stockholders. Our certificate of incorporation and bylaws further provide that special meetings of our stockholders may be called only by a majority of our total number of directors, the chairman of our board of directors, our chief executive officer, or our president (in the absence of a chief executive officer). This could have the effect of preventing or delaying significant corporate actions that would otherwise be taken by the holders of at least a majority of the combined voting power of our Class A and Class B common stock. Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at any meeting of stockholders. Our bylaws also will specify certain requirements regarding the form and content of a stockholder s notice. These provisions may deter our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our meetings of stockholders. Authorized but Unissued Shares; Undesignated Preferred Stock. The authorized but unissued shares of our Class A common stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. In addition, our board of directors may issue, without stockholder approval, up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. The existence of authorized but unissued shares of Class A common stock or preferred stock enables our board of directors to make more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. Choice of Forum Following the corporate conversion, our certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty owed to us; any action asserting a claim arising pursuant to the DGCL, our certificate of incorporation or our bylaws; any action to interpret, apply, enforce or determine the validity of any provision of our certificate of incorporation or our bylaws; or any action asserting a claim that is governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in other companies certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. Lock-Up Provisions Subject to certain limited exceptions, our certificate of incorporation will restrict the transfer of shares of our common stock other than shares of Class A common stock issued in this offering for 180 days following the date of this prospectus. In addition, subject to certain limited exceptions, our directors, executive officers and substantially all of our other stockholders have agreed pursuant to lock-up agreements with the representatives of the underwriters not to transfer their shares for 180 days following the date of this prospectus. See Shares Eligible for Future Sale Lock-Up Restrictions and Underwriting for more information. Limitations on Liability and Indemnification See the section titled Executive Compensation Limitations on Liability and Indemnification Matters. Listing We have applied to have our Class A common stock approved for listing on the New York Stock Exchange under the symbol WK effective upon the completion of the offering. Our Class B common stock will not be listed on any stock market or exchange. Transfer Agent and Registrar Upon completion of this offering, the transfer agent and registrar for our common stock will be Computershare Trust Company, N.A., located at 250 Royall Street, Canton, Massachusetts 02021. SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has not been a public market for our capital stock. Future sales of our Class A common stock in the public market, or the possibility of these sales occurring, could cause the prevailing market price for our Class A common stock to fall or impair our ability to raise equity capital in the future. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our Class A common stock in the public market after these restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at that time and our ability to raise equity capital in the future. Based on the number of shares outstanding as of September 30, 2014 and after giving effect to the corporate conversion and the conversion of a convertible promissory note issued in July 2014 in an aggregate principal amount of $5.0 million plus accrued interest into 407,183 shares of Class A common stock (based on an assumed closing date for this offering of December 17, 2014 and an assumed initial public offering price of $14.00 per share, the midpoint of the range set forth on the cover of this prospectus), upon the completion of this offering, 27,097,876 shares of Class A common stock and 12,426,947 shares of Class B common stock will be outstanding, assuming no exercise of the underwriters over-allotment option and no exercise of outstanding options. Of the outstanding shares, all of the shares sold in this offering will be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below. After giving effect to the corporate conversion, we will have reserved 3,960,000 shares of Class A common stock for issuance upon exercise of options to be granted under our 2014 Equity Incentive Plan. The grant of options to purchase shares of Class A common stock under our 2014 Equity Incentive Plan in the future is conditional on our having available a sufficient number of shares of capital stock authorized for issuance. In addition, immediately following this offering, based on the number of options outstanding as of September 30, 2014 and after giving effect to the corporate conversion, options to purchase 5,977,709 shares of Class A common stock under our 2009 Unit Incentive Plan will be outstanding. Lock-Up Restrictions Stockholders who hold our Class A or Class B common stock (other than shares of Class A common stock issued in this offering), or securities convertible into our Class A common stock, will be subject to lock-up provisions in our certificate of incorporation, under which they may not, subject to specific exceptions, sell any of our common stock for 180 days after the date of this prospectus, as described below. As a result of these provisions, subject to the provisions of Rule 144 or Rule 701, after giving effect to the corporate conversion, 39,524,823 shares will be available for sale in the public market as follows: Beginning on the date of this prospectus, unless released earlier, the 7,200,000 shares of Class A common stock sold in this offering will be immediately available for sale in the public market; and Beginning 181 days after the date of this prospectus, 32,324,823 additional shares of common stock will become eligible for sale in the public market, subject in some cases to the volume and other restrictions of Rule 144, as described below. The representatives of the underwriters may, at their discretion, remove or reduce the lock-up restrictions applicable to any number of shares of our common stock on terms and conditions and in ratios and numbers that it may fix in its sole discretion. In addition, our directors, executive officers and substantially all of our other stockholders have entered into lock-up agreements with the representatives, under which they may not, subject to specific exceptions, sell any of our common stock for 180 days after the date of this prospectus without the prior written consent of the representatives. See Underwriting. After the offering, our employees, including our executive officers and our directors, may enter into written trading plans that are intended to comply with Rule 10b5-1 under the Exchange Act. Sales under these trading plans would not be permitted until the expiration of the lock-up provisions described above. Rule 144 In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon the expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of: 1% of the number of shares of Class A common stock then outstanding, which will equal approximately 270,979 shares immediately after our initial public offering; or the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Rule 701 Under Rule 701, common stock acquired upon the exercise of certain currently outstanding options or pursuant to other rights granted under our stock plans may be resold, to the extent not subject to lock-up agreements, (a) by persons other than affiliates, beginning 90 days after the effective date of this offering, and (b) by affiliates, subject to the manner-of-sale, volume limitations, current public information and filing requirements of Rule 144, in each case, without compliance with the holding period requirement of Rule 144. However, none of the Rule 701 shares will be eligible for resale until the expiration of the lock-up provisions to which they are subject. Form S-8 Registration Statement We intend to file a registration statement on Form S-8 under the Securities Act covering all of the shares of common stock subject to options outstanding under the 2009 Unit Incentive Plan as well as the shares reserved for future issuance under the 2014 Equity Incentive Plan. We expect to file this registration statement as soon as practicable after our initial public offering. However, none of the shares registered on Form S-8 will be eligible for resale until the expiration of the lock-up provisions to which they are subject. CERTAIN U.S. FEDERAL INCOME AND STATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS The following discussion is a summary of the material U.S. federal income tax consequences of the acquisition, ownership, and disposition of our common stock to non-U.S. holders (as defined below), but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (Code), Treasury Regulations issued thereunder, published administrative rulings and judicial decisions, in each case, as of the date hereof. These authorities may be modified, possibly retroactively, or may be subject to differing interpretations, resulting in U.S. federal income tax consequences different from those discussed below. We have not sought any ruling from the Internal Revenue Service (IRS) with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions. This summary is limited to non-U.S. holders who purchase our common stock pursuant to this offering and who hold our common stock as a capital asset within the meaning of Section 1221 of the Code. This summary does not address any tax considerations that may be relevant to investors in light of their personal circumstances and except as specifically stated below does not address tax consequences arising under any state, local or non-U.S. tax laws, the U.S. federal estate tax or gift tax rules or any other U.S. federal tax laws. This summary does not address all aspects of U.S. federal income and estate taxation, does not address any aspects of the unearned income Medicare contribution tax under Section 1411 of the Code and does not deal with the alternative minimum tax or other federal taxes (such as gift tax) or with foreign state or local tax considerations that may be relevant to non-U.S. holders in light of their particular circumstances. This summary also does not address tax considerations applicable to investors that may be subject to special tax rules, including, without limitation: Banks, insurance companies or other financial institutions; Regulated investment companies and real estate investment trusts; Persons subject to the alternative minimum tax; Tax-exempt organizations; Controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; Persons who own (or are deemed to own), more than 5% of our capital stock (except to the extent specifically set forth below); Dealers in securities or currencies; Traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; Certain former citizens or long-term residents of the United States; Persons who hold our common stock as a position in a hedging transaction, straddle, conversion transaction, or other risk deduction transaction or a person deemed to sell common stock under the constructive sale provisions of the Code; Persons who receive our common stock as compensation for services; and Pension plans and other tax-qualified retirement plans. In addition, if a partnership (or an entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner therein generally will depend on the status of the partner and on the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the specific U.S. federal income tax consequences of acquiring, owning, or disposing of our common stock. Definition of Non-U.S. Holder For purposes of this discussion, a non-U.S. holder is a beneficial owner of our common stock, other than a partnership (or other entity classified as a partnership for U.S. federal income tax purposes), that is not any of the following: An individual citizen or resident of the United States for tax purposes. If you are an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For these purposes, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens; A corporation or other entity taxable as a corporation created or organized under the laws of the United States, any state therein, or the District of Columbia; An estate whose income is subject to U.S. federal income tax regardless of its source; or A trust (i) whose administration is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) which has made a valid election to be treated as a U.S. person. Distributions We do not expect to pay dividends on our common stock in the foreseeable future. Distributions with respect to our common stock, if any, generally will constitute dividends for U.S. federal income tax purposes to the extent paid out of current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. Any portion of a distribution in excess of current or accumulated earnings and profits will be treated as a return of capital and will first be applied to reduce the holder s tax basis in its common stock, but not below zero. Any remaining amount will then be considered gain from the sale or exchange of the common stock and will be treated as described below in Sale or Disposition. Subject to the discussions below regarding backup withholding and FATCA (defined below), distributions treated as dividends, if any, paid to a non-U.S. holder of our common stock that are not effectively connected with a U.S. trade or business conducted by such holder generally will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends, or such lower rate specified by an applicable tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder must timely furnish to us or our paying agent a valid IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or applicable successor form), certifying such holder s qualification for the reduced rate. This certification must be provided to us or our paying agent prior to the payment of dividends and must be updated periodically. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, who then will be required to provide certification to us or our paying agent, either directly or through other intermediaries. Non-U.S. holders that do not timely provide us or our paying agent with the required certification, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding possible entitlement to benefits under a tax treaty. If a non-U.S. holder holds our common stock in connection with the conduct of a trade or business in the United States and dividends paid on the common stock are effectively connected with such holder s U.S. trade or business (and, if required by an applicable tax treaty, attributable to a U.S. permanent establishment), those dividends paid to the non-U.S. holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the non-U.S. holder must furnish to us or our paying agent a valid IRS Form W-8ECI (or applicable successor form), certifying that the dividends are effectively connected with the non-U.S. holder s conduct of a trade or business within the United States. Any dividends paid on our common stock that are effectively connected with a non-U.S. holder s U.S. trade or business (and, if required by an applicable tax treaty, attributable to a U.S. permanent establishment) generally will be subject to regular graduated U.S. federal income tax rates, net of deductions and credits, in the same manner as if such holder were a U.S. person. Dividends that are effectively connected with the conduct of a U.S. trade or business and paid to a non-U.S. holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable tax treaty). Non-U.S. holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules. Sale or Disposition Subject to the discussions below regarding backup withholding and FATCA, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or disposition of our common stock unless: the gain is effectively connected with the non-U.S. holder s conduct of a trade or business in the United States and, if required by an applicable tax treaty, attributable to a U.S. permanent establishment; the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the sale or disposition and certain other requirements are met; or our common stock constitutes a U.S. real property interest by reason of our status as a U.S. real property holding corporation for U.S. federal income tax purposes (a USRPHC) at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder s holding period for our common stock. Any gain described in the first bullet point above generally will be subject to U.S. federal income tax at graduated tax rates on a net income basis in the same manner as if such holder were a U.S. person. A non-U.S. holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable tax treaty). Non-U.S. holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules. Any gain described in the second bullet point above generally will be subject to U.S. federal income tax at a flat 30% rate (or such a lower rate specified by an applicable income tax treaty), but may be offset by U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States), provided that the non-U.S. holder timely files U.S. federal income tax returns with respect to such losses. With respect to the third bullet point above, we believe that we currently are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. Because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our non-U.S. real property interests and other trade or business assets, however, there can be no assurance that we will not become a USRPHC in the future. In the event we do become a USRPHC, as long as our common stock is regularly traded, as defined by applicable Treasury Regulations, on an established securities market, our common stock will be treated as a U.S. real property interest only with respect to a non-U.S. holder that actually or constructively holds more than 5% of our common stock at any time during the shorter of the five-year period preceding the date of disposition or the holder s holding period. We expect our common stock to be regularly traded on an established securities market, although we cannot guarantee that it will be so traded. If gain on the sale or other taxable disposition of our stock were subject to taxation under the third bullet point above, the non-U.S. holder would be subject to regular U.S. federal income tax with respect to such gain in generally the same manner as a U.S. person and the purchaser of such common stock may be required to withhold a tax equal to 10% of the amount realized on the sale. Information Reporting and Backup Withholding Generally, we must report annually to the IRS and to each non-U.S. holder the amount of dividends paid to such holder, the name and address of the non-U.S. holder, and the amount of any tax withheld with respect to such dividends. These information reporting requirements apply even if no withholding was required because the dividends were effectively connected with the non-U.S. holder s conduct of a U.S. trade or business or withholding was reduced or eliminated by an applicable income tax treaty. This information also may be made available to the tax authorities of the country in which the non-U.S. holder resides or is established under a specific treaty or agreement with such tax authorities. Backup withholding generally will not apply to distributions to a non-U.S. holder of our common stock provided the non-U.S. holder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, as applicable, or otherwise establishes an exemption. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. U.S. information reporting and backup withholding requirements generally will apply to the proceeds of a disposition of our common stock effected by or through a U.S. office of any broker, U.S. or non-U.S., unless the holder provides a properly executed IRS Form W-8BEN, W-8BEN-E or W-8ECI, as applicable, or otherwise meets documentary evidence requirements for establishing non-U.S. holder status or otherwise establishes an exemption. Even if such certification or information is provided, however, information reporting and backup withholding requirements may apply to a payment of disposition proceeds if the broker has actual knowledge or reason to know, that the holder is, in fact, a U.S. person. Generally, U.S. information reporting and backup withholding requirements will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker. For information reporting purposes, certain brokers with substantial U.S. ownership or operations will generally be treated in a manner similar to U.S. brokers. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder s U.S. federal income tax liability, provided the required information is timely furnished to the IRS. FATCA Withholding Sections 1471 through 1474 of the Code and the regulations promulgated thereunder (FATCA) generally impose a U.S. federal withholding tax of 30% on certain payments of income, including dividends made after June 30, 2014, and certain payments of gross proceeds made after December 31, 2016, to a foreign financial institution (as defined for this purpose) (an FFI), including where the FFI receives such payments as an intermediary, unless the FFI (i) enters into an agreement with the IRS (or is subject to an applicable intergovernmental agreement) to withhold on certain payments and to collect and provide to the IRS (or local revenue authorities if required under an applicable intergovernmental agreement) substantial information regarding U.S. account holders of the FFI and its affiliates (including certain account holders that are foreign entities with U.S. owners) or is otherwise treated as complying with FATCA, and (ii) the FFI provides the payor with a properly completed Form W-8BEN-E to document its status, which must include the FFI s Global Intermediary Identification Number, obtained by registering online with the IRS. FATCA also imposes a 30% withholding tax on certain payments of income, including dividends, made after June 30, 2014, and certain payments of gross proceeds made after December 31, 2016, to a non-financial foreign entity unless the entity provides the withholding agent with a properly completed IRS Form W-8BEN-E certifying that it does not have any substantial U.S. owners or identifying its direct and indirect substantial U.S. owners. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our common stock. U.S. Federal Estate Tax Shares of common stock that are owned (or deemed to be owned) at the time of death by a non-U.S. holder who is an individual will be includable in such non-U.S. holder s taxable estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. The preceding discussion of U.S. federal income and estate tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state, and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws. UNDERWRITING Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below: Name Number of Shares Morgan Stanley & Co. LLC Credit Suisse Securities (USA) LLC Robert W. Baird & Co. Incorporated Raymond James & Associates, Inc. Stifel, Nicolaus & Company, Incorporated Total 7,200,000 The underwriters and the representatives are collectively referred to as the underwriters and the representatives, respectively. The underwriters are offering the shares of our Class A common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of our Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of our Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters over-allotment option described below. The underwriters initially propose to offer part of the shares of our Class A common stock directly to the public at the offering price listed on the cover of this prospectus and part to certain dealers. After the initial offering of the shares of our Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives. We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,080,000 additional shares of our Class A common stock at the public offering price listed on the cover of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of our Class A common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of our Class A common stock as the number listed next to the underwriter s name in the preceding table bears to the total number of shares of our Class A common stock listed next to the names of all underwriters in the preceding table. The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters option to purchase up to an additional 1,080,000 shares of our Class A common stock. Total Per Share No Exercise Full Exercise Public offering price $ $ $ Underwriting discounts and commissions to be paid by us Proceeds, before expenses, to us $ $ $ The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $3.0 million. We have agreed to reimburse the underwriters for up to $40,000 of expenses relating to clearance of this offering with the Financial Industry Regulatory Authority and the qualification of our Class A common stock under state securities laws. The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of our Class A common stock offered by them. We have applied to list our Class A common stock on the New York Stock Exchange under the trading symbol WK . We have agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the underwriters, we will not, during the period ending 180 days after the date of this prospectus, or the restricted period : (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our Class A or Class B common stock or any securities convertible into or exercisable or exchangeable for shares of our Class A or Class B common stock; or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A or Class B common stock; whether any such transaction described above is to be settled by delivery of our Class A or Class B common stock or such other securities, in cash or otherwise. In addition, we have agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the underwriters, we will not, during the restricted period, file any registration statement with the SEC relating to the offering of any shares of our Class A or Class B common stock or any securities convertible into or exercisable or exchangeable for our Class A or Class B common stock. The restrictions described in the immediately preceding paragraph to do not apply to: (1) the sale of shares of our common stock to the underwriters; (2) the issuance of shares of our common stock upon the exercise or conversion of a security outstanding on the date of this prospectus and described herein or of which the underwriters have been advised in writing; (3) the issuance of shares of common stock, options to purchase shares of common stock, or other equity awards pursuant to our employee benefit plans disclosed herein; (4) the filing of a registration statement on Form S-8 or a successor form thereto; or (5) the sale or issuance or entry into an agreement to sell or issue shares of common stock in connection with our acquisition of one or more businesses, products or technologies (whether by means of merger, stock purchase, asset purchase or otherwise) or in connection with joint ventures, commercial relationships or other strategic transactions, provided that the aggregate number of shares of common stock that we may sell or issue or agree to sell or issue pursuant to this clause shall not exceed 5% of the total number of shares of common stock issued and outstanding immediately following the completion of this offering, and provided further that the recipient of such shares of common stock agrees to be bound in writing by an agreement of the same duration and terms as agreed to by us. In addition, the holders of substantially all of our outstanding common stock, including all of our directors and officers, have agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the underwriters, they will not, during the restricted period: (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our Class A or Class B common stock or any securities convertible into or exercisable or exchangeable for shares of our Class A or Class B common stock; or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A or Class B common stock; whether any such transaction described above is to be settled by delivery of our Class A or Class B common stock or such other securities, in cash or otherwise. In addition, each such person has agreed that, without the prior written consent of Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC on behalf of the underwriters, such person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any shares of our Class A or Class B common stock or any security convertible into or exercisable or exchangeable for our Class A or Class B common stock. The restrictions described in the immediately preceding paragraph do not apply to: (1) transactions relating to shares of our common stock or other securities acquired in open market transactions after the completion of this offering, provided that no filing or public announcement under Section 16(a) of the Exchange Act or otherwise shall be required or shall be voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions; (2) transfers of shares of our common stock or any security convertible into our common stock as a bona fide gift or charitable contribution; (3) distributions by any holder of our common stock to limited partners, members or stockholders of such holder or to any corporation, partnership or other business entity that controls, is controlled by or managed by or is under common control with such holder; (4) any transfer by will or pursuant to the laws of descent and distribution; (5) any transfer to or from certain trusts or to a stockholder s family; (6) the receipt of our common stock upon the exercise of options or any transfer of common stock or securities convertible into common stock upon the exercise of options to purchase our securities on a cashless or net exercise basis to the extent permitted by the instruments representing such options so long as such exercise is effected solely by the surrender and cancellation of outstanding options; (7) any transfer by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement; (8) any transfer of shares of common stock or any security convertible into or exercisable or exchangeable for common stock pursuant to a bona fide third-party tender offer, merger, consolidation or similar transaction made to all holders of common stock involving a change of control, provided that until such tender offer, merger, consolidation or other such transaction is completed, the common stock shall remain subject to the restrictions contained in the applicable agreement; or (9) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that (i) such plan does not provide for the transfer of common stock during the restricted period and (ii) to the extent a public announcement or filing under the Exchange Act or otherwise, if any, is required or voluntarily made regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period; provided that in the case of any receipt, transfer or distribution pursuant to clauses (2) through (9), (i) each recipient, transferee, donee or distributee shall sign and deliver, to the extent not previously signed and delivered, a lock-up letter prior to any transfer or distribution and (ii) no filing or public announcement under Section 16(a) of the Exchange Act or otherwise shall be required or shall be voluntarily made during the restricted period. Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC, in their sole discretion, may release our common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. Further, subject to certain limited exceptions, our certificate of incorporation will contain provisions substantially identical to the lock-up agreements with the underwriters that will restrict the transfer of shares of our common stock other than shares of Class A common stock issued in this offering for 180 days following the date of this prospectus. See the section titled Shares Eligible for Future Sale-Lock-Up Restrictions. In order to facilitate this offering of our Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of our Class A common stock in the open market to stabilize the price of our Class A common stock. These activities may raise or maintain the market price of our Class A common stock above independent market levels or prevent or retard a decline in the market price of our Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time. The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions. We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of our Class A common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make internet distributions on the same basis as other allocations. The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. For example, we have a line of credit with an affiliate of Morgan Stanley & Co. LLC. In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments. In the ordinary course of business, we have sold, and may in the future sell, products or services to one or more of the underwriters or their respective affiliates in arms -length transactions on market competitive terms. In addition, one of our director nominees, Mr. Robert H. Herz, is a director of Morgan Stanley, an affiliate of Morgan Stanley & Co. LLC. Pricing of the Offering Prior to the completion of this offering, there has been no public market for our Class A common stock. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market for the shares will develop or that after the offering the shares will trade in the public market at or above the initial public offering price. Selling Restrictions European Economic Area In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each, a Relevant Member State), an offer to the public of any shares of our Class A common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our Class A common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: to any legal entity which is a qualified investor as defined in the Prospectus Directive; to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our Class A common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, (i) the expression an offer to the public in relation to any shares of our Class A common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our Class A common stock to be offered so as to enable an investor to decide to purchase any shares of our Class A common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, (ii) the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and (iii) the expression 2010 PD Amending Directive means Directive 2010/73/EU. United Kingdom Each underwriter has represented and agreed that: it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (FSMA)) received by it in connection with the issue or sale of the shares of our Class A common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our Class A common stock in, from or otherwise involving the United Kingdom. Hong Kong Shares of our Class A common stock may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to professional investors within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances that do not result in the document being a prospectus within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to shares of our Class A common stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong), other than with respect to shares of our Class A common stock that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder. Japan Shares of our Class A common stock have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any shares of our Class A common stock, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. Singapore This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares of our Class A common stock may not be circulated or distributed, nor may the shares of our Class A common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where shares of our Class A common stock are subscribed or purchased under Section 275 by a relevant person that is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired shares of our Class A common stock under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law. LEGAL MATTERS The validity of the shares of our Class A common stock offered by this prospectus will be passed upon for us by Drinker Biddle & Reath LLP, Chicago, Illinois. Mayer Brown LLP, Chicago, Illinois is acting as counsel to the underwriters in this offering.
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