diff --git a/parsed_sections/prospectus_summary/2024/ABLLL_abacus_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ABLLL_abacus_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c2aebaf98524652f5366db8e80606fe1ad4e19e --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ABLLL_abacus_prospectus_summary.txt @@ -0,0 +1 @@ +This summary highlights selected information included in this prospectus and does not contain all of the information that may be important to you. You should read the entire prospectus and the other documents to which we refer before you decide to invest. Our Mission The Company s mission is to educate all life insurance policy owners that their life insurance policy is personal property and to educate investors about alternatives to traditional investments using lifespan-based products as a core strategy. Abacus Overview Abacus is a leading vertically integrated alternative asset manager and market maker specializing in longevity and actuarial technology and investing in in-force life insurance products throughout the lifecycle of a life insurance policy. The Company is democratizing the life insurance space through groundbreaking new channels: ABL Tech, ABL Wealth and ABL Longevity Growth and Income Funds. Traditionally, life insurance policies are owned by individuals to insure their lives. Consistent with our mission, we educate policyholders regarding the potential to sell their policies to investors, often at a significant premium to the current cash surrender value. As an alternative asset manager since 2004, we purchase life insurance policies from consumers seeking liquidity and actively manage these policies over time via trading, holding and/or servicing. To date, we have purchased over $5 billion in face value of policies and have helped thousands of clients maximize the value of their life insurance. Over the past 20 years, the Company has built an institutionalized origination and portfolio management process that is supported by a 100+ person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company complies with applicable privacy laws to maintain and protect the confidentiality of financial, health and medical information. Abacus is also proud to be a Better Business Bureau Accredited Business with an A+ rating. As one of the leading buyers of life insurance policies in the United States for the last 18 years, we sit at the heart of the life settlements industry. We leverage our strong market position, highly efficient origination platform and proprietary technology to drive our revenue and profitability. The Company and its executive team have deep experience in the life settlement industry. Using this experience, the Company has established policies and guidelines with respect to its purchase of universal life, whole life and convertible term life insurance policies. These guidelines focus on the age and health of the insured, whether the insured is a man or a woman, the duration of the underlying life insurance policy, the expected mortality risk and face value of the underlying life insurance policy, the projected internal rate of return of the investment in the underlying life insurance policy after taking into account the cost of making continued premium payments, and the ultimate amount and timing of the death benefit of the underlying life insurance policy. The Company excludes making investments in life insurance policies based on certain types of the primary health impairment associated with the underlying insured to ensure that all policies are purchased in accordance with established industry standards and state law requirements. The Company s guidelines are designed to allow the Company to target the life insurance policies that it believes have the most upside potential to generate attractive risk-adjusted returns to the Company through either its hold or trade portfolio. Currently, the Company principally invests in non-variable universal life insurance policies and retains the discretion to invest in whole life or convertible term life insurance policies. Origination Our proven policy origination process first locates policies and screens them for eligibility for a life settlement. This process includes verifying that the policy is in force, obtaining consents and disclosures and submitting cases for life expectancy estimates, which is a process known as origination services. We generate fees on the policies we originate, which we source from three channels: (i) a large and growing network of financial advisors and agents, (ii) The information contained in this preliminary prospectus is not complete and may be changed. No securities may 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 13, 2024. Preliminary Prospectus 10,000,000 Shares Common Stock This is an offering of common stock by Abacus Life, Inc. (the Company ). We are offering 10,000,000 shares of the Company s common stock. You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our common stock is listed on The Nasdaq Capital Market ( Nasdaq ) under the symbol ABL. The last reported sale price of our common stock on June 12, 2024, was $10.41. Per ShareTotal Public offering price$$ Underwriting discounts and commissions(1) $$ Proceeds, before expenses to us$$ __________________ (1)See the section titled Underwriting for a description of the compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional 1,500,000 shares of our common stock from us at the public offering price, less the underwriting discounts and commissions. Investing in our shares of common stock involves risks. See Risk Factors beginning on page 8. 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 underwriters expect to deliver the shares on or about, , 2024. Piper SandlerTD SecuritiesB. Riley SecuritiesKKR , 2024 Table of Contents INFORMATION ABOUT THIS PROSPECTUS This prospectus is part of a registration statement on Form S-1 (File No. 333-279347). As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement. For further information, we refer you to the registration statement, including its exhibits. Statements contained in this prospectus about the provisions or contents of any agreement or other document are not necessarily complete. If the SEC s rules and regulations require that an agreement or document be filed as an exhibit to the registration statement, please see that agreement or document for a complete description of these matters. You should read this prospectus together with any additional information you may need to make your investment decision. You should also read and carefully consider the information in the documents we have referred you to in Where You Can Find Additional Information below. Neither we nor the underwriters have authorized any other person to provide you with any information other than that contained in this prospectus. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may give you. References in this prospectus to Abacus, the Company, we, us, and our refer to Abacus Life, Inc. (formerly known as East Resources Acquisition Company) and not to any of its consolidated subsidiaries, unless otherwise specified or as the context otherwise requires. Table of Contents an ongoing direct-to-consumer marketing campaign and (iii) a number of traditional life settlements intermediaries that submit policies to us on behalf of a financial advisor, agent or other client. Portfolio Management Once identified, we utilize our proprietary heat-map technology platform to determine the initial risk and viability of policies. Thereafter, a purchased policy is actively managed, whereby we consistently monitor the policy risk to optimize revenue by choosing to either (i) trade the policy to a third-party institutional investor (i.e., receive a trade spread) or (ii) hold the policy over time (i.e., pay premiums and receive a payout). Additionally, we service policies on behalf of third parties for which we receive fees as a percentage of the values of the policies. Our multifaceted and dynamic revenue model is made possible by the fact that we sit at the heart of the entire life settlements industry. Our revenue generation platform and economic model is best summarized below: (1)Origination Fees (paid as a percentage of face value of acquired policies) (2)Active Management (spreads for traded policies and realized returns for held policies) (3)Third-Party Portfolio Servicing (paid as a percentage of total asset value) We are currently a leader in the life settlements industry. The Company has approximately a 20% market share based on our 2022 capital invested/total industry capital invested and data compiled in a 2022 report by The Deal and Life Settlements Report, a U.S. life settlements industry news source. Data for the report was aggregated from each state based on 2022 annual reporting. We have a proven track record of growth and strong asset returns. We are currently operational in 49 states, which is a key differentiator in an industry with high barriers to entry given the significant regulatory requirements. Our business is supported by in excess of 100 employees and an innovative leadership team, with an average of over 20 years of experience in the industry. Our outstanding operations and execution team are led by a seasoned management team. Jay Jackson (our CEO) has worked in the investment industry for over 25 years (including at a family office, major investment firms and alternative asset managers) and pioneered the origination process and trading platform for our firm. William McCauley (our CFO) has over 20 years of experience and has held Senior Finance positions for some of the largest insurance carriers (including Transamerica, MassMutual and John Hancock). In addition, we have three Managing Partners (Todd Sean McNealy, Kevin Scott Kirby and Matthew Ganovsky) who co-founded Abacus in 2004 and helped build the institutional and broker market for the entire industry. In summary, our leaders are innovators who have directly contributed to the development of the broader life settlements industry. The Company, a Delaware corporation, was formed in 2004. We operate through our two principal subsidiaries, Abacus Settlements, LLC ( Abacus Settlements ), which was formed as a New York limited liability company in 2004, and Longevity Market Assets, LLC ( LMA ), which was formed in 2017 as a Florida limited liability company. In 2016, Abacus Settlements became licensed in Florida as a life settlement broker and converted into a Florida limited liability company. After the Business Combination, Abacus Settlements and LMA converted into Delaware limited liability companies. We are not an insurance company, are not licensed or regulated as an insurance company and therefore do not underwrite insurable risks for our own account. Table of Contents INDUSTRY AND MARKET DATA The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. Some data is also based on our good-faith estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled Risk Factors. These and other factors could cause results to differ materially from those expressed in any third-party publications or our good-faith estimates. Table of Contents Summary of Historical Financial Data for Abacus Life, Inc. The summary of historical statements of income data of the Company for the fiscal years ended December 31, 2023 and December 31, 2022 and the historical balance sheet data as of December 31, 2023 and December 31, 2022 are derived from Abacus s audited financial statements included elsewhere in this prospectus. The summary of historical statements of income data of the Company for the three months ended March 31, 2024 and March 31, 2023 and the historical balance sheet data as of March 31, 2024 are derived from the Company s unaudited financial statements included elsewhere in this prospectus. Abacus s historical results are not necessarily indicative of the results that may be expected in the future. The information below is only a summary and should be read in conjunction with the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this prospectus. As of and for the three months ended March 31, 2024 As of and for the three months ended March 31, 2023(1) As of and for the year ended December 31, 2023 As of and for the year ended December 31, 2022 Statement of Income Data: Total revenues $21,487,184 $10,273,389 $66,401,451 $44,713,552 Total cost of revenues 2,720,897 489,550 6,490,377 5,884,669 Gross profit 18,766,287 9,783,839 59,911,074 38,828,883 Operating Expenses Sales and marketing 1,929,944 729,004 4,905,747 2,596,140 General and administrative (including stock-based compensation) 11,353,499 696,892 26,482,571 1,426,865 Loss on change in fair value of debt 2,712,627 953,433 2,356,058 90,719 Unrealized loss (gain) on investments (1,164,966)(125,220)(1,369,112)1,045,623 Depreciation and amortization expense 1,682,054 1,043 3,409,928 4,282 Operating Income 2,253,129 7,528,687 24,125,882 33,665,254 Other income (expense) (53,028)(210,432)(146,443)(347,013) Interest (expense) (3,670,445)(357,383)(9,866,821)(42,798) Interest income 421,426 7,457 594,764 1,474 Gain/Loss on change in fair value of warrant liability 946,960 (4,204,360) Total other income (expense) (2,355,087)(560,358)(13,622,860)(388,337) Net (loss) income before provision for income taxes (101,958)6,968,329 10,503,022 33,276,917 Income tax expense (benefit)1,173,513 (656,467)1,468,535 889,943 Net (loss) income (1,275,471)7,624,796 9,034,487 32,386,974 Less: Net Income (Loss) attributable to Noncontrolling Interest 73,274 (460,707)(482,139)704,699 Net income attributable to common stockholders $(1,348,745)$8,085,503 $9,516,626 $31,682,275 (Loss) earnings per share (Loss) earnings per share-basic$(0.02)$0.16 $0.17 $0.63 (Loss) earnings per share-diluted$(0.02)$0.16 $0.16 $0.63 Balance Sheet Data: Total assets $376,719,400 $90,449,415 $331,826,067 $59,094,847 Total liabilities 211,378,628 54,787,235 167,755,991 30,945,150 Total stockholders equity 165,340,772 35,662,180 164,070,076 28,149,697 Table of Contents FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ). These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words believe(s), estimate(s), expect(s), predict(s), project(s), forecast(s), may, might, will, could, should, would, seek(s), plan(s), scheduled, possible, continue, potential, anticipate(s) or intend(s) or similar expressions; provided that the absence of these does not means that a statement is not forward-looking. Forward-looking statements contained in this prospectus include, but are not limited to, statements about the ability of the Company to: realize the benefits expected from the business combination and related transactions consummated by the Company on June 30, 2023 (the Business Combination ); maintain the listing of the Company on a securities exchange; achieve projections and anticipate uncertainties relating to the business, operations and financial performance of the Company, including: expectations with respect to financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder; expectations regarding product development and pipeline; expectations regarding market size; expectations regarding the competitive landscape; expectations regarding future acquisitions, partnerships or other relationships with third parties; and future capital requirements and sources and uses of cash, including the ability to obtain additional capital in the future. develop, design and sell services that are differentiated from those of competitors; retain and hire necessary employees; attract, train and retain effective officers, key employees or directors; enhance future operating and financial results; comply with laws and regulations applicable to its business; stay abreast of modified or new laws and regulations applying to its business, including privacy regulations; anticipate the impact of, and response to, new accounting standards; anticipate the significance and timing of contractual obligations; and Table of Contents __________________ (1)The balance sheet data as of and for the three months ended March 31, 2023 are balances of Longevity Market Assets, LLC. Summary of Historical Financial Data for Abacus Settlements The summary historical statements of income data of Abacus Settlements for the six months ended June 30, 2023 and the year ended December 31, 2022 are derived from Abacus Settlements audited financial statements included elsewhere in this prospectus. The summary historical statements of income data of Abacus Settlements for the three months ended March 31, 2023 are derived from Abacus Settlements unaudited financial statements included elsewhere in this prospectus. Abacus Settlements historical results are not necessarily indicative of the results that may be expected in the future. The information below is only a summary and should be read in conjunction with the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this prospectus. As of and for the three months ended March 31, 2023 As of and for the sixth months ended June 30, 2023 As of and for the year ended December 31, 2022 Statement of Income Data: Total revenue $6,299,986 $13,184,676 $25,203,463 Cost of revenue 1,229,616 2,734,949 5,538,470 Related party cost of revenue 3,165,707 6,558,354 11,022,535 Gross profit 1,904,663 3,891,373 8,642,458 Total operating expenses 2,554,039 4,854,177 8,686,590 Loss from operations (649,376)(962,804)(44,132) Other (expense) income Interest income 724 1,917 2,199 Interest (expense) (5,862)(11,725)(8,817) Other income 273 Total other (expense) (5,138)(9,808)(6,345) Loss before income taxes (654,514)(972,612)(50,477) Provision for Income taxes 2,289 2,289 2,018 Net loss and comprehensive loss (656,803)$(974,901)$(52,495) Table of Contents maintain key strategic relationships with partners and customers. Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ABQQ_ab_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ABQQ_ab_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..756bfab27fabe14d0a48d66b4ea3319a4574519a --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ABQQ_ab_prospectus_summary.txt @@ -0,0 +1,90 @@ +PROSPECTUS SUMMARY + 1 + + + RISK FACTORS + 5 + + + CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS + 16 + + + USE OF PROCEEDS + 17 + + + DILUTION + 17 + + + SELLING STOCKHOLDERS + 17 + + + PLAN OF DISTRIBUTION + 18 + + + DESCRIPTION OF CAPITAL STOCK + 19 + + + DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS, AND CONTROL PERSONS + 22 + + + EXECUTIVE COMPENSATION + 24 + + + BUSINESS + 27 + + + MARKET PRICE OF THE REGISTRANT S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS + 29 + + + MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION + 33 + + + CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS + 37 + + + SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT + 38 + + + LEGAL MATTERS + 39 + + + EXPERTS + 39 + + + WHERE YOU CAN FIND MORE INFORMATION + 39 + + + INDEX + TO CONSOLIDATED FINANCIAL STATEMENTS + 40 + + + + + +We have not, and the Selling +Stockholders have not, authorized anyone to provide you with information other than that contained in this prospectus and any applicable +prospectus supplement or amendment. We have not, and the Selling Stockholders have not, authorized any person to provide you with different +information. This prospectus is not an offer to sell, nor is it an offer to buy, these securities in any jurisdiction where the offer +is not permitted. The information contained in this prospectus and any applicable prospectus supplement or amendment is accurate only +as of its date. Our business, financial condition, results of operations, and prospects may have changed since that date. + + + + i \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ABVEW_above_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ABVEW_above_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8d21d2b4b01a32ff89614f09e40eea6bb8a281d --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ABVEW_above_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights, and is qualified in its entirety by, the more detailed information and financial statements included elsewhere in this prospectus. This summary does not contain all of the information that may be important to you in making your investment decision. You should read this entire prospectus carefully, especially the "Risk Factors" section beginning on page 9 and our consolidated financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our New Above Food Common Shares. Unless otherwise indicated or the context otherwise requires, references in this prospectus to "Company," "New Above Food," "we," "our," "us" and other similar terms refer to Above Food Ingredients Inc. and its consolidated subsidiaries. Overview The Company is a Saskatchewan-based regenerative ingredient company with a vertically integrated supply chain that produces products made with carefully sourced ingredients, with a priority on chain of custody, nutrition, flavor and transparency. Our vision is to create a healthier world – one seed, one field, and one bite at a time. With a priority on chain of custody plant proteins, enabled by scaled operations and infrastructure in primary agriculture and ingredient processing, we aim to deliver food to business and consumers with traceability, quantifiable sustainability, and nutrient density. Our ingredients are inside some of the most successful branded consumer products, with products available online and in natural grocers across Canada and the USA. Our railway infrastructure, grain storage terminals, private railcar fleet, and strategic farm acres provide reliability and agility across the supply chain. From partnering to purchase next year s planting seed to measuring the results of regenerative farming practices, we take the long view. We believe the Company is poised to expand its platform through innovation and organic growth along with acquisition opportunities in the regenerative ingredient space. We have three main product lines and operate in two reportable segments: Disruptive Agriculture and Rudimentary Ingredients, and Consumer Packaged Goods ("CPG"). The Disruptive Agriculture and Rudimentary Ingredients segment concentrates on the provisioning of discrete genetics, origination, purchasing, grading, primary processing and sale of regeneratively grown grain, as well as the origination, purchase, and sale of bespoke ingredients products, processed primarily through the Company-owned ingredient facilities. The CPG segment formulates, manufactures, sells, distributes, and markets proprietary consumer product formulations in owned brands and focuses on manufacturing and distribution for private-labeled retail owned brands. The Company also has a corporate department that carries out the centralized functions of accounting, treasury, information technology, legal, and human resources. Given that this department does not undertake business activities and does not recognize revenue that are more than incidental to the Company s activities, it is not considered to be a separate operating segment. We have experienced a decrease in sales for the year ended January 31, 2024 ("FY24") in comparison to the year ended January 31, 2023 ("FY23"), with both years having a large increase over the year ended January 31, 2022 ("FY22"). Revenues decreased to $368.4 million for FY24 from $396.5 million for FY23. Revenues for FY22 were $198.9 million. Disruptive Agriculture and Rudimentary Ingredients revenues decreased to $356.4 million in FY24 from $387.0 million in FY23, which increased from $198.7 million in FY22. CPG revenues increased to $11.6 million in FY24 from $9.4 million FY23, largely due to acquisitions that closed in May and June 2022 being included in the full FY24, compared to partial inclusion in FY23 (from the respective dates of acquisition to January 31, 2023). CPG revenues in FY22 were approximately $0.2 million, as the Company launched this segment towards the end of calendar 2021. We have generated a net loss in each of FY24, FY23, and FY22. Net losses in FY24, FY23, and FY22 were $53.3 million, $45.5 million, and $5.8 million, respectively. The Company incurred significant losses in FY24 and FY23 relating to significant professional fees relating to consulting and accounting as the Company prepares to go public, expenditures in order to fulfill sales contracts, continued investment in innovation and growth of our business, and implementation of the systems, processes and tools to be public ready. The loss in FY22 was largely related to expenses incurred in scaling up the business and beginning the process to go public. These losses specifically relate to operations, interest, and income taxes, and do not reflect specific capital expenditures or acquisitions. 1 The Business Combination On June 28, 2024 (the "Closing Date"), the Company consummated its previously announced business combination, pursuant to the Business Combination Agreement, dated as of April 29, 2023 as amended on March 12, 2024 (the "Business Combination Agreement," and the transactions contemplated thereby, collectively, the "Business Combination"), with Bite Acquisition Corp., a Delaware corporation ("Bite"), Above Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company ("Merger Sub"), the Company and Above Food Corp., a corporation incorporated under the laws of Saskatchewan, Canada ("Above Food"). As part of the Business Combination, on May 6, 2024, Above Food continued from the laws of Saskatchewan to a corporation under the laws of the Province of Alberta pursuant to the Business Corporations Act (Alberta) (the "ABCA"). On the Closing Date, pursuant to a court-approved plan of arrangement (the "Plan of Arrangement"), approved by the Court of King s Bench of Alberta (the "Court") pursuant to the Final Order of the Court dated June 18, 2024 (the "Final Order"), Above Food s shareholders effected a share exchange pursuant to which, among other things, Above Food became a direct, wholly owned subsidiary of New Above Food; and following the completion of the share exchange, Merger Sub merged with and into Bite pursuant to a Delaware statutory merger (the "Merger"), with Bite continuing as the surviving corporation following the Merger ("Surviving Bite"), as a result of which Surviving Bite became a direct, wholly owned subsidiary of the Company. On the Closing Date, pursuant to the Plan of Arrangement and prior to the effective time of the Merger (the "Merger Effective Time"), among other things, (i) the holders of common shares of Above Food ("Above Food Common Shares") received, in the aggregate, 21,964,098 common shares of the Company ("Common Shares" or "New Above Food Common Shares") in exchange for their Above Food Common Shares (the "Share Exchange"), (ii) the holders of warrants to purchase Above Food Common Shares pursuant to the Warrant Indenture, dated January 18, 2021, as supplemented by a Supplemental Warrant Indenture dated May 6, 2024, between Above Food, as issuer, and Odyssey Trust Company, as warrant agent, as amended by the Amended and Restated Warrant Indenture dated June 28, 2024 (the "A&R Warrant Indenture") (the "Above Food Indenture Warrants") received 10,611,244 warrants to purchase Common Shares, as adjusted in accordance with the Plan of Arrangement (the "Company Legacy Indenture Warrants"), in exchange for their Above Food Indenture Warrants and in the numbers determined in accordance with the Plan of Arrangement and (iii) the holders of warrants to purchase Above Food Common Shares pursuant to certificates of Above Food dated 19 January, 2021 representing an aggregate of 682,061 warrants (the "Above Food Non-Indenture Warrants") received 682,061 warrants to purchase Common Shares, as adjusted in accordance with the Plan of Arrangement (the "Company Legacy Non-Indenture Warrants" and collectively with the Company Legacy Indenture Warrants, the "Company Legacy Warrants"). On the Closing Date, at the Merger Effective Time, (i) holders of Bite common stock, par value $0.001 per share ("Bite Common Stock") (after giving effect to the stockholder redemptions of the Bite Common Stock) received, in aggregate, 5,840,438 Common Shares for their shares of Bite Common Stock and (ii) private placement warrants to purchase shares of Bite pursuant to the Warrant Agreement, dated February 11, 2021, between Bite and Continental Stock Transfer & Trust Company, held by the Sponsor were converted into 275,000 warrants to purchase Common Shares (the "Company Warrants") pursuant to the Amended and Restated Warrant Agreement, dated June 28, 2024, between the Company, Above Food, Bite and Continental Stock Transfer & Trust Company (the "A&R Warrant Agreement"). In addition, immediately prior the Merger Effective time (i) the outstanding units of Bite were each automatically separated into one share of Bite Common Stock and one-half of one Bite Public Warrant, which were exchanged for Common Shares and Company Warrants. Prior to signing the Business Combination Agreement, Above Food, the Sponsor and certain strategic investors entered into that certain Convertible Subordinated Loan Agreement, dated as of December 29, 2022 (as amended, restated or otherwise modified from time to time in accordance with its terms, the "Convertible Loan Agreement"), pursuant to which the investors party thereto have loaned, an aggregate of USD $9,200,000 to Above Food. On the Closing Date, a portion of the debt amount of $8.1 million (as defined in the Convertible Loan Agreement) was converted into 1,097,380 Above Food Common Shares equal to the principal amount of the Loan (plus the interest paid on the Closing Date in the form of Above Food Common Shares pursuant to the terms of the Convertible Loan Agreement) divided by USD $10.00, which Above Food Common Shares were converted into an aggregate of approximately 1,097,380 Common Shares pursuant to the Plan of Arrangement. In connection with the closing of the Business Combination (the "Closing"), the Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with U.S. GAAP. Above Food was been determined to be the accounting acquirer. 2 The rights of holders of our New Above Food Common Shares are governed by our articles (the "New Above Food Articles"), our amended and restated by-law no. 1 (the "New Above Food Bylaws"), and the applicable laws of Alberta, Canada, including the ABCA. Recent Developments Arcadia Biosciences, Inc. ("Arcadia"), Arcadia Wellness, LLC, ("Arcadia Wellness" and together with Arcadia, the "Sellers"), Above Food, and Above Food Ingredients Corp. ("Above Food Arcadia Sub") entered into an Asset Purchase Agreement, dated May 14, 2024, pursuant to which Above Food Arcadia Sub purchased inventory and intellectual property assets and agreed to provide a $6,000,000 promissory note (the "Arcadia Promissory Note") to the Sellers, among other assets and agreements, and in exchange the Sellers paid USD $2,000,000 to Above Food. The Arcadia Promissory Note is repayable to Arcadia in yearly installments of USD $2,000,000 annually on the anniversary of the Arcadia Promissory note, and interest payable annually on each anniversary of the Arcadia Promissory Note at the current applicable prime rate. Arcadia also has the right to obtain publicly traded New Above Food Common Shares in the amount of USD $2,000,000 until the second anniversary of the Arcadia Promissory Note, instead of receiving one of the installment payments in cash. If Arcadia elects to receive New Above Food Common Shares in lieu of a cash payment, New Above Food is required to file a resale registration statement on Form F-1 within 20 days to register the resale of such New Above Food Common Shares. On June 13, 2024, Above Food and Enhol entered into the Common Share Subscription Agreement ("Enhol Subscription Agreement"), pursuant to which Enhol agreed to purchase 2,377,082 Above Food Common Shares at a price of $2.103419 per share for an aggregate purchase price of USD $5,000,000. On June 19, 2024, Above Food issued 2,377,082 Above Food Common Shares to Enhol, which converted into 499,998 New Above Food Common Shares (the "Enhol Shares") at the Closing of the Business Combination and are subject to registration rights pursuant to the Registration Rights Agreement, 50% of which are locked up for 60 days and 50% of which are locked up for 180 days, as further described in that certain Lock-Up Agreement, dated June 19, 2024, by and between Above Food and Enhol. On June 19, 2024, Above Food acquired all the shares of Brotalia, S.L. ("Brotalia") from Enhol and Mr. Gonzalo Agorreta Preciado. Brotalia is (A) a subsidiary of Enhol which is engaged in (a) the development, production and commercialization of (i) precooked processed animal protein products and (ii) products made with alternative protein, for human consumption, (b) the development and research of new products, technologies or processes for the manufacture of edible products for human consumption, and (c) food tech project acceleration consultancy, (the "Enhol Business") and (B) the sole shareholder of Naturcook Innovaciones, S.L. (the "Subsidiary" and jointly with the Company, the "Companies") pursuant to a share purchase agreement (the "Enhol SPA") for an aggregate purchase price of $13,000,000, on the assumption that the net debt of the acquired business will be zero. The purchase price was paid by the delivery of 6,180,413 Above Food Common Shares, which converted into 1,299,998 New Above Food Common Shares at the Closing of the Business Combination. Pursuant to the Enhol SPA, Above Food agreed that Enhol and Mr. Preciado s shares under the Enhol SPA would participate in the Share Exchange. The parties to the Enhol SPA agreed that no later than 10 business days following the Closing, Above Food would cause New Above Food to file a resale registration statement on Form F-1 to register the resale of Enhol and Mr. Preciado s shares. The parties agreed that the shares issued pursuant to the Enhol SPA will be locked up for 12 months. On June 19, 2024, New Above Food and Enhol entered into a Nomination Rights Agreement ("Nomination Agreement"), pursuant to which New Above Food agreed that Enhol has the right to designate one nominee to the board of directors of New Above Food (the "New Above Food Board"), so long as Enhol holds at least 50% of the issued and outstanding New Above Food Common Shares held by Enhol as of the date of the Closing of the Business Combination, commencing at the next meeting of the New Above Food shareholders after the Closing. On June 19, 2024, Above Food, New Above Food, Sponsor, Enhol and Mr. Preciado entered into the Joinder to Registration Rights Agreement, pursuant to which Enhol and Mr. Preciado agreed to be bound by and become parties to the Registration Rights Agreement, dated June 28, 2024, by and among Above Food, New Above Food, Sponsor, and certain other investors set forth therein. Above Food entered into the PIPE Subscription Agreements, under which the investors agreed to purchase 530,000 units of Above Food at a purchase price of $10.00 per unit for a total purchase price of $5,300,000, which units included one Above Food common share and one additional Above Food common share provided from the Sponsor or from treasury (the "Advantage Shares"), which Above Food common shares, besides the Advantage Shares, converted into 530,000 New Above Food Common Shares, 25% of which are locked up for 90 days beginning on July 1, 2024. In addition, 1,533,456 common shares of Above Food were issued to the same group of shareholders prior to the Business Combination as a deposit for a future transaction, which shares were converted into 322,550 Common Shares on a one-for-0.2103419 basis as part of the Business Combination. On June 27, 2024, Bite issued a Promissory Note in favor of the Sponsor ("Bite Promissory Note"), which amended, replaced and superseded that certain promissory note, dated January 22, 2024 between Bite and the Sponsor for $3,250,000. Under the Bite Promissory Note, Bite promised to pay Sponsor an interest-free, principle amount of $3,500,000, but Sponsor could elect to convert the outstanding principle into Working Capital Units upon consummation of Bite s initial business combination. Sponsor elected to convert principle amount of $1,500,000 into Working Capital Units at the closing of the Business Combination. New Above Food and Sponsor entered into a Secured Convertible Promissory Note, dated June 27, 2024, pursuant to which New Above Food promised to pay Sponsor $2,000,000 in principle on the maturity date of June 27, 2026, with interest accruing on the unpaid principal amount at a rate equal to six percent (6%) per quarter, compounded quarterly. The entire principle amount is convertible into New Above Food Common Shares at Sponsor s election. As a result of the consummation of the business combination with Bite on June 28, 2024, the Company acquired the remaining 66.94% interest in ANF in exchange for 1,604,253 New Above Food Common Shares. 3 Above Food, NRGene Technologies Ltd. and NRGene Canada Inc. ("NRGene Canada" and together with NRG Technologies Ltd., the "Sellers"), entered into an Amendment to Asset Purchase Agreement, dated June 26, 2024, to amend that certain Asset Purchase Agreement, dated August 28, 2023, pursuant to which Above Food agreed to participate in the private financial round of NRGene Canada and allocate up to $1,000,000 of excess proceeds from any sale of New Above Food Common Shares to an investment under a SAFE investment agreement. Above Food agreed to provide the Sellers a non-recourse, interest-bearing loan in the amount of $2,362,500, for a period of six (6) months from the date of disbursement, bearing an annual interest rate of 3% per annum. Above Food also agreed to deliver to the Sellers 250,000 New Above Food Common Shares. Use of Proceeds The Selling Securityholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of the Common Shares or Company Warrants, except with respect to amounts received by us upon the exercise of the Company Warrants. Whether holders will exercise their Company Warrants, and therefore the amount of cash proceeds we would receive upon exercise, is dependent upon the trading price of the Common Shares. Each Company Warrant is exercisable for one Common Share at an exercise price of $11.50. Therefore, if and when the trading price of the Common Shares is less than $11.50, we expect that holders would not exercise their Company Warrants. The last reported sales price for the Common Shares on the Nasdaq Stock Market LLC ("Nasdaq") on July 9, 2024 was $2.33 per share. Company Warrants may not be in the money during the period they are exercisable and prior to their expiration, and the Company Warrants may not be exercised prior to their maturity, even if they are in the money, and as such, the Company Warrants may expire worthless and we may receive minimal proceeds, if any, from the exercise of Company Warrants. To the extent that any of the Company Warrants are exercised on a "cashless basis," we will not receive any proceeds upon such exercise. As a result, we do not expect to rely on the cash exercise of Company Warrants to fund our operations. Instead, we intend to rely on other sources of cash discussed elsewhere in this prospectus to continue to fund our operations. Summary Risk Factors Above Food 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. These risks include the following: Risks Related to Above Food s Business, including that: We have a limited operating history, which makes it difficult to evaluate our current business and prospects and may increase the risk of investment. We have incurred net losses for the two preceding fiscal years and may continue to incur losses and have a working capital deficiency as at January 31, 2024. Our recurring net losses, negative operating cash flows and violations of certain covenants under our lending arrangements raise substantial doubt about our ability to continue as a going concern. 4 Above Food currently is in default under the terms of the Convertible Loan Agreement. Although Above Food is in the process of negotiating an amendment to the Convertible Loan Agreement to extend the maturity date to a date following the closing of the Business Combination, there can be no assurance that Above Food will successfully extend the maturity date. We expect we will need to raise additional funding to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our product development efforts or other operations. We face significant competition and many of our competitors have substantially greater financial, technical and other resources than we do. Our lack of long-term purchase orders and commitments from our customers may lead to a rapid decline in our sales. Our ability to contract for sufficient acreage with the appropriate nutrient profile on a cost-effective basis presents challenges. Products that we develop, and food containing our products, may fail to meet standards established by third-party verification organizations that provide food certifications, such as non-GMO and gluten-free, which could reduce the value of our products to customers. To the extent we pursue strategic acquisitions, divestitures or joint ventures, we might experience operating difficulties and other consequences that may harm our business, financial condition, and operating results, and we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses. We identified material weaknesses in our internal control over financial reporting. If we are unable to remediate the material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, this may result in material misstatements or restatements of New Above Food s consolidated financial statements or cause New Above Food to fail to meet its periodic reporting obligations. We outsource to third parties certain supply-chain functions, including growing our seeds and processing our harvest. The overall agricultural industry is susceptible to commodity price changes and we are exposed to market risks from changes in commodity prices. Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions, all of which may be made worse by climate change, can impose significant costs and losses on our business. Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business. If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected. Risks Related to Regulatory, Legal and Intellectual Property Matters, including that: Food safety and food-borne illness incidents or other safety concerns may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings. Our products and operations are subject to government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements, or to respond to changes in regulations applicable to our business could adversely affect our business, financial condition, results of operations and cash flows. 5 We are subject to numerous environmental, health and safety laws and regulations relating to our use of biological materials and our food production operations. Compliance with such laws and regulations could be time consuming and costly. We may not be able to protect our differentiated process adequately, which may impact our commercial success. We may be unsuccessful in developing, licensing or acquiring intellectual property that may be required to develop and commercialize our products. General Risk Factors Related to Above Food, including that: Our business and reputation could be negatively impacted by the increased scrutiny from our stakeholders and institutional investors on ESG practices. Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition. Our results of operations may suffer if we are not able to successfully manage our increasing exposure to foreign exchange rate risks. Our results of operations may suffer due to certain risks related to our operations in Latin America. Risks Related to Ownership of New Above Food Common Shares, including that: The price of New Above Food Common Shares may be volatile in the future, which could lead to losses by investors and costly securities litigation. The rights of holders of New Above Food Common Shares may be impaired by the possible future issuance of preferred stock. New climate-related disclosure obligations in proposed SEC rule amendments could have uncertain impacts on our business, impose additional reporting obligations on us, and increase our costs. Risks Related to the Business Combination and Post-Closing Operations of New Above Food, including that: Some of Above Food s relationships with its customers, distributors and vendors may experience disruptions in connection with the Business Combination, which may limit New Above Food s business. As a "foreign private issuer" under the rules and regulations of the SEC, New Above Food is permitted to, and will, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and will follow certain home-country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers. The Company will incur significant increased expenses and administrative burdens as a public company. The Company may identify internal control weaknesses in the future or otherwise fail to develop and maintain an effective system of internal controls, which may result in material misstatements of financial statements and/or the Company s inability to meet periodic reporting obligations. 6 Implications of Being an Emerging Growth Company As a company with less than $1.07 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, as amended (the "JOBS Act"). 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: the option 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 (the "Sarbanes-Oxley Act"); 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 (i.e., an auditor discussion and analysis); 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 of shareholders on executive compensation, shareholder approval of any golden parachute payments not previously approved and having to disclose the ratio of the compensation of our chief executive officer to the median compensation of our employees. New Above Food may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the first sale of common equity securities pursuant to an effective registration statement. However, if (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a "large accelerated filer" (as defined in Rule 12b-2 under the Exchange Act) prior to the end of such five-year period, we will cease to be an emerging growth company. We will be deemed to be a "large accelerated filer" at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700.0 million or more as of the prior July 31st, (b) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least 12 months and (c) have filed at least one annual report pursuant to the Exchange Act. 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 shareholders may be different than you might receive from other public reporting companies in which you hold equity interests. 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. We have elected to use the extended transition period for complying with new or revised accounting standards. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. 7 THE OFFERING Securities offered by the Selling Securityholders We are registering the resale by Selling Securityholders named in this prospectus, or their permitted transferees, of an aggregate of 20,622,598 Common Shares (including 350,000 Common Shares issuable upon exercise of Company Warrants). Risk factors You should carefully read the "Risk Factors" beginning on page 9 and the other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in New Above Food Common Shares. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/AENTW_alliance_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/AENTW_alliance_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..69faac99bd69ccb0270e3c3eb4462422522f3d9c --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/AENTW_alliance_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 5 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/AIMDW_ainos-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/AIMDW_ainos-inc_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..16a95b1ceafe2a38034cc543af467aaf5b6ec268 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/AIMDW_ainos-inc_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary–The Lind Transaction" for a description of the Purchase Agreement and Placement Agent Agreement and "Selling Stockholders" for additional information regarding the Selling Stockholders. The prices at which the Selling Stockholders sell the Shares will be determined by the prevailing market price for the Shares or in negotiated transactions. We are not offering any shares of our common stock for sale under this prospectus. We are registering the offer and resale of the Shares to satisfy contractual obligations owed by us to the Selling Stockholders pursuant to the Purchase Agreement, the Placement Agent Agreement and documents ancillary thereto. Our registration of the Shares covered by this prospectus does not mean that the Selling Stockholders will offer or sell any of the Shares. Any of the Shares subject to resale hereunder will have been issued by us and acquired by the Selling Stockholders prior to any resale of such Shares pursuant to this prospectus. No underwriter or other person has been engaged to facilitate the sale of the Shares in this offering. The Selling Stockholders will pay or assume discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar expenses, if any, incurred for the sale of the Shares. We will not receive any proceeds from the resale of the Shares by the Selling Stockholders pursuant to this prospectus. However, we will receive proceeds from the exercise of the Warrants if any of the Selling Stockholders exercises a Warrant for cash. The Selling Stockholders, or their respective permitted transferees or other successors-in-interest, may offer the Shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. We provide additional information about how the Selling Stockholders may sell the Shares in the section entitled "Plan of Distribution" on page 9 in this prospectus. While we will not receive any proceeds from the sale of our common stock by the Selling Stockholders in the offering described in this prospectus, we may receive up to $2.16 per share upon the cash exercise of the Lind Warrant and up to $8.25 per share upon the cash exercise of the Placement Agent Warrants. Upon the exercise of the Warrants for all 1,030,732 Lind Warrant Shares and Placement Agent Warrants (taking into account a full funding of the "First Funding Amount" and the Increased Funding Amount drawn in January 2024 as described in the section entitled "Prospectus Summary—the Lind Transaction") by payment of cash, however, we will receive aggregate gross proceeds of approximately $2.3 million. However, we cannot predict when and in what amounts or if any of the Warrants will be exercised, and it is possible that the Warrants may expire and never be exercised, in which case we would not receive any cash proceeds. Our common stock and public warrants are listed on the Nasdaq Capital Market under the symbols "AIMD" and "AIMDW," respectively. On April 5, 2024, the closing sale price for our common stock was $1.16. Investing in our securities involves a high degree of risk. You should carefully review and consider "Risk Factors" beginning on page 6 of this prospectus. Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2024. i CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in this prospectus are "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our current beliefs, goals and expectations about matters such as our expected financial position and operating results, our business strategy and our financing plans. The forward-looking statements in this prospectus are not based on historical facts, but rather reflect the current expectations of our management concerning future results and events. The forward-looking statements generally can be identified by the use of terms such as "believe," "expect," "anticipate," "intend," "plan," "foresee," "may," "guidance," "estimate," "potential," "outlook," "target," "forecast," "likely" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. Forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. We cannot guarantee that our forward-looking statements will turn out to be correct or that our beliefs and goals will not change. Our actual results could be very different from and worse than our expectations for various reasons. You should review carefully all information in this prospectus and the documents that we reference herein and have filed as exhibits to the Annual Report on Form 10-K. Any forward-looking statements in this prospectus are made only as of the date hereof and, except as may be required by law, we do not have any obligation to publicly update any forward-looking statements contained in this prospectus to reflect subsequent events or circumstances. ABOUT THIS PROSPECTUS This prospectus is part of a registration statement on Form S-1 that we filed with the SEC under the Securities Act. This prospectus does not contain all of the information included in the registration statement. For further information, we refer you to the registration statement, including its exhibits, filed with the SEC. Statements contained in this prospectus about the contents of any document are not necessarily complete. If SEC rules require that a document be filed as an exhibit to the registration statement, please see such document for a complete description of these matters. You should carefully read this prospectus, together with the additional information described under the headings "Where You Can Find More Information." You should rely only on the information that is contained in this prospectus or that is incorporated by reference into this prospectus. We have not authorized anyone to provide you with information that is in addition to or different from that contained in, or incorporated by reference into, this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus is accurate as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus or of any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. Neither we, nor any of the Selling Stockholders, are offering to sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. We 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 securities as to distribution of the prospectus outside of the United States. This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been, or will be, filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the heading "Where You Can Find More Information." Throughout this prospectus, the terms "we," "us," "our," and "our Company" and "the Company" refer to Ainos, Inc., a Texas corporation. 1 PROSPECTUS SUMMARY This summary highlights certain information about us, this offering and selected information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you or that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the information under "Risk Factors" set forth in this prospectus and the information included in any prospectus supplement or free writing prospectus that we have authorized for use in connection with this offering. This prospectus contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may vary materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth under \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/AISPW_airship_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/AISPW_airship_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..e9fe9ed787d435f1e3dcd1153a03e6b0d048df21 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/AISPW_airship_prospectus_summary.txt @@ -0,0 +1,425 @@ +PROSPECTUS SUMMARY + +This summary highlights selected information from this prospectus and does not contain all of the information that is important to you in making an investment decision. This summary is qualified in its entirety by the more detailed information included in this prospectus. Before making your investment decision with respect to our securities, you should carefully read this entire prospectus, including the information under Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and the financial statements included elsewhere in this prospectus. + +Unless otherwise indicated or the context otherwise requires, references in this prospectus to the Company, we, our, us and other similar terms refer to Airship AI Holdings, Inc. and its subsidiaries, including Airship AI, Inc. (formerly known as Airship AI Holdings, Inc.), a Washington corporation ( Airship AI ). + +Business Overview + +We are a robust AI-driven data management platform that solves complex data challenges for large institutions operating in dynamic and mission-critical environments with rapidly increasing volumes of data being ingested from a similarly rapidly growing number of data sources. + +We solve these challenges by structuring dark or unstructured data at the edge, the location at which the data is generated and collected, and leveraging purpose-built AI models. Unstructured, or dark data, which is typically categorized as qualitative data, cannot be processed and analyzed via conventional data tools and methods. Conversely, structured data, typically categorized as quantitative data, is highly organized and easily decipherable by machine learning algorithms. + +Structuring and then analyzing data using AI models at the edge, versus transmitting the data from the edge back to a central processing location for structuring and analysis, enables real-time decision making and data-driven operational efficiency. + +We specialize in ingesting all available metadata from edge-based sensors used by government and law enforcement agencies around the world, including surveillance cameras (video), audio, telemetry, acoustic, seismic, and autonomous devices, along with large commercial corporations with fundamentally similar capabilities and requirements. + +Data generated by these edge-based sensors, including video, can then be run through our trained AI models to detect objects present within the video frame. Once an object is detected, for example an automobile, additional identifying characteristics of the object can be extracted from the image including the license plate characters and the make, model, and color of the automobile. This process of analyzing, logging and categorizing ingested data is referred to as structuring the data. + +Airship AI s software allows customers to view structured data both in real-time as well as to conduct searches on the structured data at a later point in time. Real-time structured data use includes, for example, alarms on a specific license plate or a specific make, model or color of automobile. Non-real-time structured data use includes, for example, searching a database of video data that has been previously ingested and stored to find instances of a particular license plate being visible, along with other logged vehicle characteristics such as make, model and color of an automobile. + +Additional edge deployed AI models enable similar object detection and recognition of common and custom trained objects, such as an aircraft, boat, person, animal, bag, or weapon. Airship AI s models provide similar data points for these object types allowing analysts the ability to be notified in real-time of the detection of a specified object and similarly search for historically detected objects. Examples include detecting aircrafts and boats along with their respective tail numbers and hull registration numbers. + +Our AI modelling process starts with pre-trained AI models from our technology ecosystem partners which we then customize using proprietary datasets tailored towards our customers unique workflow requirements. Where customers have pre-existing AI models or engines, we integrate those models or engines into our edge platform allowing customers to leverage proprietary models within the Airship AI software ecosystem. + + + +4 + +Table of Contents + +Our primary offerings include Outpost AI, Acropolis, and Airship Command. Our offerings allow customers to manage their data across the full data lifecycle, when and where they need it, using a highly secure permissioned based architecture. + +Merger + +On December 21, 2023, we completed the business combination (the Merger ) contemplated by the Merger Agreement, dated as of June 27, 2023 and amended on September 22, 2023 (the Merger Agreement ), by and among BYTE Acquisition Corp. ( BYTS ), BYTE Merger Sub, Inc., a Washington corporation and a direct, wholly-owned subsidiary of BYTS ( Merger Sub ), and Airship AI. Effective December 21, 2023, Merger Sub merged with and into Airship AI with Airship AI as the surviving corporation. Airship AI became a wholly-owned subsidiary of the Company. In connection with the Merger, BYTS changes its name to Airship AI Holdings, Inc. and Airship AI changed its name to Airship AI, Inc. + +Pursuant to the Merger Agreement, holders of our common stock, options, earnout warrants and SARs as of immediately prior to the effective time of the Merger are entitled to earn 25% of the 5,000,000 earnout shares if, for the period starting on the closing date of the Merger and ending on the last day of the full calendar quarter immediately following the first anniversary of the closing date of the Merger, (1) the revenues of the Company on a consolidated basis is at least $39 million, or (2) the aggregate value of new contract awards (including awards obtained through purchase orders) with federal law enforcement agencies (whether such awards are obtained directly or through intermediaries) has grown by at least 100% as compared to the year-over-year amount for the twelve-month period ending on the date of the Merger Agreement (the First Operating Performance Milestone ). We are currently assessing the earnout provision of the First Operating Performance Milestone, which may have been earned as of June 30, 2024. + +Recent Developments + +On June 3, 2024, we permanently reduced the exercise price of our outstanding 16,184,612 public warrants and 515,000 private warrants, previously exercisable at $11.50 per share, to an exercise price of $7.80 per share. The purpose of this reduced exercise price was to potentially raise proceeds received from the exercise of such warrants, if any, for working capital and general corporate purposes. + +On June 22, 2024, we entered into an extension agreement with Platinum Capital Partner, Inc. to extend the maturity date of a $2,000,000 senior secured convertible promissory note to June 22, 2025. In consideration for entering into the extension agreement, we agreed to issue to Platinum 232,360 shares of common stock. + +In June 2024, the Company issued an aggregate of 294,448 shares of common stock upon the exercise of stock options at exercise prices ranging from $0.12 to $1.64 per share. + +Smaller Reporting Company + +We are a smaller reporting company as defined in Rule 10(f)(1) of Regulation S-K. To the extent we qualify as a smaller reporting company, we may continue to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares of common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliates exceeds $700 million as of the prior June 30. + +Corporate Information + +Our principal executive offices are located at 8210 154th Ave NE, Redmond, WA 98052 and our telephone number is (877) 462-4250. Our corporate website address is https://airship.ai. The information contained in, or that can be accessed through, our website is not a part of or incorporated by reference in this prospectus, and you should not consider it part of this prospectus or of any prospectus supplement. We have included our website address in this prospectus solely as an inactive textual reference. + + + +5 + +Table of Contents + +Risk Factors Summary + +Investing in our securities involves risks. You should carefully consider the risks described in Risk Factors before making a decision to invest in our securities. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected. In such case, the trading price of our securities would likely decline, and you may lose all or part of your investment. Set forth below is a summary of some of the principal risks we face: + +Risks Related to Airship AI s Business and Industry + + + + + +The market for Airship AI s edge AI services and products is relatively new, and may decline or experience limited growth, and Airship AI s business is dependent on its clients continuing adoption and use its services and products. + + + + + + + +Airship AI s sales efforts involve considerable time and expense and its sales cycle is often long and unpredictable. + + + + + + + +Historically, existing customers have expanded their relationships with Airship AI, which has resulted in a limited number of customers accounting for a substantial portion of its revenue. + + + + + + + +If Airship AI does not successfully develop and deploy new technologies to address the needs of its customers, its business and results of operations could suffer. + + + + + + + +Issues raised by the use of artificial intelligence ( AI ) (including machine learning) in Airship AI s platforms may result in reputational harm or liability. + + + + + + + +Real or perceived errors, failures, defects, or bugs in Airship AI s platforms could adversely affect its results of operations and growth prospects. + + + + + + + +Airship AI may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. + + + + + + + +Airship AI has not been consistently profitable in the past and may not achieve or maintain profitability in the future. + + + + + + + +Airship AI requires substantial additional funding, which may not be available to Airship AI on acceptable terms, or at all. + + + + + + + +Unavailability of materials or higher costs could adversely affect Airship AI s financial results. + + + + + + + +If Airship AI s security measures are breached or fail and unauthorized access is obtained to a customer s data, our service may be perceived as insecure, the attractiveness of its services to current or potential customers may be reduced, and Airship AI may incur significant liabilities. + + + + + + + +Airship AI depends on its management team and other key employees and the ability to attract and retain highly skilled employees. + + + + + + + +Airship AI s management team has limited experience managing a public company and regulatory compliance may divert their attention from the day-to-day management of Airship AI s business. + + + + + + + +Airship AI s business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have an adverse effect on Airship AI s business and operating results. + + + +6 + +Table of Contents + + + +If Airship AI fails to maintain effective internal control over financial reporting or identify a material weakness or significant deficiency in its internal control over financial reporting, Airship AI s ability to report its financial condition and results of operations in a timely and accurate manner could be adversely affected, investor confidence in Airship AI company could diminish, and the value of its stock may decline. + + + + + + + +Airship AI could be subject to additional tax liabilities + + + + + +Risks Related to Our Securities + + + + + + + +There may not be enough liquidity in our securities to enable securityholders to sell their securities. + + + + + + +The market price of our equity securities may be volatile, and you could lose a significant part of your investment. + + + + + + +Our executive officers and directors exercise significant control over us, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control. + + + + + + +The requirements of being a public company may strain the Company s resources and distract management and we will incur substantial costs as a result of being a public company. + + + + + + +We do not intend to pay any cash dividends in the foreseeable future. + + + + + + +If our shares become subject to the penny stock rules, it would become more difficult to trade our shares. + + + + + +Risks Related to This Offering + + + + + + + +We have broad discretion in the use of the net proceeds from this offering and may not use them effectively. + + + + + + + +You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase. You may also experience future dilution as a result of future equity offerings. + + + + + + + +Resales of our common stock in the public market during this offering by our stockholders may cause the market price of our common stock to fall. + + + + + + + +This offering may cause the trading price of our common stock to decrease. + + + +7 + +Table of Contents + +THE OFFERING + +Issuer + +Airship AI Holdings, Inc. + + + + + +Common Stock to be Offered + +Up to 2,801,120 shares of common stock, assuming the sale of our common stock and common warrants at an assumed combined public offering price of $3.57 per share and common warrant (the last reported sale price per share of our common stock on The Nasdaq Global Market on August 16, 2024). + + + + +Common Warrants to be Offered + +Common warrants to purchase up to 2,801,120 shares of our common stock. Each common warrant has an exercise price of $ per share of common stock and is immediately exercisable and will expire five years from the date of the issuance. + +The shares of common stock and the accompanying common warrants can only be purchased together in this offering but will be issued separately and will be immediately separable upon issuance. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the common warrants. + + + + +Common Stock Outstanding Before this Offering + +23,736,027 + + + + + +Common Stock to be Outstanding Immediately After this Offering + +26,537,147 (assuming no exercise of the common warrants being offered) + + + + + +Use of Proceeds + +Assuming the maximum shares of common stock and common warrants are purchased as part of this best efforts offering, we estimate that the net proceeds from this offering will be approximately $8.9 million, after deducting estimated placement agent fees and estimated offering expenses payable by us. We currently intend to use the net proceeds from this offering for working capital and general corporate purposes. See Use of Proceeds for additional information. + + + + + +Placement Agent s Warrants + +The registration statement of which this prospectus is a part also registers for sale warrants (the Placement Agent s Warrants ) to purchase shares of common stock (equal to 10% of the number of shares of common stock sold in this offering) to Roth Capital Partners, LLC ( Roth ), as a portion of the compensation payable to Roth in connection with this offering. The Placement Agent s Warrants will be immediately exercisable at an exercise price of $ (100% of the public offering price for the shares of common stock and common warrants offered hereby) and expire on the fifth anniversary of the commencement of sales of this offering. See Plan of Distribution section on page 90. + + + + + +Risk Factors + +An investment in our securities involves a high degree of risk. See Risk Factors beginning on page 10 of this prospectus and the other information included in this prospectus for a discussion of the risk factors you should carefully consider before deciding to invest in our securities. + + + + + +Nasdaq Symbols + +Our common stock is listed on The Nasdaq Global Market under the symbol AISP and our public warrants are listed on The Nasdaq Capital Market under the symbol AISPW. There is no established public trading market for the common warrants being offered, and we do not expect a market to develop. In addition, we do not intend to apply to list the common warrants on any national securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the common warrants will be limited. + + + +8 + +Table of Contents + +The above discussion is based on 23,736,027 shares of our common stock outstanding as of August 16, 2024, and excludes the common warrants being sold in this offering and, as of that date, the following: + + + + + + + +5,120,141 shares of common stock issuable upon the exercise of stock options outstanding at a weighted average exercise price of $0.83 per share; + + + + + + + +3,706,241 shares of common stock reserved for future grants of equity-based awards under our equity incentive plan; + + + + + + + +16,159,012 shares of common stock issuable upon the exercise of public warrants at an exercise price of $7.80 per share; + + + + + + +515,000 shares of common stock issuable upon the exercise of private placement warrants at an exercise price of $7.80 per share; + + + + + + +2,689,902 shares of common stock issuable upon the exercise of warrants at an exercise price of $1.77 per share; + + + + + + +1,758,105 shares of common stock underlying stock appreciation rights with a base value of $0.12 per share; and + + + + + + +879,051 shares of common stock issuable upon the conversion of convertible debentures at an assumed conversion price of $2.275 per share. + + +9 + +Table of Contents + +RISK FACTORS + +An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not known to us or that we consider immaterial as of the date of this prospectus. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment. The following discussion should be read in conjunction with Airship AI s financial statements and notes thereto included herein. You should carefully consider the following risk factors in addition to the other information included in this prospectus, including matters addressed in the section titled \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ALMS_alumis-inc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ALMS_alumis-inc_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ALMS_alumis-inc_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/APHD_verde-bio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/APHD_verde-bio_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..464644f0129e86ca6582154e84379be611594b42 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/APHD_verde-bio_prospectus_summary.txt @@ -0,0 +1 @@ +CAUTION REGARDING FORWARD-LOOKING STATEMENTS This registration statement and the documents that are incorporated herein by reference contain certain forward-looking statements within the meaning of United States securities laws, including the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and may be identified by the use of words including, but not limited to the following; may, believe, will, expect, project, estimate, anticipate, plan, continue, or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These forward-looking statements are based on the Company s current plans and expectations and are subject to a number of risks, uncertainties and other factors which could significantly affect current plans and expectations and our future financial condition and results. These factors, which could cause actual results, performance and achievements to differ materially from those anticipated. These risks and uncertainties include the following: The availability and adequacy of our cash flow to meet our requirements; Economic, competitive, demographic, business and other conditions in our local and regional markets; Changes or developments in laws, regulations or taxes in our industry; Actions taken or omitted to be taken by third parties including our competitors, as well as legislative, regulatory, judicial and other governmental authorities; Competition in our industry; The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business; Changes in our business strategy, capital improvements or development plans; The availability of additional capital to support capital improvements and development; and Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC. You should read this prospectus completely and with the understanding that actual future results may materially differ from expectations set forth in forward looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, when evaluating the information presented in this registration statement or our other disclosures because current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. We have not undertaken any obligation to publicly update or revise any forward-looking statements. All of our forward-looking statements speak only as of the date of the document in which they are made or, if a date is specified, as of such date. Subject to mandatory requirements of applicable law, we disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in expectations or any changes in events, conditions, circumstances or information on which the forward-looking statement is based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the risk factors set forth in the section entitled Risk Factors in this prospectus. GLOSSARY OF TERMS Barrel or bbl: Stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons. BOE: One barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil. BOE/d: BOE per day. British Thermal Unit or Btu: The quantity of heat required to raise the temperature of one pound of water by one-degree Fahrenheit. Completion: The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency. Condensate: Liquid hydrocarbons associated with the production that is primarily natural gas. Crude oil: Liquid hydrocarbons retrieved from geological structures underground to be refined into fuel sources. Developed acreage: Acreage allocated or assignable to productive wells. Differential: An adjustment to the price of oil and natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas. GAAP: Generally accepted accounting principles in the United States. Gross acres or gross wells: The total acres or wells, as the case may be, in which an overriding, royalty or mineral interest is owned. MBbls: Thousand barrels of crude oil or other liquid hydrocarbons. MBOE: One thousand BOE. Mcf: Thousand cubic feet of natural gas. Mineral interests: The interests in ownership of the resource and mineral rights, giving an owner the right to profit from the extracted resources. MMBtu: Million British Thermal Units. MMcf: Million cubic feet of natural gas. Net royalty acres: Gross acreage multiplied by the net royalty interest. NGLs: Natural gas liquids. Prospect: A specific geographic area which, based on supporting geological, geophysical, or other data and preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons. Proved reserves: The estimated quantities of oil, natural gas, and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions. PUD: Proved undeveloped, used to characterize reserves. Reserves: The estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to the market and all permits required to implement the project. Reserves are not assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations). Reservoir: A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs. Royalty interest: An interest that gives an owner the right to receive a portion of the resources or revenues without having to carry any costs of development. Undeveloped acreage: Lease acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil and natural gas regardless of whether such acreage contains proved reserves. SUMMARY OF RISK FACTORS We and our business are subject to material risks, which could cause actual results, performance and achievements to differ materially from those anticipated, and the risk factors set forth in the section entitled Risk Factors beginning on page 12 of this prospectus. These risks can be summarized as follows: Business Related Risks Our business and operations are subject to risks and uncertainty surrounding the future spread of COVID-19 and related variants as well as the potential impact that these may have on our future operations. We have incurred operating losses in some of our historical periods and we could incur additional losses until we successfully integrate acquired practices, improve collections for procedures and reduce operating expenses. Our business is not highly diversified and approximately 90% of our case volume is currently concentrated in Colorado, Louisiana and Texas where we are susceptible to local and regional fluctuations in demand for our service, downturns in the economy, adverse weather conditions, changes in local or state regulations, and other localized market changes. We face significant competition from other purchases of oil and gas interests. Some of our competitors are larger and have longstanding and well-established relationships with sellers and operators. Our founder and director, Scott Cox, by virtue of his ownership of preferred shares, has the ability to influence the outcome of matters submitted to our shareholders for approval. Our development will depend on the efforts of key management, key personnel and our relationships with operators and other partnerships. We depend on payments from third parties, which may cause fluctuations in our revenue and delays and uncertainties in the reimbursement rate and the timing of reimbursement. Risk Related to our Stock Broad market and industry factors may affect the price of our common shares, regardless of our actual operating performance. Our common stock is defined as penny stock under the Exchange Act, and the rules promulgated thereunder. Our common stock is quoted on the OTC Pink, but we are not listed on any national securities exchange. The foregoing is a summary of significant risk factors that we think could cause our actual results to differ materially from expected results. However, there could be additional risk factors besides those listed herein that also could affect us in an adverse manner. You should read the risk factors set forth in the section entitled Risk Factors beginning on page 15 of this prospectus. POTENTIAL IMPACT OF THE COVID-19 PANDEMIC COVID-19. On March 11, 2020, the World Health Organization declared the current outbreak of a novel coronavirus disease 2019 ("COVID-19") to be a global pandemic. As further described herein, the COVID-19 outbreak led (and may continue to lead) to disruptions in the global economy, including extreme volatility in the stock market and capital markets. The COVID-19 outbreak led to severe disruptions in the global supply chain, capital markets and economies, and those disruptions will likely continue for some time. Concern about the potential effects of COVID-19 and the effectiveness of measures (including those under the Stafford Act declaration summarized above) put in place by global governmental bodies and reserve banks at various levels as well as by private enterprises (such as workplaces, trade groups, amateur and professional sports leagues and conferences, places of worship, schools, restaurants and gyms, among others) to contain or mitigate its spread have adversely affected economic conditions and capital markets globally (and, in certain cases, have caused a near total cessation of non-essential economic activities), and have led to historic volatility in the financial markets. There can be no assurance that such measures or other measures implemented from time to time will be successful, or for how long such measures will be in place. In addition to these general concerns, investors should consider what effect, if any, the COVID-19 outbreak or any similar outbreak, as well as the resulting recession or any further economic downturn may have on the Company and its ability to achieve its objectives. In the event of additional COVID-19 or other coronavirus outbreaks, it is unclear whether the same mitigation or containment measures taken by various governments (including at the federal, state and local level) or businesses described herein will be continued or reimplemented in other jurisdictions and the degree to which such measures will be applied, or if different measures will be implemented, and it is uncertain what impact such measures will have on the national or global economy. In light of the circumstances described above, the risks we describe elsewhere under Risk Factors in this Memorandum are heightened substantially, and you should review and carefully consider such risk factors in light of such circumstances. PROSPECTUS SUMMARY This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. References in this prospectus to we, us, our, the Company and Verde refer to Verde Bio Holdings, Inc. You should read both this prospectus together with additional information described below under the heading Where You Can Find More Information. Organization Verde Bio Holdings, Inc. was incorporated in the State of Nevada on February 24, 2010. On May 1, 2010, the Company entered into a share exchange agreement with Appiphany Technologies Corporation ( ATC ) to acquire all of the outstanding common shares of ATC in exchange for 1,500,000 common shares of the Company. As the acquisition involved companies under common control, the acquisition was accounted for in accordance with ASC 805-50, Business Combinations Related Issues, and the consolidated financial statements reflect the accounts of the Company and ATC since inception. On February 19, 2019, Media Convergence Group, a Nevada corporation ( Media Convergence ) entered into a certain Stock Purchase Agreement (the "Purchase Agreement") with TerraQuest Holdings, LLC ( TerraQuest ) for the sale of 500,000 shares of the Series A Preferred Stock (the Shares ) of the Company. The purchase of the Shares ( Share Purchase ) was closed on November 22, 2019. Upon the Closing of the Share Purchase, Scott Cox, as the successor in interest to TerraQuest, became the owner of the Shares, and as such gained voting control of the Company by virtue of the 10,000 for 1 voting rights of the Series A Preferred Shares. In connection with the Closing of the Share Purchase, the Company changed its management and Board. Robert Sargent resigned as the sole member of the Board and Scott Cox was elected as the sole member of the Board and as the Company s Chief Executive Officer. Mr. Cox brings 25 years of experience in the oil and gas industry changed the Company s business strategy to oil and gas exploration and investment. Nature of Business Historical Business The Company is a growing U.S. energy company based in Frisco, Texas. We have been engaged in the acquisition and development of high-probability, lower risk onshore oil and gas properties within the major oil and gas plays in the U.S. The Company s dual-focused growth strategy has relied primarily on leveraging management s expertise to grow through the strategic acquisition of non-operating, working interests and royalty interests with the goal of developing into a major company in the industry. Through this strategy of acquisition of royalty and non-operating properties, the Company has the unique ability to rely on the technical and scientific expertise of the world-class exploration and production ( E&P ) companies operating in the area. The Company focuses on the acquisition of and exploitation of upstream energy assets, specifically targeting oil and gas mineral interests, oil and gas royalty interests and select non-operated working interests. We do not drill wells and we do not operate wells. These acquisitions are structured primarily as acquisitions of leases, real property interests and mineral rights and royalties and are generally not regarded as the acquisition of securities, but rather real property interests. As a royalty owner, the Company has the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally is not required to pay any portion of the costs of drilling or operating the wells on the leased acreage. The Company began purchasing mineral and oil and gas royalty interests and surface properties in September 2020 and since such time has completed a total of 18 purchases. Plan of Operations To date, the Company has begun implementing its business plan and is attempting to secure additional funding to continue expansion of our services and products. Although the Company has generated revenue from its business operations, the Company will be required to raise additional funds by way of equity or debt financing to execute on its business plan, especially the expansion into additional energy assets. Government Regulation Oil, gas, biodiesel, and other energy assets are subject to extensive governmental regulation, including the fixing of rates of production from wells. Governmental regulation also may limit or otherwise affect the market for oil gas, biodiesel and other forms of energy and the prices which may be paid for those products. Governmental regulations relating to environmental matters also affect our operations. The nature and extent of various regulations, the nature of other political developments and their overall effect upon us are not predictable. Corporation Information Our principal executive offices are located at PO Box 67, Jacksboro, Texas 76458, and our telephone number is (972) 217-4080. Our website address is www.verdebh.com, although the information on our website is not deemed to be part of this prospectus. Our Common Stock Our common stock is quoted on the OTCQB under the symbol VBHI . \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ARBB_arb-iot_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ARBB_arb-iot_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..fe241f80120c82c5bfa31459dbe47067c89f3fde --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ARBB_arb-iot_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 RISK FACTORS 8 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 31 USE OF PROCEEDS 32 PRINCIPAL SHAREHOLDERS 33 DESCRIPTION OF SECURITIES 34 SHARES ELIGIBLE FOR FUTURE SALE 42 THE DISTRIBUTION 43 PLAN OF DISTRIBUTION 45 MATERIAL U.S. FEDERAL TAX CONSEQUENCES OF THE DISTRIBUTION 46 LEGAL MATTERS 50 EXPERTS 50 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 50 WHERE YOU CAN FIND MORE INFORMATION 51 We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus and we take no responsibility for any other information others may give you. The information contained in this prospectus is accurate only as of the date on the front of this prospectus, regardless of the time of delivery of this prospectus or any sale of our ordinary shares. i PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere, or incorporated by reference, in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our ordinary shares. You should \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ARDT_ardent_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ARDT_ardent_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ARDT_ardent_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ARKB_ark_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ARKB_ark_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a3d9b1ae52574f0b4a6bdc53080f956affb080ed --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ARKB_ark_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This is only a summary of the Prospectus and, while it contains material information about the Trust and its 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/or which may be important to you. You should read this entire Prospectus before making an investment decision about the Shares. See Glossary of Defined Terms for an explanation of certain industry and technical terms used in this Prospectus. As used below, the term Bitcoin network is used to describe the system as a whole that is involved in maintaining the ledger of bitcoin ownership and facilitating the transfer of bitcoin among parties. When referring to the digital asset within the Bitcoin network, bitcoin is written with a lower case b. Overview of the Trust The ARK 21Shares Bitcoin ETF (the Trust ) is an exchange-traded fund that issues common shares of beneficial interest (the Shares ) that trade on the Cboe BZX Exchange, Inc. (the Exchange ). The Trust s investment objective is to seek to track the performance of bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate - New York Variant (the Index ), adjusted for the Trust s expenses and other liabilities. The Index is calculated by CF Benchmarks Ltd. (the Index Provider ) based on an aggregation of executed trade flow of major bitcoin spot exchanges. The Index is designed to reflect the performance of bitcoin in U.S. dollars. The Index currently uses substantially the same methodology as the CME CF Bitcoin Reference Rate ( BRR ), including utilizing the same six bitcoin exchanges, which is the underlying rate to determine settlement of CME bitcoin futures contracts, except that the Index is calculated as of 4:00 p.m. Eastern time ( ET ), whereas the BRR is calculated as of 4:00 p.m. London time. The Shares of the Trust are valued daily based on the Index. In seeking to achieve its investment objective, the Trust will hold bitcoin. The Trust is sponsored by 21Shares US LLC (the Sponsor ), a wholly-owned subsidiary of Amun Holdings Ltd. The Sponsor has entered into a marketing and sub-advisory agreement (the Support Services Agreement ) with ARK Investment Management LLC (the Sub-Adviser ) to serve as the Trust s sub-adviser and provide assistance in the marketing of the Shares. The Trust does not provide investors with direct exposure to spot bitcoin, and an investment in the Trust is not a direct investment in bitcoin. Rather, the Trust provides investors with the opportunity to indirectly access the market for bitcoin through a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring bitcoin directly or acquiring it from a bitcoin spot market. The Trust will custody its bitcoin at a regulated third-party custodian, Coinbase Custody Trust Company, LLC ( Coinbase Custody or the Bitcoin Custodian ). The Bitcoin Custodian is chartered as a New York State limited liability trust company that provides custody services for digital assets. The Bitcoin Custodian is not Federal Deposit Insurance Corporation ( FDIC )-insured but carries insurance provided by private insurance carriers. The Trust will not invest in derivatives. The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin without purchasing, holding and trading bitcoin directly. Bitcoin and the Bitcoin Network The Bitcoin network is a decentralized, open-source protocol of a peer-to-peer network. It is widely understood that no single entity owns or operates the Bitcoin network. Bitcoin is not issued by any government, banks or similar organizations. The infrastructure of the Bitcoin network is collectively maintained by a decentralized user base. The Bitcoin network is accessed through software, and software governs the creation, movement, and ownership of bitcoin, the unit of account on the Bitcoin network ledger. The value of bitcoin is Table of Contents determined, in part, by the supply of, and demand for, bitcoin in the global markets for trading bitcoin, market expectations for the adoption of bitcoin as a decentralized store of value, the number of merchants and/or institutions that accept bitcoin as a form of payment and the volume of private end-user-to-end-user transactions. Bitcoin transaction and ownership records are reflected on the Bitcoin blockchain, which is a digital public record or ledger. Copies of this ledger are stored in a decentralized manner on the computers of each Bitcoin network node (a node is any user who maintains on their computer a full copy of all the bitcoin transaction records, the blockchain, as well as related software). Transaction data is permanently recorded in files called blocks, which reflect transactions that have been recorded and authenticated by Bitcoin network participants. The Bitcoin network software source code includes protocols that govern the creation of new bitcoin and the cryptographic system that secures and verifies bitcoin transactions. For more information on bitcoin and the Bitcoin network, see Bitcoin, Bitcoin Markets and Regulation of Bitcoin below. The Trust s Investment Objective The Trust s investment objective is to seek to track the performance of bitcoin, as measured by the Index, adjusted for the Trust s expenses and other liabilities. In seeking to achieve its investment objective, the Trust will hold bitcoin and will value its Shares daily as of 4:00 p.m. ET based on the Index. Barring the liquidation of the Trust or extraordinary circumstances (including but not limited to, non-recurring expenses and costs of services performed by the Sponsor or a service provider on behalf of the Trust to protect the Trust or the interests of Shareholders, such as in connection with any fork of the Bitcoin blockchain, any indemnification of agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters), the Trust generally will not purchase or sell bitcoin other than in connection with the creation or redemption of Shares. The Sponsor may also sell bitcoin to pay certain expenses, which may be facilitated by the Prime Broker (as defined below) or any other prime brokers with whom the Trust contracts. When the Trust sells or redeems its Shares, bitcoin will be transferred into or out of the Trust, as applicable, in exchange for blocks of 5,000 Shares (a Basket ) that are based on the quantity of bitcoin attributable to each Share of the Trust (net of accrued but unpaid Sponsor Fees (defined below) and any accrued but unpaid extraordinary expenses or liabilities). Financial firms that are authorized to purchase Shares from or redeem Shares to the Trust (known as Authorized Participants ) will purchase Shares by depositing cash in the Trust s account with the Cash Custodian. This will cause the Sponsor, on behalf of the Trust, to automatically instruct a designated third party, who is not an Authorized Participant but who may be an affiliate of an Authorized Participant and with whom the Sponsor has entered into an agreement on behalf of the Trust (each such third party, or the Prime Broker or Lender, as applicable, a Bitcoin Counterparty ), to (i) purchase the amount of bitcoin equivalent in value to the cash deposit amount associated with the order and (ii) deposit the resulting bitcoin deposit amount in the Trust s account with the Bitcoin Custodian, resulting in the Transfer Agent crediting the applicable amount of Shares to the Authorized Participant. When such an Authorized Participant redeems its Shares, the Sponsor, on behalf of the Trust will direct the Bitcoin Custodian to transfer bitcoin to the Bitcoin Counterparty, who will sell the bitcoin to be executed, in the Sponsor s reasonable efforts, at the Index price used by the Trust to calculate NAV, taking into account any spread, commissions, or other trading costs and deposit the cash proceeds of such sale in the Trust s account with the Cash Custodian for settlement with the Authorized Participant. Any slippage incurred (including, but not limited to, any trading fees, spreads, or commissions), on a cash equivalent basis, will be the responsibility of the Authorized Participant and not of the Trust or Sponsor. Table of Contents Authorized Participants will deliver only cash to create shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive bitcoin as part of the creation or redemption process or otherwise direct the Trust or a Bitcoin Counterparty with respect to purchasing, holding, delivering, or receiving bitcoin as part of the creation or redemption process. The Trust will create Shares by receiving bitcoin from a Bitcoin Counterparty that is not the Authorized Participant, and the Trust not the Authorized Participant is responsible for selecting the Bitcoin Counterparty to deliver the bitcoin. Further, the Bitcoin Counterparty will not be acting as an agent of the Authorized Participant with respect to the delivery of the bitcoin to the Trust or acting at the direction of the Authorized Participant with respect to the delivery of the bitcoin to the Trust. The Trust will redeem Shares by delivering bitcoin to a Bitcoin Counterparty that is not the Authorized Participant and the Trust not the Authorized Participant is responsible for selecting the Bitcoin Counterparty to receive the bitcoin. Further, the Bitcoin Counterparty will not be acting as an agent of the Authorized Participant with respect to the receipt of the bitcoin from the Trust or acting at the direction of the Authorized Participant with respect to the receipt of the bitcoin from the Trust. As of the date of this Prospectus, the Authorized Participants are Jane Street Capital, LLC, Macquarie Capital (USA) Inc., and Virtu Americas LLC. As of the date of this Prospectus, the Prime Broker, Coinbase, Inc., and the Lender, Coinbase Credit, Inc., will serve as Bitcoin Counterparties. The Trust and/or Sponsor will bear the expense and risk of delivery and ownership of bitcoin once such bitcoin has been received by the Bitcoin Custodian on behalf of the Trust and until transferred by the Bitcoin Custodian on behalf of the Trust to the Bitcoin Counterparty for conversion to cash. All bitcoin will be held by the Bitcoin Custodian. The Transfer Agent (as defined below) will facilitate the processing of purchase and sale orders in Baskets to and from the Trust. The CME CF Bitcoin Reference Rate - New York Variant The Index, which was introduced on February 28, 2022, is based on materially the same methodology (except calculation time) as the Index Provider s BRR, which was first introduced on November 14, 2016, and is the rate on which bitcoin futures contracts are cash-settled in U.S. dollars at the CME. The Index is designed based on the IOSCO Principals for Financial Benchmarks. The Index Provider is the administrator of the Index. The Index is calculated daily and aggregates the notional value of bitcoin trading activity across major bitcoin spot exchanges. The Sponsor believes that the use of the Index is reflective of a reasonable valuation of the average spot price of bitcoin and that resistance to manipulation is a priority aim of its design methodology. The methodology: (i) takes an observation period and divides it into equal partitions of time; (ii) then calculates the volume-weighted median of all transactions within each partition; and (iii) the value is determined from the arithmetic mean of the volume-weighted medians, equally weighted. By employing the foregoing steps, the Index thereby seeks to ensure that transactions in bitcoin conducted at outlying prices do not have an undue effect on the value of a specific partition, that large trades or clusters of trades transacted over a short period of time will not have an undue influence on the index level, and the effect of large trades at prices that deviate from the prevailing price are mitigated from having an undue influence on the benchmark level. In addition, the Sponsor notes that an oversight function is implemented by the Index Provider in seeking to ensure that the Index is administered through codified policies for Index integrity, which include a conflicts of interest policy, a control framework, an accountability framework, and an input data policy. It is also subject to the UK Benchmark Regulation ( BMR ), compliance with which regulations has been subject to a Limited Assurance Audit under the ISAE 3000 standard as of September 12, 2022, which is publicly available. Table of Contents Index data and the description of the Index are based on information made publicly available by the Index Provider on its website at https://www.cfbenchmarks.com. None of the information on the Index Provider s website is incorporated by reference into this Prospectus. The Sponsor has entered into a licensing agreement with the Index Provider to use the Index. The Trust is entitled to use the Index pursuant to a sub-licensing arrangement with the Sponsor. As the Index is calculated as a price return, it currently does not track airdrops involving bitcoin. Accordingly, the Trust will not participate in airdrops, as further described below in Risk factors The inability to recognize the economic benefit of a fork or an airdrop could adversely impact an investment in the Trust. Pricing Information Available on the Exchange and Other Sources The current market price per Share (symbol: ARKB ) 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 will be published by the Exchange once every 15 seconds throughout each trading day on the consolidated tape by market data vendors. The intra-day indicative value per Share is calculated based on the Index. The most recent end-of-day NAV (as defined below) will be published as of the close of business by market data vendors and available on the Sponsor s website at www.21shares.com/en-us, or any successor thereto, and will be published on the consolidated tape. Any adjustments made to the Index will be published on the Index Provider s website at https://www.cfbenchmarks.com or any successor thereto. The selection of exchanges for use in the Index is based on the accessible venues where execution transactions for bitcoin will occur. The exchanges on which market participants primarily execute transactions for bitcoin may evolve from time to time, and the Index Provider may make changes to the Constituent Exchanges comprising the Index from time to time for this or other reasons. To the extent the Trust executes transactions for bitcoin, the exchanges on which the Trust executes transactions do not impact the Constituent Exchanges comprising the Index. Although Constituent Exchanges are selected for inclusion within the Index in accordance with specified criteria and eligibility standards, changes to the Constituent Exchanges may result in an impact on the pricing information reflected in the Index. Once it has actual knowledge of material changes to the Constituent Exchanges used to calculate the Index, the Trust will notify Shareholders in a prospectus supplement and a current report on Form 8-K or in its annual or quarterly reports. The Sponsor may, in its sole discretion, change either the Index or Index Provider without Shareholder approval. The intra-day levels and closing levels of the Index are published by the Index Provider, and the closing NAV is published by the Administrator (as defined below). The Shares are not issued, sponsored, endorsed, sold or promoted by the Exchange, and the Exchange makes no representation regarding the advisability of investing in the Shares. The Index Provider makes no warranty, express or implied, as to the results to be obtained by any person or entity from the use of the Index for any purpose. Index information and any other data calculated and/or disseminated, in whole or part, by the Index Provider is for informational purposes only, not intended for trading purposes, and provided on an as is basis. The Index Provider does not warrant that the Index information will be uninterrupted or error-free, or that defects will be corrected. The Index Provider also does not recommend or Table of Contents make any representation as to possible benefits from any securities or investments, or third-party products or services. Shareholders should undertake their own due diligence regarding securities and investment practices. For more information on the Index and the Index Provider, see The Trust and Bitcoin Prices below. The Trust s Legal Structure The Trust is a Delaware statutory trust, formed on June 22, 2021, pursuant to the Delaware Statutory Trust Act ( DSTA ). The Trust continuously issues Shares representing fractional undivided beneficial interest in, and ownership of, the Trust that may be purchased and sold on the Exchange. The Trust will operate pursuant to an Amended and Restated Trust Agreement (the Trust Agreement ). Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust (the Trustee ). The Trust is managed and controlled by the Sponsor. The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021. The Trust s Service Providers The Sponsor The Sponsor, 21Shares US LLC, arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of Shares on the Exchange. The Sponsor will develop a marketing plan for the Trust, will prepare marketing materials regarding the Shares of the Trust, and will exercise the marketing plan of the Trust on an ongoing basis. The Sponsor has engaged the Sub-Adviser pursuant to the Support Services Agreement to serve as the Trust s sub-adviser and to provide assistance in the marketing of the Shares. The Sponsor is responsible for supervising the Sub-Adviser. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor s unified fee. The Sub-Adviser The Sub-Adviser, ARK Investment Management LLC, serves as the Trust s sub-adviser. The Sub-Adviser provides data, research, and, as needed, operational support to the Trust. As of February 28, 2023, the Sub-Adviser had approximately $22.9 billion in assets under management. The Trust is passively managed and does not pursue active management investment strategies, and the Sponsor and the Sub-Adviser do not actively manage the bitcoin held by the Trust. This means that the Sponsor and the Sub-Adviser do not sell bitcoin at times when its price is high or acquire bitcoin at low prices in the expectation of future price increases. It also means that the Sponsor and the Sub-Adviser do not make use of any of the hedging techniques available to professional bitcoin investors to attempt to reduce the risks of losses resulting from price decreases. The Sponsor has entered into the Support Services Agreement with the Sub-Adviser and pays the Sub-Adviser out of the unitary fee it receives from the Trust. The Trustee The Trustee, Delaware Trust Company, a Delaware trust company, acts as the trustee of the Trust as required to create a Delaware statutory trust in accordance with the Trust s Declaration of Trust and the DSTA. The Administrator The Bank of New York Mellon serves as the Trust s administrator (the Administrator ). The Administrator s principal address is 240 Greenwich Street, New York, New York 10286. Under the Fund Administration and Accounting Agreement, the Administrator provides necessary administrative, tax and accounting services and financial reporting for the maintenance and operations of the Trust, including valuing the Table of Contents Trust s bitcoin and calculating the NAV, NAV per Share, Principal Market NAV and Principal Market NAV per Share and supplying pricing information to the Sponsor for the Trust s website. In addition, the Administrator makes available the office space, equipment, personnel and facilities required to provide such services. The Transfer Agent The Bank of New York Mellon serves as the transfer agent for the Trust (the Transfer Agent ). The Transfer Agent: (1) facilitates the issuance and redemption of Shares of the Trust; (2) responds to correspondence by Trust Shareholders and others relating to its duties; (3) maintains Shareholder accounts; and (4) makes periodic reports to the Trust. The Cash Custodian The Bank of New York Mellon acts as custodian of the Trust s cash and cash equivalents (the Cash Custodian ). Pursuant to a cash custody agreement entered into with the Trust (the Cash Custody Agreement ), the Cash Custodian will establish and maintain cash account(s) for the Trust and, upon instructions from the Sponsor acting on behalf of the Trust, facilitate cash transfers and cash payments from the Trust s account(s). The Bitcoin Custodian Coinbase Custody Trust Company, LLC serves as the Trust s bitcoin custodian (the Bitcoin Custodian ) and is a fiduciary under 100 of the New York Banking Law. The Bitcoin Custodian is authorized to serve as the Trust s bitcoin custodian under the Trust Agreement and pursuant to the terms and provisions of the Custodial Services Agreement. Under the Custodial Services Agreement by and among the Bitcoin Custodian and the Trust, the Bitcoin Custodian is responsible for safekeeping all of the bitcoin owned by the Trust. The Bitcoin Custodian was selected by the Sponsor. The Bitcoin Custodian is responsible for opening an account that holds the Trust s bitcoin (the Bitcoin Account ), as well as facilitating the transfer of bitcoin required for the operation of the Trust. The Bitcoin Custodian is a third-party limited purpose trust company that was chartered in 2018 upon receiving a trust charter from the New York Department of Financial Services. The Bitcoin Custodian is subject to extensive regulation and has among the longest track records in the industry of providing custodial services for digital asset private keys. The Trust s assets with the Bitcoin Custodian are held in segregated accounts on the Bitcoin blockchain, commonly referred to as wallets, and are therefore not commingled with corporate or other customer assets. The segregated account in which the Bitcoin Custodian will custody all of the Trust s bitcoin from time to time is hereinafter referred to as the Trust s Vault Balance. The Bitcoin Custodian will keep a substantial portion of the private keys associated with the Trust s bitcoin in cold storage or similarly secure technology (the Cold Vault Balance ), with any remainder of the Vault Balance held as a Hot Vault Balance. All of the Trust s assets and private keys will be held in cold storage of the Bitcoin Custodian on an ongoing basis, but a portion of the Trust s assets may be held in hot trading wallets, from time to time, in connection with the settlement of a creation or redemption transaction. After diligence investigation, the Sponsor believes that the Bitcoin Custodian s policies, procedures, and controls for safekeeping, exclusively possessing, and controlling the Trust s bitcoin holdings are consistent with industry best practices to protect against theft, loss, and unauthorized and accidental use of the private keys. Although the Bitcoin Custodian carries insurance, the Bitcoin Custodian s insurance does not cover any loss in value to bitcoin and only covers losses caused by certain events such as fraud or theft and, in such covered events, it is unlikely the insurance would cover the full amount of any losses incurred by the Trust. Table of Contents For more information on the Bitcoin Custodian, see Custody of the Trust s Assets below. The Marketing Agent Foreside Global Services, LLC (the Marketing Agent ) is responsible for reviewing and approving the marketing materials prepared by the Sponsor for compliance with applicable SEC and Financial Industry Regulatory Authority ( FINRA ) advertising laws, rules, and regulations. The Trust s Fees and Expenses The Trust will pay the unitary Sponsor Fee of 0.21% of the Trust s bitcoin holdings. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Sponsor intends to waive the entire Sponsor Fee for (i) a six month period commencing on the day the Trust s Shares are initially listed on the Exchange, or (ii) the first $1 billion of Trust assets, whichever occurs first. Except for during periods during which the Sponsor Fee is being waived, the Sponsor Fee will accrue daily and will be payable in bitcoin weekly in arrears. The Administrator will calculate the Sponsor Fee on a daily basis by applying a 0.21% annualized rate to the Trust s total bitcoin holdings, and the amount of bitcoin payable in respect of each daily accrual shall be determined by reference to the Index. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. Operating expenses assumed by the Sponsor include (i) fees to the Sub-Adviser; (ii) the Marketing Fee, (iii) fees to the administrator, if any, (iv) fees to the Bitcoin Custodian, (v) fees to the Transfer Agent, (vi) fees to the Trustee, (vii) the fees and expenses related to any future listing, trading or quotation of the Shares on any listing exchange or quotation system (including legal, marketing and audit fees and expenses), (viii) ordinary course legal fees and expenses but not litigation-related expenses, (ix) audit fees, (x) regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act of 1933 (the 1933 Act ) or Exchange Act, (xi) printing and mailing costs; (xii) costs of maintaining the Trust s website and (xiii) applicable license fees (each, a Sponsor-paid Expense, and together, the Sponsor-paid Expenses ), provided that any expense that qualifies as an Additional Trust Expense (as defined below) will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. The Sponsor will not, however, assume certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses, including, but not limited to, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders, any indemnification of the Bitcoin Custodian, Administrator or other agents, service providers or counter-parties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, Additional Trust Expenses ). Of the Sponsor-paid Expenses, ordinary course legal fees and expenses shall be subject to a cap of $100,000 per annum. In the Sponsor s sole discretion, all or any portion of a Sponsor-paid Expense may be re-designated as an Additional Trust Expense. Pursuant to the Trust Agreement, the Sponsor or its delegates will direct the Bitcoin Custodian to transfer bitcoin from the Trust s Cold Vault Balance as needed to pay the Sponsor Fee and Additional Trust Expenses, if any. The Sponsor or its delegates will endeavor to transfer the smallest amount of bitcoin needed to pay applicable expenses. Custody of the Trust s Assets The Trust s Bitcoin Custodian will maintain custody of all of the Trust s bitcoin. The Bitcoin Custodian provides insured safekeeping of digital assets using a multi-layer cold storage security platform designed to provide offline security of the digital assets held by the Bitcoin Custodian. The Bitcoin Custodian has insurance coverage as a subsidiary under its parent company, Coinbase Global, Inc., which Table of Contents procures fidelity (e.g., crime) insurance to protect the organization from risks such as theft of funds. Specifically, the fidelity program provides coverage for the theft of funds held in hot or cold storage. The insurance program is provided by a syndicate of industry-leading insurers. The insurance program does not cover, insure or guarantee the performance of the Trust. The Bitcoin Custodian is not FDIC-insured. Bitcoin may be held across multiple wallets, any of which will feature the following safety and security measures to be implemented by the Bitcoin Custodian: Cold Storage: Cold storage in the context of bitcoin means keeping the reserve of bitcoin offline, which is a widely-used security precaution, especially when dealing with large amount of bitcoin. Bitcoin held under custodianship with the Bitcoin Custodian will be kept in high-security, offline, multi-layer cold storage vaults. This means that the private keys, the cryptographic component that allows a user to access bitcoin, are stored offline on hardware that has never been connected to the internet. Storing the private key offline minimizes the risk of the bitcoin being stolen. The Sponsor expects that nearly all of the Trust s assets and private keys will be held in cold storage of the Bitcoin Custodian on an ongoing basis. In connection with creations or redemptions, the Trust will, under most circumstances, process creations and redemptions by transferring bitcoin from its Cold Vault Balance to and/or from a Bitcoin Counterparty. From time to time, portions of the Trust s bitcoin temporarily may be held outside of cold storage in the Trading Balance maintained by the Coinbase, Inc. (the Prime Broker ) or a Bitcoin Counterparty, including in circumstances in which it is necessary in connection with creations or redemptions of Baskets or to sell bitcoin to pay Trust expenses. Multiple Private Keys: All private keys are securely stored using multiple layers of high-quality encryption and in Bitcoin Custodian-owned offline hardware vaults in secure environments. No customers or third parties are given access to the Bitcoin Custodian s private keys. The use of multiple private keys makes retrieving bitcoin from the wallet more difficult and aims to further reduce the risk of hacking theft and/or robbery. Whitelisting: Transactions are only sent to vetted, known addresses. The Bitcoin Custodian s platform supports pre-approval and test transactions. The Bitcoin Custodian requires authentication when adding or removing addresses for whitelisting. All instructions to initiate a whitelist addition or removal must be submitted via the Coinbase Custody platform. When a whitelist addition or removal request is initiated, the initiating user will be prompted to authenticate their request using a two-factor authentication key. A consensus mechanism on the Coinbase Custody platform dictates how many approvals are required in order for the consensus to be achieved to add or remove a whitelisted address. Only when the consensus is met is the underlying transaction considered officially approved. An account s roster and user roles are maintained by the Bitcoin Custodian in a separate log, an Authorized User List ( AUL ). Any changes to the account s roster must be reflected on an updated AUL first and executed by an authorized signatory. Audit Trails: Audit trails exist for all movement of bitcoin within Bitcoin Custodian-controlled bitcoin wallets and are audited annually for accuracy and completeness by an independent external audit firm. In addition to the above measures, in accordance with the Custodial Services Agreement, bitcoin held in custody with the Bitcoin Custodian will be segregated from both the proprietary property of the Bitcoin Custodian and the assets of any other customer in accounts that clearly identify the Trust as the owner of the accounts. Therefore, in the event of an insolvency of the Bitcoin Custodian, assets held in the segregated accounts would not become property of the Bitcoin Custodian s estate and would not be available to satisfy claims of creditors of the Bitcoin Custodian. The Bitcoin Custodian maintains an Internal Audit team that performs periodic internal audits over custody operations. Systems and Organizational Control ( SOC ) attestations are also performed on the Bitcoin Table of Contents Custodian s services. The SOC 1 Type 2 and SOC 2 Type 2 reports produced cover private key management controls. A SOC 1 Type 2 report addresses the controls at a service organization that are likely to be relevant to user entities internal control over financial reporting. A SOC 2 Type 2 report addresses controls at a service organization relevant to security, availability, processing integrity, confidentiality, or privacy in order to support users evaluations of their own systems of internal control. The Transfer Agent will facilitate the settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants. The Trust generally does not intend to hold cash or cash equivalents. However, there may be situations where the Trust will hold cash on a temporary basis, including in connection with the creation and redemption process. The Trust has entered into the Cash Custody Agreement, pursuant to which the Cash Custodian will establish and maintain cash account(s) for the Trust and, upon instructions from the Sponsor acting on behalf of the Trust, facilitate cash transfers and cash payments from the Trust s account(s). For more information on the Trust s custody arrangements with the Bitcoin Custodian and the Prime Broker, see Custody of the Trust s Assets and Prime Broker below. Net Asset Value Determinations As described in more detail below in Net Asset Value Determinations, the Administrator daily calculates its net asset value (which means the total assets of the Trust including, but not limited to, all bitcoin and cash less total liabilities of the Trust) ( NAV ) and NAV per Share on each day that the Exchange is open for regular trading, as promptly as practical after 4:00 p.m. ET, based on the Index. In determining the Trust s NAV, the Administrator values the bitcoin held by the Trust based on the price set by the Index as of 4:00 p.m. ET. The Sponsor believes that use of the Index mitigates against idiosyncratic market risk, as the failure of any individual spot market will not materially impact pricing for the Trust. It also allows the Administrator to calculate the NAV in a manner that significantly deters manipulation. However, determining the value of the Trust s bitcoin using the Index is not in accordance with U.S. generally accepted accounting principles ( GAAP ), and therefore, the Index is not used in the Trust s financial statements. The Trust s bitcoin are carried, for financial statement purposes, at fair value, as required by GAAP. The Trust determines the fair value of bitcoin based on the price provided by the bitcoin market that the Trust considers its principal market as of 4:00 p.m. ET on the valuation date. The NAV of the Trust determined on a GAAP basis is referred to in this Prospectus as a Principal Market NAV, and the NAV of the Trust per Share determined on a GAAP basis is referred to as Principal Market NAV per Share. NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitute for Principal Market NAV and Principal Market NAV per Share, respectively. Plan of Distribution Barring the liquidation of the Trust or extraordinary circumstances (including but not limited to, non-recurring expenses and costs of services performed by the Sponsor or a service provider on behalf of the Trust to protect the Trust or the interests of Shareholders, such as in connection with any fork of the Bitcoin blockchain, any indemnification of agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters), the Trust will not purchase or sell bitcoin other than in connection with the creation and redemption of Shares. The Sponsor may also sell bitcoin to pay certain expenses, which may be facilitated by the Prime Broker or any other prime brokers with whom the Trust contracts. Table of Contents When the Trust sells or redeems its Shares, bitcoin will be transferred into or out of the Trust, as applicable, in exchange for Baskets that are based on the quantity of bitcoin attributable to each Share of the Trust (net of accrued but unpaid Sponsor Fees (defined below) and any accrued but unpaid extraordinary expenses or liabilities). Authorized Participants will purchase Shares by depositing cash in the Trust s account with the Cash Custodian. This will cause the Sponsor, on behalf of the Trust, to automatically instruct a Bitcoin Counterparty to (i) purchase the amount of bitcoin equivalent in value to the cash deposit amount associated with the order and (ii) deposit the resulting bitcoin deposit amount in the Trust s account with the Bitcoin Custodian, resulting in the Transfer Agent crediting the applicable amount of Shares to the Authorized Participant. When such an Authorized Participant redeems its Shares, the Sponsor, on behalf of the Trust will direct the Bitcoin Custodian to transfer bitcoin to the Bitcoin Counterparty, who will sell the bitcoin to be executed, in the Sponsor s reasonable efforts, at the Index price used by the Trust to calculate NAV, taking into account any spread, commissions, or other trading costs and deposit the cash proceeds of such sale in the Trust s account with the Cash Custodian for settlement with the Authorized Participant. Any slippage incurred (including, but not limited to, any trading fees, spreads, or commissions), on a cash equivalent basis, will be the responsibility of the Authorized Participant and not of the Trust or Sponsor. The Trust and/or Sponsor will bear the expense and risk of delivery and ownership of bitcoin once such bitcoin has been received by the Bitcoin Custodian on behalf of the Trust and until transferred by the Bitcoin Custodian on behalf of the Trust to the Bitcoin Counterparty for conversion to cash. Only Authorized Participants may purchase Shares from or redeem Shares to the Trust. Authorized Participants may then offer Shares to the public at prices that depend on various factors, including the supply and demand for Shares, the value of the Trust s assets, and market conditions at the time of a transaction. Shareholders who buy or sell Shares during the day from their broker may do so at a premium or discount relative to the NAV of the Shares of the Trust. Shareholders who decide to buy or sell Shares of the Trust will place their trade orders through their brokers and will incur customary brokerage commissions and charges. Prior to this offering, there has been no public market for the Shares. The Shares are expected to be listed for trading, subject to notice of issuance, on the Exchange under the ticker symbol ARKB. The Sponsor and the Sub-Adviser are parties to the Support Services Agreement, pursuant to which the Sub-Adviser provides assistance in the marketing of the Shares, including participating in the development and preparation of marketing materials and additional web presence for the Trust. Any fees payable to the Sub-Adviser, including the Sub-Adviser Fee, are payable by the Sponsor from the Sponsor Fee. The Trust will not incur additional financial or other performance obligations pursuant to the Support Services Agreement. The Sponsor and/or the Sub-Adviser may enter into additional marketing support arrangements with respect to the Trust, to which the Trust would not be party. Any fees under such agreements would be payable by the Sponsor and/or the Sub-Adviser, as applicable, and not by the Trust. Federal Income Tax Considerations It is expected that an owner of Shares will be treated, for U.S. federal income tax purposes, as if they owned a proportionate share of the assets of the Trust. A shareholder will accordingly include in the computation of their taxable income their proportionate share of the income and expenses realized by the Trust. Each sale or other disposition of bitcoin by the Trust (including, under current Internal Revenue Service ( IRS ) guidance, the use of bitcoin to pay expenses of the Trust) will give rise to gain or loss and will therefore constitute a taxable event for Shareholders. See United States Federal Income Tax Consequences Taxation of U.S. Shareholders. Table of Contents Use of Proceeds Proceeds received by the Trust from the issuance of Baskets consist of bitcoin. Such deposits are held by the Bitcoin Custodian on behalf of the Trust until: (i) delivered out in connection with redemptions of Baskets; or (ii) transferred or sold by the Sponsor, which may be facilitated by the Prime Broker, to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor. Emerging Growth Company The Trust is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act ). For as long as the Trust is an emerging growth company, unlike other public companies, it will not be required to, among other things: (i) 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; or (ii) comply with any new audit rules adopted by the Public Company Accounting Oversight Board ( PCAOB ) after April 5, 2012, unless the SEC determines otherwise. The Trust will cease to be an emerging growth company upon the earliest of: (i) it having $1.235 billion or more in annual revenues, (ii) at least $700 million in market value of Common Shares being held by non-affiliates, (iii) it issuing more than $1.0 billion of non-convertible debt over a three-year period; or (iv) the last day of the fiscal year following the fifth anniversary of its 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 1933 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. The Trust intends to take advantage of the benefits of the extended transition period. Principal Investment Risks of an Investment in the Trust An investment in the Trust involves a high degree of risk. Any investment made in the Trust may result in a total loss of the investment. There is no assurance that the Trust will generate a profit for investors. Some of the risks you may face are summarized below. A more extensive discussion of these risks appears beginning on page 15. Risks Associated with bitcoin and the Bitcoin network Digital assets such as bitcoin were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate. The value of the Shares relates directly to the value of bitcoin, the value of which may be highly volatile and subject to fluctuations due to a number of factors. The value of the Shares depends on the development and acceptance of the Bitcoin network. The slowing or stopping of the development or acceptance of the Bitcoin network may adversely affect an investment in the Trust. Due to the nature of private keys, bitcoin transactions are irrevocable, and stolen or incorrectly transferred bitcoin may be irretrievable. As a result, any incorrectly executed bitcoin transactions could adversely affect an investment in the Trust. Table of Contents Security threats to the Trust s account with the Bitcoin Custodian could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares. Potential amendments to the Bitcoin network s protocols and software could, if accepted and authorized by the Bitcoin network community, adversely affect an investment in the Trust. A temporary or permanent fork of the Bitcoin blockchain could adversely affect an investment in the Trust. Blockchain technologies are based on the theoretical conjectures as to the impossibility of solving certain cryptographical puzzles quickly. These premises may be incorrect or may become incorrect due to technological advances and could negatively impact the future usefulness of bitcoin and adversely affect an investment in the Trust. The price of bitcoin on the bitcoin market has exhibited periods of extreme volatility, which could have a negative impact on the performance of the Trust. For example, between November 2021 and November 2022, the price of bitcoin fell from an all-time high of $68,789 to $15,460. As of November 12, 2023, the price of bitcoin has increased to $37,208. (source: Coinbase). Bitcoin exchanges on which bitcoin trades are relatively new and, in some cases, unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust. New competing digital assets may pose a challenge to bitcoin s current market position, resulting in a reduction in demand for bitcoin, which could have a negative impact on the price of bitcoin and may have a negative impact on the performance of the Trust. Risks Associated with Investing in the Trust The value of the Shares may be influenced by a variety of factors unrelated to the value of bitcoin. The NAV or Principal Market NAV may not always correspond to the market price of bitcoin and, as a result, Creation Baskets may be created or redeemed at a value that is different from the market price of the Shares. The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares. The Trust is subject to risks due to its concentration of investments in a single asset. Possible illiquid markets may exacerbate losses or increase the variability between the Trust s NAV or the Principal Market NAV and its market price. The amount of bitcoin represented by the Shares will decline over time. The Administrator is solely responsible for determining the value of the bitcoin holdings and bitcoin holdings per Share, and any errors, discontinuance or changes in such valuation calculations may have an adverse effect on the value of the Shares. Risks Associated with the Regulatory Environment of Bitcoin Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust. Table of Contents Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the Investment Company Act of 1940 ( 1940 Act ) or the protections afforded by the Commodity Exchange Act (the CEA ). Future legal or regulatory developments may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the Securities and Exchange Commission ( SEC ) or Commodity Futures Trading Commission ( CFTC ), which may cause the Trust to incur unforeseen expenses or liquidate. If regulatory changes or interpretations of an Authorized Participant s, the Trust s or the Sponsor s activities require the regulation of an Authorized Participant, the Trust or the Sponsor as a money service business under the regulations promulgated by the Financial Crimes Enforcement Network ( FinCEN ), an Authorized Participant, the Trust or the Sponsor may be required to register and comply with such regulations, which could result in extraordinary, recurring and/or nonrecurring expenses. Risks Associated with the Tax Treatment of Bitcoin Shareholders could incur a tax liability without an associated distribution of the Trust. The tax treatment of bitcoin and transactions involving bitcoin for state and local tax purposes is not settled. A hard fork of the Bitcoin blockchain could result in Shareholders incurring a tax liability. Other Risks The Exchange on which the Shares are listed may halt trading in the Trust s Shares, which would adversely impact a Shareholder s ability to sell Shares. The market infrastructure of the bitcoin spot market could result in the absence of active Authorized Participants able to support the trading activity of the Trust, which would affect the liquidity of the Shares in the secondary market and make it difficult to dispose of Shares. Shareholders that are not Authorized Participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect Shareholders investment in the Shares. The Sponsor and Sub-Adviser are leanly staffed and rely heavily on key personnel. The departure of any such key personnel could negatively impact the Trust s operations and adversely impact an investment in the Trust. Shareholders do not have the rights enjoyed by investors in certain other vehicles and may be adversely affected by a lack of statutory rights and by limited voting and distribution rights. The liability of the Sponsor, Sub-Adviser and the Trustee is limited, and the value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee, the Sponsor or the Sub-Adviser. Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks, the occurrence of which can negatively impact an investment in the Trust. Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/ARTV_artiva_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/ARTV_artiva_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..ae0ccd03627585b7b2685b8d8dd333bdbca9d964 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/ARTV_artiva_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. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections titled Risk Factors, Special Note Regarding Forward-Looking Statements, and Management s Discussion and Analysis of Financial Condition and Results of Operations, and our financial statements and the related notes appearing elsewhere in this prospectus. As used in this prospectus, unless the context otherwise requires, references to we, us, our, the company and Artiva refer to Artiva Biotherapeutics, Inc. Overview We are a clinical-stage biotechnology company focused on developing natural killer (NK) cell-based therapies for patients suffering from devastating autoimmune diseases and cancers. Our product candidates are derived from donor cells (allogeneic) rather than a patient s own cells (autologous) and are pre-manufactured, stored frozen and ready to ship to a patient s treatment location, making them what we believe to be off-the-shelf. Our lead product candidate, AlloNK, is a non-genetically modified, cryopreserved NK cell therapy being evaluated in combination with B-cell targeted monoclonal antibodies (mAbs) in an ongoing Phase 1/1b trial in systemic lupus erythematosus (SLE) with or without lupus nephritis (LN) and a basket investigator-initiated trial (IIT) in multiple autoimmune indications. Seminal peer-reviewed clinical studies using autologous CD19 chimeric antigen receptor (CAR) T-cell therapy (auto-CAR-T) for the treatment of autoimmune diseases have demonstrated that deep B-cell depletion in the periphery and in the lymphoid tissue can lead to drug-free disease remission. We have already demonstrated that AlloNK in combination with rituximab was able to drive deep B-cell depletion in the periphery and observed complete responses in heavily pre-treated patients na ve to auto-CAR-T in our ongoing Phase 1/2 clinical trial in patients with relapsed or refractory B-cell non-Hodgkin lymphoma (B-NHL). We believe the preliminary results from our Phase 1/2 clinical trial evaluating AlloNK in combination with rituximab in patients with B-NHL provide a readthrough to autoimmune disease because efficacy in both diseases appears to be accomplished with a shared mechanism of action involving B-cell depletion in the periphery and in the lymphoid tissues, followed by an immunological reset and B-cell reconstitution. We expect to report initial data on autoimmune indications from at least one of our Phase 1/1b trial or the basket IIT in the first half of 2025. To our knowledge, AlloNK was the first allogeneic, off-the-shelf NK cell therapy candidate to receive Investigational New Drug application (IND) clearance to be administered to a patient with an autoimmune disease in a U.S. clinical trial, and to receive United States Food and Drug Administration (FDA) Fast Track designation in an autoimmune disease. Additionally, to our knowledge AlloNK is the first allogeneic NK cell therapy candidate in the United States to receive IND clearance for a basket trial in autoimmune diseases, and specifically the first to be evaluated in rheumatoid arthritis (RA), pemphigus vulgaris (PV) and the anti-neutrophil cytoplasmic antibody (ANCA) associated vasculitis (AAV) subtypes granultomatosis with polyangiitis (GPA) / microscopic polyangiitis (MPA), which we are exploring through a basket IIT. We believe as we continue to execute on our strategic plan that these critical first mover advantages will solidify our leadership in multiple autoimmune diseases with high unmet need. Receiving IND clearance and any special designations, such as Fast Track designation, does not guarantee an accelerated review of AlloNK or increase the likelihood of approval of AlloNK by the FDA. Given our early stage of development, it will take several years before we complete clinical development and receive regulatory approval of AlloNK or any of our product candidates, if at all. B-Cell Driven Autoimmune Disease Background, Prevalence and Unmet Need Many autoimmune diseases occur when autoreactive B-cells produce autoantibodies that target the body s own healthy cells and tissues, which can lead to significant morbidity and long-term use of immunosuppressants and steroids. This presents an opportunity to develop treatments that deplete B-cells in a variety of autoimmune diseases such as RA, multiple sclerosis (MS), SLE, LN, AAV, systemic sclerosis (SSc), myasthenia gravis (MG) and myositis, which together account for approximately 6.8 million patients in the United States 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 jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JULY 15, 2024 PRELIMINARY PROSPECTUS 8,700,000 Shares Common Stock We are offering 8,700,000 shares of our common stock. This is our initial public offering, and no public market currently exists for our common stock. We currently expect that the initial public offering price will be between $14.00 and $16.00 per share of our common stock. We have applied to list our common stock on the Nasdaq Global Market (Nasdaq) under the symbol ARTV. We believe that upon the completion of this offering, we will meet the standards for listing on Nasdaq, and the closing of this offering is contingent upon such listing. We are an emerging growth company and a smaller reporting company as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future reports after the closing of this offering. See the section titled Prospectus Summary Implications of Being an Emerging Growth Company and a Smaller Reporting Company. Investing in our common stock involves risks. See the section titled Risk Factors beginning on page 13 of this prospectus 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. PER SHARE TOTAL Initial Public Offering Price $ $ Underwriting Discounts and Commission(1) $ $ Proceeds to Artiva Biotherapeutics, Inc., Before Expenses $ $ (1) See the section titled Underwriting for additional information regarding underwriting compensation. Delivery of the shares of common stock is expected on or about , 2024. We have granted the underwriters an option for a period of 30 days to purchase up to an additional 1,305,000 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 TD Cowen Cantor Wedbush PacGrow Needham & Company Prospectus dated , 2024 Table of Contents and Europe alone. Global sales for autoimmune disease, treatments for which in 2023 reached approximately $160 billion and represent the second-largest class of spending behind oncology, are expected to continue to grow. Approved treatments for autoimmune diseases encompass various classes of therapies, including steroids, mycophenolate mofetil (MMF), anti-tumor necrosis factor alpha (TNF ) agents and interleukin (IL) inhibitors. Even though these therapies largely provide general immunosuppression and manage symptoms of disease, many patients still suffer from disease progression, leading to worsening complications. Furthermore, chronic use of these therapies typically creates secondary complications for patients, including, but not limited to, increased risk of infections and cancer, cardiovascular disease, hypertension, Cushing s disease, diabetes and osteoporosis. While auto-CAR-T cell therapies have demonstrated the transformative potential of cell therapy, adoption has been limited since their initial approvals due to several factors, including, but not limited to, safety, patient access and scalability. We believe AlloNK in combination with B-cell targeted mAbs represents the next-generation of B-cell depleting therapies because it aims to address important limitations of auto-CAR-T, including: Scalability: AlloNK can be manufactured at scale, cryopreserved, easily transported through cold-chain logistics, and we believe be made readily available for patients. In contrast, auto-CAR-T requires a complex, costly and lengthy manufacturing process that is individualized for each patient. The need for hospitalization further compounds the challenges of scalability and access, adding financial burden to the healthcare system. For example, toxicity and extended hospitalization from treatment with auto-CAR-T could add an incremental financial burden of over $1 million per patient. The scalability of our process creates the potential to expand treatment access to the many autoimmune patients annually who currently live with the consequences of long-term steroid use. Safety: As a result of autologous and allogeneic CAR-T cell therapies association with immune effector cell-associated neurotoxicity syndrome (ICANS), cytokine release syndrome (CRS) and other severe adverse events, treatment is generally only available at advanced clinical centers capable of supporting these patients. Conversely, in our clinical trial of AlloNK in combination with rituximab in patients with relapsed or refractory B-NHL, as of April 8, 2024, more than two-thirds of the patients were not hospitalized within 30 days of dosing AlloNK. We believe this demonstrates the ability of AlloNK to be administered and managed in an outpatient setting, with limited risk of required hospitalization. Cost: Cost of goods sold (COGS) to manufacture auto-CAR-Ts is estimated at over $100,000 per treatment course, limiting flexibility in therapy pricing. Assuming two billion AlloNK cells per dose and three doses for a treatment regimen of an aggregate of six billion AlloNK cells total per patient with autoimmune disease, AlloNK s COGS per patient would be below $6,000, an order of magnitude below the current COGS of auto-CAR-T. As auto-CAR-Ts move from their currently marketed indication of hematological malignancies towards chronic and more prevalent autoimmune diseases, AlloNK s extremely competitive commercial COGS could allow for advantageous pricing flexibility and payor coverage, if approved. Table of Contents TABLE OF CONTENTS PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/AS_amer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/AS_amer_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..4727d162f321313ee458e4fb775be806e518f476 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/AS_amer_prospectus_summary.txt @@ -0,0 +1 @@ +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, including the information incorporated by reference in this prospectus and any free writing prospectus prepared by us or on our behalf, including in particular the section titled Risk Factors in this prospectus, Item 3. Key Information, Item 5. Operating and Financial Review and Prospects and Item 8. Financial Information in our Annual Report on Form 20-F for the year ended December 31, 2023, as filed with the SEC on March 18, 2024 (our Annual Report on Form 20 F ), the other sections of the documents incorporated by reference in this prospectus and the financial statements and the related notes incorporated by reference in this prospectus, before making an investment in our ordinary shares. Our Purpose Elevating the world through sport from courts to slopes, from cities to mountains, and everywhere in between, we aim to inspire people to explore and experience the joy of sports and outdoor activities, and lead better, healthier lives. Our vision is to be the global leader in premium sports and outdoor brands. Company Overview Amer Sports is a global group of iconic sports and outdoor brands, including Arc teryx, Salomon, Wilson, Atomic and Peak Performance. Our brands are known for their detailed craftsmanship, unwavering authenticity, premium market positioning and compelling market shares in their categories. We pride ourselves on cutting-edge innovation, technical performance and ground-breaking designs that allow athletes and everyday consumers to perform better every day. Through partnerships with industry influencers and elite athletes, and in collaboration with the various communities we serve, we develop next-generation products that define winning moments in sports. Our brands are creators of exceptional apparel, footwear, equipment, protective gear and accessories that we believe give our consumers the confidence and comfort to excel. Our brands are our stars, constantly elevating the consumer experience and creating thriving communities. We empower our brands to pursue market-shaping leadership and set the standard for quality, performance and brand experience globally. While our brands have established heritage and market leadership today, significant runway remains ahead. We are excited about our future and the opportunity to drive growth in each of our three reportable segments: Technical Apparel, Outdoor Performance and Ball & Racquet Sports. Our segments comprise our brand clusters, which reflect both how our consumers engage with our products and how we manage our business. Technical Apparel Outdoor Performance Ball & Racquet Sports Each segment is led by one of our core brands: Arc teryx, Salomon and Wilson. Arc teryx Arc teryx is a technical outdoor apparel brand inspired by the Canadian Coast Mountains and built on the principle of obsessive, precise design and production. Arc teryx gear pushes the boundaries of 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 December 2, 2024 PRELIMINARY PROSPECTUS 34,000,000 Shares Amer Sports, Inc. Ordinary Shares This is a public offering of 34,000,000 ordinary shares of Amer Sports, Inc. Our ordinary shares are listed on the New York Stock Exchange ( NYSE ) under the symbol AS. On November 29, 2024, the last reported sale price of our ordinary shares on the NYSE was $26.33. We are a foreign private issuer under applicable U.S. Securities and Exchange Commission rules and are eligible for reduced public company disclosure requirements. 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 21 of this prospectus and Item 3. Key Information D. Risk Factors in our Annual Report on Form 20-F (as defined herein) incorporated by reference herein. Per Ordinary Share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting for a description of all compensation payable to the underwriters. We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional 5,100,000 ordinary shares from us at the public offering price less the underwriting discounts and commissions. The underwriters expect to deliver the ordinary shares against payment in New York, New York on or about , 2024. BofA SecuritiesJ.P. Morgan Goldman Sachs Morgan Stanley Citigroup UBS Investment Bank The date of this prospectus is , 2024. 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 Amer Sports, Inc., the Company, we, our, ours, us or similar terms refer to Amer Sports, Inc., together with its subsidiaries. All references to U.S. dollars, dollars or $ are to the U.S. dollar and all references to EUR or are to the euro. Unless otherwise indicated or the context otherwise requires, all references to EMEA refer to Europe, the Middle East and Africa, all references to Greater China refer to mainland China, Hong Kong, Macau and Taiwan and all references to Asia Pacific exclude Greater China. Financial Statements Unless otherwise indicated, all financial information contained or incorporated by reference in this prospectus is prepared and presented in accordance with IFRS Accounting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Certain differences exist between IFRS and generally accepted accounting principles in the United States of America ( U.S. GAAP ) which might be material to the financial information herein. We have not prepared a reconciliation of our consolidated financial statements and related footnote disclosures between IFRS and U.S. GAAP. Potential investors should consult their own professional advisers for an understanding of the differences between IFRS and U.S. GAAP and how these differences might affect the financial information herein. Our fiscal year ends on December 31 of each year. Non-IFRS Financial Measures Management uses certain non-IFRS financial measures to supplement the financial measures prepared in accordance with IFRS, which include constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted net income/(loss) attributable to equity holders. We use constant currency revenue information to provide a framework to assess how our business segments performed excluding the effects of foreign currency exchange rate fluctuations. Management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin enhance an investor s understanding of our financial and operating performance from period to period, because they exclude certain material items relating to income tax expense, finance costs and depreciation and amortization which are not reflective of our ongoing operations and performance. Management believes Adjusted net income/(loss) attributable to equity holders enhances an investor s understanding of our financial and operating performance because it excludes certain material items relating to discontinued operations and impairment losses on goodwill and intangible assets which are not reflective of our ongoing operations and performance. In addition, management believes constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted net income/(loss) attributable to equity holders are measures commonly used by investors to evaluate companies in the apparel, footwear, sports equipment, protective gear and accessories industries. However, there are limitations to the use of these non-IFRS financial measures as analytical tools and they should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with IFRS and may not be comparable to similarly titled non-IFRS measures used by other companies. Constant currency revenue is limited as a metric to review the Company s financial results as it does not reflect impacts of foreign currency on revenue. Some of the limitations of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin include: excluding certain tax payments that may reduce cash available to us; not reflecting any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future; not reflecting changes in, or cash requirements for, our working capital needs; and not reflecting the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. Some of the limitations of Adjusted net income/(loss) attributable to equity holders include: excluding the impact of restructuring expenses, expenses related to transaction activities and expenses related to certain legal proceedings. 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 TABLE OF CONTENTS performance and enables adventurers to excel in their outdoor pursuits in the mountains, in the backcountry and on some of the world s most technical climbs. The products are known for their minimalist design and sleek and streamlined aesthetic, along with new, innovative features that continually advance outdoor activities. Product quality, from the materials to the design, allows Arc teryx to command premium pricing as evidenced by its best-selling hardshell jacket in North America, the Alpha SV. Overall, Arc teryx combines beautiful, innovative products and an authentic brand experience that extends beyond apparel, fostering communities and bringing people together across all regions of the world who share a passion for the outdoors. Salomon Born in the French Alps in 1947, Salomon creates premium innovative footwear, apparel, winter sports equipment and accessories. Since its founding, Salomon has been fueled by a culture of design, craftsmanship, continuous innovation, and performance inspired by progress, the outdoors and athletes. The brand first produced metal ski edges and expanded into releasable ski bindings before launching industry changing rear-entry ski boots and monocoque skis. The brand s leadership in winter sports helped to propel it into a diverse portfolio of sports and products including footwear and apparel. Today, Salomon is a market leader in global trail running footwear and premium hiking footwear, with products recognized for their performance, style, durability and sustainability. Over 65% of Salomon s revenue for 2023 came from footwear, while also having leading market positions in its legacy winter sports equipment categories (skis, snowboards, boots, bindings, goggles, helmets, etc.), creating a 365-day, year-round brand serving all seasons for mountain sport consumers. Wilson Sporting Goods Founded in 1914 in Chicago, Illinois, Wilson Sporting Goods is a leading manufacturer of high-performance sports equipment, apparel, footwear and accessories. The Wilson Sporting Goods portfolio is made up of the iconic Wilson brand, as well as Louisville Slugger, DeMarini, EvoShield and ATEC. Collectively, these brands bring more than three centuries of innovation, history and heritage to a variety of mainstream sports. As a multi-sports platform, Wilson drives innovation and product excellence by leveraging learnings across the brands various disciplines, including tennis, baseball and basketball, among other sports. The Wilson brand has a legacy as the top-of-the-line sports equipment and is associated with legendary athletes, including Roger Federer, Russell Wilson and Jamal Murray. In addition, Wilson is the official partner of professional sports leagues, including the NBA, WNBA, NFL, the US Open and Roland Garros Grand Slam Tennis Championships, as well as the NCAA, making Wilson products integral to performance in sport. These athletes and leagues are a testament to the credibility and reputation of Wilson s track record of innovation and superior products. While Arc teryx, Salomon and Wilson stand tall and lead our three segments, our other brands appropriately fit our sports-oriented portfolio. Brands such as Atomic and Peak Performance enhance our scale, competitive positioning and diversification across sports categories. Together, our brands enable us to lead and compete in various sports segments and drive the continued success of our portfolio. The Amer Sports Group We excel at identifying, developing and defining brands that meet our corporate vision. We empower these brands to autonomously connect with consumers and develop products to drive growth. Our platform supports the brands via scaled infrastructure and financial controls to accelerate performance. Our operations are subject to complexity and risk consistent with being a large global organization. We believe that the size and diversification of our platform mitigates risks and provides financial flexibility to invest prudently to meet the continuously evolving needs of consumers, to develop competitive advantages and to drive growth across the brands through a relentless focus on innovation. We also believe that our platform enables efficient integration, scaling and optimization of target opportunities that fit within our portfolio, as well as critical insight to inform divestiture decisions. We govern our brands through management across the finance, supply chain, sustainability, communication, legal and compliance functions, among other areas. At the same time, we enable our TABLE OF CONTENTS preceded them. With respect to financial information set out in this prospectus, a dash ( ) signifies that the relevant figure is not available or not applicable, while a zero ( 0.0 ) signifies that the relevant figure is available but is or has been rounded to zero. Market and Industry Data Market data and certain industry forecast data used in this prospectus were obtained from internal reports, where appropriate, as well as third-party sources, including independent industry publications, as well as other publicly available information. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share. In addition, assumptions and estimates of our and our industries future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause our future performance to differ materially from our assumptions and estimates. As a result, you should be aware that market, ranking and other similar industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable. See Cautionary Statement Regarding Forward-Looking Statements. Trademarks and Trade Names We own various trademark registrations and applications, and unregistered trademarks, including Arc teryx, Salomon, Wilson, Peak Performance, Atomic, Armada, Louisville Slugger, DeMarini, EvoShield and ATEC, among others, and our other registered and common law trade names, trademarks and service marks, including our corporate logo. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the and symbols, but we will assert, to the fullest extent under applicable law, rights to such trademarks, service marks and trade names. TABLE OF CONTENTS brands through our group s incubator model that provides shared learnings from data analytics across the platform as well as from the economies of scale and synergies of shared resources, including supplier services, distribution and logistics, human resources and enterprise IT infrastructure. We further serve our brands through access to shared, centralized business services, including customer service and treasury management functions. All together, these resources empower our brand leadership teams to focus on serving consumers through brand, product and go-to-market strategies that drive performance, and our global and scaled operating model enables larger, robust brand organizations to independently flourish. Deeply Committed to Sustainability As a global group of sports and outdoor brands, we believe we can foster more sustainable lifestyles, encourage mindful consumption, and promote well-being. While the sports and outdoor industry connects us with nature, we also understand it can consume our planet s precious resources. Together with our brands, we are focused on managing the complex and challenging supply chains in our industry to build a sustainability culture that positively impacts our environment and the people whose lives we touch. As a participant of the UN Global Compact, Amer Sports Corporation, our wholly owned subsidiary, aims to incorporate the Ten Principles of the Global Compact and to support applicable UN Sustainable Development Goals. In addition, we have committed to science-based near-term and net-zero emission reduction targets at the group level, which we have submitted to be validated by the Science Based Targets initiative (SBTi). At the brand level, we are focused on sustainable business practices. For example, Arc teryx opened five new ReBird Service Centers in the United States, Canada, Greater China and Japan. ReBird Service Centers offer consumers complementary repair services for their Arc teryx gear, connecting consumers to the brand s ongoing focus on improving circularity, including upcycling, resale, care and repair. Arc teryx s sustainability program, ReCare , provides consumers with information on home care and field repair for their products, while the ReCut program diverts rescued textiles that are repurposed into original and coveted pieces and the ReGear program accepts used gear and refurbishes it for sale on the ReGear platform. Salomon and Peak Performance have reduced the need for materials and transport by using 3D product samples for sales purposes and are looking to expand the use of 3D in consumer experiences and e-commerce. Further, Arc teryx and Salomon have each set brand-level near-term science-based emission reduction targets for 2030 approved by the SBTi. Our management oversees the implementation of our sustainability strategy. Cross-functional operational teams drive our efforts on sustainable business practices, led by the Amer Sports platform with participation across key brands and functions. Working groups plan and execute roadmaps on sustainability initiatives in key areas identified, such as climate change, circular economy, responsible procurement and supply chain, human rights, and diversity, equity, and inclusion. We also take our responsibility for the health and well-being of our own employees as well as the employees of our partners along the value chain seriously. Our membership in the Fair Labor Association highlights our commitment to working to uphold human rights in our global supply chain with initiatives to protect workers rights globally and drive long-term improvements through training and education, worker engagement, and integration into sourcing practices. Our Competitive Strengths We believe that the following competitive strengths have been key drivers of our success to date and strategically position us for continued success. Although we believe these competitive strengths will contribute to the growth and success of our company, our business is subject to risks that may prevent us from achieving our business objectives or otherwise adversely affect our business, results of operations or financial condition. See Risk Factors in this prospectus and Item 3. Key Information D. Risk Factors in our Annual Report on Form 20-F incorporated by reference herein, which you should consider carefully before making an investment decision to purchase our ordinary shares. Iconic Leading Brands in Attractive Diversified Categories Our dynamic portfolio of iconic brands is featured at the pinnacle of sports and power winning moments for professional athletes and amateurs alike. Our brands are defined by innovative, excellent products with superior quality, sustainability and thoughtful design, enabling them to be market shapers TABLE OF CONTENTS and leaders in intensely competitive markets for products, services and experiences. For example, Arc teryx produces specialty climbing and mountain apparel worn from the foot to the peak of the Canadian Rockies, Salomon attracts the best athletes with its footwear and winter sports equipment from the French Alps to trails across the world and Wilson Sporting Goods is a market leader for tennis equipment, baseball gloves, baseball and softball bats, basketballs and footballs. With multiple brands that are market leaders in their respective categories, we have a diversified, resilient portfolio. The consistency and profitability of our hard goods categories are complemented by multiple forward growth levers, including double digit, profitable growth in soft goods across large markets. As a group, our brands are complementary to one another while also geographically and seasonally diversified. We serve a wide range of global athletic and outdoor activities year-round. The relationship among our brands positions us to outfit the outdoor athlete from head to toe. For example, an outdoor athlete can ski on Atomic in the winter, wear an Arc teryx jacket when rock climbing in the fall and run with Salomon shoes year-round. Our market leadership in numerous categories, combined with the diversification of our portfolio, allows us to serve consumers around the world at all times of the year and reduces the aggregate level of seasonality across our business. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations. Authentic Brand Connection with Consumers across Performance Levels We believe our brands are individually and collectively genuine, true to the aligned group and brand values and purposeful in delivering on promises to our communities. The authenticity of our brands connects us to sports and outdoor enthusiasts who associate our brands with quality craftsmanship, leading innovation and a passion for athletics and the outdoors. An Arc teryx consumer sees a high-end climbing and ski brand while a Wilson consumer sees it as a leader in tennis. Our credibility is supported by strong brand heritage along with professional athletes across sports leagues and activities choosing to use our brands products. At the same time, our products fit and appeal to consumers of all skill levels. This genuine brand equity helps us drive attention and traffic to our brands, with everyday consumers seeking to align themselves with the carefully crafted brand images we have curated over time. Core to the identity of each of our brands is our mission to enhance consumer experiences. In doing so, our brands foster a sense of belonging. We create thriving communities that are passionate about the sports and activities we support and are loyal to our brands. Arc teryx hosts community events at retail locations and in the outdoors that bring thousands of people together in an authentic way. At ski resorts globally, Salomon, Atomic, Armada and Arc teryx brand awareness grows naturally as millions of outdoor enthusiasts see some of the most skilled athletes using our brands. We believe the authenticity of our brands attracts consumers, drives brand affinity and builds a growing loyal following. Performance Products Driven by Consumer-focused Innovation Our products are rooted in innovation and technical excellence, and set the standard for quality, function and style across their respective categories. Through a consumer-focused, design-led mindset, we emphasize understanding and meeting the evolving needs and demands of athletes and consumers. Our innovation processes are institutionalized through continued investment in research and development at our innovation centers. These include the Wilson Innovation Center in Chicago, Arc teryx design centers in North Vancouver, Portland and Tokyo and Salomon s Annecy Design Center in France. Our teams are constantly testing new ideas to improve our current offering and to be the first to commercialize new products, while balancing the potential lack of receptivity of new products, as well as shifting consumer preferences. Our brands are supported by former competitive athletes who enjoy an active lifestyle and have a desire to lean into hard problems and apply design to create possibility. We have an expansive network of hundreds of professional athletes and ambassadors across our brands who we actively collaborate with. We gather feedback, insights and ideas from them to incorporate into our designs. This direct feedback drives our product innovation engine and results in high-end products that are trusted by our consumers. We leverage advanced technologies to constantly improve our products and reaffirm the pricing power our brands command. For example, Wilson has driven innovation across sports including football, baseball, tennis and golf for over a century. Today, that culture of innovation is present in each of our brands as we are using artificial intelligence to design a baseball bat with a larger sweet spot, we have used 3D printing to create an TABLE OF CONTENTS airless basketball, and we use sensors and cameras on skiers to improve ski edge designs. Design features across our brands include Arc teryx and Salomon developing new, greener membranes with Gore-Tex for their jackets and shoes, improving the waterproofing and breathability, Salomon s patented Sensifit footwear technology providing precise and comfortable fit in combination with the differentiated Quicklace system and Wilson s cushion core carcass in its basketballs designed to ensure an easy grip for players. In recent years, design teams at our brands have also invested in the development of products, packaging and services with a sustainability focus, such as Wilson s Triniti tennis balls made of certain materials that enhance product longevity and using recyclable packaging and Salomon s MTN Summit alpine boot with eco-designed features. Our products shape their respective categories with innovative technologies fueled by our deep commitment to rigorous research and development. Global Market Access with Scale and Global Points of Presence Collectively, we are a scaled global business with diverse geographic reach and distribution. In 2023, 40% of our revenue was from the Americas, 33% from EMEA, 8% from Asia Pacific excluding Greater China, and 19% from Greater China. All around the globe, our brands are guided by a consumer-first mindset and meet consumers exactly where they shop, in both digital and physical spaces. Each brand boasts a multi-channel distribution strategy that is tailored to the brand s product assortment. For example, Salomon has strong access to key specialty retailers in remote mountain locations where consumers buy trail running and winter sports equipment, where the customer base differs significantly from sporting good chains. Arc teryx is oriented towards a DTC model with next generation retail locations that illuminate the brand identity and resonate with consumers, tailored to consumer preferences by region. As a group, we deploy a vertically integrated, DTC mindset, while leveraging our network of strong wholesale relationships. We are increasingly emphasizing our owned e-commerce and building out our owned retail distribution around the world. Our owned retail stores serve as attractive marketing tools that elevate the consumer experience, and, with the help of in-store activations and events, enhance brand loyalty, build communities and generate a strong return-on-investment. Our owned retail benefits our global e-commerce business, which has grown significantly across all brands, up 78% from 2021 to 2023. The combination of our wholesale and DTC channels, along with our global infrastructure allow our brands to connect with consumers conveniently and seamlessly around the world. While our business and revenues are geographically diverse, this is the aggregate result of an extensive global footprint built and expanded at the local level and fostered over decades. As of December 31, 2023, we have owned retail stores in 41 countries representing generations of investment in local communities, which allows us the flexibility to tailor our approach to best meet the needs of local markets. We are nimble across markets and able to replicate success of new product launches in one region globally in a short period of time given our investments in our growing worldwide network. Differentiated Operating Model Supporting Our Brands Our global platform supports the brands in key functional areas such as financial controls, capital allocation, compliance and sustainability. IT infrastructure, cybersecurity, vendor administration and communication functions are areas in which we seek to ensure the ongoing protection of shared assets. We also serve the brands in areas such as human resources, financial reporting, automation and continuous technological improvement. Across these functional areas, our brands benefit from infrastructure that they would not be able to build cost efficiently as stand-alone entities. The shared resources not only create synergies for the brands across each of our segments, but also empower them to prioritize and optimize brand strategy and performance. Proven Ability to Win in Greater China Since 2018, our capabilities in Greater China have expanded as our group headcount in the region has increased. We have realized significant success in the region through a commercialization strategy specific to the Chinese market. Our leaders are empowered to make decisions quickly so that we can compete to win in a dynamic and evolving Chinese retail landscape. While the brand experience for consumers is consistent with each brand s global ethos, we employ localization strategies that resonate with Chinese consumers. TABLE OF CONTENTS Our strategy in Greater China also leverages a precise retail rollout combined with operational excellence. Store locations are selected using detailed data analysis, and we are keenly focused on optimizing store size and store-level productivity. Each location seeks to bring to life our authentic brand stories. Our operational excellence allows us to refresh retail inventory on a regular cadence, helping to drive consistent traffic and excitement in our stores and facilitating a luxury experience. We have already demonstrated success in Greater China, having grown our revenue from $372.9 million in 2021 to $841.4 million in 2023, representing a 50.2% CAGR, and operating margins in the region exceeds the margins of the business overall. In addition, while our initial success in Greater China was largely related to growth of Arc teryx, we have also developed a repeatable playbook with Salomon. We believe we are in the preliminary stages of addressing our growth opportunity in Greater China as our brands continue to be recognized and appreciated by consumers in Greater China, while our proven ability to tailor and execute a regional strategy highlights our global potential. Highly Experienced Management Team with Deep Bench of Talent Our strategic vision, operational execution and company culture are driven by our executive leadership team, which has a proven track record in developing sportswear brands on a global scale. At the brand level, we have a deep bench of leaders that have significant experience building DTC retail strategies and unrivaled expertise in accessing fast growing markets. Our brand CEOs operate with a high degree of autonomy and support from group management. Within each brand organization, we have highly talented individuals executing key functionalities, including brand marketing, product development and operations. Across the organization, one third of employees at the top two leadership tiers of the company are individuals hired within the last two years, allowing for fresh perspectives to partner with experienced talent driving strong execution. Our Growth Strategies We have established comprehensive growth strategies across each of our brands, founded on the pillars of product innovation, geographic expansion, channel mix optimization and increased brand awareness. We intend to leverage both the intrinsic strengths of our brands and the synergistic benefits of our platform to pursue the following growth strategies: Leverage Innovation Leadership to Strengthen Core Categories and Scale Newer Categories The foundation of our brands success comes from an ability to innovate and create products that appeal to both elite athletes and everyday consumers. We believe our innovation model, which has been institutionalized across brands in each of our three segments, will allow us to expand our market shares within core categories, as well as tactically scale in newer categories. Within Technical Apparel, Arc teryx employs a hands-on, iterative product development process that begins with innovative ideas in the North Vancouver design center. These product innovations come to life via on-site prototyping at the nearby ARC One facility. Further, the team rigorously tests the product in the Canadian Coast Mountains with world-class mountain athletes. This results in a product that meets our high quality standards and drives continuous innovation. Core innovation enables products like the Alpha SV waterproof breathable hardshell jacket to consistently be among Arc teryx s top selling products, supporting the brand s market leadership within outdoor technical apparel and driving continued topline growth. Along with core outdoor category growth, Arc teryx plans to grow its women s category, where it has invested in new design leadership, including an expanded assortment, color palette and updated fits, along with rigorous engagement with female athletes to further expand market share with female consumers. For new product development, Arc teryx recently opened a footwear development office in Portland, Oregon to be able to provide a more comprehensive offering to the outdoor consumer, while also further diversifying product line seasonality. Arc teryx is also expanding its product portfolio through its popular contemporary urban lifestyle line, Veilance. These new categories are supplemented by sustainability programs, including ReCare , ReCut and ReGear . ReCare provides consumers with information on home care and field repair for their products, while the ReCut program diverts rescued textiles that are repurposed into original and coveted pieces and the ReGear program accepts used gear and refurbishes it for sale on the ReGear platform. TABLE OF CONTENTS Within Outdoor Performance, Salomon is deeply committed to innovation in footwear, reflected by its world-class design center in Annecy, France, along with a professional athlete collaboration program to design next-generation products. Through trail running, Salomon has been influential in shaping the modern outdoor footwear industry, rich in heritage of the French Alps. These innovations fuel the future of the sport, recently being worn by Courtney Dauwalter as she set back-to-back records at the Western States Endurance Race 100-mile run, and three weeks later, in the Hardrock 100 with the same pair of S/LAB Genesis shoes. S/LAB is the brand s halo collection of specialty running and Nordic ski systems which have won races from the UTMB in Chamonix France to the 2022 Olympic Winter Games in Beijing, China. The brand s ADDIKT PRO on-piste ski line is made with recycled ABS sidewalls, demonstrating Salomon s leading innovation. Historically, innovation has supported the evolution of Salomon s iconic products like the XT-6, which was launched in 2013 and originally designed for ultra-distance trail runners under harsh conditions. This silhouette now creates the foundation of Salomon s rapidly growing Sportstyle line, which creates a blend between function and fashion that is loved by athletes and consumers alike and represents a significant opportunity for the brand. Salomon Sportstyle footwear has become so culturally relevant that the MM6 Maison Margiela x Salomon Cross Low shoes have been worn by global superstars, including during the Super Bowl LVII halftime show, which was viewed by more than 115 million people globally. Sportstyle is the fastest growing collection in the Salomon brand with revenue over 219 million in 2023. Salomon also demonstrates an unwavering commitment to producing high-quality equipment for winter sports. During the 2022 Winter Olympic Games in Beijing, athletes using Salomon products went on to win 28 Olympic medals, showcasing the technical excellence of the brand s winter sports equipment from skis, ski boots, ski bindings, snowboards, snowboard boots and bindings. Two-time World Cup Overall Alpine ski racer Marco Odermatt has relied exclusively on Salomon ski boots and bindings in his wins. Salomon intends to continue leveraging its premier innovation capabilities to improve existing product lines as well as develop new products to drive growth and increase market share. In Ball & Racquet Sports, Wilson s in-house innovation capabilities, anchored by its innovation center located in Chicago, provide a competitive advantage and an engine for continuous growth. The brand s significant scale, particularly compared to mono-sport competitors, allows Wilson to make significant investments in research and development. The innovation process leverages key insights from technical scientists, engineers and designers who have a deep understanding of sports and the technical needs of athletes who use Wilson products. Other recent innovation examples include a Louisville Slugger baseball bat that uses simulation software combined with artificial intelligence, first utilized in the golf space and then expanded to baseball, to enhance the contact sweet spot, or the Evo NXT basketball that redistributes the weight of the ball with an advanced internal construction, making the ball easier to shoot from long range. New product introductions accounted for approximately 15% of revenue in 2023 for Wilson. These product innovations drive market share growth in core sports as well as adjacent categories such as the increasingly popular games of padel in Europe and pickleball in the United States. As a new growth lever, Wilson is expanding its reach in soft goods categories in addition to sports equipment. Wilson is already experiencing success with its Tennis 360 Softgoods strategy, which involves launching tennis footwear and increasing exposure to apparel and represented 5.0% of total Wilson sales during the year ended December 31, 2023. We believe this category will continue to grow as a larger contributor to the Wilson business and help fuel broader brand engagement. Across segments, our plans to innovate, expand our product offering and successfully implement our growth strategy may not be successful, and implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our revenue and profitability. Further Penetrate Key Markets and Strategically Broaden Our Geographic Footprint While our brands across each of our three segments have achieved global recognition, there are specific markets where they enjoy greater prominence: Arc teryx in North America and Greater China, Salomon in Europe and Wilson in North America. By capitalizing on our existing global presence and TABLE OF CONTENTS leveraging our brands strengths, we have a significant opportunity to strategically increase our presence in existing and new geographies by cultivating new customer bases where there is promising market demand and ample room for growth. Within Technical Apparel, Arc teryx s future geographic growth will be grounded in its historical momentum in North America and Greater China, with considerable opportunity in Europe and the rest of Asia Pacific. In North America and Greater China, the brand operates 51 and 64 owned retail stores, including seven and 21 factory outlets, respectively, as of December 31, 2023. During the period from 2019 to December 31, 2023, the brand has opened a net total of 30 new stores in Greater China, as well as a net total of 23 new stores in North America. In Europe and in the rest of Asia Pacific, Arc teryx operates six and 21 owned retail stores, including two and five factory outlets, respectively, as of December 31, 2023. The brand intends to continue developing its retail real estate portfolio in these markets to drive brand awareness and growth. In Europe, there are retail opportunities in large metro areas such as Paris, as well as iconic, outdoor locations across the Alps, including Chamonix, France, Zermatt, Switzerland and St. Anton, Austria, where important community-building mountain stores are targeted to create authentic brand positioning. Within Outdoor Performance, while Salomon is relatively well known in Europe, we believe brand awareness is significantly lower in Greater China and the United States. These markets represent strong growth opportunities as the technical performance, innovative design and premium nature of the brand s products, especially within footwear, align well with consumer preferences in these markets. In Greater China, Salomon has successfully opened 37 owned retail stores as of December 31, 2023 and has plans to accelerate its retail rollout in this market. Despite still emerging brand awareness, Salomon enjoys specialty niche market positioning in the United States, including being well known for its winter sports equipment. Within Ball & Racquet Sports, Wilson has a compelling opportunity to leverage its reputation for technical excellence in various sports activities, stemming from its historical success in the North American market. Wilson plans to expand its market leadership in North America while driving growth in both Greater China and Europe. In these newer markets, Wilson plans to leverage its partnership with the NBA as well as capitalize on increasing participation in sports and outdoor activities such as tennis. In Greater China, we believe that higher levels of participation in sports by children, young adults and women provide an opportunity to leverage the Tennis 360 Softgoods strategy to drive apparel and footwear growth while also developing a strong brand relationship with a large and dynamic consumer base. In Europe, Wilson plans to leverage its product authority in racquet sports to drive market share gains in padel, which is a popular fast-growing sport in the region. Fast growing sports like padel and pickleball are also fragmented and provide Wilson an opportunity to innovate on currently relatively standardized equipment. Optimize Go-to-Market Strategies to Conveniently Engage Consumers Each of our brands employs a customized go-to-market strategy that is tailored specifically to the brand s attributes and designed to effectively reach and captivate consumers. We remain committed to further refining and enhancing our go-to-market strategies with the goal of expanding our market presence, fostering customer loyalty and driving growth. Our DTC strategy will continue to require significant investment and management focus and may present risks and challenges, while our wholesale strategy may be impacted by the strength of our relationships with our wholesale partners. Within Technical Apparel, for Arc teryx, the DTC channel is the primary vehicle to engage consumers and drives both online and offline conversions. The DTC channel allows Arc teryx to seamlessly leverage grassroots community marketing strategies and provides for a more agile inventory management model focused on consistent flow of fresh product. While Arc teryx has a selective wholesale footprint that will remain an important element in its distribution strategy, we expect owned retail and e-commerce to continue to enable DTC to be the brand s fastest growing channel. Retail Brand Stores: Elevated brand stores provide a critical space for Arc teryx to engage directly with consumers, showcase products and build community. Its retail store strategy has evolved to include three differentiated store formats with square footage generally ranging from 1,000 10,000 sq. ft. With multiple store formats, the brand has expanded its retail store network, with a focus on global retail hubs like Shanghai and New York. The brand stores are highly productive with an average global sales per square foot of approximately $1,558 for TABLE OF CONTENTS the year ended December 31, 2023. Brand stores generally have been profitable with a target payback period of 24 months, with actual performance generally exceeding targets based on our global brand store openings for the year ended December 31, 2023. The ReBird Care and Repair centers, incorporated in several new stores opened since 2022, have been an important element of the brand s immersive store experience, not only to enhance our efforts in improving the circularity and reusability of our products, but also to drive traffic and consumer engagement. E-commerce: Arc teryx s digital platform is a catalyst for the business across all channels by growing brand awareness and serving as a global storefront for products and brand identity. We believe the Arc teryx e-commerce platform will continue to grow as brand awareness accelerates through brand and community marketing investments, which contribute to Arc teryx s ability to adapt its business based on consumer data received from this platform. Within Outdoor Performance, we have optimized Salomon s go-to-market strategy from a traditional wholesale model to a modern and balanced consumer-centric retail strategy. The strategy is designed to elevate the brand by selectively choosing premium wholesale partners, curating and segmenting the inventory assortment with them, while also reaching more consumers on a direct basis through owned retail and e-commerce and providing engaging consumer experiences. While the channel mix remains primarily wholesale, DTC has grown significantly from 15% of segment revenue in 2020 to 20.3% in 2023 in an effort to drive penetration globally. Direct-to-Consumer: The brand has a strategic retail expansion plan, focusing on the development of multi-sport, experiential store formats in select major global cities, such as Paris and Milan, as well as increasing the number of Sportstyle focused stores in Greater China. For e-commerce, Salomon recently redesigned its website with a vision to inspire, guide and equip new and returning consumers to unleash their potential through mountain sports. We believe the platform provides an immersive and frictionless brand experience which has led to increased traffic and conversion. We expect growth on the e-commerce platform to scale with retail expansion as brand awareness increases and Salomon builds larger brand communities. Wholesale: Salomon targets high-quality wholesale partners, including specialty retailers, globally to attract new consumers. The brand collaborates with partners to drive higher per door productivity. Within Ball & Racquet Sports, Wilson Sporting Goods s go-to-market strategy revolves around highly productive wholesale relationships complemented by owned retail stores and an e-commerce platform that create excitement around Wilson s categories and elevate Wilson s brand. The wholesale channel is pivotal for Wilson as we believe many consumers prefer to shop in stores where expert recommendations are available and can be critical to driving the point-of-sale for sporting goods. Approximately 50% of Wilson s wholesale revenue in 2023 came from differentiated specialty retailers. Through strong wholesale relationships and a complementary DTC strategy, Wilson aims to continue increasing consumer engagement in the appropriate channels. Importantly, while Wilson s owned store footprint is expected to remain relatively small and targeted, these stores serve as important consumer touchpoints to build engagement with the brand in high-quality, immersive retail environments. Wholesale: Wilson s wholesale channel comprises more than 15,000 wholesale partners globally for the year ended December 31, 2023, balanced between traditional and specialty retailers and smaller pro shops and country clubs. Through internal, specialized sales teams, Wilson closely collaborates with its wholesale partners to deliver a premium and educational consumer experience that drives brand productivity. As Wilson continues to deliver superior products, it intends to continue increasing productivity and shelf space with strategic wholesale partners. Direct-to-Consumer: Wilson leverages DTC channels to complement its wholesale strategy by increasing brand awareness and elevating the brand. Wilson has owned retail stores in strategic locations, such as New York City and Chicago, which provide an immersive consumer experience and illuminate Wilson s leadership across categories. The brand s retail strategy is TABLE OF CONTENTS complemented by a global e-commerce platform with innovative digital capabilities, such as a direct-to-team baseball offering that leverages Wilson s dynamic portfolio of brands and connections with baseball academies, clubs and organizations. Overall, we believe DTC will continue to play a critical role in driving traffic and conversion for Wilson in both the DTC and wholesale channels as brand equity and awareness grow. Grow Brand Awareness, Expand Our Communities and Increase Customer Loyalty We believe efforts to drive higher levels of brand awareness and increased customer loyalty across key markets are critical for each of our brands to achieve their commercial potential. As such, each brand has developed robust global marketing programs that build on the authenticity of each brand through strategies ranging from grass roots local community activities, to large scale global on-mountain events, to sophisticated original content and social media campaigns that leverage digital marketing. Within Technical Apparel, Arc teryx has created a reputation of authenticity and an uncompromising standard of excellence. The result has created a passionate, loyal following for the brand. However, Arc teryx global brand awareness levels are relatively low when compared to more established premium outerwear brands. The brand plans to tactically increase brand awareness and curate more passionate communities through the following global strategies: Arc teryx Academies: Each year, Arc teryx hosts several global events in some of the most iconic alpine destinations around the world such as Chamonix, France; St. Anton, Austria and Whistler, British Columbia. Each Academy focuses on a different mountain sport discipline and is open to the public. Store-Driven Events: Arc teryx s events enable the brand to connect to the communities surrounding the brand s stores. These events range from design discussions, music performances, to speaker series hosted both in-store and online. Original Content + Digital and Social Media: Arc teryx produces original content films with talented filmmakers that feature sponsored athletes. These films include examples such as Unfinished Business, a documentary about Greg Hill summiting all 20 peaks of the Spearhead Traverse in one day and Keep It Real, a video on the underground UK bouldering scene that provided original content to enable authentic brand storytelling across social media channels. We believe original content combined with digital marketing strategies will increase Arc teryx brand awareness globally. Within Outdoor Performance, while the Salomon brand has existed for more than 75 years, we believe there is an opportunity to grow brand awareness globally, particularly in North America and Greater China. To drive brand awareness, Salomon plans to use the following integrated, brand-first marketing strategy to communicate key product stories: Television, Digital and Social Media: Using television, digital and social media, Salomon plans to effectively communicate its brand story to a large audience of consumers and form a deeper connection. For example, in 2022, Salomon unveiled the new Tomorrow is Yours campaign aimed at inspiring a wider, younger and more diverse audience to connect with the outdoors. We believe this comprehensive global campaign increased brand awareness and perception globally. Brand Ambassadors: Professional athletes trust Salomon in the most demanding competitive environments, which is the greatest form of product validation. In total, more than 600 professional athletes across trail running, snowboarding and alpine and Nordic skiing actively use Salomon products. These athletes provide individual product and brand storytelling opportunities to drive awareness. Loyalty Program: In 2022, Salomon launched its loyalty program, S/Plus which allows consumers to earn points for each purchase, access exclusive products and receive other members only benefits. Original Content: Salomon.tv originated in 2009 as the original branded content platform in sports, highlighting athletes, sports, products and community. TABLE OF CONTENTS Events: Salomon has developed a leading series of running events in some of the most iconic outdoor destinations around the world called The Golden Trail Series ( GTS ). These events are the only running events in the world designed and developed for a global television audience. In 2023, GTS events were broadcasted on Eurosport across 53 countries. Salomon plans to further increase spending to add events in Japan and Greater China to complement the United States and European races, entrenching Salomon as the leading global brand powering the sport of trail running. Within Ball & Racquet Sports, Wilson has recently elevated its brand through consistent, cohesive brand messaging across sports categories. Today Wilson is thoughtfully balancing product marketing and brand marketing to engage consumers, and it intends to continue growing its brand awareness in key global markets through the following strategies: Professional Partnerships: For more than 110 years, Wilson has been and continues to be a part of championship-level performance for some of the world s best athletes and iconic sports leagues. These endorsements and partnerships serve as a competitive advantage, providing a differentiated opportunity to convey a story around Play What the Pros Play. Wilson plans to continue leveraging these partnerships with both professional leagues and young aspiring talent across sport activities to build brand awareness globally. Strategic Marketing: Known for product excellence across sport categories, Wilson is establishing a cohesive brand identity that sources and amplifies brand equity from each categories leadership and authenticity, effectively shifting from category marketing to brand marketing. Wilson leverages digital marketing, social media platforms, experiential concepts and collaborations with brands such as KITH to deliver authentic brand and product messaging to consumers. The digital marketing strategy combines personalized targeting, engaging content and data-driven optimization to build brand awareness and drive consumer engagement. In 2022, the brand launched a marketing program for everyone to Live Like an Athlete, which immediately increased the brand s social media engagement. Wilson continues to build on this brand momentum through the Wilson Tennis 360 Softgoods strategy and a comprehensive brand campaign delivered in 2023. Leverage the Amer Sports Platform to Scale All of Our Brands We have laid the foundation and infrastructure to enable premium brands to thrive and scale on the Amer Sports platform. The ability for brands to chart their own consumer-centric strategies while leveraging the global scale and capabilities of our platform provides an opportunity for all our brands across each of our three segments to accelerate their growth in a profitable manner. For example, Atomic and Peak Performance have an opportunity to leverage our platform to increase their presence globally. Atomic is a leading player in winter sports as validated through the use of Atomic equipment by some of the world s best alpine athletes, including Mikaela Shiffrin. We intend to leverage this professional brand halo to capture additional market share in the global winter sports equipment industry and further extend the Atomic brand to apparel and accessories. Given its Nordic roots, Peak Performance has a strong following within EMEA; however, there is an opportunity to expand the brand globally in the Americas, Greater China and the rest of Asia Pacific. Corporate Information We were incorporated as Amer Sports Management Holding (Cayman) Limited in the Cayman Islands as an exempted company with limited liability on January 3, 2020. On August 4, 2023, we changed our name to Amer Sports, Inc. Our registered offices are located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our telephone number at this address is +1 345 945 3901. Our corporate offices are located at Siltasaarenkatu 8-10, FI-00530 Helsinki, Finland. Our telephone number at this address is +358 (0)20 712 2500. Investors should contact us for any inquiries through the address and telephone number of our corporate offices. Our principal website is www.amersports.com. The information on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website. TABLE OF CONTENTS THE OFFERING Issuer Amer Sports, Inc. Offering of ordinary shares 34,000,000 shares. Option to purchase additional ordinary shares We have granted the underwriters an option to purchase up to 5,100,000 additional ordinary shares within 30 days of the date of this prospectus. Ordinary shares to be issued and outstanding after this offering 539,559,667 shares (or 544,659,667 shares if the underwriters option to purchase additional shares is exercised in full). Use of proceeds We estimate that the net proceeds to us from the offering will be approximately $870.7 million (or $1.0 billion if the underwriters option to purchase additional shares is exercised in full), after deducting estimated underwriting discounts and commissions and offering expenses payable by us based on an assumed public offering price of $26.33 per ordinary share, which was the last reported sale price on the NYSE on November 29, 2024. We intend to use the net proceeds we receive from this offering to repay a portion of our outstanding borrowings under our Term Loan Facilities (as defined below). See Use of Proceeds. Dividend policy We have never declared nor paid any cash dividends on our ordinary shares. Our second amended and restated memorandum and articles of association permits us to pay dividends. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends but our board of directors may choose to do so at any point if it is in the best interests of the Company and our shareholders. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors subject to applicable laws, and will depend on then-existing conditions, including our financial condition, results of operation, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our Senior Facilities Agreement (as defined herein) restricts our ability to make distributions, including dividends, subject to certain exceptions. Listing Our ordinary shares are listed on the NYSE, under the symbol AS. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BCAX_bicara_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BCAX_bicara_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..78aaea26360eed793249bf1d5e21281e202b973b --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BCAX_bicara_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated 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 the context otherwise requires, the terms Bicara, the Company, we, us, and our in this prospectus refer to Bicara Therapeutics Inc. and its wholly owned subsidiary, or either or both of them as the context may require. Overview We are a clinical-stage biopharmaceutical company committed to bringing transformative bifunctional therapies to patients with solid tumors. Our lead program ficerafusp alfa is a bifunctional antibody that combines two clinically validated targets, an epidermal growth factor receptor, or EGFR, directed monoclonal antibody with a domain that binds to human transforming growth factor beta, or TGF- . Through this dual-targeting mechanism, ficerafusp alfa has the potential to exert potent anti-tumor activity by simultaneously blocking both cancer cell-intrinsic EGFR survival and proliferation, as well as the immunosuppressive TGF- signaling within the tumor microenvironment, or TME. Ficerafusp alfa directs the TGF- inhibitor into the immediate TME through the binding of EGFR on tumor cells, which we believe will lead to durable responses and an increase in overall survival, or OS, while reducing the adverse effects typically associated with systemic TGF- inhibition. Ficerafusp alfa is initially being developed in head and neck squamous cell carcinoma, or HNSCC, where there remains a significant unmet need. We intend to initiate a pivotal Phase 2/3 trial of ficerafusp alfa in combination with pembrolizumab as a first-line therapy in recurrent/metastatic, or R/M, HNSCC excluding patients associated with human papillomavirus infection, or HPV-positive patients, with oropharyngeal squamous cell carcinoma, or OPSCC, late in the fourth quarter of 2024 or early in the first quarter of 2025. We are conducting an ongoing Phase 1/1b trial of ficerafusp alfa in the U.S., which includes a cohort of HNSCC patients who were treatment-na ve in the R/M setting. In this cohort, treatment with ficerafusp alfa in combination with pembrolizumab resulted in a 54% (21/39) overall response rate, or ORR, in the efficacy evaluable population, and a 64% (18/28) ORR in patients not associated with human papillomavirus infection, or HPV-negative patients. The historical response rate observed in a Phase 3 trial with pembrolizumab monotherapy, the current standard of care in R/M HNSCC, was 19%. Furthermore, treatment with ficerafusp alfa in combination with pembrolizumab demonstrated an 18% (5/28) complete response rate, or CR rate, and a median progression-free survival, or mPFS, of 9.8 months in HPV-negative patients. With at least 12 months of follow-up, median OS and median duration of response, or mDOR, have not yet been reached, and we expect to announce updated interim Phase 1/1b data at future medical meetings in 2025. Based on the clinical data generated to date, we believe that ficerafusp alfa in combination with pembrolizumab has the potential to become a first-line standard of care therapy in HPV-negative R/M HNSCC. We also believe ficerafusp alfa has the potential to provide meaningful clinical benefit in other solid tumors where there is a strong biologic rationale for the dual inhibition of both EGFR and TGF- , such as colorectal cancer and other squamous cell carcinomas which typically overexpress EGFR and TGF- pathways. We have demonstrated preliminary activity of ficerafusp alfa in combination with pembrolizumab or as a monotherapy across several squamous cell carcinomas, including cutaneous squamous cell carcinoma, or CSCC. Within our Phase 1/1b dose expansion cohorts conducted in the U.S. and Canada, we have observed to date a preliminary 42% (5/12) ORR with ficerafusp alfa monotherapy in relapsed and/or refractory CSCC patients. We have built a platform designed to facilitate the development of bifunctional therapies that precisely target the tumor and deliver a tumor-modulating payload to the tumor site. This dual-targeting approach both 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 jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 11, 2024 PRELIMINARY PROSPECTUS 14,705,882 Shares Common Stock This is the initial public offering of shares of common stock of Bicara Therapeutics Inc. We are offering 14,705,882 shares of our common stock. Prior to this offering, there has been no public market for our common stock. We expect the initial public offering price to be between $16.00 and $18.00 per share. We have applied to list our common stock on The Nasdaq Global Market, or Nasdaq, under the symbol BCAX. We believe that upon the completion of this offering, we will meet the standards for listing on The Nasdaq Global Market, and the completion of this offering is contingent upon such listing. We are an emerging growth company and smaller reporting company as defined under the U.S. federal securities laws and will be subject to reduced public company reporting requirements for this prospectus and future filings. See the section titled Prospectus Summary Implications of Being an Emerging Growth Company and a Smaller Reporting Company. Investing in our common stock involves a high degree of risk. Please see the section titled 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. Per share Total Initial public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to us $ $ (1) See the section titled Underwriting for additional information regarding underwriting compensation payable to the underwriters. At our request, the underwriters have reserved up to 5% of the common stock offered by this prospectus for sale, at the initial public offering price, to certain individuals identified by us. See Underwriting - Directed Share Program. We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase an additional 2,205,882 shares of common stock at the initial offering price, less the underwriting discounts and commissions. The underwriters expect to deliver the shares of common stock on or about , 2024. Morgan Stanley TD Cowen Cantor Stifel Prospectus dated , 2024 Table of Contents enhances drug exposure within the TME and limits systemic toxicity. This approach was deployed in the development of ficerafusp alfa, where we believe the bifunctional design can improve upon the therapeutic profile of immunotherapies and targeted therapies by addressing resistance mechanisms and limiting off-target toxicity, therefore, enhancing the treatment effect and tolerability for targeted patient populations with cancer. HNSCC Background HNSCC is one of the most common cancers in the U.S. and globally with a rising incidence anticipated to reach one million new global cases annually by 2030. There are approximately 67,000 cases of HNSCC each year in the U.S with a 13% 5-year survival rate. Ten percent of HNSCC patients are diagnosed with metastatic disease and up to 30% develop a recurrence or metastases over time after initial treatment for advanced HNSCC. There are approximately 23,000 cases of R/M HNSCC each year in the U.S. Median OS for patients with R/M HNSCC is only 12 months. Most cases of HNSCC are believed to arise from mutations that accumulate due to carcinogenic exposure, such as tobacco smoke, or by HPV. Approximately 80% of patients with R/M HNSCC are HPV-negative, a status associated with a worse prognosis. Pembrolizumab monotherapy is the standard of care for R/M HNSCC patients who have evidence of PD-L1 expressing tumors is pembrolizumab monotherapy. The KEYNOTE-048 Phase 3 trial of pembrolizumab conducted by Merck & Co. Inc., or Merck & Co, demonstrated an ORR of 19% with a mPFS of 3.2 months in a population of HPV-negative and HPV-positive patients with combined positive scores, or CPS, greater than or equal to one. For patients with a CPS less than one and no PD-L1 expression within their TME, the typical standard of care is the EXTREME regimen, a combination of cetuximab and chemotherapy, which has low response rates and survival, as well as a difficult tolerability profile. We believe the poor prognoses in HPV-negative R/M HNSCC and the low ORR associated with available therapies may be attributed to the elevated levels of TGF- observed in these patients. It has been shown in translational studies that EGFR inhibition leads to further increases in TGF- levels which result in the development of resistance to EGFR-targeted therapeutics. We believe blocking TGF- has the potential to prevent resistance and improve the anti-tumor activity of anti-EGFR therapies, leading to more durable responses and an increase in OS. Similarly, inhibiting TGF- may reduce the fibrosis and immune-exclusion within the TME that could be responsible for the low efficacy seen with checkpoint inhibitors in these immunosuppressive, or cold tumors. We believe promoting immune activation via TGF- blockade may translate to significant increases in anti-tumor efficacy, particularly in the depth and durability of responses in combination with anti-PD1 therapies. Our Dual-Targeting Mechanism: EGFR and TGF- EGFR is the primary member of a larger family of cell-surface growth factor receptors harboring intrinsic tyrosine kinase function. EGFR is involved in many tumor-promoting pathways. Its overexpression has been linked to multiple squamous cell cancers, including HNSCC, where EGFR expression has been shown to be greater than 90%. EGFR has been a long-standing focus for cancer drug development due to the correlation between EGFR expression, poor prognosis and resistance to therapy. Cetuximab is an EGFR-directed monoclonal antibody approved for HNSCC and colorectal cancer that drives anti-tumor responses by inhibiting EGFR signaling and through antibody-dependent cell-mediated cytotoxicity, or ADCC. However, acquired resistance mechanisms to cetuximab can prevent durable responses. We believe that there is a significant market opportunity for EGFR targeted therapies with improved efficacy, durability and OS compared to cetuximab. TGF- is a cytokine that controls a range of biological functions and is widely understood to play a critical role in cancer. TGF- perpetuates tumor survival by promoting tumor cell proliferation, migration, invasion and metastasis. TGF- also serves as an immunosuppressant, inhibiting both natural killer, or NK, cells and cytotoxic T cells. The inhibition of TGF- has been demonstrated to improve anti-tumor responses in vivo. However, these Table of Contents TABLE OF CONTENTS Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BEAGR_bold_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BEAGR_bold_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..7328aeabe30a4bd505aff1d4fa9106102fb2c8d9 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BEAGR_bold_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary Our Sponsor for more information regarding, among other things, the amount of compensation and securities received or to be received by our sponsor, its affiliates and our officers and directors. Table of Contents The following table illustrates the difference between the public offering price and our net tangible book value per share, as adjusted to reflect various potential redemption levels that may occur in connection with the closing of our initial business combination, which we refer to as Adjusted NTBVPS, on a pro forma basis to give effect to this offering and the issuance of the private placement shares, assuming no exercise of the over-allotment option and exercise of the over-allotment option in full. Adjusted NTBVPS excludes the effect of the consummation of our initial business combination or any related transactions or expenses. See the section titled Dilution for more information. As of June 30, 2024 Offering Price of $10.00 25% of Maximum Redemption 50% of Maximum Redemption 75% of Maximum Redemption Maximum Redemption Adjusted NTBVPS Adjusted NTBVPS Difference between Adjusted NTBVPS and Offering Price Adjusted NTBVPS Difference between Adjusted NTBVPS and Offering Price Adjusted NTBVPS Difference between Adjusted NTBVPS and Offering Price Adjusted NTBVPS Difference between Adjusted NTBVPS and Offering Price Assuming No Exercise of Over-Allotment Option $ 7.63 $ 7.05 $ 2.95 $ 6.08 $ 3.92 $ 4.18 $ 5.82 $ (1.34 ) $ 11.34 Assuming Full Exercise of Over-Allotment Option $ 7.64 $ 7.06 $ 2.94 $ 6.10 $ 3.90 $ 4.20 $ 5.80 $ (1.30 ) $ 11.30 Members of our management team will directly or indirectly own founder shares and/or private placement shares 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 and in negotiating or accepting the terms of the transaction because of their financial interest in completing an initial business combination within the completion window. 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 were to be included by a target business as a condition to any agreement with respect to our initial business combination. The low price that our sponsor, executive officers and directors (directly or indirectly) paid for the founder shares creates an incentive whereby our officers and directors could potentially make a substantial profit even if we select an acquisition target that subsequently declines in value and is unprofitable for public shareholders. If we are unable to complete our initial business combination within the completion window, the founder shares may expire worthless, except to the extent they receive liquidating distributions from assets outside the trust account, which could create an incentive for our sponsor, executive officers and directors to complete a transaction even if we select an acquisition target that subsequently declines in value and is unprofitable for public shareholders. Additionally, each of our 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 officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, there may be actual or potential material conflicts of interest between our sponsor, its affiliates or promoters on the one hand, and the investors in this offering on the other hand. See the sections titled Proposed Business Sourcing of Potential Business Combination Targets and Management Conflicts of Interest. 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 , 2024. UBS Investment Bank Jefferies _________________ , 2024 Table of Contents TABLE OF CONTENTS Page Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BGFR_bestgofer_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BGFR_bestgofer_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..fb2b1f39b13aad893922278eae2cf88b49720d9d --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BGFR_bestgofer_prospectus_summary.txt @@ -0,0 +1 @@ +S-1/A 1 bgof_s1a.htm REGISTRATION STATEMENT Registration Statement UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1/A Amendment #4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BestGofer Inc. (Exact name of registration as specified in its charter) Nevada 7200 82-5296245 (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 10 Nisan Beck St, Jerusalem Israel 91034 (972) 03-9117987 (Principal place of business) Robert Burnett Witherspoon Brajcich McPhee, PLLC 601 W. Main Avenue, Suite 1400 Spokane, Washington 99201 Office: (509) 455-9077 Fax: (509) 624-6441 (Name, address and telephone number for agent for service of process) 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 checkmark whether the registration is a larger accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filler, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registration has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay until the Registration 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. 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 Exchange Commission is effective. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PRELIMINARY PROSPECTUS BESTGOFER INC. 2,080,000 Common Shares There is no public market for our Common stock and we have not applied for the listing or quotation of our Common stock on any public market. Selling Shareholders will sell at $0.04 per share. The price at which Selling Shareholders will sell their shares has been arbitrarily determined by the Company s president and bears no relationship to our assets, book value, earnings or any other information regarding the Company. After the effective date of the registration statement, we intend to seek a market maker to file a Form 211 application with the Financial Industry Regulatory Authority ( FINRA ) and then apply to have our Common stock quoted via OTC Markets. We currently have no market maker who is willing to file a Form 211 on our behalf. There is no assurance that any active trading market for our shares will develop or will be sustained if developed. We are registering a total of 2,080,000 shares of our Common stock held by Selling Shareholders. There is no minimum number of shares required to be purchased by each investor. The Offering is being conducted by the Selling Shareholders. The shares will be sold by the Selling Shareholders. All of the shares being registered for sale by the Selling Shareholders will be sold at $0.04 per share regardless of whether the Company s Common Stock becomes quoted via OTC Markets. We receive no proceeds from the sale of any shares sold in this Offering. There is no guarantee that a public market will ever develop, and you may be unable to sell your shares. Selling shareholders are underwriters in this offering. There is no commitment for any of the underwriters to purchase any shares. BestGofer Inc. is a development stage company and currently has no active business operations. Any investment in the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a complete loss of your investment. Our independent auditors have issued an audit opinion for BestGofer Inc., which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The Company has no nominal operations and has assets consisting solely of cash and cash equivalents and is therefore a shell company as defined in Rule 405. BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS AND, PARTICULARLY, THE RISK FACTORS SECTION, BEGINNING ON PAGE 2. Neither the U.S. Securities and Exchange Commission ( SEC ) nor any state securities division has approved or disapproved these securities, or determined if this Prospectus is current, complete, truthful or accurate. Any representation to the contrary is a criminal offense. The information in this Prospectus is not complete and may be changed. Selling Shareholders will not sell these securities until the registration statement filed with the SEC is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. TABLE OF CONTENTS PART I - INFORMATION REQUIRED IN PROSPECTUS 1 SUMMARY OF PROSPECTUS 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BIOA_bioage_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BIOA_bioage_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BIOA_bioage_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BIRK_birkenstoc_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BIRK_birkenstoc_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..9805652c4d9317c868934f49139f8ff16f67b880 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BIRK_birkenstoc_prospectus_summary.txt @@ -0,0 +1 @@ +This summary highlights information contained elsewhere in this prospectus and incorporated by reference herein. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus and the documents incorporated by reference herein carefully, including the sections entitled Risk Factors and Cautionary Statement Regarding Forward-Looking Statements in this prospectus, the sections entitled Risk Factors, Business and Operating and Financial Review and Prospects in our 2023 Annual Report incorporated by reference in this prospectus and our consolidated financial statements and notes to those consolidated financial statements incorporated by reference in this prospectus, before deciding to invest in our ordinary shares. Who We Are BIRKENSTOCK is a revered global brand rooted in function, quality and tradition dating back to 1774. We are guided by a simple, yet fundamental insight: human beings are intended to walk barefoot on natural, yielding ground, a concept we refer to as Naturgewolltes Gehen. Our purpose is to empower all people to walk as intended by nature. The legendary BIRKENSTOCK footbed represents the best alternative to walking barefoot, encouraging proper foot health by evenly distributing weight and reducing pressure points and friction. We believe our function-first approach is universally relevant; all humans anywhere and everywhere deserve to walk in our footbed. From this insight, we have developed a broad, unisex portfolio of footbed-based products, anchored by our iconic Core Silhouettes, the Madrid, Arizona, Boston, Gizeh and Mayari. While these silhouettes drive consistent, high-visibility revenues and represent a significant portion of our overall business, we also continue to expand our extensive archive by extending our existing silhouettes and launching new styles. This expands our reach across price points, usage occasions and product categories. We incorporate distinctive design elements and develop new materials to create newness while staying true to our heritage and uncompromising quality standards. We are German made. Our production capabilities reflect centuries-old traditions of craftsmanship and commitment to using only the highest quality materials. To ensure each product meets our rigorous quality standards, we operate a vertically integrated manufacturing base and produce all our footbeds in Germany. In addition, we assemble the vast majority of our products in Germany and produce the remainder elsewhere in the EU. We maintain strict control over our entire supply chain, responsibly sourcing materials that originate mainly from Europe. As described by our Chief Executive Officer, Oliver Reichert, Consumers buy our products for a thousand wrong reasons, but they all come back for the same reason: for our functional proposition, enduring commitment to quality and the rich tradition of our Company which enables us to establish meaningful emotional connections with our consumers. The deep trust we create allows us to enjoy long-lasting relationships with our consumers oftentimes spanning decades as evidenced by findings from the Consumer Survey that revealed the average BIRKENSTOCK consumer in the U.S. owns 3.6 pairs. Through the strong reputation and universal appeal of our brand enabling extensive word-of-mouth exposure and outsized earned media value we have efficiently built a growing global fanbase of millions of consumers that uniquely transcends geography, gender, age and income. We reach these consumers around the world through a multi-channel engineered distribution model, which balances the growing demand for our products and our constrained supply capacity to create scarcity in the market. We strategically allocate our products between our wholesale partners in the B2B channel, which we have been optimizing in recent years, and our rapidly growing DTC channel. As a result, we drive consistently robust revenue growth and operating margins, achieve excellent sell-through rates and deepen our direct connections with our consumers. In fiscal 2023, we generated revenues of 1,491.9 million, gross profit margin of 62.1%, net profit of 75.0 million, Adjusted net profit of 207.2 million, net profit margin of 5.0%, Adjusted net profit margin of 13.9%, Adjusted EBITDA of 482.7 million and Adjusted EBITDA margin of 32.4%, while selling 30.7 million units. The information in this prospectus is not complete and may be changed. The selling shareholder 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 June 24, 2024 Preliminary Prospectus 14,000,000 Ordinary Shares Birkenstock Holding plc The selling shareholder identified in this prospectus is offering 14,000,000 ordinary shares, no par value, of Birkenstock Holding plc (the Company ). The underwriters may also purchase up to 2,100,000 ordinary shares from the selling shareholder within 30 days of the date of this prospectus. We will not receive any of the proceeds from the sale of the ordinary shares by the selling shareholder. Our ordinary shares are listed on the New York Stock Exchange (the NYSE ) under the symbol BIRK. On June 21, 2024, the last reported share price of our ordinary shares as reported on the NYSE was $61.47 per share. Following the offering and the distribution of ordinary shares to the managers described herein, BK LC Lux MidCo S. r.l. ( MidCo ), an entity affiliated with L Catterton and the selling shareholder, will beneficially own approximately 73.2% of our ordinary shares (or 72.1% if the underwriters exercise in full their option to purchase additional ordinary shares from the selling shareholder). As a result, we will continue to be a controlled company under the corporate governance rules of the NYSE applicable to listed companies, and therefore are permitted to elect not to comply with certain corporate governance requirements thereunder. Investing in our ordinary shares involves risks. See Risk Factors beginning on page 30 of this prospectus and the section entitled Risk Factors in our Annual Report on Form 20-F for the fiscal year ended September 30, 2023 (the 2023 Annual Report ) incorporated by reference in this prospectus. Per ordinary share Total Public offering price $ $ Underwriting discounts and commissions(1) $ $ Proceeds, before expenses, to the selling shareholder $ $ (1)We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See Underwriting for a description of all compensation payable to the underwriters. 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. The underwriters expect to deliver the ordinary shares against payment in New York, New York on or about , 2024. Joint Bookrunners Goldman Sachs & Co. LLC J.P. Morgan The date of this prospectus is , 2024. Neither we, the selling shareholder nor the underwriters have authorized anyone to provide any information or to make any representations other than the information contained or incorporated by reference in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We, the selling shareholder 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, the selling shareholder and the underwriters have not authorized any other person to provide you with different or additional information. Neither we, the selling shareholder nor the underwriters are making an offer to sell the ordinary shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained or incorporated by reference in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus and the information in the documents incorporated by reference in this prospectus is accurate only as of the date of such document, regardless of the time of delivery of this 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. This prospectus is not an offer to sell or the solicitation of an offer to buy these ordinary shares in any circumstances under which such offer or solicitation is unlawful. For investors outside the United States: Neither we, the selling shareholder nor any of the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes 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, this offering of ordinary shares and the distribution of this prospectus outside the United States. Our Company is a Jersey public limited company, and we are a foreign private issuer under the rules of the SEC. As a foreign private issuer, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Exchange Act. Moreover, a number of our directors and executive officers are not residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon such persons or to enforce against them judgments obtained in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the federal or state securities laws of the United States. We have been advised by our legal counsel in Jersey that it is uncertain as to whether the courts of Jersey would entertain original actions based on U.S. federal or state securities laws or enforce judgments from U.S. courts against us or our officers and directors which originated from actions alleging civil liability under U.S. federal or state securities laws. See Enforcement of Judgments for additional information. Jersey Regulatory Matters The JFSC has given, and has not withdrawn, its consent under Article 2 of the Control of Borrowing (Jersey) Order 1958 to the issue of our ordinary shares. The JFSC is protected by the Control of Borrowing (Jersey) Law 1947 against any liability arising from the discharge of its functions under that law. A copy of this prospectus has been delivered to the Jersey Registrar of Companies in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002 and the Jersey Registrar of Companies has given, and has not withdrawn, its consent to the circulation of this prospectus. It must be understood that, in giving these consents (once received), neither the Jersey Registrar of Companies nor the JFSC takes any responsibility for the financial soundness of the Company or for the correctness of any statements made, or opinions expressed, with regard to it. If you are in any doubt about the contents of this prospectus, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser. The price of securities and the income from them can go down as well as up. The directors of the Company have taken all reasonable care to ensure that the facts stated in this prospectus are true and accurate in all material respects, and that there are no other facts the omission of which What We Stand For Our core values of Function, Quality and Tradition influence everything we do and underpin our brand s deep cultural relevance that has stood the test of time. For decades, BIRKENSTOCK has attracted independent thinkers and transcended prevailing style norms, remaining committed to our values, even as the global zeitgeist has evolved around and moved toward us. In the 1960s and 1970s, the global peace movement and hippies adopted BIRKENSTOCK, wearing our Madrid, Arizona and Boston, as part of their celebration of freedom and free-spiritedness. In the 1980s, the green movement adopted BIRKENSTOCK, proudly wearing our products for our ethical approaches to production and consumption. In the 1990s, inspired by the feminism movement, more women wore BIRKENSTOCKs to free themselves from long-standing fashion norms that required wearing painful high heels and other constricting footwear. Today, consumers turn to BIRKENSTOCK in their search for healthy, high-quality products and as a rejection of formal dress culture. By remaining true to our values of Function, Quality and Tradition, BIRKENSTOCK has endured across generations. Function Our proprietary footbed the result of successive innovations, beginning in the late 19th century with the invention of the contoured shoe last, which reflects the anatomy of the human foot represents the foundation of our brand and products. The functional nature of and growing usage occasions for BIRKENSTOCK products enable the universality of our brand, allowing us to serve every human regardless of geography, gender, age and income. At its core, the BIRKENSTOCK footbed promotes Naturgewolltes Gehen : Every foot employs 26 bones, 33 muscles and over 100 tendons and ligaments in walking. Improper footwear can cause friction, pain, injury and poor posture, among other ailments. Our anatomically shaped BIRKENSTOCK footbed provides natural support and stimulation, promoting even weight distribution, fully supported arches and no unnatural pressure points from heel to toe. Orthopedic theory suggests the benefits of walking barefoot on natural yielding ground are far reaching, including pain reduction in the foot and throughout the body, improved mobility, and natural posture, since the foot is kept in its natural state. By mimicking the effects of natural yielding ground ( footprint in the sand ), the System Birkenstock leans on the benefits of this phenomenon, attempting to enable would make misleading any statement in this prospectus, whether of facts or opinion. All the directors of the Company accept responsibility accordingly. Our company secretary is Gen II Corporate Services (Jersey) Limited, whose current business address is 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands. Our registered office is 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands and our register of members is kept at 13 Castle Street, St Helier, JE1 1ES. PRESENTATION OF FINANCIAL AND OTHER INFORMATION Certain Definitions Unless otherwise indicated or the context otherwise requires, all references in this prospectus to BIRKENSTOCK Group, Birkenstock, the Company, we, our, ours, us or similar terms refer to Birkenstock Holding plc, together with all of its subsidiaries. References to the selling shareholder or MidCo are to BK LC Lux MidCo S. r.l., a soci t responsabilit limit e incorporated under the laws of the Grand Duchy of Luxembourg. References to Euro or means the currency of the member states of the European Monetary Union that have adopted or that adopt the single currency in accordance with the treaty establishing the European Community, as amended by the Treaty on European Union. All references to U.S. Dollars, Dollars, USD or $ are to the legal currency of the United States. All references to Canadian Dollars are to the legal currency of Canada. In this prospectus, unless otherwise noted, amounts that are converted from Euro to U.S. Dollars are converted at an exchange rate of $1.0811 per 1, the exchange rate as of March 28, 2024, and at an exchange rate of $1.0804 per 1, the average exchange rate for the six months ended March 31, 2024. Financial Statements We maintain our books and records in Euros and prepare our consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ( IFRS ). Birkenstock GmbH & Co. KG is the accounting predecessor of BK LC Lux Finco 2 S. r.l., subsequently renamed Birkenstock Holding Limited on July 12, 2023, for financial reporting purposes. Birkenstock Holding Limited was converted to a Jersey public limited company and subsequently renamed Birkenstock Holding plc on October 4, 2023. The Company s financial statement presentation in this prospectus and our 2023 Annual Report distinguishes the Company s presentations into two distinct periods, the period up to and including April 30, 2021, the Transaction s closing date (labeled Predecessor ), and the period after that date (labeled Successor ) and are further distinguished as follows: the Successor periods represent fiscal 2023 ( 2023 Successor Period ), fiscal 2022 ( 2022 Successor Period ) and the period from May 1, 2021 through September 30, 2021 ( 2021 Successor Period and, collectively with the 2023 Successor Period and the 2022 Successor Period, the Successor Periods ) and the Predecessor period represents the period from October 1, 2020 through April 30, 2021 (the Predecessor Period ). The Predecessor Period and the Successor Periods (together, the audited consolidated financial statements ) have been separated by a vertical black line on the consolidated financial statements to highlight the fact that the financial information for such periods has been prepared under two different cost bases of accounting. The audited consolidated financial statements of the Company included in our 2023 Annual Report are incorporated by reference in this prospectus. The audited consolidated financial statements prepared in accordance with IFRS have been audited by EY GmbH & Co. KG Wirtschaftspr fungsgesellschaft (formerly Ernst & Young GmbH Wirtschaftspr fungsgesellschaft), as stated in their report incorporated by reference in this prospectus. The Company s unaudited interim condensed consolidated financial statements as of and for the six months ended March 31, 2024 and March 31, 2023 (the unaudited interim condensed consolidated financial statements and, together with the audited consolidated financial statements, the consolidated financial statements ) have also been presented and are incorporated by reference in this prospectus. walking as intended by nature. The inherent functionality of our products enables BIRKENSTOCK to serve a distinct purpose for consumers. As illustrated below, the Original BIRKENSTOCK footbed is comprised of several distinctive components: Quality We believe how things are made matters as much as the product itself. We build BIRKENSTOCK products to be long-lasting, durable and repairable, a distinctive approach in the market today. We never compromise on material quality; for example, our uppers are made of leathers of the highest quality (i.e., 2.8-3.0 mm thick leather). Our materials and components are primarily sourced from suppliers in Europe and processed under the highest environmental and social standards in the industry by operating state-of-the-art scientific laboratories for materials testing. Furthermore, by vertically integrating our manufacturing operations in the EU one of the safest and most regulated manufacturing environments in the world we maintain a high degree of control over the quality and craftsmanship of our products, ensuring a consistent consumer experience. Consumers recognize BIRKENSTOCK for its superior product quality. According to the Consumer Survey, we outperform our peers on a statistically significant level on measures of material quality, construction and craftsmanship, as well as durability. As a result, the loyalty of BIRKENSTOCK consumers is unparalleled, with some consumers keeping pairs for multiple decades through careful maintenance and repair. Tradition Honoring our heritage represents the cornerstone of our culture. We feel a profound responsibility to protect and live up to our treasured tradition built over the last two and a half centuries of crafting functional, high-quality products. This deep respect for our history continuously guides our actions, compelling us to emphasize our values across all aspects of our business. Financial information for fiscal 2020 is derived from our consolidated financial statements filed with the United States Securities and Exchange Commission (the SEC ) in our registration statement on Form F-1 dated October 4, 2023. We also present revenues for the years ended September 30, 2014 to 2019, which information has been derived from the consolidated financial statements of Birkenstock GmbH & Co. KG for such periods presented, each prepared in accordance with German GAAP. The consolidated financial statements of Birkenstock GmbH & Co. KG for fiscal 2014 to fiscal 2017 do not include Birkenstock USA LP, which was not consolidated with Birkenstock GmbH & Co. KG until fiscal 2018. Therefore, the revenues presented for fiscal 2014 to fiscal 2017 consist of reported revenues for Birkenstock GmbH & Co. KG plus revenues for Birkenstock USA LP derived from management reporting. There are no significant differences in revenues recognized under German GAAP and IFRS. Our fiscal year ends September 30. References to fiscal 2023 or FY 2023 refer to the fiscal year ended September 30, 2023, and references to other fiscal years follow the same convention. Our financial information should be read in conjunction with Operating and Financial Review and Prospects in our 2023 Annual Report and our consolidated financial statements, including the notes thereto, each incorporated by reference in this prospectus. Basis of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Rounding We have made rounding adjustments to some of the figures included or incorporated by reference in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them. With respect to financial information set out in this prospectus, a dash ( ) signifies that the relevant figure is not available or not applicable, while a zero ( 0.0 ) signifies that the relevant figure is available but is or has been rounded to zero. INDUSTRY AND MARKET DATA Certain information used in this prospectus contains statistical data, estimates and forecasts concerning the industry in which we operate that are based on external service providers (for which data is not publicly available), other publicly available information and independent industry publications, as well as our internal sources and general knowledge of, and expectations concerning, the industry. Our internal sources include the Consumer Survey. All Consumer Survey figures included are provided as of May 2023 and are based on the responses of our customers who elected to participate in the surveys. In the Consumer Survey, we calculate our NPS based on respondents indications of their likelihood to recommend BIRKENSTOCK on a scale from 0 to 10. Responses of 9 or 10 are considered promoters and responses of 6 or less are considered detractors. We then subtract the percentage respondents who are detractors from the percentage of respondents. Within this prospectus, we reference information and statistics regarding the Apparel and Footwear industry. We have obtained this information and statistics from various independent third-party sources, including independent industry publications, reports by market research firms and other independent sources. Some data and other information contained in this prospectus are also based on management s estimates and calculations, which are derived from our review and interpretation of internal surveys and independent sources. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share within this industry. While we believe such information is reliable, we have not independently verified any third-party information. While we believe our internal company research and estimates are reliable, such research and estimates have not been verified by any independent source. In addition, assumptions and estimates of our and our industries future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause our future performance to differ materially from our assumptions and estimates. As a result, you should be aware that market, ranking and other similar industry data included in this prospectus, and estimates and beliefs While our family tradition of shoemaking can be traced back to 1774, the evolution of our brand gained momentum in the early 20th century with our development of the footbed in 1902. We invented the word Fussbett, or footbed, and this discovery laid the groundwork for what became the System Birkenstock, a doctrine and practice of orthopedic principles, built around Naturgewolltes Gehen, that still guides us today. The footbed remains the guiding principle for everything we do and the platform we use to explore new product categories. It reminds us to develop products that make our consumers lives better, embedding function, quality and purpose in everything we make. The philosophy of the System Birkenstock grounds our approach to shoemaking to this day. Where We Are Today Over a decade ago, the Birkenstock family brought in its first outside management team, commencing the present era of BIRKENSTOCK. Under the leadership and vision of Oliver Reichert, first as a General Manager in 2009 and then as the Chief Executive Officer beginning in 2013, we have transformed our business from a family-owned, production-oriented company into a global, professionally managed enterprise committed to growing our brand. In the current era, we have built on our legacy while continuing to revolutionize processes and strategies to unleash our global potential, growing revenues at a 20% CAGR from fiscal 2014 to fiscal 2023. Note: See Presentation of Financial and Other Information Financial Statements. We use a highly intentional celebrate the archive, build the archive approach to product architecture and innovation across our expanding portfolio of over 700 silhouettes. We incorporate our legendary footbed across all silhouettes, several of which have developed significant global recognition and acclaim of their own. Our top five silhouettes collectively generated over 75% of our annual revenues in fiscal 2023. We continually reinterpret or celebrate these timeless, iconic silhouettes through makeovers and adaptations, enabling us to drive consistent, recurring growth with minimal risk. Alongside our classics, we have built our extensive archive by innovating new silhouettes; nine of the top 20 products in fiscal 2023 represent new styles that we have introduced since fiscal 2017. In particular, we have focused on expanding our closed-toe silhouette assortment which represented over 25% of revenues in fiscal 2023 to enable us to address additional usage occasions as well as balance seasonality. based on that data, may not be reliable. Neither we, the selling shareholder nor the underwriters can guarantee the accuracy or completeness of any such information contained in this prospectus. Some of the information herein has also been extrapolated from market data, reports, surveys and studies using our experience and internal estimates. Elsewhere in this prospectus, statements regarding the industry in which we operate, our position in this industry and the size of certain markets are based solely on our experience, internal studies, estimates and surveys and our own investigation of market conditions. TRADEMARKS AND TRADE NAMES We own or have rights to various trademarks, trade names or service marks that we use in connection with our business, including BIRKENSTOCK, Birko-Flor, Birki, Birk and Papillio, among others, and our other registered and common law trade names, trademarks and service marks, including our corporate logo. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the and symbols, but we will assert, to the fullest extent under applicable law, rights to such trademarks, service marks and trade names. CERTAIN DEFINITIONS The following is a summary of certain defined terms and concepts that we use throughout this prospectus: AB-Beteiligungs GmbH refers to AB-Beteiligungs GmbH, an entity controlled by Alexander Birkenstock, one of our controlling shareholders prior to the Transaction; ABL Facility refers to the multicurrency asset-based loan facility established by the ABL Facility Agreement; ABL Facility Agreement refers to the asset-based-loan facility agreement entered into on April 28, 2021 by Birkenstock Group B.V. & Co. KG, Birkenstock US BidCo, Inc. and Birkenstock Limited Partner S. r.l.; APMA refers to the Asia-Pacific, Middle East and Africa region; ASP refers to average selling price; B2B refers to business-to-business; CAGR refers to compound annual growth rate; Code refers to the Internal Revenue Code of 1986; Consumer Survey refers to a series of general branding and marketing internal surveys with approximately 70,000 participants conducted in May 2023 to determine the demographics and habits of our consumers; DTC refers to direct-to-consumer; EU refers to the European Union; EVA refers to ethylene-vinyl acetate; Exchange Act refers to the Securities Exchange Act of 1934, as amended; German GAAP refers to the German Commercial Code; Our commitment to creating functional, purpose-driven products with the highest integrity has enabled us to build a strong brand reputation with universal appeal. In addition, powerful secular trends an increased focus on health, the casualization of daily life, the breakthrough of modern feminism and the rise of purpose-led, conscious consumption have converged around BIRKENSTOCK and will continue to fuel our brand relevance and reach for the next 250 years. We strive to match our universal appeal with democratic access to products; we offer our adults unisex products across a broad range of prices, from a retail entry price point of 45 for our EVA styles to over 1,600 for our highest-end collaborations. The deep connections we build with our diverse, global fan base engender profound trust, high levels of loyalty and unparalleled word-of-mouth endorsement. In a recent Consumer Survey, approximately 70% of our existing U.S. consumers indicated they had purchased at least two pairs of BIRKENSTOCKs, with the average U.S. consumer owning 3.6 pairs. In that same Consumer Survey, nearly 90% of recent purchasers indicated a desire to purchase again and over 40% of consumers indicated they did not even consider another brand when last purchasing BIRKENSTOCK, a testament to our category ownership. Given the increasing relevance and strength of our brand, demand for our products has historically exceeded supply. As a consequence, we have spent the past decade refining our engineered distribution model through which we mindfully and strategically allocate product across channels and regions. We have consolidated control over our brand globally by converting distributor markets, rationalizing wholesale distribution to focus on strategic accounts that support our brand positioning and reach, and investing in our DTC business, which has grown at a 40% CAGR between 2018 and 2023. We allocate our finite production capacity globally, creating scarcity in the market and facilitating strong control over our brand, as well as predictable, consistent growth. We stick to this strategy with great discipline, even when expanding production capacity. Our strongest, most developed regions are the Americas and Europe, which represented 54% and 35% of revenues in fiscal 2023, respectively. Our APMA region has demonstrated considerable growth potential, which historically has not been fully realized because of deliberate decisions to prioritize the Americas and Europe due to finite supply. The expansion of our production capacity provides us with the bandwidth necessary to serve our customers and meet the demand for our products in underpenetrated markets and categories. Recent Financial Performance Our powerful business model and consistent execution have delivered continuous top-line growth and an expanding margin profile. Our financial performance reflects the strong demand for our brand and the benefits of our engineered distribution model that delivers the right product for the right channel at the right price point. This approach enables us to enjoy a rare combination of consistent, predictable growth and high levels of profitability, providing us with significant flexibility to invest in our operations and growth initiatives. This strategy has resulted in: Revenues increasing from 962.0 million in fiscal 2021 to 1,491.9 million in fiscal 2023, a 25% two-year CAGR; Number of units sold increasing at a 4% two-year CAGR between fiscal 2021 and fiscal 2023; ASP increasing at a 19% two-year CAGR between fiscal 2021 and fiscal 2023; DTC penetration increasing from 34.0% of revenues in fiscal 2021 to 40.0% of revenues in fiscal 2023; Gross profit margin expanding from 45.4% in fiscal 2021 to 62.1% in fiscal 2023; Adjusted gross profit margin expanding from 57.0% in fiscal 2021 to 62.1% in fiscal 2023; HMRC refers to HM Revenue & Customs; Incremental Senior Term Facilities refers to incremental facilities which may also be established under the Senior Term Facilities Agreement from time to time (including by way of an increase to any existing facilities or the establishment of new facilities); IPO refers to the Company s initial public offering that closed on October 13, 2023; IRS refers to the U.S. Internal Revenue Service; Jersey Companies Law refers to the Companies (Jersey) Law 1991, as amended; JFSC refers to the Jersey Financial Services Commission; L Catterton refers to a U.S.-headquartered and consumer-focused investment firm that acquired a majority stake in BIRKENSTOCK through affiliated entities in 2021; ManCo refers to BK LC ManCo GmbH & Co. KG, an indirect parent entity of our Company; MidCo refers to BK LC Lux MidCo S. r.l., an entity affiliated with L Catterton; Notes refers to the 430.0 million in aggregate principal amount of 5.25% Senior Notes due 2029 issued by Birkenstock Financing S. r.l. on April 29, 2021; NPS refers to Net Promoter Score; Order refers to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; PFIC refers to a passive foreign investment company under the Code; Principal Shareholder refers to L Catterton and its affiliates, which include MidCo; PU refers to polyurethane; RSP refers to retail sales price; SDRT refers to UK stamp duty reserve tax; SEC refers to the United States Securities and Exchange Commission; Securities Act refers to the Securities Act of 1933, as amended; Senior Credit Facilities refers to the Senior Term Facilities and Incremental Senior Term Facilities when taken together; Senior Term Facilities Agreement refers to the senior facilities agreement entered into by Birkenstock Limited Partner S. r.l. on April 28, 2021; Shareholders Agreement refers to the shareholders agreement entered into with MidCo on October 13, 2023; Tax Law refers to the Income Tax (Jersey) Law 1961 (as amended); Net profit decreasing from 81.8 million in fiscal 2021 to 75.0 million in fiscal 2023, with net profit margin contracting by 4.0 percentage points from 9.0% in fiscal 2021 to 5.0% in fiscal 2023; Adjusted net profit increasing at a 15.1% two-year CAGR from 156.5 million in fiscal 2021 to 207.2 million in fiscal 2023, with Adjusted net profit margin contracting by 2.1 percentage points from 16.0% in fiscal 2021 to 13.9% in fiscal 2023; and Adjusted EBITDA growing at a 28.5% two-year CAGR from 292.3 million in fiscal 2021 to 482.7 million in fiscal 2023, with Adjusted EBITDA margin expanding 2.4 percentage points from 30.0% in fiscal 2021 to 32.4% in fiscal 2023. This strategy has also yielded strong results in the most recent six months ended March 31, 2024, where we have observed: Revenues increasing from 644.2 million for the six months ended March 31, 2023 to 784.2 million for the six months ended March 31, 2024, a 22% increase; DTC penetration increasing from 34.1% of revenues for the six months ended March 31, 2023 to 35.5% of revenues for the six months ended March 31, 2024; Gross profit margin contracting from 60.4% for the six months ended March 31, 2023 to 58.2% for the six months ended March 31, 2024; Net profit increasing from 40.2 million for the six months ended March 31, 2023 to 64.5 million for the six months ended March 31, 2024 with net profit margin expanding by 2.0 percentage points from 6.2% for the six months ended March 31, 2023 to 8.2% for the six months ended March 31, 2024; Adjusted net profit decreasing by 7.7% from 101.6 million for the six months ended March 31, 2023 to 93.7 million for the six months ended March 31, 2024, with Adjusted net profit margin contracting by 3.8 percentage points from 15.8% for the six months ended March 31, 2023 to 12.0% for the six months ended March 31, 2024; and Adjusted EBITDA increasing by 8.6% from 224.4 million in the six months ended March 31, 2023 to 243.7 million for the six months ended March 31, 2024, with Adjusted EBITDA margin contracting by 3.7 percentage points from 34.8% for the six months ended March 31, 2023 to 31.1% for the six months ended March 31, 2024. Term and Revolving Facilities Agreement refers to the term and revolving facilities agreement entered into by Birkenstock Limited Partner S. r.l., as company, Birkenstock Group B.V. & Co. KG and Birkenstock US BidCo Inc., as borrowers, the other loan parties thereto, Goldman Sachs Bank USA, as agent and security agent, and the lenders party thereto on May 28, 2024; Transaction refers to Birkenstock Holding plc s acquisition of the shares and certain assets that comprised the BIRKENSTOCK Group; U.S. refers to the United States of America; U.S. GAAP refers to U.S. generally accepted accounting principles; USD Term Loan refers to our USD-denominated term loans under the Senior Term Facilities Agreement; UK refers to the United Kingdom; and Vendor Loan refers to the loan agreement with AB-Beteiligungs GmbH. Note: See Presentation of Financial and Other Information Financial Statements. Adjusted Gross Profit and Adjusted EBITDA are non-IFRS measures. For reconciliations to the most directly comparable IFRS measure, see Summary Consolidated Financial Information Non-IFRS Financial Measures. Our Addressable Market Inspired by Naturgewolltes Gehen, we construct our products to empower all humans to walk as nature intended. We believe this function-first ethos limits the reach of our products only by the global population. Our core opportunity lies in deploying our iconic footbed across the broader footwear market globally, including in our largest markets of North America and Europe, as well as newer markets in Asia and the Middle East. Beyond geographical expansion, significant market share opportunity exists in our established and new product categories. Global Footwear Market The global footwear industry is a large and fragmented market. We believe there is ample whitespace to continue growing the BIRKENSTOCK brand. We expect to capture market share globally, particularly in Asia Pacific, where we are meaningfully underpenetrated. We believe we are uniquely positioned to win share in the large and growing global footwear market given our commitment to delivering superior orthopedic functionality in support of the following key enduring consumer megatrends: Growing Preference for Healthy Products Consumers prioritize purchases that benefit their overall health as they become aware of the negative effects of wearing unsupportive footwear. Our footbed-based products meet inherent consumer demand through their functionality and encouragement of the natural walking motion and proper foot health. Casualization Across Usage Occasions Over the last generation, the use of formal footwear has declined as a result of the ongoing shift towards casual dress and rise of sneaker culture, both trends accelerated by COVID-19. We find ourselves at a nexus of these changing consumer behaviors as consumers increasingly free themselves from long-standing fashion norms, seeking more functional footwear and apparel choices across usage occasions. This enduring trend also coincides with the shift towards healthy products as consumers seek alternatives to traditional work and other non-casual footwear options that do not promote or negatively impact foot health. Breakthrough of Modern Feminism The ongoing evolution and expansion of the role of women in society continues to drive meaningful shifts in their preferences in footwear and apparel. While trends in fashion come and go, we believe women s increasing preference for functional apparel and footwear has and will prove secular in nature. As a brand that has long stood for functionality, we believe this ongoing tailwind will continue to drive relevance and growth for the BIRKENSTOCK brand. Appreciation and Affinity for Heritage and Craftsmanship We believe consumers increasingly value brands that have rich traditions, have clarity in their purpose and take significant responsibility for their operations. We have observed these trends across various consumer industries, including luxury leather goods and ready-to-wear clothing, watches and personal care products, among others. We believe BIRKENSTOCK s functional, purpose-led brand, uncompromising commitment to quality and centuries-old crafting traditions align well with the ongoing shift towards brands with authentic heritages and craftsmanship. Our Competitive Strengths We believe the following strengths are central to the power of our brand and business model: Purpose Brand Built Around our Legendary Footbed and Products An Orthopedic Tradition The heart of our brand is the footbed, which forms the core of our own orthopedic methodology, the System Birkenstock. The benefits of our system are supported by decades of research, podiatrist recommendations and consumer loyalty. Our purpose to empower all people to walk as intended by nature has created an enduring connection with our consumers, who recognize us for functionality, craftsmanship, German engineering, uncompromising quality and a differentiated product experience. This authentic connection with our consumers positions BIRKENSTOCK at the center of a shift toward conscious, responsible and health-oriented consumption instead of fast fashion or trend-chasing. Much of our success can be traced back to our long history of product innovations, including the contoured shoe last, footbed and footbed sandal. We outline our groundbreaking innovations below: Category-Defining, Universally Relevant Silhouettes While these innovations started orthopedically in nature, we have since launched several distinctive, instantly recognizable silhouettes that blend the functionality of our legendary footbed with timeless aesthetics. Many of these silhouettes including our Core Silhouettes, the Madrid, Arizona, Boston, Gizeh and Mayari have come to define and become synonymous with their respective categories, resulting in a distinct competitive advantage for our brand. All but one the Mayari have been in the market for over 40 years and continue to attract significant attention today. From the beginning, these silhouettes have been conceptualized, promoted and sold as unisex products, further supporting our fundamental purpose and driving mass appeal of the brand. These top selling models undergo regular seasonal makeovers and serve as the canvas for many of our collaborations created within our 1774 premium line, generating newness while allowing us to celebrate this core collection. Our Core Silhouettes have demonstrated consistent, recurring double-digit growth. Proven Innovation Strategy We have developed an extensive archive of over 700 silhouettes through our differentiated innovation engine. We approach product innovation through two primary lenses: (1) celebrating the archive by utilizing distinct design elements to modify existing silhouettes and introduce newness in a low-risk manner and (2) building the archive by leveraging our footbed as the development platform, enabling us to create new products from the inside-out. Our approach leverages our product archive, market insights and whitespace analysis to identify areas where we can create trends from within and export those to the market through a proven roadmap of product development, demand creation and engineered distribution. Celebrate the Archive We routinely update our Core Silhouettes and other existing silhouettes by adjusting parameters such as color, materials and other details (e.g., buckles) to create newness and strategically extend their reach. For example, we have expanded the Arizona silhouette across price points and usage occasions, adding a water-friendly variant utilizing EVA, while also broadening the Arizona s appeal through collaborations. This approach continuously infuses the brand with newness while undertaking minimal risk. As a result, revenues from the Arizona silhouette have grown at a CAGR of over 20% between fiscal 2018 and 2023. Build the Archive We also consistently build our archive by introducing new silhouettes developed around our celebrated footbed. Given the functional nature of our products and the loyalty BIRKENSTOCK consumers have for their footbeds, we have successfully expanded our assortment across new silhouettes and product categories. The success of this approach can be seen in the popularity of our recent launches; new silhouettes introduced since fiscal 2017 represented nine of the top 20 selling products in fiscal 2023. Furthermore, we have focused on the significant opportunity in closed-toe silhouettes, which have grown to over 25% of revenues in fiscal 2023, supported beyond our classic Boston by silhouettes such as the Zermatt, Buckley and Bend. This approach has enabled us to expand our brand reach across seasons and usage occasions, as well as drive growth through higher ASPs. Launched in 2020, the Bend sneaker exemplifies the success of our approach to building the archive in new, strategically important categories, with Bend revenues growing over one-third between fiscal 2022 and 2023. Go-Forward Product Strategy Looking ahead, we will continue to grow our Core Silhouette collections through low-risk newness while also deploying our footbed across more product categories and usage occasions. Specifically, we expect to refine existing silhouettes and create new silhouettes that incorporate new materials and production techniques, such as PU direct injection, to specifically address identified consumer needs and broaden our product range across usage occasions. For example, our PU technology will enable extensive innovation in outsoles, allowing us to create products tailored for active and outdoor and professional usage occasions. To further strengthen our innovation capabilities and extend our functional leadership, we formed a dedicated biomechanics team and created a laboratory for new technical and materials innovations in 2018. Global Fan Community Enabling Efficient Demand Creation Broad and Democratic Fan Base We serve a global community of millions of highly engaged consumers, who we attract with our function-first collection of high-quality footwear. Our fans, many of whom have been with us for decades, are enthusiastic, loyal, quality seekers across all aspects of society, including doctors, chefs, adventurers, professional athletes and models on the runways of Paris Fashion Week. We attract a diverse range of consumers that transcends geography, gender, age and income. Source: Consumer Survey; geographical split based on share of fiscal 2022 revenues Our holistic approach to foot health serves as the foundation for a globally accessible, relevant and democratized brand experience that serves a broad consumer base across usage occasions and price points. We have demonstrated success across a broad price range, from our EVA styles, which have a RSP starting at 45, to our 1774 collection styles and collaborations, which have a RSP of upwards of 1,600. Unparalleled Consumer Engagement and Loyalty Our diverse set of consumers discover our brand in many ways, sometimes not immediately for the inherent orthopedic benefits, but become loyal fans through their continued use of our products. According to the Consumer Survey, the average BIRKENSTOCK consumer in the U.S. owns 3.6 pairs of our product today, reflecting the enthusiasm with which consumers engage with our brand. In addition, 86% of recent BIRKENSTOCK purchasers indicated a desire to purchase again. Anecdotally, Birkenstories of obsessive fan loyalty are plentiful, with grandparents passing on the tradition of BIRKENSTOCK to future generations and others building collections of BIRKENSTOCKs over time. Efficient Demand Creation The deep connection consumers feel with our beloved brand leads to significant word-of-mouth exposure and extensive, high-quality earned media, enabling highly efficient marketing spend. According to the Consumer Survey, nearly 90% of BIRKENSTOCK buyers come to us through unpaid channels, with the top three sources of awareness being: (1) heard about it from a friend, (2) saw someone wearing it and (3) growing up with it. Our consumers love for BIRKENSTOCK and their strong desire to organically promote the brand are further demonstrated by our NPS of 55%. Furthermore, we amplify BIRKENSTOCK in the cultural zeitgeist through calculated demand creation strategies, including through creative content developed by our content house as well as through strategic product collaborations led by our 1774 office in Paris. Our unique brand, iconic footbed and instantly recognizable aesthetics have generated significant unsolicited attention from well-known brands seeking to collaborate with us. This has enabled us to partner with diverse brands such as Rick Owens, St ssy, DIOR and Manolo Blahnik to create products that activate specific consumer groups and markets for BIRKENSTOCK. We benefit from the unpaid advocacy and support that is the natural byproduct of celebrities, public figures and other influential fans who are frequently seen wearing our products. Engineered Distribution Approach Complementary Multi-Channel Strategy We optimize growth and profitability through a complementary, multi-channel distribution strategy for DTC and B2B. We operate our channels synergistically, utilizing the B2B channel to facilitate brand accessibility while fully engaging consumers in our DTC channel, which offers our complete product range and access to our most desired and unique silhouettes. Across both channels, we execute a strategic allocation and product segmentation process, often down to the single door level, to ensure we sell the right product in the right channel at the right price point. This approach employs key levers such as the expansion of our DTC channel, market conversions from third-party distributors, optimization of our wholesale partner network, increased overall share of premium products and strategic pricing. This process allows us to manage the finite nature of our production capacity, with a rigorous focus on control of our brand image and on profitability. As a result, we drive top-line growth and protect margins, prevent brand dilution and deepen our connection to consumers. We pioneered this engineered distribution model in our U.S. market, ultimately helping drive a 31% revenue CAGR in the U.S. between fiscal 2014 and fiscal 2023. This transformative approach now serves as a blueprint for all our regions, where we have strategically converted from third-party distributors to owned distribution, accelerated DTC penetration, strategically expanded our retail footprint and increased our share of closed-toe and other high ASP products. Building on our success in the U.S., we have taken back distribution in key markets, including the UK, France, Canada, Japan and South Korea, reducing the share of business in third-party distribution from 32% of revenues in fiscal 2018 to 13% in fiscal 2023. Our strongest, most developed regions are the Americas, which accounted for 54% of revenues in fiscal 2023, and Europe, which accounted for 35% of revenues, while APMA represented 10% of revenues. Balanced Shift Towards DTC Our DTC footprint promotes direct consumer relationships and provides access to BIRKENSTOCK in its purest form. We have grown DTC revenues at a 40% CAGR between 2018 and 2023 as part of our strategy to increase DTC penetration. Our DTC channel enables us to express our brand identity, engage directly with our global fan base, capture real-time data on customer behavior and provide consumers with unique product access to our most distinctive styles. Additionally, our increasing levels of organic demand creation, together with higher ASPs, support an attractive profitability outlook in the DTC channel, which reached a 40% share of revenues in fiscal 2023, up from 18% in fiscal 2018. Since 2016, we have invested significantly in our online platform to support the penetration of our DTC channel, establishing our own e-commerce sites in more than 30 countries with ongoing expansion into new markets. In addition, as of March 31, 2024, we operated a network of approximately 57 owned retail stores, complementing our e-commerce channel with the live experience of our best product range. The largest concentration of our retail locations is in Germany, where we operated 21 locations. We have recently embarked on a disciplined strategy of opening new retail stores and store formats to grow our brand awareness and give consumers a 360 degree brand experience. Our latest openings are Miami, Soho and Brooklyn in New York City, Venice Beach in Los Angeles, London, Cologne, Tokyo, Singapore, Mumbai and Delhi. Intentional Wholesale Partnerships Our wholesale strategy is defined by intentionality in partner selection, identifying the best partners in each segment and price point. We segment our wholesale product line availability into specific retailer quality tiers, ensuring we allocate the right product to the right channel for the right consumer. For example, we limit access to our premium 1774 and certain collaboration products to a curated group of brand partners. For our wholesale partners, we are a must carry brand based on the enthusiasm with which our consumers pursue our products. We believe that the BIRKENSTOCK brand is consistently amongst the top performers in sell-through in our core categories at most of our retail partners. We generate significantly more demand from existing and prospective wholesale customers than we can supply, putting us in an enviable position where we can create scarcity in the market and obtain consistently favorable economic terms on wholesale distribution. The early placement of wholesale orders approximately six months in advance greatly aids in our production planning and allocation. In addition, sell-through transparency from important wholesalers provides real-time insight into the overall market and inventory dynamics. During fiscal 2023, we worked with approximately 6,000 carefully selected wholesale partners in over 85 countries, ranging from orthopedic specialists to major department stores, to high-end fashion boutiques. As of March 31, 2024, our strategic partners also operated approximately 260 mono-brand stores to provide our consumers a multi-channel experience in select markets. Vertically Integrated Manufacturing A key differentiator of BIRKENSTOCK is our vertically integrated manufacturing which creates strong competitive and operational advantages in an industry that has largely been offshoring production since the 1980s. During fiscal 2023, we assembled the vast majority of our overall products and produced 100% of our footbeds in our factories in Germany, with supplemental component manufacturing in Portugal. These facilities are critical to delivering the high-quality products our brand promises and our consumers expect. With nearly every silhouette requiring over 50 hands to complete, our skilled workers ensure we complete production in rigorous accordance with centuries-old know-how and craftsmanship. Inside our factories, most of our machines and automation are custom-made and cannot be found anywhere else in the world. For example, if no standard equipment is available on the market to fulfill these goals, we design and build our own proprietary machines with hand-picked suppliers. Our approach to owned manufacturing ensures we produce our products to the highest quality standards, that we remain deliberate in the environmental resources we use and that we invest appropriately in innovation to support the brand s continued growth. Our consumers can take comfort in that we engineer and produce 100% of our footwear in the EU, one of the safest and most regulated markets in the world. Furthermore, we source most of our raw materials from across Europe in compliance with strict quality, social and environmental standards based on industry best practices. We believe this vertical integration creates a unique degree of strategic control, further supported by robust contingency measures and the benefits of sourcing redundancy and diversity across multi-supplier relationships to ensure continuity of operations and flow of product. We have recently expanded, and continue to expand, our owned manufacturing footprint globally. Our newest factory in Pasewalk, Germany began operations in September 2023, expanding our popular EVA and PU product capacity while freeing up incremental capacity for cork latex products in our other factories to further meet the strong demand for our brand. We are currently expanding our component manufacturing facility in Arouca, Portugal as well as our manufacturing facility in G rlitz, Germany. Between October 1, 2021 and the end of fiscal 2024, we will have spent approximately 180 million in expanding our production capacity. We expect to double our production capacity versus fiscal 2022 over the next several years as the result of our investments, including expected capital expenditures of approximately 100 million for fiscal 2024. We expect capital expenditures will continue to decline in absolute terms over the next several years. We remain committed to our policy that all footbed production and engineering take place in Germany and that all final assembly occurs in the EU to ensure the highest quality products are manufactured according to centuries-long tradition. Passionate and Proven Management Team Our brand s ethos is rooted in an enduring commitment to the highest standards of corporate citizenship that encompasses a dedication to our employees and to the highest quality and broad support of innovation and creativity. Our leadership team remains committed to supporting a centuries-old legacy of aligning our corporate ethos to actions that support positive social, economic and environmental outcomes for both the localities in which we operate and our global community. We benefit from the industry expertise and know-how of our passionate, experienced, visionary and proven senior management team led by Oliver Reichert, our Chief Executive Officer; Dr. Erik Massmann, our Chief Financial Officer; Markus Baum, our Chief Product Officer; Klaus Baumann, our Chief Sales Officer; David Kahan, our President Americas; Mehdi Nico Bouyakhf, our President Europe; Jochen Gutzy, our Chief Communications Officer; Christian Heesch, our Chief Legal Officer; and Mark Jensen, our Chief Technical Operations Officer who together have an average of more than 20 years of industry experience. The executive leadership team is executing on a bold vision to continue to unlock the power and significance of BIRKENSTOCK, which, through fiscal 2023, has grown revenues at a 20% CAGR since fiscal 2014, after Oliver Reichert took over as Chief Executive Officer. This has been accomplished while significantly expanding profitability through greater control over our brand, increased DTC share and operational efficiencies. For a description of the challenges we face and the limitations of our business and operations, see Risk Factors Summary and Risk Factors. Our Growth Strategies We believe we have only just begun to unlock the power of our profound transformation and realize the full global potential of BIRKENSTOCK. We estimate our share of the massive 340 billion global footwear industry to be less than one percent, presenting substantial opportunity for further growth. We believe we are well-positioned to significantly expand our market share and drive sustainable growth and profitability through the following pillars, each of which represents a continuation of the proven strategies we have been executing over the past decade. Expand and Enhance the Product Portfolio We will continue to expand our product archive through our celebrate and build approach to innovation, entering into new usage occasions while investing in categories we serve today through new and innovative offerings. We intend to diversify our product portfolio, strengthen loyalty with consumers who already love BIRKENSTOCK, drive higher penetration in our existing markets and channels and expand our reach and appeal across new consumers, geographies and usage occasions. Through the broad application of the BIRKENSTOCK footbed, we intend to develop our product offering through the following strategies: Drive the Core Through Inside-out Innovation: We will continue to incorporate our legendary footbed as the central functional element in our proven product formula as we celebrate and build our archive. We will renew existing silhouettes and introduce new ones by strategically using aesthetics, construction, design and materials updates that flex elements across uppers, outer soles, buckle details and other embellishments to deliver innovative functionality and renewed purpose. In doing so, we will continue to broaden and deepen our product assortment across price bands, building on the success of our opening price point EVA line as well as collaborations through our 1774 line. Inside-out innovation drives growth across our product portfolio: Strengthen Year-Round Product Mix with Closed-Toe Offerings: We will continue to diversify into closed-toe silhouettes (clogs and shoes), enabling the brand to serve different usage occasions for consumers, balance seasonality and drive growth and profitability through higher ASPs. We have made substantial progress in this strategic effort, as demonstrated by expansion in the share of closed-toe products, which accounted for over 25% of total revenues in fiscal 2023. Develop Presence in Underpenetrated Categories: We intend to drive business by staying true to our orthopedic heritage and creating highly functional products across a variety of usage occasions, including professional, active and outdoor, kids, home and orthopedic. We have already achieved promising success with our recent offerings in these expansionary categories, such as our outdoor products where we have created new silhouettes by using PU direct injection technology to develop water-friendly and high-grip outsoles. Additionally, our use of EVA similarly expands our portfolio by creating products suitable for use in and around water. These developments broaden our potential product range across usage occasions by creating highly functional, water ready, anti-slip outsoles and more rugged constructions. This approach continues to support a strong pipeline of new products that is expected to accelerate growth: Leverage our Brand in Function-led, Non-Footwear Categories: We will leverage our functional expertise, brand equity and trust from our consumers to extend the BIRKENSTOCK brand into non-footwear categories. We are launching a new, highly functional prestige shoe care and footcare line made in Germany exclusively from materials of natural origin and rooted in our deep heritage in foot health. We have also extended our brand s heritage in health into the sleep category, introducing a range of BIRKENSTOCK sleep systems that leverage our core expertise in orthopedic research and functional product design. Drive Engineered Distribution on a Global Scale We will continue to leverage our engineered distribution approach to strategically allocate our production capacity across channels, regions and categories in a manner that supports our continued success. Specifically, we aim to drive growth across regions by continuing to operate our proven playbook in the U.S. and Europe, where we have significantly grown our DTC channel while optimizing our B2B presence with wholesale partners who support our brand positioning. Our DTC channel has expanded from 18% of revenues in fiscal 2018 to 40% of revenues in fiscal 2023. We expect that future DTC growth will be fueled by both e-commerce and retail. In e-commerce, our growth will be supported by new online store openings and new customer attraction, and fueled by increased member growth. In retail, we plan to pursue disciplined, strategic additions to our retail footprint given our relatively limited presence today of approximately 57 owned stores, 21 of which are in Germany. We expect DTC penetration will increase slightly in the coming years as we balance DTC growth with continued expansion with new and existing strategic wholesale partners globally. We have extensive whitespace to grow within and outside of our largest geographies, the U.S. and Europe. We believe there are still sizable growth opportunities in key developed markets where the brand has a presence but remains significantly underpenetrated, including the UK, France, Southern Europe and Canada. As we ramp up our production capacity, we will unlock the large growth potential of the APMA region, which has generated significant latent demand that we have been unable to fulfill in recent years given more limited supply. Our targeted growth strategies will build upon our growing popularity in the region s emerging markets, including China and India, where our brand is nascent, and in countries such as South Korea, Australia and New Zealand, where we have a more established presence and brand awareness. Educate Fans on Our Brand Purpose and Grow the BIRKENSTOCK Fan Base We will continue to educate consumers globally about the advantages of BIRKENSTOCK products. We believe consumers become evangelists for our brand when they experience the merits of our superior functional design. The function of our products and the power of our brand has enabled us to build our Company largely through organic, unpaid sources, including word-of-mouth, repeat buying, earned media, high profile influencer support and our 1774 collaborations office. These organic factors support a virtuous cycle of consumer consideration, trial, conversion, repeat purchase and recommendation. Our recently established BIRKENSTOCK content house was created to produce powerful stories of BIRKENSTOCK s craftsmanship, fan love and other core values across various social media platforms, providing powerful organic vehicles to engage with and attract new fans. We will further engage with our loyal fanbase through new formats in community activations and retail, strengthening our fan engagement through the introduction of temporary and ambassador led retail concepts, focusing on a small footprint of stores operated in partnership with local entrepreneurs who will serve as brand ambassadors by virtue of their professions, pursuits or social media presences. Additionally, our newly launched BIRKENSTOCK membership program, which offers exclusive access to products and other unique benefits, will serve as a principal tool for driving increased engagement with new and existing consumers in the future. While our brand has achieved substantial traction globally and those who have experienced our products demonstrate strong loyalty, our presence remains relatively nascent in many of our markets. Our brand awareness outside of Germany and the United States remains well below that of our most established markets and of other leading footwear brands, providing us with a clear runway for growth. According to the Consumer Survey, aided brand awareness, which we define as consumer awareness about the brand when specifically asked about the brand, in the United States is 68%. We believe increasing consumer awareness of our brand, the functional benefits of our products and our constantly evolving product offering will generate substantial growth as we introduce new consumers to our brand and convert those who are aware of the brand into consumers. Invest in and Optimize the Company to Support the Next Generation of Growth We will continue to invest in our people and our manufacturing and supply chain to support future growth. We will also seek operational improvements to drive efficiencies and increase the speed and flexibility of our operations. Optimize and Expand our Production Capacity: We will further optimize our current production footprint by introducing automation where appropriate, while also strategically expanding capacity by investing in new facilities. We are currently making investments that will increase our capacity and extend our capabilities, as evidenced by our new facility in Pasewalk, Germany, which began operations in September 2023. Expand our Owned and Third-Party Logistics Infrastructure: We will strengthen our owned and operated fulfillment centers while adding significant through-put via third-party partners. We will continue to invest in expanding our outbound capacity by adding incremental logistics capabilities in the U.S. and other key markets. This will also allow us to optimize our current logistics infrastructure to better service our growing business, while lowering operational costs. Drive Operational Efficiencies: We have invested ahead of our growth in all areas of the business, including product creation and manufacturing, multi-channel distribution and corporate infrastructure. As we continue our growth trajectory, we plan to leverage these investments, realize economies of scale and optimize efficiency in our business. Recent Developments On May 28, 2024, Birkenstock Limited Partner S. r.l., as the company, Birkenstock Group B.V. & Co. KG and Birkenstock US BidCo Inc., as borrowers, and the other loan parties thereto entered into the Term and Revolving Facilities Agreement with Goldman Sachs Bank USA, as agent and security agent, and the lenders party thereto, which includes a Euro denominated term loan facility (the New EUR Term Loan ) in an aggregate principal amount of 375.0 million and a USD denominated term loan facility in an aggregate principal amount equal to $280.0 million (the New USD Term Loan and together with the New EUR Term Loan, the New Term Loans ). A euro denominated multicurrency revolving facility in an aggregate principal amount of 225.0 million was established alongside the New Term Loans under the Term and Revolving Facilities Agreement (the Revolving Facility and together with the New Term Loans, the Term and Revolving Facilities ). The Term and Revolving Facilities have an original maturity of February 28, 2029 and the proceeds of the New Term Loans will be applied towards refinancing in full the term loans under the Senior Term Facilities Agreement. The Senior Term Facilities Agreement will be fully cancelled upon the refinancing thereof, which is expected to take place in the Company's fourth quarter ending September 30, 2024 (the date of such refinancing being, the Refinancing Date ). The ABL Facility will also be cancelled on the Refinancing Date. The Revolving Facility may be drawn on and from the Refinancing Date and is available for utilization until January 26, 2029. Corporate Structure A simplified organizational chart showing certain legal entities within our corporate structure is set forth below (all subsidiaries are, directly or indirectly, 100% owned by Birkenstock Holding plc): Corporate Information Birkenstock Holding plc was formed on February 19, 2021 as BK LC Lux Finco 2 S. r.l., a Luxembourg private limited liability company. On April 25, 2023, we changed our name from BK LC Lux Finco 2 S. r.l. to Birkenstock Group Limited and converted (by way of re-domiciliation) the legal form of our Company to a Jersey private company. On July 12, 2023, we changed our name from Birkenstock Group Limited to Birkenstock Holding Limited. On October 4, 2023, we changed the legal status of our Company to a Jersey public limited company and our name from Birkenstock Holding Limited to Birkenstock Holding plc. Our registered offices are located at 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands. Our principal executive offices are located at 1-2 Berkeley Square, London W1J 6EA, United Kingdom. Our telephone number is +44 2033 270270. Our principal website is www.birkenstock-holding.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this prospectus or the registration statement of which it forms a part. Implications of Being a Foreign Private Issuer We are considered a foreign private issuer. Accordingly, we report under the Exchange Act as a non-U.S. company with foreign private issuer status. This means that, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States or (iii) our business is administered principally in the United States. In addition, as a foreign private issuer, the Company is also entitled to rely on exceptions from certain corporate governance requirements of the NYSE. As a result, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers. In this prospectus and the documents incorporated by reference herein, we have taken advantage of certain of the reduced reporting requirements as a result of being a foreign private issuer. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity securities. Our Principal Shareholder L Catterton L Catterton invested and acquired a majority stake in the Company in 2021 through affiliated entities. L Catterton is a market-leading consumer-focused investment firm, managing approximately $35 billion of equity capital across three multi-product platforms: private equity, credit and real estate. Leveraging deep category insight, operational excellence and a broad network of strategic relationships, L Catterton s team of more than 250 investment and operating professionals across 17 offices partners with management teams to drive differentiated value creation across its portfolio. Founded in 1989, the firm has made over 275 investments in some of the world s most iconic consumer brands. L Catterton was formed through the partnership of Catterton, LVMH and Financi re Agache. Entities affiliated with L Catterton control a majority of the combined voting power of our outstanding ordinary shares. As a result, we are a controlled company within the meaning of the NYSE corporate governance rules. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a controlled company and may elect not to comply with certain corporate governance standards, including (i) the requirement that a majority of the board of directors consist of independent directors, (ii) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee s purpose and responsibilities and (iii) the requirement that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominations committee that consists entirely of independent directors and that we adopt a written charter or board resolution addressing the nominations process. We take advantage of certain of these exemptions, and, as a result, you may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements. In the event that we cease to be a controlled company, we will be required to comply with these provisions within the transition periods specified in the NYSE corporate governance rules. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BITB_bitwise_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BITB_bitwise_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..cc56217d728473b723796495011ce7f2adc4adbc --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BITB_bitwise_prospectus_summary.txt @@ -0,0 +1 @@ +is only a summary of the prospectus and, while it contains material information about the Covered Transactions, the Trust and its Shares, it does not contain or summarize all of the information about the Covered Transactions, the Trust and the Shares contained in this prospectus that is material and/or which may be important to you. You should read this entire prospectus before making an investment decision about the Shares. For a glossary of defined terms, see Appendix A. As used below, Bitcoin with an uppercase "B" is used to describe the software and network system as a whole that is involved in maintaining the ledger of bitcoin ownership and facilitating the transfer of bitcoin among parties. When referring to the cryptocurrency within and native to the Bitcoin network, bitcoin is written with a lower case "b." This prospectus uses the terms "cryptocurrency" and "digital asset" to describe assets such as bitcoin. For more information on such terms, see the glossary. Overview of the Trust The Bitwise Bitcoin ETF (the "Trust") is an exchange-traded product that issues common shares of beneficial interest ("Shares") that are listed on the NYSE Arca, Inc. (the "Exchange") under the ticker symbol "BITB." The Trust s investment objective is to seek to provide exposure to the value of bitcoin held by the Trust, less the expenses of the Trust s operations and other liabilities. In seeking to achieve its investment objective, the Trust holds bitcoin and establish its net asset value ("NAV") with reference to the CME CF Bitcoin Reference Rate - New York Variant ("BRRNY"). The Trust is sponsored and managed by Bitwise Investment Advisers, LLC (the "Sponsor"). Bitcoin is a relatively new digital asset with the potential to provide a globally exchangeable unit of value that can be transferred on a peer-to-peer basis. Bitcoin is decentralized, meaning that the supply of bitcoin is not determined by a central government, but rather by software protocols that limit both the total amount of bitcoin that will be produced and the rate at which such bitcoin is released into the network. In addition, the official ledger or record of who owns what bitcoin is not maintained by any central entity, but rather, is maintained by multiple different independent computers and entities simultaneously. Bitcoin have certain features associated with several types of assets, most notably commodities and currencies. U.S. regulators have made limited pronouncements regarding the treatment of bitcoin and the Bitcoin network under federal and state laws; however, the Sponsor believes that, on balance, the important features of bitcoin and other digital assets are those that are characteristics of commodities and therefore has referred to and discussed these assets as such. This interpretation is supported by regulatory actions and court determinations that regard bitcoin as a commodity under the Commodity Exchange Act of 1936 (the "Commodity Exchange Act") and the Commodity Futures Trading Commission ("CFTC") regulations thereunder. In addition, the Sponsor is not aware of any current U.S. court or regulatory interpretation that regards bitcoin as either legal tender – although it may be used as a medium of exchange or form of money – or a security. It is not known whether all U.S. or foreign regulators or courts will share this view, adopt a single, different view or espouse a variety of differing views. As bitcoin remains a relatively new asset, buying, holding and selling bitcoin is very different than buying, holding and selling more conventional investments like stocks and bonds or other physical commodities. For example, bitcoin generally may be acquired through the process of "mining," purchased or received as consideration in a private transaction, or purchased on a digital asset trading platform. Private transactions may be difficult to arrange, and involve complex and potentially risky procedures around safekeeping, transferring and holding the bitcoin. Meanwhile there are also currently over 200 digital asset trading platforms from which to choose, the quality and regulation of which varies significantly. Purchasing bitcoin on a trading platform generally requires choosing a platform, opening an account, and transferring money or a different digital asset to the trading platform in order to purchase the bitcoin. Some trading platforms have been "hacked," resulting in significant losses to the platform or its users. The Trust provides direct exposure to the value of bitcoin held by the Trust with Coinbase Custody Trust Company, LLC ("Coinbase Custody" or the "Bitcoin Custodian"). The Bitcoin Custodian is chartered as a New York State limited liability trust company that provides custody services for digital assets. The Bitcoin Custodian is not Federal Deposit Insurance Corporation ("FDIC")-insured but carries insurance provided by private insurance carriers. The net assets of the Trust and its Shares are valued on a daily basis with reference to the BRRNY, a standardized reference rate published by CF Benchmarks Ltd. (the "Benchmark Provider") that is designed to reflect the performance of bitcoin in U.S. dollars. The BRRNY is calculated by the Benchmark Provider based on an aggregation of executed trade flow of major bitcoin trading platforms ("Constituent Platforms"). The BRRNY currently uses substantially the same methodology as the CME CF Bitcoin Reference Rate ("BRR"), including utilizing the same six Constituent Platforms, which is the underlying rate to determine settlement of CME bitcoin futures contracts, except that the BRRNY is calculated as of 4:00 p.m. Eastern time ("ET"), whereas the BRR is calculated as of 4:00 p.m. London time. 1 The Trust provides investors with the opportunity to access the market for bitcoin through a traditional brokerage account without the potential barriers to entry or risks involved with acquiring and holding bitcoin directly. The Trust will not use derivatives that could subject the Trust to additional counterparty and credit risks. The Sponsor believes that the design of the Trust will enable certain investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use bitcoin by investing in the Shares rather than purchasing, holding and trading bitcoin directly. The Covered Transactions Description of the Covered Transactions On the Closing Date, pursuant to an Asset Purchase and Contribution Agreement (the "APA") among the Osprey Fund, Osprey, the Trust and Bitwise, all of the bitcoin owned by the Osprey Fund will be contributed to the Trust, and the Trust will issue an amount of Shares equal to the product of the aggregate value of the Acquired Bitcoin as determined by reference to the CME CF Bitcoin Reference Rate - New York Variant ("BRRNY") on the business day prior to the Closing Date multiplied by the number of Acquired Bitcoin, divided by the net asset value per Share on the business day prior to the Closing Date (the "Consideration Shares"). The Consideration Shares will be deposited with the brokerage designated by Osprey. As soon as practicable following the closing of the Asset Purchase, pursuant of a Plan of Dissolution and Liquidation adopted by the Osprey Fund, the Osprey Fund will distribute the Consideration Shares held by the Osprey Fund to its Unitholders on a pro-rata basis (the "Pre-Liquidation Distribution"). Thereafter, the Osprey Fund will wind-up its affairs and liquidate. After paying creditors of the Osprey Fund and making provisions for claims and obligations of the Osprey Fund, the Osprey Fund will distribute to each Unitholder their pro rata portion of the remaining assets, if any, held by the Osprey Fund (the "Final Liquidating Distribution", and collectively with the Pre-Liquidation Distribution, the "Liquidating Distributions"). As of November 15, 2024, the Osprey Fund had total (unaudited) liabilities of approximately $90,000 representing management fee payable, amounts due to Osprey, and other amounts payable. The Liquidating Distributions and the Asset Purchase are referred to collectively herein as the "Covered Transactions". After the Pre-Liquidation Distribution, each Unitholder will become a beneficial owner of the Trust, which trades on the NYSE Arca under the ticker symbol "BITB" (CUSIP No.: 09174C104). It is expected that shortly after the Liquidating Distributions, the Osprey Fund will terminate and all outstanding Units will be cancelled. Background of the Covered Transactions On March 5, 2024, the Osprey Fund announced that it was aware the Units were trading at a discount to the value of its underlying bitcoin and was exploring strategic alternatives to maximize Unitholder value. As part of that process, Osprey stated its intention to consider a wide range of options, including a transaction with an existing exchange traded product that invests in bitcoin. The Osprey Fund also announced that if a strategic transaction was not identified, Osprey intended to liquidate and dissolve the Osprey Fund within 180 days of the announcement. On the same day, the Osprey Fund filed a Form 15 with the SEC to terminate its registration under Section 12(g) of the 1934 Act. Such termination became effective on June 3, 2024. Upon filing of the Form 15, the Osprey Fund s obligation to file reports under Section 13(a) of the 1934 Act terminated, including the obligation to file Forms 10-K, 10-Q, and 8-K. Units of the Trust remained quoted on the OTCQX and subject to the OTCQX alternative reporting standard. Following the March 5, 2024 announcement, Osprey began contacting potential counterparties, including Bitwise, to solicit interest in participating in a transaction of the type described in the announcement. Bitwise indicated its preliminary interest in causing the Trust to enter into such a transaction, subject to the negotiation and execution of a definitive agreement satisfactory to all parties. On May 31, 2024, Osprey held a telephonic meeting with Bitwise and Morgan, Lewis & Bockius LLP ("Morgan Lewis"), legal counsel to Osprey, to discuss a potential sale of the Osprey Fund to the Trust. In June 2024, Bitwise and Osprey informally reached an agreement on the structure of a proposed transaction. Such a transaction was to be in the form of an asset purchase of the Osprey Fund s bitcoin in exchange for Shares of the Trust that had been registered under the 1933 Act on an appropriate registration statement. While the parties considered other forms of transactions, including a private placement of the Shares followed by either the resales by Unitholders pursuant to Rule 144 under the 1933 Act or the filing of a registration statement covering the resale of the Shares received in the Transaction, Bitwise and Osprey determined that the agreed upon structure was the most efficient means of delivering freely tradable Shares to Unitholders without any intervening gaps in liquidity of the Unitholders ownership interests. Further, the parties agreed that in connection with the asset purchase, the Osprey Fund would dissolve and liquidate, which would serve to make the transaction tax-free under the Code. For Bitwise, the proposed transaction would expand its position as a premier crypto asset manager, while the Trust would benefit from additional economies of scale from the additional bitcoin assets received in the transaction. 2 On July 2, 2024, Bitwise delivered to Osprey an initial draft of the APA. Over the next several weeks, the parties, together with their respective legal and tax advisors, negotiated the APA and prepared the ancillary documents, including Osprey s Plan of Liquidation and Dissolution. On July 18, 2024, Osprey delivered a revised draft of the APA to Bitwise. On August 2, 2024 and August 15, 2024, representatives of each of Osprey, Morgan Lewis, Bitwise and Chapman and Cutler LLP ("Chapman"), legal counsel to Bitwise, met telephonically to discuss finalizing the APA. Between August 2, 2024 and August 26, 2024, representatives of each of Osprey, Morgan Lewis, Bitwise and Chapman met telephonically and exchanged numerous emails to finalize the remaining open items related to the APA, including Osprey s Plan of Liquidation and Dissolution, and other related matters. On August 26, 2024, Osprey, the Osprey Fund, Bitwise and the Trust executed the APA. On August 27, 2024, Osprey and Bitwise jointly announced the entering into of the APA and their intention to close the transactions contemplated thereby by the end of 2024. Comparison of Investment Objective and Strategy The Osprey Fund s investment objective is for its Units to reflect the performance of bitcoin by reference to the Coin Metrics CMBI Bitcoin Index provided by Coin Metrics Inc, less the Osprey Fund s expenses and other liabilities. The Trust seeks to track the value of bitcoin by refence to the BRRNY. The following table compares the Coin Metrics CMBI Bitcoin Index to the BRRNY: Coin Metrics CMBI Bitcoin Index CME CF Bitcoin Reference Rate - New York Variant Administrator Coin Metrics CF Benchmarks Ltd. Calculation Currency USD USD Constituent Exchanges Bitstamp, Coinbase, Crypto.com, Kraken, LMAX Digital Bitstamp, Coinbase, itBit, Kraken, Gemini, LMAX Digital Determination Time 4:00 p.m. New York time 4:00 p.m. New York time Observation Window 61 minutes prior to the determination time, separated into 61 one-minute time intervals. 60 minutes prior to the determination time, separated into 12 5-minute time intervals. Weighting The volume-weighted median price (VWMP) of each time interval is calculated. The volume-weighted median rate is calculated by ordering the transactions from lowest to highest price, taking the cumulative sum of volumes of these transactions, and identifying the price associated with the trades at the 50th percentile of volume. The time-weighted average price (TWAP) of the 61 time intervals is cal- culated using a custom weight function. The weight function assigns a weight of 0 percent to the first time interval, subsequent time intervals are assigned a weight that increases linearly, and the last two time intervals are assigned a weight of 5 percent such that the sum of all weights equals 100 percent. The weight function assigns more weight to time slices that are closer to the Determination Time. The resulting figure is the published reference rate. For each time interval, the volume-weighted median trade price is calculated from the trade prices and sizes of all Relevant Transactions (as defined below). The BRRNY is then determined by the equally-weighted average of the volume medians of all partitions. Establishment Date January 1, 2020 February 28, 2022 Oversight Frequency Quarterly Quarterly While the Trust and the Osprey Fund have substantially similar investment objectives and investment strategy, there are differences between the investment restrictions and investment risks. For example, the Trust is an exchange-traded product that lists its Shares on the NYSE Arca, Inc. The Trust creates or redeems its Shares in blocks of 10,000 Shares (each, a "Basket") based on the quantity of bitcoin attributed to each Share of the Trust (net of accrued but unpaid expenses and liabilities) multiplied by the number of Shares comprising a Basket. The Trust only creates and redeems Baskets with Authorized Participants and investors who decide to buy or sell Shares of the Trust will place orders through their brokers. Finally, the Trust pays its Sponsor a unitary management fee of 0.20% per annum of the Trust s bitcoin holdings. The Osprey Fund privately offered its Units under Regulation D under the 1933 Act in June 2020 and November 2020, respectively. It suspended the creations of new Units on November 1, 2021 and does not currently provide for the redemption of Units by Unitholders. The Units are quoted on the OTCQX. Due to the lack of an ongoing redemption program as well as price volatility, low trading volume and closings of Bitcoin exchanges due to fraud, failure, security breaches or otherwise, there is no assurance that the market value of the Units reflect the per Unit value of the Osprey Fund s bitcoin, less the Osprey Fund s expenses and other liabilities. The Units may trade at a substantial premium over, or a substantial discount to, the NAV per Unit and the Osprey Fund has not met its investment objective to date. Finally, the Osprey Fund pays to Osprey a management fee at an annual rate of 0.49% of the daily net asset value of the Osprey Fund. This management fee accrues daily in bitcoin and is payable, at Osprey s sole discretion, in bitcoin or in U.S. dollars. Any other material differences in investment risks between the Trust and the Osprey Fund relate primarily to (1) the Trust being managed by Bitwise whereas the Osprey Fund is managed by Osprey, (2) the Trust will be governed by the Trust s First Amended and Restated Declaration of Trust and Trust Agreement (the "Bitwise Trust Agreement"), and (3) certain service providers (as noted below) that provide third party service arrangements to the Trust will be different from those of the Osprey Fund. Each of these differences is discussed in greater detail in the prospectus. 3 Service Providers The Osprey Fund and the Trust have some of the same service providers. Differences in those entities providing sponsorship, administration and accounting, audit, transfer agency, distribution, custody, and Delaware Trustee services to the Osprey Fund and the Trust are as noted in the following table. The following table also notes other differences related to the shares, respectively, of the Osprey Fund and the Trust. The Osprey Fund The Trust Sponsor Osprey Funds, LLC Bitwise Investment Advisers, LLC Administrator Theorem Fund Services, LLC The Bank of New York Mellon Marketing Agent None Foreside Fund Services, LLC Transfer Agent Continental Stock Transfer & Trust Company The Bank of New York Mellon Auditor Grant Thornton LLP KPMG LLP Bitcoin Custodian Coinbase Custody Trust Company, LLC Same Cash Custodian Customers Bank The Bank of New York Mellon Delaware Trustee CSC Delaware Trust Company Same Ticker Symbol OBTC BITB CUSIP Number 68839C206 09174C104 OTC Market/Primary Listing Exchange OTCQX NYSE Arca Comparison of Fund Expenses The Osprey Fund pays to Osprey a management fee at an annual rate of 0.49% of the daily net asset value of the Osprey Fund. This management fee accrues daily in bitcoin and is payable, at Osprey s sole discretion, in bitcoin or in U.S. dollars. Osprey is responsible for the routine operational, administrative and other ordinary fees and expenses of the Osprey Fund; provided, however, that the Osprey Fund is responsible for audit fees, index license fees, aggregate legal fees in excess of $50,000 per annum and the fees of the Osprey Fund s Custodian and certain extraordinary expenses of the Osprey Fund, including but not limited to taxes and governmental charges, expenses and costs, expenses and indemnities related to any extraordinary services performed by Osprey or any other service provider on behalf of the Osprey Fund to protect the Osprey Fund or the interest of unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX. The Trust pays a unitary Sponsor Fee of 0.20% per annum of the Trust s bitcoin holdings. The Trust s administrator calculates the Sponsor Fee on a daily basis by applying a 0.20% annualized rate to the Trust s total bitcoin holdings, and the amount of bitcoin payable in respect of each daily accrual shall be determined by reference to the BRRNY. In exchange for the Sponsor Fee, Bitwise has agreed to assume and pay the normal operating expenses of the Trust, which include the trustee s monthly fee and out-of-pocket expenses, the fees of the Trust s regular service providers, exchange listing fees, tax reporting fees, SEC registration fees, printing and mailing costs, audit fees and up to $500,000 per annum in ordinary legal fees and expenses. Role of the Sponsors in the Covered Transactions Osprey is not receiving any compensation dependent on the consummation of the Covered Transactions. Bitwise will not receive any consideration in connection with the Covered Transaction other than any additional Sponsor Fee resulting from the increase in the bitcoin held by the Trust. Bitwise, as sponsor of the Trust, will be responsible for management of the Trust. Bitwise is also responsible for selecting and overseeing the service providers to the Trust and preparing and filing periodic reports on behalf of the Trust with the SEC and provide any required certifications for such reports. 4 Terms and Conditions to Consummation of the Covered Transactions With respect to the Covered Transactions, the obligations of the Osprey Fund and the Trust are subject to the following terms and conditions, among others: A registration statement filed by the Trust with the Securities and Exchange Commission in connection with the Trust s Shares to be issued pursuant to Covered Transactions shall have been declared effective under the Securities Act of 1933. Bitwise and the Trust shall have obtained an order from the SEC pursuant to Section 19(b) of the 1934 Act approving a proposed rule change to the rules of the Exchange to permit the listing and trading of the Shares on the Exchange following the completion of the Covered Transactions. The Sponsor has determined that such approval is not requied and therefore waived this condition. Osprey and the Osprey Fund shall have taken all action necessary to cause the quotation or listing of the shares of the Osprey Fund to have ceased or been delisted on any over-the-counter market. The Osprey Fund shall have adopted a Plan of Dissolution and Liquidation providing for the dissolution and liquidation of the Osprey Fund following the Closing Date. Each of Osprey, the Osprey Fund, Bitwise and the Trust, as applicable, shall have made all filings and delivered all notices to all governmental authorities and other persons necessary in connection with the consummation of the Covered Transactions. All encumbrances on the bitcoin to be acquired by the Trust shall have been released in full and Osprey, on behalf of the Osprey Fund, shall deliver to the Trust written evidence regarding the release of any such encumbrances. Osprey, on behalf of the Osprey Fund and Bitwise, on behalf of the Trust, shall have each delivered an officer s certificate certifying that all agreements and commitments set forth in the Asset Purchase Agreement have been satisfied. Osprey and the Osprey Fund shall have delivered to Bitwise and the Trust duly executed counterparts to the Asset Purchase Agreement and any accompanying agreements, and Bitwise and the Trust shall have delivered to Osprey and the Osprey Fund duly executed counterparts to the Asset Purchase Agreement and any accompanying agreements. The Osprey Fund shall have received a legal opinion that the consummation of the transactions contemplated by the Covered Transactions will not result in the recognition of gain or loss for federal income tax purposes for the Osprey Fund or its shareholders. The Osprey Fund shall have received a legal opinion as to the Trust s status as a grantor trust for U.S. federal income tax purposes and that each beneficial owner of Consideration Shares will be treated as directly owning its pro rata share of the Trust s assets and a pro rata portion of the Trust s income, gain, losses and deductions will "flow through" to each beneficial owner of Consideration Shares. The Covered Transactions may be terminated at any time prior to the effectuation of the Covered Transactions on the Closing Date by mutual agreement of Osprey, on behalf of the Osprey Fund, and Bitwise, on behalf of the Trust. Following the closing of the Asset Purchase, there are no conditions to the consummation of the Liquidating Distributions. Osprey will seek to complete the Liquidating Distributions as soon as practicable following the consummation of the Asset Purchase. Regulatory Approvals No regulatory approvals are required for the consummation of the Covered Transactions. No Voting Rights Unitholders have no right to vote on the Covered Transactions. Under the Osprey Trust Agreement, Osprey Fund unitholders have no voting rights with respect to the Osprey Fund except as expressly provided in the Osprey Trust Agreement. Section 13.3 of the Osprey Trust Agreement provides that the sponsor may cause (i) the Osprey Fund to be merged into or consolidated with, converted to or to sell all or substantially all of its assets to, another trust or entity; (ii) the Units of the Osprey Fund to be converted into beneficial interests in another statutory trust (or series thereof); or (iii) the Units of the Osprey Fund to be exchanged for units in another trust or company under or pursuant to any U.S. state or federal statute to the extent permitted by law. Osprey, with written notice to the Unitholders, may approve and effect any of the transactions contemplated under (i) — (iii) above without any vote or other action of the Unitholders. 5 No Appraisal or Dissenters Rights The Osprey Fund s Unitholders will not be entitled to exercise appraisal or dissenters rights under the Delaware Statutory Trust Act in connection with the Covered Transactions. Osprey Fund Unitholders who object to the Covered Transactions or who otherwise do not wish to receive Consideration Shares should, before the Closing Date, sell their Units in the secondary market. The Osprey Fund will promptly notify its Unitholders of the timing of the Covered Transactions and the anticipated Closing Date pursuant to the disclosure guidelines of OTCQX and post material updates to its website at www.ospreyfunds.io. Governing Instruments Both the Osprey Fund and the Trust are Delaware statutory trusts. The Osprey Trust Agreement is the Osprey Fund s governing instrument applicable to the Osprey Fund and its Unitholders. The Bitwise Trust Agreement is the Trust s governing instrument applicable to the Trust and its Shareholders. The terms of the Osprey Trust Agreement are substantially similar to the terms of Bitwise Trust Agreement. Consequently, the instruments that govern the rights of the Trust Shareholders with respect to their Shares will not be materially different from those that govern the rights of the Osprey Fund s Unitholders with respect to their Units. Federal Income Tax Consequences As a condition to the closing of the Asset Purchase, the Osprey Fund will receive a tax opinion from Chapman and Cutler LLP with respect to the Covered Transactions substantially to the effect that for federal income tax purposes: Neither the Osprey Fund (nor upon liquidation of the Osprey Fund, each of its Unitholders) will be required to recognize gain or loss solely by reason of the Covered Transactions; The Trust is not an association taxable as a corporation for federal income tax purposes but will be classified as a grantor trust and will be governed by the provisions of subpart E of Part I of subchapter J (relating to trusts) of chapter 1 of the Code; Subject to the rules of Treas. Reg. 1.671-5, (i) income of the Trust will be treated as income of each shareholder of the Osprey Fund in proportion to their interest in the Trust after Closing, (ii) an item of the Trust income will have the same character in the hands of a shareholder as it would have if the shareholder directly owned a pro rata portion of the Trust s assets and, (iii) subject to the rules of Treas. Reg. 1.671-5, each shareholder will be considered to have received his or her pro rata share of income derived from each Trust asset when such income would be considered to be received by the shareholder if the shareholder directly owned a pro rata portion of the Trust s assets; and The Osprey Fund (and upon liquidation of the Osprey Fund, each of its Unitholders) will be treated as the owner of a pro rata portion of the Trust s assets under the grantor trust rules of Sections 671-679 of the Code. In rendering the opinion, counsel will rely upon, among other things, certain facts and assumptions and certain representations of Osprey and Bitwise. The condition that the Osprey Fund receive such an opinion may not be waived. No tax ruling has been or will be received from the Internal Revenue Service ("IRS") in connection with the Covered Transactions. An opinion of counsel is not binding on the IRS or a court, and no assurance can be given that the IRS would not assert, or a court would not sustain, a contrary position. Bitcoin and the Bitcoin Network Bitcoin is based on the decentralized, open source protocol of a peer-to-peer network (the "Bitcoin network") first described in 2008 and launched in 2009. No single entity owns or administers the Bitcoin network, and bitcoin are not issued by governments, banks or similar organizations. The infrastructure of the Bitcoin network is collectively maintained by a decentralized user base and developers who donate their time to maintain and improve the network. The Bitcoin network is accessed through software, and software protocols govern the creation, movement, and ownership of bitcoin, as reflected on the distributed ledger of transactions known as the "Bitcoin blockchain." The value of bitcoin is determined, in part, by the supply of, and demand for, bitcoin in global trading markets, market expectations for the adoption of bitcoin as a decentralized store of value, the number of merchants and/or institutions that accept bitcoin as a form of payment and the volume of private end-user-to-end-user transactions. 6 Bitcoin transaction and ownership records are reflected on the Bitcoin blockchain, which is a digital public record or ledger of all transactions completed on the Bitcoin network. This ledger is decentralized, meaning that a copy is stored and updated continuously on the computers of each Bitcoin network node (a node is a computer or other device running a version of the Bitcoin network software that maintains a copy of the Bitcoin blockchain and directly communicates transactions to other nodes on the Bitcoin network). Commentators have identified Bitcoin s primary innovation as the ability to trust that the Bitcoin blockchain is updated properly for each node without having to trust any single party to ensure the integrity of the ledger or the network. Transaction data is permanently recorded on the Bitcoin blockchain in files called "blocks," which reflect transactions that have been recorded and authenticated by Bitcoin network participants. The Bitcoin network software includes protocols that govern the creation of bitcoin and the cryptographic system that secures and verifies bitcoin transactions. By operating Bitcoin network software, users agree to and contribute to consensus around such software protocols. While the Bitcoin network and trading markets for bitcoin are still new, the Sponsor believes that various objective factors indicate that the Bitcoin ecosystem has matured, including, without limitation, the following: increased certainty regarding the regulation of the Bitcoin network and the uses thereof; the launch of futures contracts for bitcoin on major, established and regulated commodity futures exchanges in the United States ("U.S."); the subsequent growth of significant trading volume in bitcoin futures; increased participation by institutional investors; the arrival of major, established market makers that rely on sophisticated and technologically enabled trading systems to arbitrage bitcoin price discrepancies that may appear between different trading platforms; the development of a robust bitcoin lending market; a significant expansion in the availability of institutional-quality custody services from regulated third-party custodians; and the advent and increasing ubiquity of significant insurance on custodied assets held at third-party custodians. The Sponsor believes that these factors have combined to improve the efficiency of the bitcoin market, creating a dynamic, institutional-quality, two-sided market (discussed below). For more information on bitcoin and the Bitcoin network, see "Bitcoin, Bitcoin Market, Bitcoin Exchanges and Regulation of Bitcoin" below. The Trust s Investment Objective and Strategies The Trust s investment objective is to seek to provide exposure to the value of bitcoin held by the Trust, less the expenses of the Trust s operations. In seeking to achieve its investment objective, the Trust holds bitcoin and accrues the Sponsor s management fee (the "Sponsor Fee") in U.S. dollars. The Trust values its bitcoin holdings, net assets and the Shares daily based on the BRRNY. The Trust is passively managed and does not pursue active management investment strategies, and the Sponsor does not actively manage the bitcoin held by the Trust. This means that the Sponsor does not sell bitcoin at times when its price is high or acquire bitcoin at low prices in the expectation of future price increases. It also means that the Sponsor does not make use of any of the hedging techniques available to professional bitcoin investors to attempt to reduce the risks of losses resulting from price decreases. The Trust will not utilize leverage or any similar arrangements in seeking to meet its investment objective. Bitcoin will be the only digital asset held by the Trust. Although the Shares are not the exact equivalent of a direct investment in bitcoin, they provide investors with an alternative that constitutes a relatively cost-effective way to obtain bitcoin exposure through the securities market. When the Trust creates or redeems its Shares, it will do so in blocks of 10,000 Shares (each, a "Basket") based on the quantity of bitcoin attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities) multiplied by the number of Shares comprising a Basket (10,000) (the "Basket Amount"). For an order to create (purchase) a Basket, the purchase shall be in the amount of U.S. dollars needed to purchase the Basket Amount (plus a per order transaction fee), as calculated by the Administrator (as defined below). For an order to redeem a Basket, the Sponsor shall arrange for the Basket Amount to be sold and the cash proceeds (minus a per order transaction fee) distributed. The Trust only creates and redeems Baskets in transactions with financial firms that are authorized to purchase or redeem Shares with the Trust (each, an "Authorized Participant"). Shares initially comprising the same Basket but offered by the Authorized Participants to the public at different times may have different offering prices, which depend on various factors, including the supply and demand for Shares, the value of the Trust s assets, and market conditions at the time of a transaction. 7 The Basket Amount required to create each Basket changes from day to day. On each day that the Exchange is open for regular trading, the Administrator adjusts the quantity of bitcoin constituting the Basket Amount as appropriate to reflect accrued expenses and any loss of bitcoin that may occur. The computation is made by the Administrator each business day prior to the commencement of trading on the Exchange. The Administrator determines the Basket Amount for a given day by dividing the number of bitcoin held by the Trust as of the opening of business on that business day, adjusted for the amount of bitcoin constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on that business day, by the quotient of the number of Shares outstanding at the opening of business divided by 10,000. Fractions of a bitcoin smaller than a satoshi (0.00000001 bitcoin) are disregarded for purposes of the computation of the Basket Amount. The Basket Amount so determined is communicated via electronic mail message to all Authorized Participants and made available on the Sponsor s website for the Shares. Purchases and Sales of Bitcoin Because the Trust conducts creations and redemptions of Shares for cash, it is responsible for purchasing and selling bitcoin in connection with those creation and redemption orders. The Trust may also be required to sell bitcoin to pay certain extraordinary, non-recurring expenses that are not assumed by the Sponsor. The Sponsor, on behalf of the Trust, will typically seek to buy and sell bitcoin at a price as close to the BRRNY as practical. Such purchase and sale transactions may be conducted pursuant to two models: (i) the "Trust-Directed Trade Model"; or the (ii) "Agent Execution Model." The Trust intends to utilize the Trust-Directed Trade Model for all purchases and sales of bitcoin and will only utilize the Agent Execution Model in the event that no Bitcoin Trading Counterparty is willing or able to effectuate the Trust s purchase or sale of bitcoin. Under the Trust-Directed Trade Model, the Sponsor, on behalf of the Trust, is responsible for acquiring bitcoin from a bitcoin trading counterparty that has been approved by the Sponsor (each, a "Bitcoin Trading Counterparty"). There is no contractual relationship between the Trust, the Sponsor or the Bitcoin Trading Counterparties and all transactions are done on an arms-length basis. Under the Agent Execution Model, Coinbase, Inc. ("Coinbase Inc." or the "Prime Execution Agent", which is an affiliate of the Bitcoin Custodian), acting in an agency capacity, conducts bitcoin purchases and sales on behalf of the Trust with third parties through its Coinbase Prime service pursuant to an agreement (the "Prime Execution Agreement.") To utilize the Agent Execution Model, the Trust may maintain some bitcoin or cash in a trading account (the "Trading Balance") with the Prime Execution Agent. To avoid having to pre-fund purchases or sales of bitcoin in connection with cash creations and redemptions and sales of bitcoin to pay Trust expenses not assumed by the Sponsor, to the extent applicable, the Trust may borrow bitcoin or cash as trade credit ("Trade Credit") from Coinbase Credit, Inc. (the "Trade Credit Lender") on a short-term basis pursuant to the Coinbase Credit Committed Trade Financing Agreement (the "Trade Financing Agreement"). The CME CF Bitcoin Reference Rate – New York Variant The BRRNY was designed to provide a daily, 4:00 p.m. New York time reference rate of the U.S. dollar price of one bitcoin that may be used to develop financial products. The BRRNY uses the same methodology as the BRR, which was designed by the CME Group and CF Benchmarks Ltd. to facilitate the cash settlement of Bitcoin Futures traded on the Chicago Mercantile Exchange ("CME"). The only material difference between the BRRNY and BRR is that the BRR measures the U.S. dollar price of one bitcoin as of 4:00 p.m. London time and the BRRNY measure the U.S. dollar price of one bitcoin as of 4:00 pm Eastern time. The CME Group also publishes the CME CF Bitcoin Real Time Index (the "CME Bitcoin Real Time Price"), which is a continuous measure of the U.S. dollar price of one bitcoin calculated once per second. Each of the BRRNY, BRR and the CME Bitcoin Real Time Price are representative of the bitcoin trading activity on the Constituent Platforms, which include, as of the date of this prospectus, Bitstamp, Coinbase, Gemini, itBit, LMAX and Kraken. For more information on the BRRNY, BRR and CME Bitcoin Real Time Price, see "The Trust and Bitcoin Prices" below. 8 The Trust uses the BRRNY to calculate its daily NAV and utilizes the CME Bitcoin Real Time Price to calculate an Indicative Trust Value ("ITV"). The ITV is intended to provide additional information not otherwise available to the public that may be useful to investors and market professionals in connection with the trading of the Shares on the Exchange. It is calculated by using the prior day s holdings at close of business and the most recently reported price level of the CME Bitcoin Real Time Price. The ITV will be disseminated on a per Share basis every 15 seconds during regular Exchange trading hours of 9:30 a.m. to 4:00 p.m. New York time. The Trust s Legal Structure The Trust is a Delaware statutory trust, formed pursuant to the Delaware Statutory Trust Act ("DSTA"). The Trust continuously issues common shares representing units of undivided beneficial ownership of the Trust that may be purchased and sold on the Exchange. The Trust operates pursuant to the Amended and Restated Declaration of Trust and Trust Agreement (the "Trust Agreement"), dated as of December 27, 2023. Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust (the "Trustee"). The Trust is managed and controlled by the Sponsor pursuant to the terms of the Trust Agreement and the Sponsor Agreement, dated as of January 5, 2024, between the Trust and the Sponsor. The Sponsor is a limited liability company formed in the state of Delaware on June 4, 2018. Except as required under applicable federal law or under the rules or regulations of an Exchange, shareholders of the Trust ("Shareholders") do not have any voting rights, take no part in the management or control, and have no voice in, the Trust s operations or business. The Trust s Service Providers The Sponsor Bitwise Investment Advisers, LLC serves as the Sponsor for the Trust. The Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the U.S. and the listing of Shares on the Exchange. The Sponsor develops a marketing plan for the Trust, prepares marketing materials regarding the Shares, and operates the marketing plan of the Trust on an ongoing basis. The Sponsor also oversees the additional service providers of the Trust and exercises managerial control of the Trust as permitted under the Trust Agreement. The Trustee Delaware Trust Company serves as the Trustee, as required to create a Delaware statutory trust in accordance with the Trust Agreement and the DSTA. The Administrator The Bank of New York Mellon ("BNY Mellon") serves as the Trust s administrator (in such capacity, the "Administrator"). Under the Trust Administration and Accounting Agreement, the Administrator provides necessary administrative, tax and accounting services and financial reporting for the maintenance and operations of the Trust. In addition, the Administrator makes available the office space, equipment, personnel and facilities required to provide such services. The Administrator s principal address is 240 Greenwich Street, New York, New York 10286. The Transfer Agent BNY Mellon serves as the transfer agent for the Trust (in such capacity, the "Transfer Agent"). The Transfer Agent: (1) issues and redeems Shares of the Trust; (2) responds to correspondence by Shareholders and others relating to its duties; (3) maintains Shareholder accounts; and (4) makes periodic reports to the Trust. The Bitcoin Custodian Coinbase Custody Trust Company, LLC serves as the Trust s Bitcoin Custodian pursuant to an agreement between it and the Trust (the "Bitcoin Custody Agreement"). The Bitcoin Custodian is a fiduciary under 100 of the New York Banking Law. Under the Bitcoin Custody Agreement, the Bitcoin Custodian is responsible for safekeeping the bitcoin owned by the Trust. The Bitcoin Custodian was selected by the Sponsor. The Bitcoin Custodian has responsibility for opening a special account that holds the Trust s bitcoin (the "Trust Bitcoin Account") and implementing the controls designed by the Sponsor for the account, as well as facilitating the transfer of bitcoin required for the operation of the Trust. The Bitcoin Custodian will also enter into an agreement with the Sponsor to open a custody account to receive payment of the Sponsor Fee (the "Sponsor Bitcoin Account"). 9 The Bitcoin Custodian is a third-party limited purpose trust company that was chartered in 2018 upon receiving a trust charter from the New York Department of Financial Services. The Bitcoin Custodian has among the longest track records in the industry of providing custodial services for digital asset private keys. The Sponsor believes that the Bitcoin Custodian s policies, procedures, and controls for safekeeping, exclusively possessing, and controlling the Trust s bitcoin holdings are consistent with industry best practices to protect against theft, loss, and unauthorized and accidental use of the private keys. The Trust Bitcoin Account and Sponsor Bitcoin Account are segregated accounts and are therefore not commingled with corporate or other customer assets. The Cash Custodian The Bank of New York Mellon also serves as the Cash Custodian pursuant to an agreement between it and the Trust (the "Cash Custody Agreement"). The Cash Custodian is the custodian for the Trust s cash holdings. The Trust may retain additional cash custodians from time to time pursuant to a cash custodian agreement to perform certain services that are typical of a cash custodian. The Sponsor may, in its sole discretion, add or terminate cash custodians at any time. The Marketing Agent Foreside Financial Services, LLC (the "Marketing Agent") is responsible for: (1) working with the Transfer Agent to review and approve, or reject, purchase and redemption orders of Shares placed by Authorized Participants with the Transfer Agent; and (2) reviewing and approving the marketing materials prepared by the Trust for compliance with applicable U.S. Securities and Exchange Commission ("SEC") and Financial Industry Regulatory Authority ("FINRA") advertising laws, rules, and regulations. Except for the specific, limited circumstance and time in which the Trust is using the Agent Execution Model, the Trust, the Sponsor and the service providers will not loan or pledge the Trust s assets, nor will the Trust s assets serve as collateral for any loan or similar arrangement. During the specific, limited circumstance and time when the Trust is using the Agent Execution Model, the Trust s bitcoin may be subject to a lien to secure outstanding Trade Credits in favor the Trade Credit Lender, as is discussed in further detail below. The Trust s Fees and Expenses The Trust pays the unitary Sponsor Fee of 0.20% per annum of the Trust s bitcoin holdings. For a 6-month period commencing on the day the Shares are initially listed on the Exchange, the Sponsor has agreed to waive the entire Sponsor Fee on the first $1 billion of Trust assets. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement and Sponsor Agreement. Except during periods during which all or a portion of the Sponsor Fee is being waived, the Sponsor Fee is accrued daily and is payable in bitcoin monthly in arrears. The Administrator calculates the Sponsor Fee on a daily basis by applying a 0.20% annualized rate to the Trust s total bitcoin holdings, and the amount of bitcoin payable in respect of each daily accrual shall be determined by reference to the BRRNY. The NAV of the Trust is reduced each day by the amount of the Sponsor Fee calculated each day. On or about the last day of each month, an amount of bitcoin will be transferred from the Trust Bitcoin Account to the Sponsor Bitcoin Account equal to the sum of all daily Sponsor Fees accrued for the month in U.S. dollars divided by the BRRNY on the last day of the month. The Trust is not responsible for paying any fees or costs associated with the transfer of bitcoin to the Sponsor. The Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor Fee in its sole discretion. To the extent not already disclosed in the prospectus, the Sponsor may notify Shareholders of its intent to commence, or cease, waiving the Sponsor Fee on the Trust s website, in a prospectus supplement, through a current report on Form 8-K and/or in the Trust s annual or quarterly reports. In exchange for the Sponsor Fee, the Sponsor has agreed to assume and pay the normal operating expenses of the Trust, which include the Trustee s monthly fee and out-of-pocket expenses, the fees of the Trust s regular service providers (Cash Custodian, Bitcoin Custodian, Prime Execution Agent, Marketing Agent, Transfer Agent and Administrator), Exchange listing fees, tax reporting fees, SEC registration fees, printing and mailing costs, audit fees and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $500,000 per annum. The Sponsor has also assumed the costs of the Trust s organization. 10 The Trust may incur certain extraordinary, non-recurring expenses that are not assumed by the Sponsor, including but not limited to, taxes and governmental charges, any applicable brokerage commissions, financing fees, Bitcoin network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the Shareholders (including, for example, in connection with any fork of the Bitcoin blockchain, any Incidental Rights (as defined below) and any IR Asset (as defined below)), any indemnification of the Cash Custodian, Bitcoin Custodian, Prime Execution Agent, Transfer Agent, Administrator or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters. The Administrator and/or the Sponsor will direct the Bitcoin Custodian to transfer bitcoin from the Trust Bitcoin Account to the Sponsor Bitcoin Account to pay the Sponsor Fee and any other Trust expenses not assumed by the Sponsor. To pay for expenses not assumed by the Sponsor that are denominated in U.S. dollars, the Sponsor, on behalf of the Trust, may sell the Trust s bitcoin as necessary to pay such expenses. Custody of the Trust s Assets The Trust s Bitcoin Custodian maintains custody of all of the Trust s bitcoin, other than that which is maintained in a trading account (the "Trading Balance") with Coinbase, Inc. ("Coinbase Inc." or the "Prime Execution Agent", which is an affiliate of the Bitcoin Custodian), in the Trust Bitcoin Account. The Trading Balance is only used in the limited circumstances in which the Trust is using the Agent Execution Model to effectuate the purchases and sales of bitcoin. The Bitcoin Custodian provides safekeeping of digital assets using a multi-layer cold storage security platform designed to provide offline security of the digital assets held by the Bitcoin Custodian. However, the Bitcoin Custodian is not a banking institution or otherwise a member of the Federal Deposit Insurance Corporation ("FDIC") and, therefore, deposits held with or assets held by the Bitcoin Custodian are not FDIC-insured. In addition, neither the Trust nor the Sponsor insure the Trust s bitcoins. The Bitcoin Custodian has insurance coverage as a subsidiary under its parent company, Coinbase Global, Inc., which procures fidelity (e.g., crime) insurance to protect the organization from risks such as theft of funds. Specifically, the fidelity program provides coverage for the theft of funds held in hot or cold storage. The insurance program is provided by a syndicate of industry-leading insurers. The insurance program does not cover, insure or guarantee the performance of the Trust. The bitcoin in the Trust Bitcoin Account may be held across multiple wallets, any of which feature the following safety and security measures to be implemented by the Bitcoin Custodian: Cold Storage: Cold storage in the context of bitcoin means keeping the reserve of bitcoin offline, which is a widely-used security precaution, especially when dealing with large amount of bitcoin. Bitcoin held under custodianship with the Bitcoin Custodian is kept in high-security, offline, multi-layer cold storage vaults. This means that the private keys, the cryptographic component that allows a user to access bitcoin, are stored offline on hardware that has never been connected to the internet. Storing the private key offline minimizes the risk of the bitcoin being stolen. The Sponsor expects that all of the Trust s bitcoin will be held in cold storage of the Bitcoin Custodian on an ongoing basis. In connection with creations or redemptions, the Trust, under most circumstances, processes redemptions by selling bitcoin from the portion of its bitcoin held in cold storage. Private Keys: All private keys are securely stored using multiple layers of high-quality encryption and in Bitcoin Custodian-owned offline hardware vaults in secure environments. No customers or third parties are given access to the Bitcoin Custodian s private keys. Whitelisting: Transactions are only sent to vetted, known addresses. The Bitcoin Custodian s platform supports pre-approval and test transactions. The Bitcoin Custodian requires authentication when adding or removing addresses for whitelisting. All instructions to initiate a whitelist addition or removal must be submitted via the Coinbase Custody platform. When a whitelist addition or removal request is initiated, the initiating user will be prompted to authenticate their request using a two-factor authentication key. A consensus mechanism on the Coinbase Custody platform dictates how many approvals are required in order for the consensus to be achieved to add or remove a whitelisted address. Only when the consensus is met is the underlying transaction considered officially approved. An account s roster and user roles are maintained by the Bitcoin Custodian in a separate log, an Authorized User List ("AUL"). Any changes to the account s roster must be reflected on an updated AUL first and executed by an authorized signatory. 11 Audit Trails: Audit trails exist for all movement of bitcoin within Bitcoin Custodian-controlled bitcoin wallets and are audited annually for accuracy and completeness by an independent external audit firm. In addition to the above measures, in accordance with the Bitcoin Custody Agreement, bitcoin held in custody with the Bitcoin Custodian is segregated from both the proprietary property of the Bitcoin Custodian and the assets of any other customer in accounts that clearly identify the Trust as the owner of the accounts. Under the rare and limited circumstances when the Trust is utilizing the Agent Execution Model to acquire bitcoin, a portion of the Trust s bitcoin holdings and cash holdings may be held with the Prime Execution Agent in the Trading Balance. The Trust only utilizes the Agent Execution Model when the Trust-Directed Trading Model is unavailable. Within the Trust s Trading Balance, the Prime Execution Agreement provides that the Trust does not have an identifiable claim to any particular bitcoin (and cash). Instead, the Trust s Trading Balance represents an entitlement to a pro rata share of the bitcoin (and cash) the Prime Execution Agent holds on behalf of customers who hold similar entitlements against the Prime Execution Agent. In this way, the Trust s Trading Balance represents an omnibus claim on the Prime Execution Agent s bitcoins (and cash) held on behalf of the Prime Execution Agent s customers. The Prime Execution Agent holds the bitcoin associated with customer entitlements across a combination of omnibus cold wallets, omnibus "hot wallets" (meaning wallets whose private keys are generated and stored online, in Internet-connected computers or devices) or in omnibus accounts in the Prime Execution Agent s name on a trading venue (including third-party venues and the Prime Execution Agent s own execution venue) where the Prime Execution Agent executes orders to buy and sell bitcoin on behalf of its clients. Within such omnibus hot and cold wallets and accounts, the Prime Execution Agent has represented to the Sponsor that it keeps the majority of assets in cold wallets, to promote security, while the balance of assets is kept in hot wallets to facilitate rapid withdrawals. However, the Sponsor has no control over, and for security reasons the Prime Execution Agent does not disclose to the Sponsor, the percentage of bitcoin that the Prime Execution Agent holds for customers holding similar entitlements as the Trust which are kept in omnibus cold wallets, as compared to omnibus hot wallets or omnibus accounts in the Prime Execution Agent s name on a trading venue. The Prime Execution Agent has represented to the Sponsor that the percentage of assets maintained in cold versus hot storage is determined by ongoing risk analysis and market dynamics, in which the Prime Execution Agent attempts to balance anticipated liquidity needs for its customers as a class against the anticipated greater security of cold storage. The Trust relies on the Cash Custodian to hold any cash related to the creation and redemption of Shares, purchase or sale of bitcoin or held for payment of expenses not assumed by the Sponsor. The Transfer Agent facilitates the settlement of Shares in response to the placement of purchase and redemption orders from Authorized Participants. Plan of Distribution On the Closing Date, pursuant to an Asset Purchase and Contribution Agreement (the "APA") among the Osprey Fund, Osprey, the Trust and Bitwise, all of the bitcoin owned by the Osprey Fund will be contributed to the Trust, and the Trust will issue an amount of Shares equal to the product of the aggregate value of the Acquired Bitcoin as determined by reference to the CME CF Bitcoin Reference Rate - New York Variant ("BRRNY") on the business day prior to the Closing Date multiplied by the number of Acquired Bitcoin, divided by the net asset value per Share on the business day prior to the Closing Date (the "Consideration Shares"). On the Closing Date, the Consideration Shares will be deposited with the brokerage designated by Osprey. As soon as practicable following the closing of the Asset Purchase], pursuant of a Plan of Dissolution and Liquidation adopted by the Osprey Fund, the Osprey Fund will distribute the Consideration Shares held by the Osprey Fund to its Unitholders on a pro-rata basis (the "Pre-Liquidation Distribution"). Thereafter, the Osprey Fund will wind-up its affairs and liquidate. After paying creditors of the Osprey Fund and making provisions for claims and obligations of the Osprey Fund, the Osprey Fund will distribute to each Unitholder their pro rata portion of the remaining assets, if any, held by the Osprey Fund (the "Final Liquidating Distribution", and collectively with the Pre-Liquidation Distribution, the "Liquidating Distributions"). The Final Liquidating Distribution is expected to occur as soon as practicable following the Pre-Liquidation Distribution, but in no event later than 90 days thereafter. The Liquidating Distributions and the Asset Purchase are referred to collectively herein as the "Covered Transactions". After the Pre-Liquidation Distribution, each Unitholder will become a beneficial owner of the Trust, which trades on the NYSE Arca under the ticker symbol "BITB" (CUSIP No.: 09174C104). It is expected that shortly after the Liquidating Distributions, the Osprey Fund will terminate and all outstanding Units will be cancelled. 12 Federal Income Tax Considerations Owners of Shares are treated, for U.S. federal income tax purposes, as if they owned a proportionate share of the assets of the Trust. They are also viewed as if they directly received a proportionate share of any income of the Trust, or as if they had incurred a proportionate share of the expenses of the Trust. Consequently, each sale of bitcoin by the Trust (which includes under current IRS guidance using bitcoin to pay expenses of the Trust) constitutes a taxable event to Shareholders. See "United States Federal Income Tax Consequences—Taxation of U.S. Shareholders." Use of Proceeds The only proceeds to the Trust from the Covered Transactions will be bitcoin. The Trust holds the bitcoin and will only sell or transfer the bitcoin in order to (i) pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor, (ii) distribute to Authorized Participant in connection with redemptions of Baskets, or (iii) disposed of in a liquidation of the Trust. In the event that the Trust is terminated and its assets are to be liquidated, all of the Trust s bitcoin will be sold and the cash proceeds will be distributed to Shareholders. Under no circumstances will the Trust distribute bitcoin to Shareholders. Principal Investment Risks of an Investment in the Trust An investment in the Trust involves risks. Investors may choose to use the Trust as means of investing indirectly in bitcoin. Because the value of the Shares is correlated with the value of the bitcoin held by the Trust, it is important to understand the investment attributes of, and the market for, bitcoin. As noted, there are significant risks and hazards inherent in the bitcoin market that may cause the price of bitcoin to widely fluctuate. Investors considering a purchase of Shares should carefully consider how much of their total assets should be exposed to the bitcoin market, and should fully understand, be willing to assume, and have the financial resources necessary to withstand, the risks involved in the Trust s investment strategy, and be in a position to bear the potential loss of their entire investment in the Trust. Bitcoin is a relatively new technological innovation with a limited history. There is no assurance that usage of the Bitcoin network or bitcoin will continue to grow. A contraction in use or adoption of bitcoin may result in increased volatility or a reduction in the price of bitcoin, which could adversely impact the value of the Shares. Sales of newly created or "mined" bitcoin may cause the price of bitcoin to decline, which could negatively affect an investment in the Shares. Bitcoin markets have a limited history, bitcoin trading prices have exhibited high levels of volatility, and in some cases such volatility has been sudden and extreme. Because of such volatility, Shareholders could lose all or substantially all of their investment in the Trust. Regulation of the use of bitcoin and the Bitcoin network continues to evolve in both the U.S. and foreign jurisdictions, which may restrict the use of bitcoin or otherwise impact the demand for bitcoin. Disruptions at digital asset trading platforms could adversely affect the availability of bitcoin and the ability of Authorized Participants to purchase or sell bitcoin and, therefore, their ability to create and redeem Shares. Custody of digital assets such as bitcoin include unique risks of loss. The loss or destruction of private keys could prevent the Trust from accessing its bitcoin. Loss of these private keys may be irreversible and could result in the loss of all or substantially all of an investment in the Trust. Similarly, transactions on the Bitcoin network generally may not be reversed or corrected, meaning that errors in transactions from the Trust Bitcoin Account could result in the loss of all or substantially all of an investment in the Trust. There is no assurance as to whether the Trust will be profitable or meet its expenses and liabilities. Any investment made in the Trust may result in a total loss of the investment. The Trust s return may not match the performance of the BRRNY because the Trust incurs operating expenses. The NAV of the Trust may not always correspond to the market price of its Shares for a number of reasons, including price volatility, trading activity, normal trading hours for the Trust, the calculation methodology of the NAV, and/or the closing of digital asset trading platforms due to fraud, failure, security breaches or otherwise. As a result, Baskets may be created or redeemed at a U.S. dollar value that differs from the market price of the Shares. 13 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BKV_bkv-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BKV_bkv-corp_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BKV_bkv-corp_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BLGO_biolargo_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BLGO_biolargo_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..03a73e7a71c10aa065888076551b9331228c7f47 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BLGO_biolargo_prospectus_summary.txt @@ -0,0 +1 @@ +S-1 1 blgo20240405_s1.htm FORM S-1 blgo20240405_s1.htm Table of Contents As filed with the Securities and Exchange Commission April 12, 2024 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BIOLARGO, INC. (Exact name of registrant as specified in its charter) Delaware 2800 65-0159115 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) BioLargo, Inc. 14921 Chestnut St. Westminster, CA 92683 (888) 400-2863 (Address, including zip code, and telephone number, including area code, of registrant s principal executive offices) Copy to: Gilbert Bradshaw, Esq. Corporate Securities Legal LLP 18818 Teller Avenue, Suite 115 Irvine, CA 92612 Tel: (949) 752-1100/Fax: (949) 752-1144 gil@securitieslegal.com Agents and Corporations, Inc. 1201 Orange Street, Suite 600 Wilmington, DE 19801 (302) 575-0877 (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 or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer Accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine. Table of Contents The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and 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: PROSPECTUS 34,888,449 shares of common stock This prospectus relates to the offer and sale of up to 34,888,449 shares of common stock, par value $0.00067, of BioLargo, Inc., a Delaware corporation, by the selling stockholders identified herein (referred to collectively herein as the selling stockholders, or individually as a selling stockholder ). These shares are issuable upon exercise of warrants that were issued to the selling stockholders between May 4, 2020, and January 26, 2024, at an average exercise price of $0.2586 per share. We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholders. We may receive up to $9,022,461 aggregate gross proceeds in the event the warrants are exercised in full. After exercise of the warrants, the selling stockholders may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. See Plan of Distribution for more information about how the selling stockholders may sell the shares of common stock being registered pursuant to this prospectus. Each selling stockholder may be considered underwriter within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended. We will pay the expenses incurred in registering the shares, including legal and accounting fees. See Plan of Distribution . Since January 23, 2008, our common stock has been quoted on the OTC Markets OTCQB marketplace (formerly known as the OTC Bulletin Board , and referred to in this prospectus as the OTC Markets ) under the trading symbol BLGO. On April 11, 2024, the last reported sale price of our common stock on the OTC Markets was $0.325. The securities offered in this prospectus involve a high degree of risk. You should consider the risk factors beginning on page 5 before purchasing 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. The date of this prospectus is Table of Contents TABLE OF CONTENTS Page # PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BMR_beamr_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BMR_beamr_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BMR_beamr_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BNED_barnes_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BNED_barnes_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BNED_barnes_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BNIGF_beroni_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BNIGF_beroni_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BNIGF_beroni_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BODYW_beachbody_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BODYW_beachbody_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..647436712cf1c685c8aec0f5818171f75fea9247 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BODYW_beachbody_prospectus_summary.txt @@ -0,0 +1 @@ +This summary highlights selected information from this prospectus and may not contain all of the information that is important to you in making an investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our 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. See also the section entitled Where You Can Find Additional Information. Unless context otherwise requires, references in this prospectus to Beachbody, BODi, the Company, we, us or our refer to the business of The Beachbody Company, Inc. and its consolidated subsidiaries. The Company BODi is a leading subscription health and fitness company. We focus primarily on digital content, supplements, connected fitness, and consumer health and wellness. Our goal is to continue to provide holistic health and wellness content and subscription-based solutions. We are the creator of some of the world s most popular fitness programs, including P90X, Insanity, and 21 Day Fix, which transformed the at-home fitness market and disrupted the global fitness industry by making it accessible for people to get results anytime, anywhere. Our comprehensive nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. These fitness and nutrition programs are available through our Beachbody On Demand ( BOD ) and Beachbody On Demand Interactive ( BODi ) streaming services. We offer nutritional products such as Shakeology nutrition shakes, BEACHBAR snack bars, and Ladder premium supplements as well as a commercial-grade stationary cycle with or without a 360-degree touch screen tablet and connected fitness software. Leveraging our history of fitness content creation, nutrition innovation, and our network of micro-influencers, whom we call Partners , we plan to continue market penetration into the health and wellness markets to reach a wider health, wellness and fitness audience. Our revenue is generated primarily through our network of Partners, social media marketing channels, and direct response advertising. Components of revenue include recurring digital subscription revenue, revenue from the sale of nutritional and other products, and connected fitness revenue. In addition to selling individual products on a one-time basis, we bundle digital and nutritional products together at discounted prices. Corporate Information We were incorporated under the name Forest Road Acquisition Corp. on September 24, 2020 as a Delaware corporation for purposes of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On June 25, 2021, we changed our name to The Beachbody Company, Inc. Our principal executive office is located at 400 Continental Blvd, Suite 400, El Segundo, California 90245. Our telephone number is (310) 883-9000. Our website address is www.beachbody.com. Information contained on 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. Recent Developments 2023 Equity Offering On December 10, 2023, the Company entered into a securities purchase agreement for the issuance and sale of 420,769 shares of Class A Common Stock at a purchase price of $9.75 per share and pre-funded warrants to Table of Contents Note 2. Revenue The Company s revenue disaggregated by geographic region is as follows (in thousands): Year Ended December 31, 2023 2022 Geographic region: United States $ 473,465 $ 620,942 Rest of world1 53,644 71,257 Total revenue $ 527,109 $ 692,199 1 Consists of Canada, United Kingdom and France. Other than the United Sates, no single country accounted for more than 10% of the Company s total revenue. The Company determined that, in addition to the preceding table, the disaggregation of revenue by revenue type as presented in the consolidated statements of operations achieves the disclosure requirement to disaggregate revenue into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Deferred Revenue Deferred revenue is recorded for nonrefundable cash payments received for the Company s performance obligation to transfer, or stand ready to transfer, goods or services in the future. Deferred revenue consists of subscription fees billed that have not been recognized and physical products sold that have not yet been delivered. The Company expects to recognize approximately 95% of the remaining performance obligations as revenue in the next 12 months, and the remainder thereafter. During the year ended December 31, 2023, the Company recognized $95.6 million of revenue that was included in the deferred revenue balance as of December 31, 2022. During the year ended December 31, 2022, the Company recognized $106.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021. The balance in deferred revenue as of December 31, 2021 was $107.1 million. Note 3. Fair Value Measurements The Company s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands): December 31, 2023 Level 1 Level 2 Level 3 Assets Derivative assets $ $ $ Restricted short-term investments 4,250 Total assets $ $ 4,250 $ Liabilities Public Warrants $ $ $ 17 Private Placement Warrants 9 Term Loan Warrants 392 Common Stock Warrants 2,707 Total liabilities $ $ $ 3,125 F-4 Table of Contents Note 10. Accrued Expenses Accrued expenses consist of the followings (in thousands): December 31, 2023 2022 Partner costs $ 13,971 $ 14,535 Inventory, shipping and fulfillment 6,869 11,687 Employee compensation and benefits 4,334 20,584 Sales and other taxes 3,963 4,818 Information technology 3,176 2,207 Advertising 872 1,176 Customer service expenses 437 956 Other accrued expenses 8,525 8,467 Total accrued expenses $ 42,147 $ 64,430 On September 29, 2023, the Company entered into a financing agreement with IPFS Corporation of California ( IPFS ) to finance certain of its annual insurance premiums. The Company financed $2.5 million, which will be paid over a ten month period with the first payment due on November 1, 2023. The financing has an interest rate of 8.83% and IPFS has a security interest in the underlying policies that have been financed. The $1.8 million outstanding as of December 31, 2023 is recorded in other current liabilities in the consolidated balance sheet and the interest expense is recorded in interest expense in the consolidated statement of operations. On October 6, 2023, the Company entered into a financing agreement with First Insurance Funding ( FIF ) to finance certain of its annual insurance premiums. The Company financed $2.0 million, which will be paid over a nine month period with the first payment due on November 1, 2023. The financing has an interest rate of 8.75% and FIF has a security interest in the underlying policies that have been financed. The $1.4 million outstanding as of December 31, 2023 is recorded in other current liabilities in the consolidated balance sheet and the interest expense is recorded in interest expense in the consolidated statement of operations. Note 11. Debt On August 8, 2022 (the Effective Date ), the Company, Beachbody, LLC as borrower (a wholly owned subsidiary of the Company), and certain other subsidiaries of the Company as guarantors (the Guarantors ), the lenders (the Lenders ), and Blue Torch Finance, LLC, ( Blue Torch ) as administrative agent and collateral agent for such lenders (the Term Loan Agent ) entered into a financing agreement which was subsequently amended (collectively with any amendments thereto, the Financing Agreement ). The Financing Agreement provides for senior secured term loans on the Effective Date in an aggregate principal amount of $50.0 million (the Term Loan ) which was drawn on the Effective Date. In addition, the Financing Agreement permits the Company to borrow up to an additional $25.0 million, subject to the terms and conditions set forth in the Financing Agreement. Borrowings under the Term Loan are unconditionally guaranteed by the Guarantors, and all present and future material U.S. and Canadian subsidiaries of the Company. Such security interest consists of a first-priority perfected lien on substantially all property and assets of the Company and subsidiaries, including stock pledges on the capital stock of the Company s material and direct subsidiaries, subject to customary carveouts. In connection with the Financing Agreement, the Company incurred $4.5 million of third-party debt issuance costs which are recorded in the consolidated balance sheets as a reduction of long-term debt as of December 31, 2023 and 2022 and are being amortized over the term of the Term Loan using the effective-interest method. The Term Loan borrowings may take the form of base rate ( Reference Rate ) loans or Secured Overnight Financing Rate ( SOFR Rate ) loans. Reference Rate loans bear interest at a rate per annum equal to the sum of an applicable margin of 6.15% per annum, plus the greater of (a) 2.00% per annum, (b) the Federal Funds Rate F-5 Table of Contents Number of Performance Vested Options Weighted- Average Grant Date Fair Value (per option) Unvested at December 31, 2022 $ Granted 318,440 12.77 Unvested at December 31, 2023 318,440 $ 12.77 The Company does not use cash to settle equity instruments issued under equity-based compensation awards. The total fair value of awards which vested during the years ended December 31, 2023 and 2022 was $9.6 million and $14.4 million, respectively. The intrinsic value of options exercised during the year ended December 31, 2022 was $0.8 million. There were no options exercised during the year ended December 31, 2023. A summary of RSU activity is as follows: RSUs Outstanding Number of RSUs Weighted- Average Fair Value (per RSU) Outstanding at December 31, 2022 63,184 $ 72.50 Granted 496,176 28.37 Vested (230,340 ) 34.11 Forfeited (27,139 ) 34.58 Outstanding at December 31, 2023 301,881 $ 31.97 RSUs granted to employees generally vest over four years, based on continued employment, while RSUs granted to members of the Board generally vest approximately one year after grant date. The fair value of RSUs vested during the year ended December 31, 2023 and 2022 was $7.9 million and $2.2 million, respectively. On January 1, 2023, the number of shares available for issuance under the 2021 Incentive Award Plan (the 2021 Plan ) increased by 312,162 pursuant to the terms of the 2021 Plan. As of December 31, 2023, 254,995 shares of Class A common stock were available for issuance under the 2021 Plan. Vested RSUs included shares of common stock that the Company withheld on behalf of certain employees to satisfy the minimum statutory tax withholding requirements, as defined by the Company. The Company withheld shares of common stock with an aggregate fair value and remitted taxes of $2.2 million and $0.2 million during the years ended December 31, 2023 and 2022, respectively, which were classified as financing cash outflows in the consolidated statements of cash flows. The Company canceled and returned these shares to the 2021 Plan, which are available under the plan terms for future issuance. On June 14, 2023, the Board adopted the Company s 2023 Employment Inducement Incentive Award Plan (the Inducement Plan ) for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSU s, dividend equivalents and other stock or cash-based awards to prospective employees. The Board reserved 477,661 shares of the Company s common stock for issuance pursuant to the awards granted under the Inducement Plan. Effective as of June 15, 2023, the Company appointed Mark Goldston as Executive Chairman, replacing the service of Mr. Daikeler in his capacity as Chairman of the Board. Mr. Daikeler continues to serve as the F-6 Table of Contents Schedule I The Beachbody Company, Inc. (Parent Company Only) Condensed Statement of Operations and Comprehensive Loss (in thousands) Year Ended December 31, 2023 Change in fair value of warrant liabilities $ 2,679 Other income 127 Equity in net loss of subsidiaries (155,507 ) Net loss and total comprehensive loss $ (152,701 ) See note to condensed financial statements. F-7 Table of Contents purchase up to 122,821 shares of Class A Common Stock at a pre-funded purchase price of $9.7499 per share and an exercise price of $0.0001 per share with certain institutional investors in a registered direct offering. The Company received proceeds of $4.9 million, net of placement agent fees. The Company also issued 543,590 Common Warrants to purchase 543,590 shares of Class A Common Stock at an exercise price of $11.24 per share in a concurrent private placement (collectively, the Registered Direct Offering ). On January 12, 2024, the investor exercised all of the pre-funded warrants and converted them into 122,821 shares of the Company s Class A Common Stock. Reverse Stock Split On November 21, 2023, we effected a 1-for-50 reverse stock split of our issued and outstanding common stock. The reverse stock split did not change the authorized number of shares or the par value of our common stock or preferred stock, but did effect a proportional adjustment to the number of shares of common stock outstanding, per share exercise price and the number of shares of common stock issuable upon the exercise of outstanding stock options, the number of shares of common stock issuable upon the vesting of restricted stock awards ( RSU s ), the number of shares of common stock under the Employee Stock Purchase Plan (the ESPP ), the conversion rate of our outstanding warrants into common stock and the number of shares of common stock eligible for issuance under our 2021 Stock Plan (the 2021 Plan ). Goodwill and Intangible Asset Impairment Our annual goodwill impairment test, which was performed as of December 31, 2023, determined that our goodwill was impaired and we recorded goodwill impairment of $40.0 million in the year ended December 31, 2023. We also determined as of December 31, 2023 that our intangible assets were impaired and we recorded an intangible asset impairment of $3.1 million in the year ended December 31, 2023. Impairment and Sale of Investment In December 2023, the Company recorded a $4.0 million impairment on its $5.0 million investment in equity securities of a privately-held company based on an observable price change. The Company sold this investment on January 9, 2024 for $1.0 million and made a partial prepayment on the Term Loan (as defined below) of $1.0 million. On January 9, 2024 (the Consent Effective Date ), the Company and Blue Torch entered into Consent No. 1 and Amendment No. 3 to the Financing Agreement (the Third Amendment ), which among other things, amended the minimum liquidity financial covenant. Sale/Leaseback of Property On February 29, 2024, we sold our Van Nuys production facility which had a net carrying value of $4.8 million at December 31, 2023, for $6.2 million. Simultaneous with the sale we entered into a five year lease of the facility at an annual base rate of $0.3 million per year. The Company used the proceeds received from the sale to make a partial prepayment of $5.5 million on the Term Loan. On February 29, 2024, the Company and Blue Torch entered into Consent No. 2 and Amendment No. 4 to the Financing Agreement (the Fourth Amendment ), which among other things, amended the minimum liquidity financial covenant. 2024 Restructuring In January 2024, the Company executed cost-reduction initiatives primarily related to the Company s key initiatives. These actions resulted in approximately $1.6 million in costs consisting primarily of termination benefits during the first quarter of 2024. Table of Contents December 31, 2022 Level 1 Level 2 Level 3 Assets Derivative assets $ $ 462 $ Total assets $ $ 462 $ Liabilities Public Warrants $ 415 $ $ Private Placement Warrants 107 Term Loan Warrants 1,226 Total liabilities $ 415 $ $ 1,333 Fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their recorded values due to the short period of time to maturity. Restricted short-term investments of $4.3 million at December 31, 2023 consist of a one-year certificate of deposit ( CD ) that matures on July 26, 2024 with an interest rate of 4.8%, which is restricted due to a contractual agreement. The fair value of the Public Warrants, which traded in active markets until November 24, 2023, was based on quoted market prices during the period it was traded in active markets. The fair value of derivative instruments is based on Level 2 inputs such as observable forward rates, spot rates, and foreign currency exchange rates. The Company s Private Placement Warrants, Term Loan Warrants and Common Stock Warrants, and the Company s Public Warrants after they ceased trading on an active market, are classified within Level 3 of the fair value hierarchy because their fair values are based on significant inputs that are unobservable in the market. Private Placement Warrants The Company determined the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of the Company s Class A common stock. Volatility was based on the implied volatility derived from the Company s historical volatility. The expected life was based on the remaining contractual term of the Private Placement Warrants, and the risk-free interest rate was based on the implied yield available on U.S. treasury securities with a maturity equivalent to the Private Placement Warrants expected life. The significant unobservable input used in the fair value measurement of the Private Placement Warrants is the implied volatility. Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively. The following table presents significant assumptions utilized in the valuation of the Private Placement Warrants on December 31, 2023 and 2022: As of December 31, 2023 2022 Risk-free rate 4.1 % 4.2 % Dividend yield rate Volatility 97.6 % 75.0 % Contractual term (in years) 2.48 3.49 Exercise price $ 575.00 $ 575.00 F-4 Table of Contents Company s CEO and as a director. In connection with the employment offer letter to Mr. Goldston, he was granted a stock option under the Inducement Plan, covering an aggregate of 477,661 shares of the Company s Class A common stock, par value $0.0001 per share (the Option ). Of this amount, 159,221 shares subject to the Option will vest based on continued service (the Time-Vesting Options ) and 318,440 shares will vest based on the attainment of applicable performance goals and continued service (the Performance-Vesting Options ). The Time-Vesting Options will vest and become exercisable with respect to 25% of the Time-Vesting Options subject to the Option on each of the first four anniversaries of June 15, 2023. The Performance-Vesting Options will vest and become exercisable based on both (1) the achievement of pre-determined price per share goals and (2) Mr. Goldston s service through the applicable vesting date. Any earned Performance-Vesting Options will vest and become exercisable as of the later of (1) June 15, 2024, and (2) the date on which the applicable price per share goal is achieved. The weighted average exercise price of the Performance-Vesting Options was $22.02 per option and none of the Performance-Vesting Options were exercisable as of December 31, 2023. Vesting tranche Number of Performance -Vesting Options Price per share goal Tranche 1 79,610 $ 50.00 Tranche 2 79,610 $ 75.00 Tranche 3 79,610 $ 100.00 Tranche 4 79,610 $ 125.00 The share price is measured by averaging the fair market value (as defined in the Inducement Plan) per share over any 30 consecutive trading-day period. Employee Stock Purchase Plan In May 2022, the Company established an ESPP, the terms of which allow for qualified employees to participate in the purchase of designated shares of the Company s common stock at a price equal to 85% of the lower of the closing price at the beginning or ending of each six-month purchase period. The number of shares of Class A common stock available under the ESPP is increased on January 1 of each calendar year beginning on January 1, 2022 and ending on January 1, 2031 by an amount equal to the lesser of (i) 1% of the total number of shares of Class A and Class X common stock outstanding as of the final day of the immediately preceding calendar year and (ii) the number of shares determined by the Company s Board. As of December 31, 2023, 137,976 shares of Class A common stock remain available for issuance under the ESPP. During the year ended December 31, 2023, 47,257 shares of the Company s common stock were issued pursuant to the ESPP at an average price of $13.78 per share. Stock-based compensation expense associated with the Company s ESPP is based on fair value estimated on the date of grant using the Black-Scholes option pricing valuation model and the following weighted-average assumptions for grants during the year ended December 31, 2023: December 31, 2023 Weighted-average risk-free rate 4.7 % Dividend yield rate Weighted-average volatility 54.4 % Expected term (in years) 0.50 Weighted-average grant date fair value $ 5.32 Compensation Warrants During the year ended December 31, 2020, the Company issued warrants for the purchase of 79,612 of the Company s Class A common stock at an exercise price of $126.00 per share. These warrants vest 25% at the F-6 Table of Contents Schedule I The Beachbody Company, Inc. (Parent Company Only) Condensed Statement of Cash Flows (in thousands) Year Ended December 31, 2023 Cash flows from operating activities: Net loss $ (152,701 ) Adjustments to reconcile net loss to net cash provided by operating activities: Change in fair value of warrant liabilities (2,679 ) Equity in net loss of subsidiaries 155,507 Changes in operating assets and liabilities: Prepaid expenses 8 Accrued expenses 9 Net cash provided by operating activities 144 Cash flows from investing activities: Net cash used in investing activities Cash flows from financing activities: Decrease in due to subsidiaries (8,299 ) Proceeds from issuance of common shares in the Employee Stock Purchase Plan 553 Tax withholdings payments for vesting of restricted stock (2,178 ) Proceeds from issuance of Equity Offering, net of issuance costs 4,908 Net cash used in financing activities (5,016 ) Net decrease in cash and cash equivalents (4,872 ) Cash and cash equivalents, beginning of year 4,897 Cash and cash equivalents, end of year $ 25 See note to condensed financial statements. F-7 Table of Contents Amendment to Financing Agreement and Blue Torch Warrants On April 5, 2024, the Company and Blue Torch entered into Amendment No. 5 to the Financing Agreement (the Fifth Amendment ), which among other things, amended the minimum revenue financial covenant and the minimum liquidity financial covenant. In connection with the Fifth Amendment, the Company also amended and restated the warrants to purchase 97,482 shares of the Company s Class A Common Stock, originally issued to affiliates of Blue Torch (the Blue Torch Warrants ) (the Warrant Second Amendment ). The Warrant Second Amendment amends the exercise price of the warrants from $20.50 per share of Class A Common Stock to $9.16 per share. Risk Factors Summary of Risk Factors If we are unable to anticipate and satisfy consumer preferences and shifting views of health, fitness and nutrition, our business may be adversely affected. If we are unable to sustain pricing levels for our products and services, our business could be adversely affected. Our success depends on our ability to maintain the value and reputation of our brands. The perception of the effects or value of our products may change over time, which could reduce customer demand. We may not successfully execute or achieve the expected benefits of our strategic alignment initiatives and other cost-saving measures we may take in the future, and our efforts may result in further actions and/or additional asset impairment charges and adversely affect our business. Our marketing strategy relies on the use of social media platforms and any negative publicity on such social media platforms may adversely affect the public perception of our brand, and changing terms or conditions or ways in which advertisers use their platforms may adversely affect our ability to engage with customers. We may be unable to attract and retain customers, which would materially and adversely affect our business, results of operations and financial condition. Our customers use their connected fitness products and fitness accessories to track and record their workouts. If our products fail to provide accurate metrics and data to our customers, our brand and reputation could be harmed and we may be unable to retain our customers. Our business relies on sales of a few key products. If there are any material delays or disruptions in our supply chain, or errors in forecasting of the demand for our products and services, our business may be adversely affected. The failure or inability of our contract manufacturers to comply with the specifications and requirements of our products could result in product recall, which could adversely affect our reputation and subject us to significant liability should the consumption of any of our products cause or be claimed to cause illness or physical harm. If any of our products are unacceptable to us or our customers, or any other change in the competitive landscape and activities of our competitors, our business could be harmed. Our business model relies on high quality customer service, and any negative impressions of our customer service experience may adversely affect our business and result in harm to our reputation. Table of Contents adjustments to the carrying value of inventory based on assumptions regarding future demand for the Company s products, anticipated margin, planned product discontinuances, and the physical condition (e.g. age and quality) of the inventory. Accounts Receivable, Net (included in Other Current Assets) The Company s accounts receivable primarily represents amounts due from third party sales. The allowance for credit losses is based on several factors, including the length of time accounts receivable are past due, the Company s previous loss history, the specific customer s ability to pay its obligations and any other forward looking data regarding customers ability to pay which may be available. Content Assets, Net The Company capitalizes costs associated with the development and production of programs on its streaming platforms. The Company capitalizes production costs as customer usage and retention data supports that future revenue will be earned. These costs are classified as non-current assets in the consolidated balance sheets. Content assets are predominantly monetized as a film group and are amortized over the estimated useful life based on projected usage, which has been derived from historical viewing patterns, resulting in an accelerated amortization pattern. Amortization begins when the program is first available for streaming by customers and is recorded in the consolidated statements of operations as a component of digital cost of revenue. When an event or change in circumstances indicates a change in projected usage, content assets are reviewed for potential impairment in aggregate at a group level. To date, the Company has not identified any such event or changes in circumstances. Property and Equipment, Net Property and equipment, which includes computer software and web development costs, are recorded at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets, which primarily range from two to seven years and up to 39 years for buildings. Leasehold improvements are depreciated over the shorter of the life of the assets or the remaining life of the related lease. Costs of maintenance, repairs, and minor replacements are expensed when incurred, while expenditures for major renewals and betterments that extend the useful life of an asset or provide additional utility are capitalized. Software and web development projects in-process consist primarily of costs associated with internally developed software that has not yet been placed into service. The Company capitalizes eligible costs to acquire, develop, or modify internal-use software that are incurred subsequent to the preliminary project stage. Depreciation of these assets begins upon the initial usage of the software. When property is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in net income (loss). Business Combinations The Company accounts for business combinations under the acquisition method of accounting. The cost of an acquired company is assigned to the tangible and identifiable assets purchased and the liabilities assumed on the basis of their fair values at the date of acquisition. Any excess of the purchase price over the fair value of tangible and intangible assets acquired is assigned to goodwill. The transaction costs associated with business combinations are expensed as they are incurred. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the fair value of the consideration transferred in a business combination over the fair value of the underlying identifiable assets and liabilities acquired. Goodwill and intangible assets deemed F-3 Table of Contents The following table presents changes in the fair value of the Private Placement Warrants for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Balance, beginning of period $ 107 $ 2,133 Change in fair value (98 ) (2,026 ) Balance, end of period $ 9 $ 107 For the years ended December 31, 2023 and 2022, the change in the fair value of the Private Placement Warrants resulted from the change in price of the Company s Class A common stock, remaining contractual term, and risk-free rate. The changes in fair value are included in the consolidated statements of operations as a component of change in fair value of warrant liabilities and in the consolidated balance sheets as other liabilities. Public Warrants The Company determined the fair value of the Public Warrants, which traded in active markets until November 24, 2023, based on quoted market prices during the period it was traded in active markets. The Company determined the fair value of the Public Warrants after November 24, 2023 using a Black-Scholes option-pricing model and the quoted price of the Company s Class A common stock. Volatility was based on the implied volatility derived primarily from the Company s historical volatility. The expected life was based on the remaining contractual term of the Public Warrants, and the risk-free interest rate was based on the implied yield available on U.S. treasury securities with a maturity equivalent to the Public Warrants expected life. The significant unobservable input used in the fair value measurement of the Public Warrants is the implied volatility. Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively. The following table presents significant assumptions utilized in the valuation of the Public Warrants on December 31, 2023: As of December 31, 2023 Risk-free rate 4.1 % Dividend yield rate Volatility 97.6 % Contractual term (in years) 2.48 Exercise price $ 575.00 The following table presents changes in the fair value of the Public Warrants for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Balance, beginning of period $ 415 $ 2,701 Change in fair value (398 ) (2,286 ) Balance, end of period $ 17 $ 415 For the years ended December 31, 2023 and 2022, the change in the fair value of the Public Warrants resulted from the change in price of the Public Warrants as traded on an active market and after November 24, 2023 the change in the fair value of the Public Warrants resulted from the change in price of the Company s Class A F-4 Table of Contents The Financing Agreement also contains customary representations, warranties, and covenants, which include, but are not limited to, restrictions on indebtedness, liens, payment of dividends, restricted payments, asset sales, affiliate transactions, changes in line of business, investments, negative pledges and amendments to organizational documents and material contracts. The Financing Agreement contains customary events of default, which among other things include (subject to certain exceptions and cure periods): (1) failure to pay principal, interest, or any fees or certain other amounts when due; (2) breach of any representation or warranty, covenant, or other agreement in the Financing Agreement and other related loan documents; (3) the occurrence of a bankruptcy or insolvency proceeding with respect to any Loan Party; (4) any failure by a Loan Party to make a payment with respect to indebtedness having an aggregate principal amount in excess of a specified threshold; and (5) certain other customary events of default. In connection with the Term Loan, the Company issued to certain holders affiliated with Blue Torch warrants for the purchase of 94,335 shares of the Company s Class A common stock at an exercise price of $92.50 per share. The Term Loan Warrants vest on a monthly basis over four years, with 30%, 30%, 20% and 20% vesting in the first, second, third and fourth years, respectively. The Term Loan Warrants have a seven-year term from the Effective Date. See Note 3, Fair Value Measurements , for information on the valuation of the Term Loan Warrants. The Term Loan Warrants were recorded in the consolidated balance sheet as warrant liabilities. The initial fair value of the Term Loan Warrants of $5.2 million, is being amortized as a debt discount over the term of the Term Loan using the effective interest method. In connection with the Second Amendment, the Company also amended and restated the Term Loan Warrants. The amendment of the Term Loan Warrants amended the exercise price from $92.50 per share to $20.50 per share. The amended exercise price increased the fair value of the Term Loan Warrants as of the Second Amendment Effective Date by $0.8 million and was recorded as of the Second Amendment Effective Date as an incremental debt discount, and in addition to the remaining debt discount, is being amortized over the amended term of the Term Loan using the effective-interest method. In connection with the Equity Offering (defined later), the Term Loan Warrants conversion ratio was amended resulting in an increase in the number of shares purchased upon the exercise of the Term Loan Warrants to 97,482 shares of the Company s Class A common stock. The aggregate amounts of payments due for the periods succeeding December 31, 2023 and reconciliation of the Company s debt balances, net of debt discount and debt issuance costs, are as follows (in thousands): Year ending December 31, 2024 $ 8,068 Year ending December 31, 2025 2,500 Year ending December 31, 2026 24,527 Total debt 35,095 Less current portion (8,068 ) Less unamortized debt discount and debt issuance costs (5,960 ) Add capitalized paid-in-kind interest 424 Total long-term debt $ 21,491 The payments in the year ending December 31, 2024 include a partial prepayment of $1.0 million which was paid on January 9, 2024 as part of the Third Amendment and a partial prepayment of $5.5 million which was paid on February 29, 2024 as part of the Fourth Amendment. See Note 23, Subsequent Events , for more information on the amendments to the Term Loan. Principal payments on the Term Loan are $1.3 million per year from the Effective Date to September 30, 2024, payable on a quarterly basis, and thereafter, are $2.5 million per year, payable on a quarterly basis with the remaining principal amount due on the maturity date of February 8, 2026. At December 31, 2023 the Company had one irrevocable standby letter of credit outstanding, totaling $0.1 million which is collateralized by $0.1 million of cash. This letter of credit expires on December 6, 2024 F-5 Table of Contents grant date and 25% at each of the first, second, and third anniversaries of the grant date. The warrants have a 10-year contractual term. As of December 31, 2023, 79,612 warrants were exercisable. Compensation cost associated with the warrants was recognized over the requisite service period, which was 4.25 years. Repricing of Stock Options The Company determined that a significant portion of its outstanding stock options had an exercise price per share that was significantly higher than the current fair market value of the Company s common stock (the Underwater Options ). In order to help retain and motivate holders of Underwater Options, and align their interests with those of stockholders, on September 14, 2023, the Compensation Committee of the Board resolved that it was in the best interests of the Company and its stockholders to amend certain of the Underwater Options (the Amended Underwater Options ) for current employees and consultants of the Company that were either (1) not maturing in fiscal 2023 or (2) that had not been issued at an exercise price of less than $50 in the prior twelve months, to reduce the exercise price of each Amended Underwater Option to the closing per share price of the Company s common stock on September 14, 2023 (the Repricing ). The Company had 531,515 Amended Underwater Options which had their exercise price amended to $17.35 per option. Excluded from the Repricing were, among others, Underwater Options held by members of the Board, the Company s CEO and Executive Chairman; any Underwater Options with an exercise price less than $50.00; and options granted to consultants who are no longer providing services to the Company. Except for the modification of the exercise price, all other terms and conditions of the Amended Underwater Options remain in effect. The Company determined that the Repricing represented a modification of share-based awards under ASC 718. Accordingly, the Company recognized incremental stock-based compensation of $1.6 million which was recorded as of the Repricing, related to 255,174 vested Amended Underwater Options as of the Repricing. As of the Repricing $1.5 million incremental unrecognized compensation expense related to 276,341 unvested Amended Underwater Options will be recognized as expense over the requisite service period in which the options vest, or 1.6 years. Equity-Based Compensation Expense Equity-based compensation expense, which also includes the Repricing and modifications for the years ended December 31, 2023 and 2022 was as follows (in thousands): Year Ended December 31, 2023 2022 Cost of revenue $ 2,992 $ 1,416 Selling and marketing 9,852 7,015 Enterprise technology and development 1,330 1,403 General and administrative 9,717 7,786 Total equity-based compensation $ 23,891 $ 17,620 As of December 31, 2023, the total unrecognized equity-based compensation expense was $33.1 million, which will be recognized over a weighted-average remaining period of 2.41 years. In connection with the restructuring activities that took place during the year ended December 31, 2023, the Company modified certain stock awards of terminated employees (approximately 25 employees in the three month period ended September 30, 2023 and approximately 100 employees in the three months ended March 31, 2023). The modifications included accelerating the vesting of any options that would have vested within three F-6 Table of Contents Note to Condensed Financial Statements of The Beachbody Company, Inc. (Parent Company Only) Basis of Presentation These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of The Beachbody Company, Inc. (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed the specified threshold amount of the consolidated net assets of the Company. The ability of The Beachbody Company, Inc. s operating subsidiaries to pay dividends may be restricted due to the terms of the subsidiaries outstanding Term Loan as described in Note 11, Debt , to the audited consolidated financial statements. These condensed parent company-only financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. These condensed parent company-only financial statements should be read in conjunction with the consolidated financial statements and related notes. The Company has omitted the condensed parent company only consolidated financial statements as of and for the year ended December 31, 2022 since the Financing Agreement was only in place for a portion of the year ended December 31, 2022 and would therefore not be meaningful. Note 23. Subsequent Events As mentioned in Note 1, Description of Business and Summary of Significant Accounting Policies and Note 11, Debt, on January 9, 2024, the Company sold its investment in equity securities of a privately-held company for $1.0 million. On the Consent Effective Date, the Company made a partial prepayment of $1.0 million on the Term Loan (which amount was classified as a current obligation at December 31, 2023) and the related prepayment premium of 3%. The amounts related to this partial prepayment will be recorded in the quarter ending March 31, 2024. As mentioned in Note 11, Debt , the Company on the Consent Effective Date entered into the Third Amendment, which among other things, (i) consents to the sale of certain assets by the Company and (ii) amends certain terms of the Financing Agreement, including without limitation, the minimum liquidity financial covenants thereunder, such that the minimum liquidity levels shall be (1) $19.0 million at all times from the Consent Effective Date through and including March 31, 2024 and (2) $24.0 million at all times thereafter through the maturity of the Term Loan. As mentioned in Note 6, Property and Equipment, Net , Note 11, Debt and Note 12, Leases , on February 29, 2024, the Company sold its Van Nuys production facility which had a net carrying value of $4.8 million at December 31, 2023, for $6.2 million. Simultaneous with the sale, the Company entered into a five year lease of the facility, with two options to extend the lease for a period of three years each. The lease has an annual base rate of $0.3 million which increases by 3% each year. The Company used the net proceeds received from the sale to make a partial prepayment of $5.5 million on the Term Loan (which was classified as a current obligation as of December 31, 2023) and the related prepayment premium of 3%. The amounts related to the sale of the facility and the partial prepayment will be recorded in the quarter ended March 31, 2024. The facility served as collateral on the Term Loan, which required the Company to obtain the approval of Blue Torch to sell the facility. The approval to sell the facility from Blue Torch was not obtained until February 2024. As mentioned in Note 11, Debt , the Company on February 29, 2024 entered into the Fourth Amendment which among other things, (1) consents to the sale of certain assets by the Company and (2) amends certain terms of the Financing Agreement, including without limitation, the minimum liquidity financial covenant thereunder, such that the minimum liquidity levels shall be (1) $17.0 million at all times from February 29, 2024 through and including March 31, 2024 and (2) $22.0 million at all times thereafter through the maturity of the Term Loan. F-7 Table of Contents The seasonal nature of our business could cause operating results to fluctuate. If we fail to obtain and retain high-profile strategic relationships, or if the reputation of any of these parties is impaired, our business may suffer. Our co-founder has control over all stockholder decisions because he controls a substantial majority of our voting power through super voting stock. Our financing agreement restricts our current and future operations and our ability to engage in certain business and financial transactions and may adversely affect our business. Our ability to generate the significant amount of cash needed to pay interest and principal on our indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control. There can be no assurance that we can further penetrate existing markets or that we can successfully expand our business into new markets. We may expand into international markets, which would expose us to significant risks. The price of shares of our Class A Common Stock may experience volatility and the market price of our Class A Common Stock after this offering may drop below the price you pay. You may experience future dilution as a result of future equity offerings or other equity issuances. The number of shares of our Class A Common Stock available for future issuance or resale could adversely affect the market price of our Class A Common Stock. Because we do not expect to declare cash dividends on our Class A Common Stock in the foreseeable future, shareholders must rely on appreciation of the value of our Class A Common Stock for any return on their investment. We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition and results of operations. We collect, store, process, and use personal information and other customer data which subjects us to legal obligations and laws and regulations related to data security and privacy, and any actual or perceived failure to meet those obligations could harm our business. Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations. If we suffer a security breach or otherwise fail to properly maintain the confidentiality and integrity of our data, including customer credit card, debit card and bank account information, our reputation and business could be materially and adversely affected. We face risks, such as unforeseen costs and potential liability in connection with allegations of injuries arising from equipment we supply and content we produce, license, advertise, and distribute through our various content delivery platforms. Our nutritional products must comply with regulations of the Food and Drug Administration, ( FDA ), as well as state, local and applicable international regulations. Any non-compliance with the FDA or other applicable regulations could harm our business. Table of Contents to have an indefinite life are not amortized. Instead, goodwill and indefinite-lived intangible assets are assessed for impairment annually or more frequently if an event or change in circumstances occurs that, with respect to goodwill, would more likely than not reduce the fair value of a reporting unit ( RU ) below its carrying value or, for indefinite-lived intangible assets, indicate that it is more likely than not that the asset is impaired. The Company has historically performed its annual goodwill impairment assessment as of October 1. During the fourth quarter of 2023, the Company decided to change the date of its annual impairment assessment from October 1 to December 31. The Company completed the required annual impairment test for goodwill as of October 1, 2023, prior to the change of the annual impairment test for goodwill to December 31. The change was made to more closely align the impairment assessment date with the Company s annual planning and forecasting process. The change in date of the annual impairment test is not deemed material as the new measurement date of December 31 is in relative close proximity to the previous measurement date and the change did not have any impact on goodwill or the impairment of goodwill. The change has been applied prospectively and would not have had an impact on a retrospective basis. As of December 31, 2023 and 2022, the Company had no indefinite-lived intangible assets. Long-Lived Assets Management reviews long-lived assets (including property and equipment, content assets, and definite-lived intangible assets) for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Recoverability of assets is determined by first grouping the long-lived assets at the lowest level for which there are identifiable cash flows, and then comparing the carrying value of each asset group to its forecasted undiscounted cash flows. If the forecasted undiscounted cash flows indicates that the carrying value of the assets is not recoverable, an impairment test of the asset group is performed. Impairment is recognized if the carrying amount of the asset group exceeds its fair value. As of December 31, 2023 and 2022, the Company s long-lived assets were located in the U.S. Leases The Company accounts for its leases of administrative offices and production studios under ASC 842, Leases ; the Company does not have any leases where it acts as a lessor as of December 31, 2023. Under this guidance, arrangements meeting the definition of a lease are classified as operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee and are recorded on the consolidated balance sheets as both a right-of-use ( ROU ) asset and lease liability, calculated by discounting fixed lease payments over the lease term at the discount rate implicit in the lease or the Company s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset results in straight-lined rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the ROU asset and lease liability, the Company elected the practical expedient to combine lease and non-lease components. Rental income on subleases is recognized on a straight-line basis over the estimated lease term. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election and instead recognizes rent expense on a straight-line basis over the lease term for such leases. Warrant Liabilities The Company has issued warrants on several occasions including during its initial public offering process, the execution of its Term Loan (defined later) and in the Equity Offering (defined later), which have not met the criteria to be classified in stockholders equity. F-3 Table of Contents common stock, remaining contractual term, and risk-free rate. The changes in fair value are included in the consolidated statements of operations as a component of change in fair value of warrant liabilities and in the consolidated balance sheets as other liabilities. Common Stock Warrants The Company determined the fair value of the Common Stock Warrants, which were issued on December 13, 2023, using a Black-Scholes option-pricing model and the quoted price of the Company s Class A common stock. Volatility was based on the implied volatility derived from the average of the actual market activity of the Company s peer group and the Company s historical volatility. The expected life was based on the remaining contractual term of the Common Stock Warrants, and the risk-free interest rate was based on the implied yield available on U.S. treasury securities with a maturity equivalent to the Common Stock Warrants expected life. The significant unobservable input used in the fair value measurement of the Common Stock Warrants is the implied volatility. Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively. The following table presents significant assumptions utilized in the valuation of the Common Stock Warrants on December 31, 2023: As of December 31, 2023 Risk-free rate 3.8 % Dividend yield rate Volatility 75.2 % Contractual term (in years) 5.44 Exercise price $ 11.24 The following table presents changes in the fair value of the Common Stock Warrants for the year ended December 31, 2023 (in thousands): Year ended December 31, 2023 Balance, beginning of year $ Issued in connection with Equity Offering 3,255 Change in fair value (548 ) Balance, end of year $ 2,707 For the year ended December 31, 2023, the change in the fair value of the Common Stock Warrants for the period from December 13, 2023 (the date they were issued) to December 31, 2023 resulted from the change in price of the Company s Class A common stock, remaining contractual term, and risk-free rate. The changes in fair value are included in the consolidated statements of operations as a component of change in fair value of warrant liabilities and in the consolidated balance sheets as other liabilities. Term Loan Warrants The Company determined the fair value of the Term Loan Warrants using a Black-Scholes option-pricing model and the quoted price of the Company s Class A common stock. Volatility was based on the implied volatility derived from the average of the actual market activity of the Company s peer group and the Company s historical volatility. The expected life was based on the remaining contractual term of the Term Loan Warrants, and the risk-free interest rate was based on the implied yield available on U.S. treasury securities with a maturity equivalent to the Term Loan Warrants expected life. The significant unobservable input used in the fair value F-4 Table of Contents and is automatically extended for one-year terms unless notice of non-renewal is provided 60 days prior to the end of the applicable term. At December 31, 2023, the cash collateralizing this letter of credit is classified as current restricted cash in our consolidated balance sheet. Note 12. Leases The Company leases facilities under noncancelable operating leases expiring through 2027 and certain equipment under a finance lease expiring in 2024. As of December 31, 2023 and 2022, the Company had operating lease liabilities of $3.3 million and $5.3 million respectively, and ROU assets of $3.1 million and $5.0 million, respectively. As of December 31, 2023 and 2022, the Company had finance lease liabilities of approximately zero and $0.1 million, respectively, and ROU assets of approximately zero and $0.1 million, respectively. The Company s leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of lease liabilities and ROU assets as the Company is not reasonably certain to exercise these options. Variable expenses generally represent the Company s share of the landlord operating expenses. The following summarizes the Company s leases (in thousands): Year Ended December 31, 2023 2022 Finance lease costs: Amortization of right-of-use asset $ 73 $ 192 Interest on lease liabilities 2 8 Operating lease costs 2,097 2,150 Short-term lease costs 18 202 Variable lease costs 301 566 Short-term sublease income (32 ) (127 ) Total lease costs $ 2,459 $ 2,991 Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 2 $ 8 Operating cash flows from operating leases 2,319 2,195 Financing cash flows from finance leases 121 153 Right-of-use asset obtained in exchange for new operating lease liabilities 420 Weighted-average remaining lease term finance leases 0.3 1.3 Weighted-average remaining lease term operating leases 2.3 2.9 Weighted-average discount rate finance leases 4.0 % 4.0 % Weighted-average discount rate operating leases 4.1 % 4.5 % F-5 Table of Contents months of the employees termination date, and all vested options will be available for exercise for a total of six months after the employees termination date (that is, three months in addition to the standard three months per the original agreement). As a result of these modifications, the Company recognized approximately $1.0 million reduction to equity-based compensation expense within general and administrative expense in the consolidated statements of operations for the year ended December 31, 2023. The fair value of each award that vests solely based on time as of the date of grant is estimated using a Black-Scholes option-pricing model. The following table summarizes the weighted average assumptions used to determine the fair value of time vested option grants: December 31, 2023 2022 Risk-free rate 3.9 % 3.0 % Dividend yield rate Volatility 62.2 % 52.9 % Expected term (in years) 5.18 6.16 Weighted-average grant date fair value $ 13.65 $ 31.50 The vesting periods are based on the terms of the option grant agreements, generally four to five years. The risk-free interest rates are based on the U.S. Treasury rates as of the grant dates for the expected terms of the options. The price volatilities represent calculated values based on the historical price volatilities of publicly traded companies within the Company s industry group and the Company s historical volatility over the options expected terms. The expected terms of the options granted were estimated using the simplified method by taking an average of the vesting periods and the original contractual terms. The fair value of the Performance-Vesting Options as of the date of grant is estimated using a Monte Carlo simulation. The following table summarizes the weighted average assumptions used to determine the fair value of the Performance-Vesting Options: December 31, 2023 Risk-free rate 3.7 % Dividend yield rate Volatility 53.7 % Expected term (in years) 10.00 Weighted-average grant date fair value $ 13.00 The vesting periods are based on the terms of the option grant agreements, generally four to five years. The risk-free interest rates are based on the U.S. Treasury rates as of the grant dates for the expected terms of the options. The price volatilities represent calculated values based on the historical price volatilities of publicly traded companies within the Company s industry group and the Company s historical volatility over the options expected terms. The expected terms of the options granted were estimated using the simplified method by taking an average of the vesting periods and the original contractual terms. Note 17. Derivative Financial Instruments As of December 31, 2023 and 2022, the notional amount of the Company s outstanding foreign exchange options was $4.4 million and $17.6 million, respectively. In the year ended December 31, 2023, management made a determination to cease entering into any further foreign exchange options at this time, which resulted in the decrease in the notional amount of the Company s outstanding foreign exchange options at December 31, 2023. The Company s foreign exchange options outstanding at December 31, 2023 will all expire prior to March 31, 2024. There were no outstanding forward contracts as of December 31, 2023 and 2022. F-6 Table of Contents After the prepayments on January 9, 2024 and February 29, 2024, the principal amount outstanding on the Term Loan was $28.6 million. As mentioned in Note 14, Restructuring , in January 2024, the Company executed cost-reduction initiatives intended to streamline the business. These actions are expected to result in approximately $1.7 million in costs consisting primarily of termination benefits during the first quarter of 2024. F-7 Table of Contents Our network of micro-influencers, whom we call Partners , could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could have a material adverse effect on our business. Our products or services offered as part of automatically renewing subscriptions or memberships could be found not to be in compliance with laws or regulations in one or more markets, which could have a material adverse effect on our business. Our BODi Bikes and other products may be subject to warranty claims, recalls or intellectual property disputes that could result in significant direct or indirect costs, each of which could have an adverse effect on our business, financial condition, and results of operations. Table of Contents Public and Private Placement Warrants The Company has outstanding warrants for the purchase of 200,000 shares of the Company s Class A common stock at an exercise price of $575.00 per share (the Public Warrants ) and outstanding warrants for the purchase of 106,667 shares of the Company s Class A common stock at an exercise price of $575.00 per share (the Private Placement Warrants ). All of the Public and Private Placement Warrants remained outstanding as of December 31, 2023 and 2022. The Public Warrants were publicly traded on the New York Stock Exchange (the NYSE ) but were delisted by the NYSE on November 24, 2023 due to their abnormally low price levels. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis, as described in the warrant agreement. In no event will the Company be required to net cash settle any warrant. The Private Placement Warrants are transferable, assignable or salable in certain limited exceptions. The Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will cease to be Private Placement Warrants and will become Public Warrants, and will be redeemable by the Company and exercisable by such holders on the same basis as the other Public Warrants. Term Loan Warrants In connection with the Term Loan (defined later), the Company issued warrants for the purchase of 94,335 shares of the Company s Class A common stock at an exercise price of $92.50 per share to certain holders affiliated with Blue Torch Finance, LLC (the Term Loan Warrants ). In connection with the Second Amendment (defined later), the Company also amended and restated the Term Loan Warrants. The amendment of the Term Loan Warrants amended the exercise price from $92.50 per share to $20.50 per share. The Term Loan warrants vest on a monthly basis over four years and have a seven-year term. In connection with the Equity Offering (defined later), the Term Loan Warrants conversion ratio was amended resulting in an increase in the number of shares purchased upon the exercise of the Term Loan Warrants to 97,482 shares of the Company s Class A common stock. Common Stock Warrants In connection with the Equity Offering (defined later), the Company issued warrants (the Common Stock Warrants ) to certain institutional investors to purchase 543,590 shares of Class A common stock at an exercise price of $11.24 per share. The Common Stock Warrants may be exercised at any time beginning June 13, 2024 and will expire on June 13, 2029. See Note 15, Stockholders Equity , for additional information on the Equity Offering and the Common Stock Warrants. The Company evaluated the Public, Private Placement, Term Loan and Common Stock Warrants (collectively, the Warrants ) under ASC 815, Derivatives and Hedging Contracts in Entity s Own Equity , and concluded they do not meet the criteria to be classified in stockholders equity. Since the Warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as other liabilities in the consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the change in fair value of warrant liabilities within the consolidated statements of operations at each reporting date. The Public Warrants were publicly traded until November 24, 2023, when they were delisted by the NYSE due to the NYSE s determination that the Public Warrants were no longer suitable for listing, and thus had an observable market price to estimate fair value until the date that they were delisted. The Private Placement, Term Loan and Common Stock Warrants, as well as the Public Warrants after the date they were delisted, are valued using a Black-Scholes option-pricing model as described in Note 3, Fair Value Measurements to the consolidated financial statements. The change in the fair values of the Warrants for the years ended December 31, 2023 and 2022, resulted in a $2.7 million and $8.3 million non-cash change in fair value gain in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively. F-3 Table of Contents measurement of the Term Loan Warrants is the implied volatility. Significant changes in the implied volatility would result in a significantly higher or lower fair value measurement, respectively. See Note 11, Debt , for additional information regarding the Term Loan Warrants. The following table presents significant assumptions utilized in the valuation of the Term Loan Warrants at December 31, 2023 and 2022: As of December 31, 2023 2022 Risk-free rate 3.8 % 4.0 % Dividend yield rate Volatility 74.5 % 75.0 % Contractual term (in years) 5.60 6.61 Exercise price $ 20.50 $ 92.50 The following table presents changes in the fair value of the Term Loan Warrants for the year ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Balance, beginning of year $ 1,226 $ Issued in connection with Term Loan 5,236 Amended in connection with Second Amendment 802 Change in fair value (1,636 ) (4,010 ) Balance, end of year $ 392 $ 1,226 For the year ended December 31, 2023, the change in the balance of the Term Loan Warrants was due to the amendment of the Term Loan Warrants, which reduced the exercise price from $92.50 per share to $20.50 per share which resulted in an increase in the fair value of the Term Loan Warrants of $0.8 million as of the Second Amendment Effective Date (defined later) and the change in the fair value of the Term Loan Warrants. For the years ended December 31, 2023 and 2022 the changes in fair value of the Term Loan Warrants was due to the change in price of the Company s Class A common stock, the remaining contractual term and the risk-free rate. The changes in fair value are included in the consolidated statements of operations as a component of change in fair value of warrant liabilities and in the consolidated balance sheets as other liabilities. Fair Value on a Non-recurring Basis Certain assets have been measured at fair value on a non-recurring basis, using significant unobservable inputs (Level 3). The following table presents the non-recurring losses recognized for the year ended December 31, 2023 due to asset impairments, and the fair value and asset classification of the related assets as of the impairment date (in thousands): December 31, 2023 Fair Value Total Losses Goodwill $ 85,166 $ (40,000 ) Other investments 1,000 (4,000 ) Intangible assets (3,092 ) Total $ 86,166 $ (47,092 ) F-4 Table of Contents Maturities of operating and finance lease liabilities, excluding short-term leases, are as follows (in thousands): Operating Leases Finance Leases Total Year ended December 31, 2024 $ 2,079 $ 2 $ 2,081 Year ended December 31, 2025 687 687 Year ended December 31, 2026 712 712 Year ended December 31, 2027 132 132 Total 3,610 2 3,612 Less present value discount (352 ) (352 ) Lease liabilities at December 31, 2023 $ 3,258 $ 2 $ 3,260 As the Company s lease agreements do not provide an implicit rate, the discount rates used to determine the present value of lease payments are generally based on the Company s estimated incremental borrowing rate for a secured borrowing of a similar term as the lease. In November 2021, the Company entered into an agreement effective January 2022, assigning its Santa Monica office lease to a third party with a lease term expiring in 2025. Although the lease assignment requires the Company to remain secondarily liable as a surety with respect to the lease, the Company does not believe it is probable that it will be responsible for the obligations. The value of the associated guarantee liability is insignificant. On February 29, 2024, the Company sold its Van Nuys production facility and entered into a five year lease of the facility at an annual base rate of $0.3 million. See Note 23, Subsequent Events , for additional information on the lease of this facility. Note 13. Commitments and Contingencies Inventory Purchase and Service Agreements The Company has noncancelable inventory purchase and service agreements with multiple service providers which expire at varying dates through 2028. During the year ended December 31, 2023 there were no losses on inventory purchase commitments. During the year ended December 31, 2022, the Company recorded $2.7 million for losses on inventory purchase commitments related to connected fitness hardware. These losses were included in accrued expenses in the consolidated balance sheets and connected fitness cost of revenue in the consolidated statements of operations. Service agreement obligations include amounts related to fitness and nutrition trainers, future events, information systems support, and other technology projects. Future minimum payments under noncancelable service and inventory purchase agreements for the periods succeeding December 31, 2023 are as follows (in thousands): Year ended December 31, 2024 $ 17,452 Year ended December 31, 2025 1,475 Year ended December 31, 2026 100 Year ended December 31, 2027 75 Year ended December 31, 2028 75 $ 19,177 The preceding table excludes royalty payments to fitness trainers, talent, and others that are based on future sales as such amounts cannot be reasonably estimated. During the year ended December 31, 2023 the Company paid $4.6 million of royalty payments exclusive of guaranteed payments. F-5 Table of Contents The following table presents the fair value of the Company s derivative instruments which are included in other current assets in the consolidated balance sheets (in thousands): December 31, 2023 2022 Derivatives designated as hedging instruments $ $ 343 Derivatives not designated as hedging instruments 119 Total derivative assets $ $ 462 There were no derivative liabilities as of December 31, 2023 and 2022. The Company expects that $0.1 million of existing losses recorded in accumulated other comprehensive loss will be reclassified into net income (loss) over the next 12 months. The Company assessed its derivative instruments and determined that they were effective during the years ended December 31, 2023 and 2022. The following table shows the pre-tax effects of the Company s derivative instruments on its consolidated statements of operations (in thousands): Year Ended December 31, Financial Statement Line Item 2023 2022 Unrealized gains (losses) Other comprehensive income (loss) $ (334 ) $ 24 Losses reclassified from accumulated other Cost of revenue $ (101 ) $ (45 ) comprehensive income (loss) into net loss General and administrative (121 ) (63 ) Total amounts reclassified $ (222 ) $ (108 ) Gains (losses) recognized on derivatives not designated as hedging instruments Cost of revenue $ (98 ) $ 13 Note 18. Income Taxes The components of the Company s loss before income taxes were as follows (in thousands): Year Ended December 31, 2023 2022 U.S. $ (154,571 ) $ (198,245 ) Foreign 1,967 1,000 Loss before income taxes $ (152,604 ) $ (197,245 ) F-6 Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BOLD_boundless_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BOLD_boundless_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BOLD_boundless_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BRRR_coinshares_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BRRR_coinshares_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..f4eb95ef5e27210e79edcfe7a8334dfcb8fc99cc --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BRRR_coinshares_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This is only a summary of the prospectus and, while it contains material information about the Trust and its Shares, it does not contain or summarize all of the information about the Trust and the Shares contained in this prospectus which is material and/or which may be important to you. You should read this entire prospectus, including "Risk Factors" beginning on page 9, before making an investment decision about the Shares. Trust Overview The investment objective of the Trust is for the Shares to reflect the performance of the value of a bitcoin as represented by the CME CF Bitcoin Reference Rate – New York Variant (the "Index"), less the Trust s liabilities and expenses. In seeking to achieve its investment objective, the Trust will hold bitcoin and will value its Shares daily based on the value of bitcoin as reflected by the Index, which is an independently calculated value based on an aggregation of executed trade flow of major bitcoin spot exchanges. The Index currently uses substantially the same methodology as the CME CF Bitcoin Reference Rate ("BRR"), including utilizing the same six Bitcoin Exchanges, which is the underlying rate to determine settlement of CME bitcoin futures contracts, except that the Index is calculated as of 4:00 p.m. ET, whereas the BRR is calculated as of 4:00 p.m. London time. There can be no assurance that the Trust will achieve its investment objective. The Sponsor is authorized under a trust agreement between the Sponsor and the Trustee (the "Trust Agreement") to substitute an alternative index, reference rate, or other methodology for valuing bitcoin for the Index for purposes of the Trust s investment objective and valuation policies at its sole discretion and without Shareholder approval. The Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin. Because the value of the Shares is tied to the value of the bitcoins held by the Trust, it is important to first understand the investment attributes of, and the market for, bitcoins. Investing in the Shares does not insulate the investor from certain risks, including price volatility. The price of bitcoin on the bitcoin market has exhibited periods of extreme volatility, which could have a negative impact on the performance of the Trust. For example, between November 2021 and November 2022, the price of bitcoin fell from an all-time high of $68,789 to $15,460. As of December 28, 2023, the price of bitcoin has increased to $42,526. See "Risk Factors." The Trust is passively managed and does not pursue active management investment strategies, and the Sponsor does not actively manage the bitcoin held by the Trust. This means that the Sponsor does not sell bitcoin at times when its price is high or acquire bitcoin at low prices in the expectation of future price increases. It also means that the Sponsor does not make use of any of the hedging techniques available to professional bitcoin investors to attempt to reduce the risks of losses resulting from price decreases. Except as provided below under the heading "The Coinbase Prime Broker and the Trade Credit Lender," the Trust, the Sponsor and the Trust s service providers will not loan or pledge the Trust s assets, nor will the Trust s assets serve as collateral for any loan or similar arrangement, nor will the Trust utilize leverage or similar arrangements in seeking to meet its investment objective. The Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust s operations or business. Except in limited circumstances, Shareholders will have no voting rights under the Trust Agreement. Bitcoins are a digital commodity based on an open-source protocol. Bitcoins are not issued by any government, bank or central organization, and instead exist on an online, peer-to-peer computer network (the "Bitcoin Network") that hosts a public transaction ledger where bitcoin transfers are recorded (the "Blockchain"). The Bitcoin Network is accessed through software, and software governs bitcoin creation, movement and ownership. Bitcoins have no physical existence beyond the record of transactions on the Blockchain. The Blockchain is a public record of the creation, custody and flow of funds of bitcoins, showing every transaction effected on the Blockchain among users online "digital wallets" where their bitcoins are effectively stored. Bitcoins may be sent or received through users digital wallets by using public and private keys that are part of the Bitcoin Network s cryptographic security mechanism. The Shares represent units of fractional undivided beneficial interest in and ownership of the Trust and are expected to be traded under the ticker symbol "BRRR" on The Nasdaq Stock Market, LLC ("Nasdaq" or the "Exchange"). The Trust issues Baskets of Shares to Authorized Participants on an ongoing basis in exchange for cash, which is used to purchase bitcoin that is deposited for safekeeping with the Custodian (as defined below). The Trust will distribute cash by redeeming Shares in Baskets on an ongoing basis from Authorized Participants. See "Description of the Shares—Redemption of the Shares." The CME CF Bitcoin Reference Rate – New York Variant The Index, which was introduced on February 28, 2022, is based on materially the same methodology (except calculation time) as the CME CF Bitcoin Reference Rate ("BRR"), which was first introduced on November 14, 2016 and is the rate on which bitcoin futures contracts are cash-settled in U.S. dollars at the CME. The Index is designed based on the IOSCO Principals for Financial Benchmarks. The administrator of the Index is CF Benchmarks Ltd. (the "Benchmark Administrator"). The Index is calculated daily and aggregates the notional value of bitcoin trading activity across major bitcoin spot exchanges. 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 January 9, 2024 VALKYRIE BITCOIN FUND Common Shares of Beneficial Interest The Valkyrie Bitcoin Fund (the "Trust") is an exchange-traded fund that issues common shares of beneficial interest (the "Shares"), which represent units of fractional undivided beneficial interest in and ownership of the Trust. The Trust s purpose is to hold bitcoin, which is a digital commodity based on the cryptographic protocols used by the decentralized, peer-to-peer bitcoin computer network. The investment objective of the Trust is for the Shares to reflect the performance of the value of a bitcoin as represented by the CME CF Bitcoin Reference Rate - New York Variant (the "Index"), less the Trust s liabilities and expenses. The Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin. Valkyrie Digital Assets LLC is the sponsor of the Trust (the "Sponsor"), Delaware Trust Company is the trustee of the Trust (the "Trustee"), U.S. Bancorp Fund Services, LLC is the transfer agent of the Trust (in such capacity, the "Transfer Agent") and the administrator of the Trust (in such capacity, the "Administrator"), Paralel Distributors LLC is the marketing agent of the Trust (the "Marketing Agent"), Coinbase Custody Trust Company, LLC is the initial custodian of the Trust s bitcoin (the "Custodian"), Coinbase, Inc., an affiliate of the Custodian, is the prime broker of the Trust (the "Coinbase Prime Broker"), and U.S. Bank, N.A., an affiliate of the Transfer Agent and Administrator, is the cash custodian of the Trust (the "Cash Custodian"). This is an initial public offering of the Trust s Shares. The Shares may be purchased from the Trust only in one or more blocks of 5,000 Shares (a block of 5,000 Shares is called a "Basket"). The Trust issues Baskets of Shares to certain authorized participants ("Authorized Participants") on an ongoing basis as described in "Plan of Distribution." Baskets are offered continuously in exchange for cash. The Trust does not issue fractions of a Basket. The initial price per Share is $13 and was selected as an appropriate and convenient price that would facilitate secondary market trading of Shares. The Trust intends to redeem Shares in Baskets on an ongoing basis from Authorized Participants. The Authorized Participants have acknowledged that some activities on their part may result, depending on the circumstances, in their being deemed participants in a distribution in a manner which could, under certain interpretations of applicable law, render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act of 1933 (the "Securities Act"). The initial Authorized Participant of the Trust is Cantor Fitzgerald & Co. The Trust intends to list the Shares on The Nasdaq Stock Market, LLC ("Nasdaq" or the "Exchange") under the symbol "BRRR." Valkyrie Funds LLC (the "Seed Capital Investor"), an affiliate of the Sponsor, has agreed to purchase the seed Baskets (the "Seed Baskets"), comprising of 40,000 Shares at a per-Share price of $13.00. Total proceeds to the Trust from the sale of the Seed Baskets are expected to be $520,000. The Trust intends to purchase bitcoin with the proceeds of the Seed Baskets prior to the listing of the Shares on the Exchange. The Seed Capital Investor will act as a statutory underwriter in connection with the Seed Baskets it purchases. See "Seed Capital Investor" for additional information. The Shares comprising the Seed Baskets could be sold at different prices if sold by the Seed Capital Investor at different times. Shareholders who decide to buy or sell Shares of the Trust will place their trade orders through their brokers and may incur customary brokerage commissions and charges. Prior to this offering, there has been no public market for the Shares. The Shares are expected to be listed for trading, subject to notice of issuance, on Nasdaq. Investing in the Trust involves risks similar to those involved with an investment directly in bitcoin and other significant risks. See "Risk Factors" beginning on page 9. The offering of an indeterminate amount of the Trust s Shares is registered with the SEC in accordance with the Securities Act. \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BTCO_invesco_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BTCO_invesco_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BTCO_invesco_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BTCY_biotricity_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BTCY_biotricity_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..2dfd9a983891522e2ad5c30c6facd0a755c4f1ad --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BTCY_biotricity_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/BTC_grayscale_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/BTC_grayscale_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a1f3e47c2af3f5be6bc3401dbc822f6821adba63 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/BTC_grayscale_prospectus_summary.txt @@ -0,0 +1 @@ +Prospectus Summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/CAMP_camp4_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/CAMP_camp4_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..a2e3b75755b914f9d0b12158ba8805255d3a8e91 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/CAMP_camp4_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY This summary highlights, and is qualified in its entirety by, 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 sections titled Risk factors, Business, and Management s discussion and analysis of financial condition and results of operations and our consolidated financial statements and the related notes appearing elsewhere in this prospectus, before making an investment decision. As used in this prospectus, unless the context otherwise requires, references to we, us, our, the company, CAMP4 and CAMP4 Therapeutics refer to CAMP4 Therapeutics Corporation. CAMP4 is the final camp before the summit of Mount Everest. It is also home to a climbing haven in Yosemite National Park where the world s greatest climbers gather to push the boundaries for what is thought to be possible. Like these elite climbers, we are pushing the boundaries of biology to discover and develop new and potentially life changing therapeutics. Overview We are a clinical-stage biopharmaceutical company pioneering the discovery and development of regulatory RNA-based therapeutics with the goal of upregulating gene expression and restoring healthy protein levels to treat a broad range of genetic diseases. Regulatory RNAs, or regRNAs, play a central role in the regulation of every protein-coding gene by contributing to gene activation and suppression. Our approach is designed to amplify messenger RNA, or mRNA, expression by harnessing the power of regRNAs that form localized complexes with transcription factors and regulate gene expression. Our proprietary RNA Actuating Platform, or RAP Platform, allows us to rapidly and systematically identify and characterize the active regulatory elements controlling every expressed gene and tens of thousands of druggable enhancer and promoter regRNA sequences that control protein-coding genes. Once a disease-associated target gene is identified, we apply our RAP Platform to identify the controlling regRNA and rapidly generate novel antisense oligonucleotide, or ASO, candidates, which we also refer to as RNA Actuators. These ASOs are designed to bind to the identified regRNA and amplify the expression of the target gene in a specific and controllable way. We are initially focused on metabolic and central nervous system, or CNS, diseases with validated disease biology, and we believe our RAP Platform allows us to address a broad range of genetic diseases in which a modest increase in protein expression can be clinically meaningful. Based on our preclinical studies, we believe our lead product candidate, CMP-CPS-001, has the potential to be the first disease-modifying therapy for the treatment of the most prevalent urea cycle disorders, or UCDs. UCDs are a group of severe, inherited metabolic diseases caused by mutations in the genes that encode one or more of the eight enzymes and transporters necessary to convert ammonia into urea. The inability of the body to properly metabolize ammonia leads to the accumulation of toxic levels in circulation, ultimately resulting in severe health outcomes, such as neurologic disability, seizure and death. CMP-CPS-001 is designed to improve urea cycle activity by amplifying expression of carbamoyl phosphate synthetase 1, or CPS1, an enzyme that catalyzes the first step of the urea cycle, by binding to a CPS1-specific regRNA. Our preclinical studies have demonstrated that modulating the activity of the target regRNA increases expression of the CPS1 gene, resulting in increased CPS1 enzyme levels, which allows for more ammonia to be converted into urea, thereby lowering ammonia levels to normal, healthy ranges. These preclinical studies also demonstrated that CMP-CPS-001 can increase the level of, or upregulate, the production of multiple enzymes responsible for converting ammonia into urea, potentially allowing us to address more than 85% of patients with UCDs, which we refer to as our pan-UCD approach. We are in the early stages of development and are evaluating CMP-CPS-001 in an ongoing Phase 1 clinical trial in healthy volunteers and expect to report data from all four cohorts of the single ascending dose, or SAD, portion of the trial in the first quarter of 2025 and from the multiple ascending dose, or MAD, portion of the trial in the second half of 2025. We are also leveraging our RAP Platform to advance our first preclinical program for the treatment of synaptic Ras GTPase activating protein 1, or SYNGAP1,-related disorders. We expect to initiate final Good Laboratory Practice, or GLP, toxicology studies in our SYNGAP1 program in 2025 to enable the filing of clinical trial applications. 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 Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. Subject to completion, dated October 7, 2024 Preliminary prospectus 5,000,000 shares Common stock This is an initial public offering of shares of common stock by CAMP4 Therapeutics Corporation. We are offering 5,000,000 shares of our common stock. The initial public offering price is expected to be between $14.00 and $16.00 per share. Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on the Nasdaq Global Market under the trading symbol CAMP, and this offering is contingent upon the listing of our common stock on the Nasdaq Global Market. We are an emerging growth company and a smaller reporting company as defined under the U.S. federal securities laws and, as such, will be subject to reduced public company reporting requirements for this prospectus and future filings. See Prospectus summary Implications of being an emerging growth company and a smaller reporting company. Investing in our common stock involves a high degree of risk. See Risk factors beginning on page 15 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 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 discounts and commissions(1) $ $ Proceeds before expenses, to us $ $ (1) See the section titled Underwriting for additional information regarding underwriting compensation. We have granted the underwriters an option for a period of 30 days to purchase up to 750,000 additional shares of common stock from us at the public offering price less the underwriting discount. The underwriters expect to deliver the shares against payment on or about , 2024. J.P. Morgan Leerink Partners Piper Sandler William Blair , 2024 TABLE OF CONTENTS The transcription of DNA into mRNA, the molecular template that is then translated into protein, is a complex yet carefully coordinated cellular process involving numerous components. Only a small portion of the DNA in the human genome is transcribed into RNA that codes for proteins. The vast majority of the transcriptome originates from non-coding regions of DNA, a portion of which, referred to as enhancers and promoters, perform a crucial role in determining the specificity, timing and level at which a particular gene is expressed. RegRNAs are non-coding RNAs that are transcribed by these enhancer and promoter DNA regions that form localized complexes with transcription factors to control the expression of protein-coding genes, either increasing or decreasing their expression within natural physiological ranges. The approximately 20,000 genes that code for mRNA in the human genome are controlled by hundreds of thousands of DNA enhancers and their associated regRNAs. Deficient protein levels characterize over a thousand diseases. Haploinsufficient diseases are dominantly inherited conditions in which inadequate gene expression is driven by a mutation in a single allele, or gene copy, and results in reductions of protein levels by as much as 50%. Numerous other genetic conditions are caused by recessive mutations that result in diminished gene activity. Data from our preclinical studies and research reports published by third parties demonstrate that increasing expression of disease-associated genes by modest amounts can restore healthy protein levels and provide therapeutic benefit in these disorders. Therefore, modest increases in protein expression have the potential to be clinically meaningful in both haploinsufficient and recessive partial loss-of-function disorders, of which there are more than 1,200. Our RAP Platform has the potential to identify the regRNA associated with all of these diseases, which we believe enables us to design RNA Actuators to address the underlying biology of these diseases. We aim to leverage our RAP Platform to develop product candidates designed to regulate transcription in a gene-specific manner to restore healthy protein levels and remedy these diseases. However, our approach is unproven and may not lead to successful efforts to develop and commercialize our product candidates and to identify and discover additional potential product candidates. Our RAP Platform We believe our RAP Platform can unlock the potential of the human genome and have broad applications across a range of diseases caused by sub-optimal levels of protein expression. Our technology is based upon the pioneering work in transcription regulation conducted by our co-founders, Richard Young, PhD and Leonard Zon, MD. We have built our RAP Platform to identify and characterize every regRNA that controls protein-coding genes and to develop novel ASO-based therapeutics to modulate regRNA activity to increase the expression of protein-coding genes of interest and thereby address the underlying cause of genetic diseases. Based on our proprietary mapping of regRNAs and screening and optimizing of ASOs, we have established a leadership position in regRNA-targeting therapies. Our goal is to be the preeminent company focused on discovering, developing and delivering regRNA-targeting therapeutics to patients. We believe that the ability to upregulate genes selectively through targeting regRNA could provide a new way to treat a wide range of human diseases and has the potential to become a class of new medicines. At present, very few regRNAs are described in public genomic databases, as they are often expressed at low levels and their importance was not fully understood. Our RAP Platform utilizes next-generation sequencing technologies and custom sequence analyses to map the active regulatory elements controlling every expressed gene. These data empower our proprietary machine learning algorithm, known as EPIC, to identify the specific control elements that regulate any gene of interest in the most specific manner, including elements that may restrict gene expression to a particular cell type. This enables us to identify the exact sites of regRNA synthesis and ultimately map the complete sequence of every candidate regRNA to target for therapeutic gene control. To date, we have mapped multiple cell types in as little as three months, comprising a number of potentially addressable diseases in the liver, CNS, heart, skeletal muscle and immune system. Our in-house development and application of this technology has enabled us to identify tens of thousands of enhancer and promoter regRNA sequences and their key biological properties, resulting in what we believe to be the most robust regRNA dataset available. We combine our RAP Platform with ASO chemistry that has been utilized and validated in U.S. Food and Drug Administration, or FDA,-approved products to develop programmable RNA Actuators that are designed to precisely TABLE OF CONTENTS TABLE OF CONTENTS Page Prospectus summary 1 \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/CAPTW_captivisio_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/CAPTW_captivisio_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e518d089b44486cd99766f885f8c605884993a4 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/CAPTW_captivisio_prospectus_summary.txt @@ -0,0 +1 @@ +PROSPECTUS SUMMARY Overview Captivision is a holding company incorporated in the Cayman Islands on February 24, 2023, with principal executive offices in South Korea. We conduct our operations through Captivision Korea, one of our wholly-owned subsidiaries in the Republic of South Korea, and its subsidiaries in the United Kingdom, China, Japan, Hong Kong and the United States. We are the exclusive developer, manufacturer and installer of an innovative architectural media glass product called G-Glass. G-Glass is the world s first IT-enabled construction material that transforms buildings into extraordinary digital content delivery devices. We are a market leader in the delivery of fully transparent media fa ade capabilities with over 500 architectural installations worldwide. Founded in South Korea in 2005, Captivision Korea is now a vertically integrated manufacturer controlling almost every aspect of product assembly and installation, including assembling media glass laminates, manufacturing aluminum frames, developing electronics, operating software, and delivering products. Structure of Captivision The following diagram depicts our simplified organizational structure: (1) Excludes G-Frame s 11.4% Ownership (2) Excludes G-Frame s 7.4% Ownership (3) Excludes G-Frame s 16.6% Ownership Status as Emerging Growth Company We are an emerging growth company as defined in the JOBS Act. We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of Ordinary Shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We may take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as emerging growth companies, including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public Table of Contents accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation. If some investors find us less attractive as a result, there may be a less active trading market for our securities and the prices of securities may be more volatile. Foreign Private Issuer Captivision is a foreign private issuer as defined in the Exchange Act. As a foreign private issuer, we are exempt from certain rules under the Exchange Act, including certain disclosure and procedural requirements applicable to proxy solicitations under Section 14 of the Exchange Act, our board, officers and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act with respect to their purchases and sales of our Ordinary Shares, and we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as companies whose securities are registered under the Exchange Act but are not foreign private issuers. Foreign private issuers are also not required to comply with Regulation Fair Disclosure ( Regulation FD ), which restricts the selective disclosure of material non-public information. Accordingly, there may be less publicly available information concerning Captivision than there is for companies whose securities are registered under the Exchange Act but are not foreign private issuers, and such information may not be provided as promptly as it is provided by such companies. As a foreign private issuer, we are also permitted to follow certain home country corporate governance practices in lieu of the requirements of the Nasdaq Marketplace Rules (the Nasdaq Rules ) pursuant to Nasdaq Rule 5615(a)(3), which provides for such exemption to compliance with the Nasdaq Rule 5600 Series. We rely on the exemptions available to foreign private issuers listed in the section entitled Management Corporate Governance Practices, and we may rely on additional exemptions in the future. Risk Factors Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled Risk Factors immediately following this prospectus summary, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our securities and result in a loss of all or a portion of your investment. Some of these risks include, but are not limited to: We will require substantial additional financing to fund our operations and complete the development and commercialization of the process technologies that produce each of our products or new aspects of our existing process technologies that produce each of our products, and we may not be able to obtain such financing on favorable terms, or at all. Unpaid transaction expenses, the costs of certain fee deferral arrangements and the issuances of additional Ordinary Shares under certain of our contracts and arrangements may result in dilution of holders of Ordinary Shares and have a negative impact on our results of operation, our liquidity and/or the market price of the Ordinary Shares. The fourth-generation architectural media glass industry is a nascent industry; it may take a long time for our technology to penetrate its target markets. Our future growth and success is dependent upon the DOOH market and the construction industry s willingness to adopt architectural media glass and specifically our G-Glass technology. Failure to maintain the performance, reliability and quality standards required by our customers could have a materially adverse impact on our financial condition and results of operation. Our business and results have been and, may in the future be, adversely affected by fluctuations in the cost or availability of raw materials, components, purchased finished goods, shipping or services. Table of Contents A global economic downturn could result in reduced demand for our products and adversely affect its profitability. Our sales cycle for large projects is protracted, which makes our annual revenue and other financial metrics hard to predict. Technological innovation by others could render our technology and the products produced using its process technologies obsolete or uneconomical. Our financial projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, our actual revenues, market share, expenses and profitability may differ materially from expectations. Our success depends upon its ability to develop new products and services and enhance existing products and services through product development initiatives and technological advances; any failure to make such improvements could harm our future business and prospects. Our government sector sales, which comprise a significant portion of our sales, may be adversely affected by presidential and congressional elections, policy changes, government land development plan changes and other local political events. The IT, vertical real estate and large format wallscape sectors are regulated and any new or modified regulatory restrictions could adversely affect our sales and results of operations. Changes in building codes could lower the demand for our G-Glass technology. We sometimes manages the installation of our products, which subjects us to risks and costs that may impact our profit margin. We sometimes rely on third-party contractors for the installation of its products, which subjects us to risks and costs that are out of our control. We are subject to labor, health, construction/building and safety regulations, and may be exposed to liabilities and potential costs for lack of compliance. Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facilities could lead to production curtailments or shutdowns that prevent us from producing our products. We may be adversely affected by disruptions to our manufacturing facilities or disruptions to our customer, supplier or employee base. We operates with a modest inventory, which may make it difficult for us to efficiently allocate capacity on a timely basis in response to changes in demand. Our business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible losses or other disruptions of our operations in the future, which may not be covered by insurance. Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects. Earthquakes, tsunamis, floods, severe health epidemics and other natural calamities could materially adversely affect our business, results of operations or financial condition. We continue to face significant risks associated with its international expansion strategy. Our current liquidity resources raise substantial doubt about our ability to continue as a going concern and to comply with our debt covenants unless we raise additional capital to meet our obligations in the near term. Table of Contents Our results of operations are subject to exchange rate fluctuations, which may affect its costs and revenues. We are subject to the risks of operations in the United Kingdom, China, Japan, Hong Kong and the United States. The Warrants and the Converted Options may never be in the money, and may expire worthless. We rely on production facility operators and manufacturing facility employees, and the loss of the services of any such personnel or the inability to attract and retain will adversely affect our business. Recent Developments July Contribution Agreements On July 16, 2024, we entered into Contribution Agreements (the July Contribution Agreements ) with Captivision Korea and certain creditors of Captivision Korea (the Contributors ), pursuant to which the Contributors agreed to contribute the respective outstanding balances remaining under their various debt agreements with Captivision Korea (the July Contributed Debt ) to us in exchange for the issuance of Ordinary Shares in a debt to equity conversion transaction (the July Conversion ). Pursuant to the July Conversion, an aggregate of KRW 5,791,867,301 (approximately $4,244,681 as of the exchange rate calculation date) of July Contributed Debt was contributed to us in exchange for the issuance of an aggregate of 1,414,895 Ordinary Shares at a conversion price per Ordinary Share equal to $3.00. G-SMATT Europe Disposition and termination of distribution right In connection with our streamlining and internalizing of our European and Middle East sales, functions, we determined that it was in our best interest to dispose of our interest in G-SMATT Europe, which previously served as our European and Middle East sales affiliate and partly owned subsidiary. G-SMATT Europe does not have material assets other than its rights under a distribution agreement with Captivision Korea, dated May 18, 2020 (the Distribution Agreement ), granting G-SMATT Europe exclusive distribution rights for Captivision Korea s LED transparent display products in the United Kingdom and European Union, which has been terminated by Captivision Korea, effective as of September 19, 2024. July 18 Private Bonds Subscription Agreements On July 18, 2024, Captivision Korea entered into a Private Bonds Subscription Agreement (the July 18 Subscription Agreement ) with certain individuals listed on Annex 1 thereto (each a July 18 Subscriber and collectively, the July 18 Subscribers ), pursuant to which the July 18 Subscribers agreed to subscribe to and Captivision Korea agreed to issue an aggregate amount of KRW 3,100,000,000 (approximately $2.23 million) of unregistered private placement bonds (the July 18 Bonds ). The July 18 Bonds mature on July 18, 2026 and bear an interest rate of 2.00% per annum to be paid on the date of every three months from the date of issuance. The yield-to-date maturity rate shall be 6.00% per annum. Pursuant to the terms of the July 18 Subscription Agreement, a July 18 Subscriber may request early redemption for all or part of the issue price of the July 18 Bonds (i) from October 18, 2024, which is three months from the date of the issuance of the July 18 Bonds, until the day before the maturity date; and (ii) at any time after the issuance date upon the occurrence of an event of default of the Jul 18 Subscription Agreement. If a July 18 Subscriber requests early redemption, Captivision Korea shall repay the principal of the July 18 Bonds requested for early redemption within three months from the date of receipt of the early redemption request form provided by such July 18 Subscriber (the July 18 Early Redemption Payment Date ), and interest from the date of the request for early redemption until the July 18 Early Redemption Payment Date shall not be paid. Table of Contents If a July 18 Subscriber makes a request for early redemption, at such July 18 Subscriber s discretion, he or she may be repaid by making an in-kind contribution of monetary claims, which are held against Captivision Korea upon the exercise of the right of early redemption, to us, and thereafter would be issued Ordinary Shares, each a July 18 D/E Conversion . The issue price per Ordinary Share for a July 18 D/E Conversion shall be $2.70. The approximate maximum numbers of Ordinary Shares that might be issued is 826,667 Ordinary Shares. Marketing Services Agreement On July 18, 2024, we entered into a Marketing Services Agreement (the Marketing Services Agreement ) with Outside The Box Capital Inc. ( OTB ), pursuant to which we agreed to issue 83,333 Ordinary Shares to OTB as consideration for its services provided under the Marketing Services Agreement at a price per Ordinary Share equal to $2.40. July Private Placement On July 30, 2024, we entered into Subscription Agreements (the July Subscription Agreements ) with certain investors, pursuant to which such investors agreed to subscribe for and purchase from us an aggregate amount of $1,675,000 Ordinary Shares. The purchase price per share was $2.47, resulting in the issuance of a total of 678,138 Ordinary Shares. July 29 Private Bonds Subscription Agreement On July 29, 2024, we entered into a Private Bonds Subscription Agreement (the July 29 Subscription Agreement ) with Captivision Korea and certain individuals listed on Annex 1 thereto (each a July 29 Subscriber and collectively, the July 29 Subscribers ), pursuant to which the July 29 Subscribers agreed to subscribe to and Captivision Korea agreed to issue an aggregate amount of KRW 1,900,000,000 (approximately $1,377,120) of unregistered private placement bonds (the July 29 Bonds ). The July 29 Bonds mature on July 29, 2026 and bear an interest rate of 2.00% per annum to be paid on the date of every three months from the date of issuance. The yield-to-date maturity rate shall be 6.00% per annum. Pursuant to the terms of the July 29 Subscription Agreement, a July 29 Subscriber may request early redemption for all or part of the issue price of the July 29 Bonds (i) from October 29, 2024, which is three months from the date of the issuance of the July 29 Bonds, until the day before the maturity date; and (ii) at any time after the issuance date upon the occurrence of an event of default of the July 29 Subscription Agreement. If a July 29 Subscriber requests early redemption, Captivision Korea shall repay the principal of the July 29 Bonds requested for early redemption within three months from the date of receipt of the early redemption request form provided by such July 29 Subscriber (the July 29 Early Redemption Payment Date ), and interest from the date of the request for early redemption until the July 29 Early Redemption Payment Date shall not be paid. If a July 29 Subscriber makes a request for early redemption, at such July 29 Subscriber s discretion, he or she may be repaid by making an in-kind contribution of monetary claims, which are held against Captivision Korea upon the exercise of the right of early redemption, to us, and thereafter would be issued Ordinary Shares, each a July 29 D/E Conversion . The issue price per Ordinary Share for a July 29 D/E Conversion shall be $2.50. The approximate maximum numbers of Ordinary Shares that might be issued is 550,848 Ordinary Shares. Change in Executive Officer Status On August 7, 2024, as part of ongoing organizational adjustments, our board of directors determined that, based on their roles and responsibilities, Dr. Ho Joon Lee, our chief technology officer and a member of our board of directors, and Orhan Erthugul, our managing director, do not qualify as executive officers, as defined under the Exchange Act. Dr. Lee will remain as employees, and as member of our board of directors. Table of Contents September Debt Contribution Agreements On September 25, 2024, we entered into Debt Contribution Agreements (the September Debt Contribution Agreements ) with G-SMATT Europe and certain creditors of G-SMATT Europe (the September Debt Contributors ), pursuant to which the September Contributors agreed to contribute the respective outstanding balances remaining under their various debt agreements with Captivision Korea (the September Contributed Debt ) to us in exchange for the issuance of Ordinary Shares in a debt to equity conversion transaction (the September Debt Conversion ). Pursuant to the September Debt Conversion, an aggregate of $978,273 of September Contributed Debt was contributed to us in exchange for the issuance of an aggregate 39,594 Ordinary Shares at a conversion price per Ordinary Share equal to $10.00 and an aggregate 232,934 Ordinary Shares at a conversion price per Ordinary Share equal to $2.50. September Equity Contribution Agreement On September 25, 2024, we entered into an Equity Contribution Agreement (the September Equity Contribution Agreement ) with G-SMATT Europe and CSY Netherlands Holding BV ( CSY ), pursuant to which CSY agreed to contribute to us its $660,400 of equity in G-SMATT Europe in exchange for the issuance of an aggregate of 264,160 Ordinary Shares at a conversion price equal to 2.50 in an equity to equity conversion transaction. September Private Placement On September 25, 2024, we entered into Subscription Agreements (the September Subscription Agreements ) with certain investors, pursuant to which such investors agreed to subscribe for and purchase from us an aggregate amount of $500,000 Ordinary Shares. The purchase price per share was $1.65, resulting in the issuance of a total of 303,030 Ordinary Shares. Consulting Agreement On September 30, 2024, Captivision Korea entered into the Consulting Agreement with Houng Ki Kim, pursuant to which Mr. Kim agreed to provide Captivision Korea with management consulting services related to (x) to identifying and proposing financing options, (y) establishing financial policies and guidelines and (z) optimizing operational efficiency (collectively, the Services ). As consideration for the Services, we agreed to issue to Mr. Kim (i) 100,000 ordinary shares upon the execution of the Consulting Agreement and (ii) 10,000 ordinary shares on a monthly basis for the duration of the Consulting Agreement. Furthermore, if Mr. Kim advises Captivision Korea on a successful financing he shall receive an additional fee from Captivision Korea equal to 5% of any funds raised. He shall also be entitled to up to $15,000 a month in reimbursement by Captivision Korea for any expenses incurred in connection with providing the Services. Mr. Kim has agreed not to engage with United States persons or entities or undertake any solicitation in or through any means of interstate commerce in the United States in connection with the performance of the Services. The term of the Consulting Agreement is from September 1, 2024 to December 31, 2024, with a mutual option to extend until December 31, 2025. Dismissal of Independent Registered Public Accounting Firm On October 2, 2024, the Audit Committee of our board of directors approved the conclusion of the engagement and dismissal of CKP as the our independent registered public accounting firm, effective October 2, Table of Contents 2024. The audit reports of CKP on our financial statements as of and for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years ended December 31, 2022 and 2023 and the subsequent interim period through the effective date of CKP s dismissal, (i) there were no disagreements between us and CKP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of CKP, would have caused it to make reference thereto in its reports on the Company s financial statements for such fiscal years and (ii) there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K. Appointment of Independent Registered Public Accounting Firm On October 2, 2024, the Audit Committee approved the appointment of UHY as our new independent registered public accounting firm, effective October 2, 2024. During the fiscal years ended December 31, 2023 and 2022, and the subsequent interim period through the effective date of UHY s engagement, neither us nor anyone on our behalf consulted with UHY with respect to either (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 our consolidated financial statements, and no written report or oral advice was provided by UHY to us that UHY concluded was an important factor considered by us in reaching a decision as to the accounting, auditing, or financial reporting issue or (ii) any matter that was the subject of either a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Table of Contents \ No newline at end of file diff --git a/parsed_sections/prospectus_summary/2024/CBDW_1606-corp_prospectus_summary.txt b/parsed_sections/prospectus_summary/2024/CBDW_1606-corp_prospectus_summary.txt new file mode 100644 index 0000000000000000000000000000000000000000..d27fbe40ebafee724a1ed3037f219665e09b3e95 --- /dev/null +++ b/parsed_sections/prospectus_summary/2024/CBDW_1606-corp_prospectus_summary.txt @@ -0,0 +1,15 @@ +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 this entire prospectus carefully, especially the Risk Factors section of this prospectus and our financial statements and the related notes appearing at the end of this prospectus, before making an investment decision. Except as otherwise indicated, references to we, us, our, 1606 , and the Company refer to 1606 Corp. + +Company Overview + +1606 Corp., a Nevada corporation (the Company, we, or us ) was incorporated in Nevada in February 2021 as a spin-off from Singlepoint Inc. in April 2021. We started by offering a tobacco- and nicotine-free smoking alternative called 1606 Original Hemp. We started to sell hemp, aroma-free cigarettes, first by reselling the star brand, and eventually our own brand called TRUZ. The brands expanded to include Singlez, an individually packeted version of the TRUZ hemp cigarettes. This business has been discontinued. + +In August of 2023, we decided to use our knowledge of the cannabidiol ( CBD ) industry to move into AI chatbots specifically made for the CBD industry. We partnered with ARXT Labs to create a proprietary Chatbot using AI to answer customer questions and recommend a product based on their answers and preferences. We then signed a distribution contract with Cool Blue Distribution to sell the service to CBD companies as well as offer their CBD expertise through Cool Blue s owner, Don Flanagan. In late 2023, we debuted our first chat bot, chatCBDW by CBDW AI, and began signing up customers to test and implement the bot on their CBD websites. + +With our corporate headquarters located in Phoenix, Arizona, our executive team experienced in CBD products, and our board s knowledge of the technology and AI spaces, we believe we are positioned to become the market leader for AI Bot technology. + +We also see the future potential for our chatbot technology to expand beyond the CBD industry to any industry with issues with consumer questions and indecisive over product choices. This includes the solar, beauty, and auto parts industries among many others. + +