As
filed with the Securities and Exchange Commission on May 4, 2017
Registration
No.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
YANGTZE
RIVER DEVELOPMENT LIMITED
(Exact
name of registrant as specified in its charter)
Nevada
|
|
27-1636887
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
Number)
|
41
John Street, Suite 2A
New
York, NY 10038
(646)
861-3315
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
CSC
Services of Nevada, Inc.
2215-B
Renaissance Drive
Las
Vegas, NV 89119
(888)
921-8397
(Address,
including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Joseph
M. Lucosky, Esq.
John
O’Leary, Esq.
Lucosky
Brookman LLP
101
Wood Avenue South, 5th Floor
Iselin,
NJ 08830
(732)
395-4400
APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this registration statement.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box. ☐
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective on filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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
|
☐
|
Accelerated
filer
|
☒
|
Non-accelerated
filer
|
☐
(Do not check if a smaller reporting company)
|
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 pursuant to Section 13(a) of the Exchange Act. ☐
CALCULATION
OF REGISTRATION FEE
Title
of each class of securities to be registered
|
|
Amount to be
registered/
proposed
maximum
offering price
per unit/
proposed
maximum aggregate
offering price
|
|
|
Amount
of
registration
fee
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|
Common Stock, par value $0.0001 per share
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|
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(1)(2)
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(3)
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Preferred Stock, par value $0.0001 per share
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|
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(1)(2)
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(3)
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Debt Securities
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|
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(1)(2)
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(3)
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Warrants
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|
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(1)(2)
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(3)
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Rights
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(1)(2)
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(3)
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Units
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(1)(2)
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(3)
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Total
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$
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300,000,000
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$
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34,770
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(1)
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This
registration statement covers an indeterminate number of shares of common stock, shares of preferred stock, debt securities,
warrants, rights, and units that may be sold by the registrant from time to time, for a maximum aggregate offering price of
all securities not to exceed $300,000,000. Any securities registered hereunder may be sold separately or as units with other
securities registered hereunder. The securities registered also include an indeterminate amount and number of shares of common
stock as may be issued upon exercise of warrants, conversion of preferred stock, or pursuant to the anti-dilution provisions
of any such securities. The securities registered also include an indeterminate amount and number of shares of preferred stock
as may be issued upon exercise of warrants or pursuant to the anti-dilution provisions of any such securities.
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(2)
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The
proposed maximum aggregate offering price per class of security will be determined from time to time by the registrant in
connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class
of security pursuant to General Instruction II.D. of Form S-3 under the Securities Act of 1933, as amended (the “Securities
Act”).
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(3)
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The
registration fee has been calculated in accordance with Rule 457(o) under the Securities Act.
|
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell 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 May 4, 2017
PROSPECTUS
YANGTZE
RIVER DEVELOPMENT LIMITED
$300,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Rights
Units
We
may offer and sell up to $300 million in the aggregate of the securities identified above from time to time in one or more offerings.
This prospectus provides you with a general description of the securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the
offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained
in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement
before you invest in any of our securities.
Selling
stockholders may also offer shares of our common stock from time to time in connection with this offering. The securities we and/or
selling stockholders offer will have an aggregate public offering price of up to $300 million. We will provide specific terms
of any offering, including the price to the public of the securities, in supplements to this prospectus. These securities may
be offered separately or together in any combination and as separate series. You should read this prospectus and any applicable
prospectus supplement and free writing prospectus carefully before you invest in our securities.
We
and/or selling stockholders may sell these securities on a continuous or delayed basis directly, through agents, dealers or underwriters
as designated from time to time, or through a combination of these methods. For additional information on the methods of sale,
you should refer to the section entitled “Plan of Distribution”. We and/or selling stockholders, as applicable, reserve
the sole right to accept, and together with any agents, dealers and underwriters, reserve the right to reject, in whole or in
part, any proposed purchase of securities. If any agents, dealers or underwriters are involved in the sale of any securities,
the applicable prospectus supplement will set forth any applicable commissions or discounts. Our net proceeds, and the net proceeds
of any selling stockholders, if applicable, from the sale of securities also will be set forth in the applicable prospectus supplement.
The prospectus supplement will also contain more specific information about the offering, including the names of any selling stockholders,
if applicable.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents
are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution”
for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing
the method and terms of the offering of such securities.
INVESTING
IN OUR SECURITIES INVOLVES RISKS. SEE THE “
RISK FACTORS
” ON PAGE 17 OF THIS PROSPECTUS AND ANY SIMILAR SECTION
CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our
common stock is listed on the Nasdaq Capital Market under the symbol “YERR” On May 3, 2017, the last reported sale
price of our common stock on the Nasdaq Capital Market was $7.93 per share.
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 May 4, 2017.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission, or the SEC, using
a “shelf” registration process. By using a shelf registration statement, we may sell securities from time to time
and in one or more offerings up to a total dollar amount of $300 million as described in this prospectus. Each time that we offer
and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information about the securities
being offered and sold and the specific terms of that offering. The prospectus supplement may also add, update or change information
contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus
and the applicable prospectus supplement, you should rely on the prospectus supplement. Before purchasing any securities, you
should carefully read both this prospectus and the applicable prospectus supplement, together with the additional information
described under the heading “Where You Can Find More Information; Incorporation by Reference.”
We
have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement
to this prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate
only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition,
results of operations and prospects may have changed since those dates.
When
we refer to “YERR,” “we,” “our,” “us” and the “Company” in this prospectus,
we mean Yangtze River Development Limited, unless otherwise specified. When we refer to “you,” we mean the holders
of the applicable series of securities.
WHERE
YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available
Information
We
file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC. Such information
filed with the SEC by us can be inspected and copied at the Public Reference Room maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Room of the SEC at prescribed
rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a web site that contains reports, proxy and information statements and other
information about issuers, such as us, who file electronically with the SEC. The address of that website is
http://www.sec.gov
.
Our
website address is
http://www.yerr.com.cn
. The information on our website, however, is not, and should not be deemed to
be, a part of this prospectus.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all
of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided
below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration
statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is
qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more
complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC’s Public Reference
Room in Washington, D.C. or through the SEC’s website, as provided above.
Incorporation
by Reference
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can
disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically
update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
modifies or replaces that statement.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus,
between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are
not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the
future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01
of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously
been filed with the SEC:
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Our
Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 10, 2017
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Our
Annual Report on Form 10-K Amendment No. 1 for the year ended December 31, 2016, filed with the SEC on March 10, 2017
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Our
Annual Report on Form 10-K Amendment No. 2 for the year ended December 31, 2016, filed with the SEC on March 17, 2017
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Our
Annual Report on Form 10-K Amendment No. 3 for the year ended December 31, 2016, filed with the SEC on May 1, 2017
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Our
Current Reports on Form 8-K filed with the SEC on May 13, 2016, June 17, 2016, October 6, 2016, November 23, 2016, February
28, 2017, (as amended by Amendment No.1 on Form 8-K/A, filed with the SEC on March 1, 2017), March 9, 2017, and April 17,
2017
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●
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The
description of our Common Stock contained in our Registration Statement on Form S-1, filed with the SEC on February 18, 2016,
as amended, and any amendment or report filed with the SEC for the purpose of updating the description
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All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering, including all such documents we may file with the SEC after the date of the initial registration
statement and prior to the effectiveness of the registration statement, but excluding any information furnished to, rather than
filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from
the date of the filing of such reports and documents.
You
may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they
are specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
Yangtze
River Development Limited
41
John Street, Suite 2A
New
York, NY 10038
(646)
861-3315
Exhibits
to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus
and any accompanying prospectus supplement.
THE COMPANY
Overview
Yangtze
River Development Limited is a Nevada corporation that operates through its wholly-owned subsidiary Energetic Mind, which operates through
its wholly-owned subsidiary Ricofeliz Capital, which operates through its wholly-owned subsidiary Wuhan Newport, a wholly foreign-owned
enterprise that primarily engages in the business of real estate and infrastructural development with a port logistics center
located in Wuhan, Hubei Province of China. Situated in the middle reaches of the Yangtze River, Wuhan Newport is a large infrastructure
development project implemented under China’s latest “One Belt One Road” initiative and is believed to be strategically
positioned in the “Pilot Free Trade Zone” of the Wuhan Port, a crucial trading window among China, the Middle East
and Europe. To be fully developed upon completion, within the logistics center, there will be six operating zones: port operation
area, warehouse and distribution area, cold chain logistics area, rail cargo loading area, exhibition area and business related
area. The Logistics Center is also expected to provide a number of shipping berths for cargo ships of various sizes. Wuhan Newport
is expected to provide domestic and foreign businesses direct access to the Pilot Free Trade Zone in Wuhan. The project will include
commercial buildings, professional logistic supply chain centers, direct access to the Yangtze River, Wuhan-Xinjiang-Europe Railway
and ground transportation, storage and processing centers, and IT supporting services, among others.
Income
generated from the use of the warehouses, cargo loading and unloading, railway and highway transportation and logistics services
and other logistics supporting services is expected to be the main source of our expected income. It is also expected that income
from real estate sales and leasing would be a relatively minor portion of our expected income since we are planning to sell or
lease only a small portion of our real estate properties such as office spaces. We plan to use the major area of our real estate
properties for the development of our Logistics Center, from which our main source of expected income can be derived. Theses income
includes but not limited to the service fees we charge for our clients’ usage of warehouses, online information platform,
ship berths, cold-chain storages, cargo handling, shipment loading and unloading.
Wuhan
Yangtze River Newport Logistics Center
The
Wuhan Yangtze River Newport Logistics Center (the “Logistics Center”), is an extensive complex located in Wuhan, the
capital of the Hubei Province of China, a major transportation hub city with access to numerous railways, roads and expressways
passing through the city and connecting to major cities in China, as well as other international centers of commerce and business.
The
Logistics Center is expected to occupy approximately 1,918,000 square meters, for which the construction and development are expected
to be completed in three phases in three years and reach its target maximum annual profit by the end of 2021 assuming the entire
funding required for construction of the Logistics Center of $1.03 billion is in place by 2020 and the Logistics Center is in
operation according to our business plan. The following table illustrates the timeframe of our investment and construction progress.
Time
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Phase of
Investment/Construction
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Percentage of Total
Anticipated
Investment/Construction (1)
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Production Capacity (2)
|
1
st
Year (2017)
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1
st
Phase
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40%
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30%
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2
nd
Year
(2018)
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2
nd
Phase
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70%
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40%
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3
rd
Year
(2019)
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3
rd
Phase
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100%
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60%
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4
th
Year
(2020)
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Completed
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100%
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75%
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5
th
Year
(2021)
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Completed
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100%
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100%
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(1)
|
The
percentage of construction in a certain phase reflects the anticipated contribution of the investment in such particular phase.
For example, contribution of 40% of the total investment in Phase 1 will lead to construction of 40% of total value of the
Logistics Center.
|
(2)
|
The
percentage of Production Capacity shows the fraction of the target maximum annual profit to be earned under the full operation
of the Wuhan Project. We target to reach its maximum annual profit by the end of 2021 assuming the entire funding required
for construction of the Logistics Center of $1.03 billion is in place by 2020 and the Logistics Center is in operation according
to our business plan.
|
The
Logistics Center is located within the Wuhan Newport Yangluo Port, on the upper stream of the Yangtze River, and close to the
northern base of Wuhan Iron and Steel, China’s first mega-sized iron and steel production complex. The Logistics Center
is expected to include a port terminal that will be located approximately 26.5km from the Wuhan Guan and 5.5km from the Yangluo
Yangtze River Bridge. The operation area of the port is expected to consist of a riverbank of 1,039 meters with eight 5,000-to-10,000-ton
berths, two of which are multi-purpose berths and the other six are general cargo berths. It is designed to be able to handle
up to 5,000,000 tons of cargo annually, including up to 100,000 TEU for annual container throughput (including 20,000 TEU in freezer
areas), 1,000,000 tons of iron and steel and 3,000,000 tons of general cargo.
Within
the Logistics Center, functional areas will be divided into six operating zones: a port operation area, a warehouse and distribution
area, a cold chain supply logistics area, a rail cargo loading area, an exhibition area and a business related area. The Logistics
Center will also be complemented with container storage areas, multi-functional areas, general storage areas, a multi-functional
warehouse and infrastructural development, including new roads, gas stations, parking areas, gas and water pipes, electricity
lines and all other facilities and equipment to operate the Logistics Center.
Pilot
Free Trade Zone
Aside
from being situated in the Wuhan Yangluo Comprehensive Bonded Zone, Yangluo development area is strategically situated at one
of China’s Pilot Free Trade Zone (FTZ). On March 31, 2017, the PRC State Council has approved the establishment of seven
pilot free trade zones in Liaoning, Zhejiang, Henan, Hubei, Sichuan, Shaanxi as well as Chongqing municipality. On April 1, 2017,
the seven zones were officially open. Hubei FTZ will be built on an area of 119.96 square kilometers including up to
70 square kilometers in Wuhan, and focus on the emerging industries like intelligent manufacturing, as well as the modern service
industries relating to international trade, financial services, modern logistics, inspection & testing, R&D, information
services, professional services, etc.
(Source: http://en.hubei.gov.cn/news/newslist/201704/t20170401_977258.shtml)
Wuhan
Newport has signed a twenty-year lease agreement, the maximum number of years permitted by the applicable PRC laws, and with rights
to renew at its sole discretion effective April 27, 2015, to lease approximately 1,200,000 square meters of land for building
logistics warehouses in support of the Logistics Center. The warehouses are expected to be comprised of port terminal zones, warehouse
logistics zones, cold chain supply zones and railroad loading and unloading zones. The warehouses, once constructed, will connect
the port terminal along the Yangtze River and the railway leading to Europe, satisfying the requirement of China’s latest
“One Belt, One Road” initiative. It will also be able to support large logistics companies in Wuhan and other nearby
provinces which will rent the warehouses, terminals and offices within the Logistics Center.
Logistics
Center Highlights:
|
●
|
The
shipping center will be implemented under China’s latest “One Belt, One Road” initiative to promote the
“Yangtze River Economic Belt”
|
|
|
|
|
●
|
Wuhan
Newport is part of the Yangluo port, which is part of one of seven newly opened Free Trade Zones in China in April 2017
|
|
|
|
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●
|
Wuhan
Newport is part of the “Yangluo Comprehensive Bonded Zone”, which allows the enterprises in the zone to receive
certain favorable tax treatments such as export tax rebates and less or free of value-added tax and consumption tax
|
The
“One Belt, One Road” Initiative
According
to the
Vision and Actions on Jointly Building Belt and Road
issued by the National Development and Reform Commission, Ministry
of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, with State Council authorization in March
2015, “One Belt, One Road” (the “Initiative”) is a infrastructural development concept initiated by the
leaders of the Chinese government in 2013. It refers to the New Silk Road Economic Belt, which will link China with Europe through
Central and Western Asia, and the 21st Century Maritime Silk Road, which will connect China with Southeast Asian countries, Africa
and Europe through the Pacific and Indian Ocean. Neither the belt, nor the road, follow a designated route, but serve as a conceptual
roadmap for China’s plan to expand its presence commercially to the regions outside of the country and strengthen its economic
relationships with the nations in these regions.
The
“Belt” and the “Road” run through the continents of Asia, Europe and Africa, connecting the vibrant East
Asian economic circle on one end and developed European economic circle on the other, and encompassing countries with huge potential
for economic development. The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the
Baltic), linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia, and connecting China
with Southeast Asia, South Asia and the countries along the Indian Ocean. The 21st-Century Maritime Silk Road is designed to go
from China’s coast to Europe through the South China Sea and the Indian Ocean in one route, and from China’s coast
through the South China Sea to the South Pacific in the other.
On
land, the Initiative is expected to focus on jointly building a new Eurasian Land Bridge and developing China-Mongolia-Russia,
China-Central Asia-West Asia and China-Indochina Peninsula economic corridors by taking advantage of international transport routes,
relying on core cities along the Belt and Road and using key economic industrial parks as cooperation platforms. At sea, the Initiative
is expected to focus on jointly building smooth, secure and efficient transportation routes connecting major sea ports along the
Belt and the Road. The China-Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor are closely related
to the Belt and Road Initiative, and therefore require closer cooperation and greater progress. (Source:
http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html
;
National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic
of China, with State Council authorization
).
The
following map illustrates the location of the New Silk Road Economic Belt and the 21st Century Maritime Silk Road:
(Source:
Xinhua Finance Agency)
Corporate
History
On
December 23, 2009, the Company was incorporated under the laws of the State of Nevada under the name of “Ciglarette, Inc.”
Our operations at the time consisted of marketing and distributing a “smokeless” cigarette. During that time, we had
no revenue and our operations were limited to capital formation, organization, and development of our business plan and target
customer market.
On
March 1, 2011, the Company completed a reverse acquisition transaction through a share exchange with Kirin China Holding, a British
Virgin Islands company (“Kirin China”), whereby the Company acquired all of the issued and outstanding shares of Kirin
China in exchange for 18,547,297 shares of common stock, which represented approximately 98.4% of the total shares outstanding
immediately following the closing of this share exchange (the “First Share Exchange”). Upon consummation of the
First Share Exchange, the Company changed its name to “Kirin International Holding, Inc.” and traded under the symbol
“KIRI” on the OTC Markets. As a result of the First Share Exchange, Kirin China became a wholly-owned subsidiary.
The Company ceased the smokeless cigarette business and became a holding company, through various controlled entities in China
and engaged in the development and operation of real estate in China. Through Kirin China, the Company engaged in private real
estate development focusing on residential and commercial real estate development in “tier-three” cities in China.
Tier-three cities are provincial capital cities with ordinary economic development and prefecture cities with relatively strong
economic development.
On
December 19, 2015, we entered into certain share exchange agreements with Energetic Mind and all the shareholders of Energetic
Mind, whereby we acquired 100% of the issued and outstanding ordinary shares of Energetic Mind (the “Second Share Exchange”).
Pursuant to the terms of the agreements for the Second Share Exchange, in exchange for 100% of the issued and outstanding ordinary
shares of Energetic Mind, we agreed to issue to (i) the shareholders of Energetic Mind an aggregate of one hundred fifty-one million
(151,000,000) shares of the Company’s common stock and (2) a certain related party an additional 8% convertible promissory
note in the principal amount of one hundred fifty million dollars ($150,000,000), with a conversion price of $10.00 per share.
On
December 31, 2015, we disposed all of its interests in i) Brookhollow Lake, LLC, ii) Newport Property Holding, LLC, iii) Kirin
China, iv) Kirin Hopkins Real Estate Group LLC, v) Archway Development Group LLC, vi) Specturm International Enterprise, LLC and
vii) wholly-owned subsidiary HHC-6055 Centre Drive LLC. The sale of Kirin China also effectively terminated the Company’s
contractual relationship with Hebei Zhongding Real Estate Development Co. Ltd and XingtaiZhongdingJiye Real Estate Development
Co., Ltd, both of which are companies formed under the laws of the People’s Republic of China and were deemed the Company’s
variable interest entities prior to this sale (“Subsidiaries Sale”).
As
a result of the Second Share Exchange and the Subsidiaries Sale, we currently operates its business solely through its wholly-owned
subsidiary Energetic Mind, which is the sole shareholder of Ricofeliz, which engages its business through its wholly-owned subsidiary
Wuhan Newport.
On
January 13, 2016, we filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of the State of the
State of Nevada, changing its name from “Kirin International Holding, Inc.” to “Yangtze River Development Limited”.
Effective January 22, 2016, Company changed its stock symbol from “KIRI” to “YERR”.
Organization&
Subsidiaries
Upon
completion of the Second Share Exchange described above in “Corporate History,” Yangtze River Development Limited
holds 100% of the ordinary shares of its wholly owned subsidiary, Energetic Mind, which holds all of the share capital of Ricofeliz
Capital. Ricofeliz Capital holds all of the share capital of Wuhan Newport, a wholly foreign-owned enterprise located in
Wuhan of Hubei Province in China.
The
following diagram illustrates our corporate structure as of the date of this prospectus:
Overview
of the Logistics Center
The
Logistics Center is expected to be an extensive complex located in Wuhan, the capital of the Hubei Province of China, a major
transportation hub with numerous railways, roads and expressways passing through the city and connecting to major cities in China,
as well as other international centers of commerce and business.
The
Logistics Center is expected to occupy approximately 1,918,000 square meters, for which the construction and development are expected
to be completed in three phases in three years and reach its target maximum annual profit by the end of 2021 assuming the entire
funding required for construction of the Logistics Center of $1.03 billion is in place by 2020 and the Logistics Center is in
operation according to our business plan. The following table illustrates the timeframe of our investment and construction progress.
Time
|
|
Phase of
Investment/Construction
|
|
Percentage of Total
Anticipated
Investment/Construction (1)
|
|
Production Capacity (2)
|
1
st
Year (2017)
|
|
1
st
Phase
|
|
40%
|
|
30%
|
2
nd
Year
(2018)
|
|
2
nd
Phase
|
|
70%
|
|
40%
|
3
rd
Year
(2019)
|
|
3
rd
Phase
|
|
100%
|
|
60%
|
4
th
Year
(2020)
|
|
Completed
|
|
100%
|
|
75%
|
5
th
Year
(2021)
|
|
Completed
|
|
100%
|
|
100%
|
(1)
|
The
percentage of construction in a certain phase reflects the anticipated contribution of the investment in such particular phase.
For example, contribution of 40% of the total investment in Phase 1 will lead to construction of 40% of total value of the
Logistics Center.
|
(2)
|
The
percentage of Production Capacity shows the fraction of the target maximum annual profit to be earned under the full operation
of the Logistics Center. We target to reach our maximum annual profit by the end of 2021 assuming the entire funding required
for construction of the Logistics Center of $1.03 billion is in place by 2020 and the Logistics Center is in operation according
to our business plan.
|
Office
Complex Development
With
the advantage of being in the Comprehensive Bonded Zone and Pilot Free Trade Zone, Wuhan Newport’s Logistics
Center has obtained the land use rights to develop approximately 500,000 square meters of commercial lands until August 30, 2048
with rights of renewal, on which Wuhan Newport plans to build an office complex of approximately 700,000 square meters. As of
the date of this prospectus, the complex, totaling approximately 100,000 square meters has been completed and there are 600,000
square meters outstanding to be constructed within the next five (5) years.
The
office complex will be supported by a light railway line from downtown Wuhan that is undergoing construction. The complex will
be accessible by two stations along the light railway line. In addition, a highway along the north shore of the Yangtze River
in Wuhan is currently under construction; the completion of the highway is also expected to provide direct ground access between
Wuhan city center and the Logistics Center and cut down the commute time to only 20 minutes.
Upon
completion of the construction of the office buildings, Wuhan Newport plans to sell half of the complex while leasing out the
remaining half for long-term rental income. It is the Company’s goal to recoup the initial capital investment costs for
the entire projected logistics center through the sale of a certain portion of the complex and generate a stable return based
on rent of the other half of the complex upon completion of the project.
Transportation
and Logistics Services
Taking
advantage of the regional highways, railways and waterways in the Yangluo area, we plan to develop a shipping hub with access
to all types of cargo transportation and offer complementary services to businesses within this logistics center. We intend to
create an efficient, reliable and comprehensive logistics service system by utilizing third-party service providers with offices
within the Logistics Center to provide professional logistics services.
We
are currently constructing the port terminal which will be the focal point of the Yangtze River Economic Belt. The Yangtze River
riverbank, within our properties, measures 1,039 meters and will host eight cargo berths handling ships ranging from 5,000 to
10,000 tons.
As
of January 1, 2016, a government sponsored cargo transportation railway has been completed and launched leading to the premise
of the Logistic Center, known as, the Wuhan-Xinjiang-Europe (“WXE”) Railway. The WXE is a part of the Silk Road Economic
Zone, as it is within the “One Belt, One Road” initiative. The WXE Freight Train sets out from Wuhan to Xinjiang and
finally ends in Hamburg, Germany. Wuhan Newport’s terminal will therefore be an important component of the “Silk Road
Economic Belt” under the “One Belt, One Road” framework. (Source:
http://www.wuhantime.com/detail.php?aid=1964
;
The Wuhan Time
).
The custom facility at the Yangluo Comprehensive
Bonded Area allows cargo vessels ranging from 5,000 to 10,000 tons to set out from Shanghai downstream via the Yangtze River in
order to transport “Made in China” commodities to the Pacific Ocean and further to any other ports across the Indian
Ocean. This same route will also return commodities from other countries directly back to Wuhan and then distribute them throughout
the rest of China. Aside from being situated within the Wuhan Yangluo Comprehensive Bonded Zone, the Yangluo development area is
within one of seven newly opened Free Trade Zones in China approved by the State Council in April 2017.
The estimated cost of the Logistic Center is approximately $1.03 billion US dollars.
Cold
Chain Logistics Services
A
cold chain is a temperature-controlled supply chain for products that need to be kept under low temperatures. An unbroken cold
chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used to
help extend and ensure the shelf life of products such as fresh agricultural produce, seafood and frozen food.
Within
the Logistics Center, we plan to provide extensive storage and processing services to its customers. Meanwhile, a cold chain logistics
service system will be established to better help the Company’s clients’ processing needs for their frozen foods,
meats and other products that need special processing and handling. In addition, we will offer professional services with temperature
controls, sorting, processing, packaging and delivery to ensure the reliability and safety of the logistics process.
Information
Platform
To
adapt to the needs of modern logistics service and meet the standards of the industry worldwide, we will establish comprehensive
automated management systems, as well as develop an operation system, enquiry system and decision-making systems for all types
of business information such as warehouse, storage, trade, distribution and transportation, movable assets supervision and freight
forwarding. We plan to launch an integrated and information-sharing platform geared towards the demand of its targeted markets
and potential clients.
We
will establish a uniform information platform including an internet-based logistics information portal and an e-commerce platform
to provide the Company’s clients with services such as logistics services tracking, service rating, online operation, electronic
transaction, and etc. We expect this information portal to be equally reliable for both service providers and their respective
clients.
We
will also establish an e-commerce system based on the logistics information portal and it will provide clients with many updated
services such as online transactions, online payments, online inquiries and business information communication. This will create
a comprehensive service system and a business model with high integration of information flow, capital flow, trade flow and goods
flow.
Portside
Service
We
also plan to provide incentives for companies that specialize in IT, production of new material and high-end equipment and manufacturing
companies to station nearby the Logistics Center so that these companies can grow with the Logistics Center, leveraging each other’s
specializations to serve each other’s business needs.
Logistics
Financing
Logistics
financing is mainly based on using supplies as collateral to obtain financing for supply chains to improve their overall economic
efficiency. Developing innovative logistics financing is significant because traditionally mortgages or loans are concentrated
in real estate and logistics financing provides a lower systematic risk for lenders.
Compared
to developed countries, logistics financing is a rather new field in China with a huge market potential of about $1 trillion.
The driving force for logistics financial services in western countries is mainly attributable to financial institutions, as opposed
to third-party private logistics companies in China who would occasionally provide financing options.
Logistics
financial services became a popular investment vehicle among these third-party lenders. However, the business of logistics financing
has become too complex for these private lenders to handle, as they will need professional services to guide them through the
process and thus safeguard their investments.
Even
though the history of logistics financing has been relatively short in China, the appetite for this is expected to grow as the
Pilot Free Trade Zones in Shanghai, Tianjin and the one expected to be granted in Wuhan, will likely attract more business and
international financial institutions to launch offices or branches within these Pilot Free Trade Zones to serve the businesses
in the areas. Logistics financing not only provides the businesses with a new alternative to meet their capital needs, but also
opens a new channel for commercial banks to reach small and midsize businesses. While interest income generated from logistics
financing transactions is often an important source of income for many multinational logistics companies, companies who are able
to provide financing are often the industry leaders. Because logistics financing can be an effective channel for the Company to
reach its targeted market, our Company plans to capture this first-mover advantage when logistics financing is still in its development
stage in China.
In
light of this market opportunity, we plan to establish and utilize e-commerce platforms to offer online booking, dealing and exhibiting
services for electronic products, commodities, foods and metals. We also plan to provide comprehensive support services to complement
logistics financing. Maritime insurance and training services will also be offered within the Logistic Center. We plan to help
its clients raise construction capital through Build-Transfer (BT), Build-Operate-Transfer (BOT), corporate debt and equity financing.
In addition, Company plans to collaborate and develop strategic alliances with other logistics or cargo shipping centers around
the world.
Sales
and Marketing
We
plan to sell its properties by forming strategic alliances with CMST Development (Hankou) Co. Ltd. (“CMST-Hankou”),
the Shanxi Chamber of Commerce in Hubei (“SCCH”) and the Wuhan Coal Business Association (“WCBA”).
Partnership
with CMST
CMST-Hankou
is a regional subsidiary of the CMST Development Co. Ltd, which is a state-owned enterprise that principally engages in the logistics
and import & export businesses. CMST-Hankou’s core business includes warehouse storage, sale and distribution of commodities,
and freight forwarding. Pursuant to the Memorandum of Understanding executed with CMST-Hankou on August 20, 2015, CMST-Hankou has
agreed to transfer all of its warehouse storage and processing division, distribution service division and other existing businesses
to the premises of the Logistics Center. In addition, CMST-Hankou has agreed to move its warehouse for steel trading business
with the Shanghai Future Exchange to the Logistics Center. In consideration, we have agreed to offer CMST-Hankou a 5% discount
for all services provided within the Logistics Center, including those within the warehouses, port terminal, and railway operating
zones. In addition, CMST-Hankou has agreed to assist the Company with the establishment of an online commodity exchange platform
to provide a comprehensive support system through the supply chain and provide necessary personnel to help with the management
of the warehouse operations within the Logistics Center. Though at a slight discount, the Company is expected to receive fees
based on CMST-Hankou’s large volume of commodities that need to be stored and use of complementary services at the warehouse
facilities and operating areas, as well as rental income and/or property sales generated from the office complex. However, the
partnership is subject to the terms and conditions of the definitive agreement between CMST-Hankou and the Company. No assurances
can be provided at this point that such a definitive agreement will be executed.
Partnership
with SCCH
SCCH
is a non-profit business coalition with 252 businesses across various industries as members. Pursuant to the Memorandum of Understanding
executed with SCCH on July 27, 2015, SCCH has agreed to move its headquarters to the office complex within the Logistics Center
by purchasing or leasing certain units. In consideration of a 7% discount to the purchase price of $2,729 per square meter of
our properties, approximately 50 businesses within the organization plan to open offices in the Logistics Center and purchase
at least 100,000 square meters of space within the office complex. SCCH, on behalf of 50 businesses, also executed a letter of
intent to purchase approximately 100,000 square meters of storefront. In addition, because we expect the 50 businesses to have
a total annual turnover of commodities of more than 5,000,000 tons, we have agreed to offer members of SCCH a 5% discount for
all services provided within the Logistics Center, including those within the warehouses, port terminal, and railway operating
zones. However, the partnership is subject to the terms and conditions of the definitive agreement between SCCH and the Company.
No assurances can be provided at this point that such a definitive agreement will be executed.
Partnership
with WCBA
WCBA
is a non-profit business coalition with more than 300 businesses within the coal mining industry as members. Pursuant to the Memorandum
of Understanding executed with WCBA on September 17, 2015, WCBA has agreed to move its headquarters to the office complex within
the Logistics Center by purchasing or leasing certain units. We have agreed to offer WCBA member businesses a 5% discount to the
purchase price of $2,729 per square meter of our properties. In addition, because we expect WCBA members to have a total annual
turnover of coal-related commodities of more than 20,000,000 tons and will use the Company’s warehouse storage for at least
3,000,000 tons, we have agreed to offer members of WCBA a 5% discount for all services provided within the Logistics Center, including
those within the warehouses, port terminal, and railway operating zones. However, the partnership is subject to the terms and
conditions of the definitive agreement between WCBA and the Company. No assurances can be provided at this point that such a definitive
agreement will be executed.
Market
Opportunity for Logistics Finance
According
to an industry review issued by the China Federation of Logistics and Purchasing, with the stabilization and recovery of the economy,
the logistics industry began to rise gradually from the steady state before. According to statistics, the total value of social
logistics goods in 2012 was 177.3 trillion yuan, with a year-on-year growth of 9.8%, dropping 2.5% compared with growth in 2011,
dropping 0.2 percentage points compared with the first half of the year, rebounded by 0.2 percentage points compared to the first
three quarters. National logistics added value is 3.5 trillion yuan, achieving a year-on-year growth of 9.1%. Although this figure
is somewhat lower than the same period last year, it’s still 1 percentage point higher than the tertiary industry. Logistics
value added has a share of 6.8% of GDP, accounting for 15.3% of the value added to the service sector. The total cost of national
social logistics is 9.4 trillion yuan, with a year-on-year growth of 11.4%, dropping 7.1 % compared to the growth of last year.
Total costs of social logistics account for 18% of GDP, with a year-on-year increase of 0.2 percentage points. The logistics cost
of economic operations is still high. (Source:
http://www.chinawuliu.com.cn/english/201406/16/290820.shtml
;
China Federation
of Logistics and Purchasing
).
Logistics
financing provides financial services such as financing, clearance and insurance to support the logistics industry. It evolves
as the logistics industry develops. Not only can logistics financing services improve the service capability and increase the
profitability of third party logistics companies; it can also expand financing channels, decrease financing cost and increase
the capital efficiency.
The
major target clients for logistics finance services are small and medium sized companies, which are an important sector of China’s
economy and have great weight in the market. One of the biggest hurdles in the life cycle of these small and medium sized companies
is lack of cash flow, which can become the “bottle neck” of their development and prevent progress. The need for logistics
financing results from the lack of available credit financing facilities and the difficulty of obtaining financing on the capital
markets. Therefore, logistics financing services protect against the financing problems by allowing these small and medium companies
to use their raw materials and commodities as collateral to borrow money. Logistics financing increases the liquidity of cash
flow, lowers the clearance risks and improves the efficiency of the economic operation. Upon completion of the Logistics Center,
we expect to house many small and mid-size logistics companies. The offering of logistics financing will therefore become an important
component of the business, as these businesses are expected to have financing needs as they grow their businesses.
Market
Overview of Wuhan
Located
in the middle reaches of the Yangtze River, Wuhan has been regarded as the gateway to nine provinces nearby. Beijing-Guangzhou
Railway and the Yangtze River converge in Wuhan and also the Beijing-Jiulong Railway and the Beijing-Guangzhou Railway intersect
in it, thus forming a railway network linking North China, Southwest China, Central South China and East China. Moreover, the
Beijing-Zhuhai Expressway and the Shanghai-Chengdu Expressway converge in Wuhan and a high-speed railway along the Yangtze River
will be completed in this area in the near future. A “flexible multimodal transportation system,” combining expressways,
high-speed railways and water transportation on the Yangtze River will give greater prominence to Wuhan’s position of strategic
importance as a junction of water and land transportation in China.
According
to the statistics published by the Wuhan government, Wuhan is the largest economic city in central China with an annual GDP of
more than $160 billion. In 2015, the China State Council introduced and implemented the Midstream Yangtze River City Group Development
Plan headed by Wuhan. In fact, the city was once called “The Oriental Chicago” by US Harper’s Magazine back
in 1918. Wuhan is also among the largest inland logistics and cargo distribution centers in China, with its ability to cover approximately
a 400 million person population in the five neighboring provinces including Hunan, Jiangxi, Anhui, Henan and Sichuan. At present,
there are over 10,000 commercial organizations, 105,000 commodity networks, 4 commercial listed enterprises, and 8 comprehensive
shopping centers on the list of China Top 100 Retail Shopping Centers. (Source:
http://www.whfao.gov.cn/html/guide/201602/t20160204_45988.shtml
;
Foreign Affairs Office of Wuhan City Government
).
China
is thoroughly implementing the strategy of coordinated regional development, expanding domestic demand, innovation-driven development
and new urbanization, and building a new economic support belt relying on the Yangtze River. As a central city in the central
region and the middle reach of the Yangtze River, as well as the country’s major transportation hub and science and technology
base, Wuhan faces multiple overlapping strategic opportunities. Location, transportation, science, education, market and other
advantages will be further enhanced and fully released and more quickly transformed into development and competitive advantage.
Wuhan
is also a major transportation hub in Central China, situated at the midstream of the Yangtze River. Going west alongside the
Yangtze upstream, includes cities or provinces such as Chongqing, Sichuan, Yunnan and Qinghai. Going east downstream, includes
provinces such as Hunan, Anhui and Jiangsu, as well as municipal cities such as Shanghai, until finally ending at the Pacific
Ocean. The railway runs north bound to Harbin, westbound to Urumqi, east bound to Shanghai and south bound to the Shenzhen Highway
and expressways that stretch in all directions ensuring easy and convenient transportation to all of China’s provinces.
With
the rapid development of inland waterway transportation in China, the logistics and port management industries have grown significantly.
Wuhan is one of the major inland water ports in China. In 2014, the Wuhan government released an
Opinion On Accelerating The
Establishment Of Shipping Center In The Middle Reach Of Yangtze River
, indicating that the government will help the Wuhan
shipping center to be a well-equipped, surrounding industry developed internationally with a scaled and intelligent inland water
shipping center with all port and shipping resources highly concentrated. In the
Development Plan On Wuhan Logistics Space
(2012-2020)
published by the Wuhan city government, * Wuhan is strategically positioned as the critical joint of the global
supply chain and the logistics transportation hub and information center of China. (Source:
http://www.wuhan.gov.cn/hbgovinfo/szfxxgkml/fggw/szfwj/201505/t20150515_30288.html
;
Wuhan City Government
).
However,
in Wuhan, logistics for domestic trade operate separately from those for international trade and all the resources are scattered
and not concentrated to form a well-organized and well-managed international supply chain. It becomes very difficult for Wuhan
to realize the synergy of business, logistics, money and information. In addition, a majority of the current logistics companies
in Wuhan focus on traditional cargo transportation and storage services. Therefore, there exists an opportunity for an efficient,
comprehensive and modern logistics service center like our Company’s Logistics Center to facilitate the channel of both
regional and global logistics.
Competitive
Advantages
The
following factors reflect the Company’s advantages over the company’s competitors:
|
●
|
Experienced
Logistics Management Team.
We have a professional team with significant experience in logistics
management. Members of the Company’s team have had work experience with well-known logistics management companies in
different cities. In addition, the management members are well educated with degrees from top universities such as Huazhong
University of Science and Technology, Wuhan University, University of British Columbia and the Chinese Academy of Social Sciences.
|
|
●
|
Encouraging
Policy Environment.
Under China’s latest “One Belt, One Road” initiative, the Company
is strategically positioned in the “Pilot Free Trade Zone” of the Wuhan Port approved by China State Council in
April 2017, a crucial trading window between China, the Middle East and Europe. In May 2015, the China State Council
approved the nation’s economic strategic plan, the Vigorous Development Plan of Yangtze River Economic Belt. The Yangtze
River Economic Belt has sharpened the focus on the Wuhan New Port Yangluo Terminal, the port project that the Company is developing.
|
|
●
|
Unique
Transportation Network.
Wuhan is located in the middle reaches of the Yangtze River, east facing
south-eastern coastal economic developed area and west linking north-western raw material base. The distance to
metropolitan cities, such as Beijing, Shanghai, Hong Kong and Chongqing are within 1,200 kilometers. As a
central city on mainland China, Wuhan is capable of reaching over 30 provinces like Yunnan Province, Henan Province, Sichuan
Province, Shanxi Province, Jiangxi Province and Hunan Province and 600 cities and counties in China.
|
|
●
|
Highway:
the Logistics Center is in close proximity to the Beijing-Zhuhai expressway, the Shanghai-Chengdu Expressway, and
the Jiangbei Expressway.
|
|
●
|
Waterway:
the project adjacent to the Yangluo deep-water port, has eight 5,000-ton berths, directly leading to Jianghai. Yangluo
Port is the largest national shipping port in Central China and the largest container port in the upper reaches of the Yangtze
River. We will be strategically located for international procurement, distribution and delivery.
|
|
●
|
Railway:
through Chinese commodity freight logistics Beijing-Guangzhou, Beijing-Kowloon Railway, close to Beijing-Guangzhou
railway extension line, special railway lines offer direct access to the center of the Wuhan Yangtze River Newport Logistics
Center, through Jiangbei railway- Xianglushan station connects all of the domestic railway freight stations, and through the
construction of the “Chinese new Europe” railway through the Continent.
|
|
●
|
Airport:
30 kilometers from the Wuhan Tianhe airport.
|
|
●
|
Light-rail
transit:
by the year 2018, two light rail stations are expected to be completed next to the Logistics Center, cutting
the commute to downtown Wuhan to only 20 minutes.
|
|
●
|
Jiangbei
Expressway:
after the completion of Jiangbei Expressway, commute by car from downtown Wuhan to the Logistics Centers
is expected to be only about 20 minutes.
|
The
following maps illustrate the location of the Wuhan Newport Logistics Center and surrounding transportation network:
Employees
As
of the date of this prospectus, we have a total of 87 employees, including our executive officers.
Our
employees are not represented by any collective bargaining agreement, and we have never experienced a work stoppage. We believe
we have good relations with our employees.
Intellectual Property
Trademark
We have completed application for trademark protection in China
for our Company’s logo.
Domain
Names
We
have added the domain names i)
www.yerr.com.cn
; ii)
www.cjxgwl.com
; and iii)
www.cjxgwl.cn
to the Internet
Content Provider License that we currently hold and we have received the updated ICP License covering the foregoing domain name.
Properties
Our
corporate headquarters is located at 41 John Street, Suite 2A, New York, NY 10038, for which we have paid $88,740 for a one year
lease starting from April 2017.
The
following chart illustrates the properties we currently have the land use rights to in Wuhan, Hubei Province, China. We do not
have ownership over such properties.
Certification
Number
of
Land Use Right
|
|
Location
|
|
Purpose of Use
|
|
Area (㎡)
|
|
Termination
Date
|
Wu Xin Guo Yong (2008)
Di Zhuan No. 029
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province,
PRC
|
|
Commercial
|
|
9,802.67
|
|
August 30, 2048
|
Wu Xin Guo Yong (2008)
Di Zhuan No. 030
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province, PRC
|
|
Commercial
|
|
59,308.09
|
|
August 30, 2048
|
Wu Xin Guo Yong (2008)
Di Zhuan No. 031
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province, PRC
|
|
Commercial
|
|
79,178.94
|
|
August 30, 2048
|
Wu Xin Guo Yong (2008)
Di Zhuan No. 032
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province, PRC
|
|
Commercial
|
|
87,108.30
|
|
August 30, 2048
|
Wu Xin Guo Yong (2009)
Di Zhuan No. 005
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province, PRC
|
|
Commercial
|
|
176,853.70
|
|
August 30, 2048
|
Wu Xin Guo Yong (2009)
Di Zhuan No. 006
|
|
South of Han Shi Road, Wuhan Yangluo Economic Development Zone, Hubei Province, PRC
|
|
Commercial
|
|
103,304.49
|
|
August 30, 2048
|
As
of December 31, 2016, as disclosed in the notes to our financial statements, we have completed the construction of four buildings
covering area of approximately 35,350.4 square meters of construction area. We have also physically completed other three buildings
in the area and are in the process of obtaining necessary government approval. We have obtained advance sales permits on these
three buildings.
The
following chart illustrates the properties we currently lease in Wuhan, Hubei Province, PRC and New York, United States. We do
not have ownership over such properties.
Name of the Property
|
|
Location
|
|
Purpose of Use
|
|
Area (㎡)
|
|
Duration Date
|
Land Lease No. HZ20150427 (1)
|
|
Chunfeng Village, Yangluo Neighborhood, Wuhan, Hubei Province,
PRC
|
|
Commercial
|
|
1,214,654.52
|
|
April 26, 2035
|
New York Office Premise
|
|
41 John Street, New York, NY 10038
|
|
Commercial
|
|
Suite 2A
|
|
March 31, 2018
|
(1)
|
On
October 8, 2016, we entered an amendment to the Land Lease No. HZ20150427 Agreement (“Amendment”) that was executed
on April 27, 2015 between the Company and Chunfeng Villagers Committee at the Yangluo Neighborhood Office in Xinzhou District,
Wuhan (“CVC”). We agreed to make an advance payment of the first year rent to CVC (“First Year Rent”),
upon the earlier of the following date or event to occur: (i) June 3rd, 2017; or (ii) within 5 days after the Company’s
port terminal obtains approval from the government. The term of such land lease is 20 years from the date of CVC’s receipt
of the First Year Rent.
|
Legal
Proceedings
There
are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that
is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries.
Except as described below, no director or executive officer has been a director or executive officer of any business which has
filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years. No current director or executive
officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years.
No current director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities
during the past ten years. No current director or officer has been found by a court to have violated a federal or state securities
or commodities law during the past ten years.
On
December 19, 2015, James Coleman joined us as Executive Director. Prior to joining us, Mr. Coleman was the managing member and
owner of Firebird International LLC, Dream International Holdings LLC and Dream Recovery International LLC, all of which are privately
held companies engaged primarily in drug rehabilitation businesses. On September 13, 2016, all three entities mentioned above
filed voluntary petitions in the United States Bankruptcy Court for the District of Southern Florida seeking relief under the
provisions of chapter 7 of title 11 of the United States Code in order to facilitate liquidations in these three entities.
In
addition, there are no material proceedings to which any affiliate to our Company, or any owner of record or beneficially of more
than five percent of any class of voting securities of our Company, is a party that is adverse to our Company or any of our subsidiaries
or has a material interest adverse to our Company or any or our subsidiaries. We are not currently involved in any litigation
that we believe could have a material adverse effect on our financial condition or results of operations.
However,
from time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that
may harm our business.
RISK FACTORS
An
investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together
with all of the other information included in this prospectus, before making an investment decision. If any of the following risks
actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our
shares of common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Cautionary
Note Regarding Forward Looking Statements” below for a discussion of what types of statements are forward-looking statements,
as well as the significance of such statements in the context of this prospectus.
Risks
Relating to Our Business
MAJORITY
OF OUR BUSINESS, ASSETS AND OPERATIONS ARE LOCATED IN THE PEOPLE’S REPUBLIC OF CHINA.
The
majority of our business, assets and operations are located in the People’s Republic of China. The economy of the PRC differs
from the economies of most developed countries in many respects. The economy of the PRC has been transitioning from a planned
economy to a market-oriented economy. Although in recent years the PRC’s government has implemented measures emphasizing
the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment
of sound corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by
the PRC’s government. In addition, the PRC’s government continues to play a significant role in regulating industry
by imposing industrial policies. The PRC’s government exercises significant control over the PRC’s economic growth
through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy
and providing preferential treatment to particular industries or companies. Some of these measures benefit the overall economy
of the PRC, but may have a negative effect on us.
ACTIONS
OF GOVERNMENT OR CHANGE OF POLICIES MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We
are at risk from significant and rapid change in the legal systems, regulatory controls, and practices in areas in which we operate.
These affect a wide range of areas including the real estate development approval system, employment practices, transportation,
cargo storage, logistics, financing and sale of the buildings; our property rights; data protection; environment, health and safety
issues; macro-economic policies, central government directions and instructions, China’s Five Year Plan, “One Belt
One Road” initiative; and accounting, taxation and stock exchange regulation. Accordingly, changes to, or violation of,
these systems, controls or practices could increase costs and have material and adverse impacts on the reputation, performance
and financial condition of our development and operation.
IF
WE NEED ADDITIONAL CAPITAL TO FUND OUR FUTURE OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO
LIMIT THE SCOPE OF OUR OPERATIONS.
If
adequate additional financing is not available on reasonable terms, we may not be able to undertake ongoing real estate construction
or continue to develop and expand the services of our Logistics Center, which may as a result impact our cash flow and we would
have to modify our business plans accordingly. We will not be able to fully implement our business plan unless the $1 billion
funding (as described in the prospectus summary) is in place by 2020 and we do not have any definitive agreement nor letter
of intent for such financing except for this offering. There is no assurance that additional financing will be available
to us.
In
connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital
to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including
(i) our profitability; (ii) the development of competitive projects undertaken by our competition; and (iii) the level of our
investment in construction and development. We cannot assure you that we will be able to obtain capital in the future to meet
our needs.
If
we cannot obtain additional funding, we may be required to: (i) limit our operations and expansion; (ii) limit our marketing efforts;
and (iii) decrease or eliminate capital expenditures. Such reductions could have a materially adverse effect on our business and
our ability to compete.
Even
if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving such additional
capital that are favorable to us. Any future capital investments could dilute or otherwise materially and adversely affect the
holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain
financing could have rights, preferences and privileges senior to the common stock offered hereof. We cannot give you any assurances
that any additional financing will be available to us, or if available, will be on terms favorable to us.
WE
HAVE SUSTAINED SIGNIFICANT RECURRING OPERATING LOSSES AND EXPERIENCED NEGATIVE CASH FLOW FOR OPERATIONS SINCE INCEPTION.
We
have sustained recurring losses and experienced negative cash flow from operations since inception. Since inception, we have focused
on developing and implementing our business plan. As of December 31, 2016, we have generated cumulative losses of approximately
$29 million since inception, and we expect to continue to incur losses until 2018. We believe that our existing cash resources
will not be sufficient to sustain operations during the next twelve months. We need to generate revenue and raise funding in order
to sustain our operations and continue to implement our business plan. If we are unable to obtain additional funds when they are
needed or if such funds cannot be obtained on terms acceptable to us, we would likely be unable to execute upon the business plan
or pay expenses as they are incurred, which would have a material, adverse effect on our business, financial condition and results
of operations. The amount of future losses and when, if ever, we will achieve profitability are uncertain.
WE
DERIVE THE MAJORITY OF OUR REVENUES FROM SALES IN THE PRC AND ANY DOWNTURN IN THE CHINESE ECONOMY COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
The
majority of our revenues are expected to be generated from sales of our properties and services in the PRC and we anticipate that
revenues from such sales will continue to represent the substantial portion of our total revenues in the near future. Our sales
and earnings can also be affected by changes in the general economy. Our success is influenced by a number of economic factors
which affect consumer income, such as employment levels, business conditions, interest rates, oil and gas prices and taxation
rates. Adverse changes in these economic factors, among others, may restrict consumer spending, thereby negatively affecting our
sales and profitability.
WE
ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION THAT COULD CAUSE US TO INCUR SIGNIFICANT LIABILITIES OR RESTRICT OUR BUSINESS ACTIVITIES.
Regulatory
requirements could cause us to incur significant liabilities and operating expenses and could restrict our business activities.
We are subject to statutes and rules regulating, among other things, certain developmental matters, building and site design,
and matters concerning the protection of health and the environment. Our operating expenses may be increased by governmental regulations,
such as building permit allocation ordinances and impact and other fees and taxes that may be imposed to defray the cost of providing
certain governmental services and improvements. Any delay or refusal from government agencies to grant us necessary licenses,
permits, and approvals could have an adverse effect on our operations.
OUR
SALES WILL BE AFFECTED IF MORTGAGE FINANCING BECOMES MORE COSTLY OR OTHERWISE BECOMES LESS ATTRACTIVE.
Certain
purchasers of our properties are expected to rely on mortgages to finance their purchases. An increase in interest rates may significantly
increase the cost of mortgage financing, thus affecting the affordability of our properties. The PRC’s government and commercial
banks may also increase the down payment requirement, impose other conditions or otherwise change the regulatory framework in
a manner that would make mortgage financing unavailable or unattractive to potential property purchasers. If the availability
or attractiveness of mortgage financing is reduced or limited, many of our prospective customers may not be able to purchase our
properties and, as a result, our business, liquidity and results of operations could be adversely affected.
THE
PRACTICE OF PRE-SELLING PROJECTS MAY EXPOSE US TO SUBSTANTIAL LIABILITIES.
It
is common practice by property developers in China to pre-sell properties (while still under construction), which involves certain
risks. For example, we may fail to complete a property development that may have been fully or partially pre-sold, which
would leave us liable to purchasers of pre-sold units for losses suffered by them without adequate resources to pay the liability
if funds have been used on the project. In addition, if a pre-sold property development is not completed on time, the purchasers
of pre-sold units may be entitled to compensation for late delivery. If the delay extends beyond a certain period, the purchasers
may be entitled to terminate the pre-sale agreement and pursue a claim for damages that exceeds the amount paid and our ability
to recoup the resulting liability from future sales.
WE
ARE DEPENDENT ON THIRD-PARTY SUBCONTRACTORS, MANUFACTURERS, AND DISTRIBUTORS FOR ALL ARCHITECTURE, ENGINEERING AND CONSTRUCTION
SERVICES, AND CONSTRUCTION MATERIALS. A DISCONTINUED SUPPLY OF SUCH SERVICES AND MATERIALS WILL ADVERSELY AFFECT OUR PROJECTS.
We
are dependent on third-party subcontractors, manufacturers, and distributors for all architecture, engineering and construction
services, and construction materials. A discontinued supply of such services and materials will adversely affect our construction
projects and the success of the Company.
WE
MAY BE ADVERSELY AFFECTED BY FLUCTUATIONS IN THE PRICE OF RAW MATERIALS AND SELLING PRICES OF OUR PROPERTIES.
The
land and raw materials that are used in our projects have experienced significant price fluctuations in the past. There is no
assurance that they will not be subject to future price fluctuations or pricing control. The land and raw materials that are used
in our projects may experience price volatility caused by events such as market fluctuations or changes in governmental programs.
The market price of land and raw materials may also experience significant upward adjustment, if, for instance, there is a material
under-supply or over-demand in the market. These price changes may ultimately result in increases in the selling prices of our
properties, and may, in turn, adversely affect our sales volume, sales, operating income, and net income.
WE
FACE INTENSE COMPETITION FROM OTHER REAL ESTATE DEVELOPERS AND/OR LOGISTICS COMPANIES.
The
real estate and logistics industries in the PRC are both highly competitive. Many of our competitors are well capitalized and
have greater financial, marketing, and other resources than we do. Some of our competitors also have larger land banks, greater
economies of scale, broader name recognition, a longer track record, and more established relationships in certain markets. Competition
among property developers may result in increased costs for the acquisition of land for development, increased costs for raw materials,
shortages of skilled contractors, oversupply of properties, decrease in property prices in certain parts of the PRC, a slowdown
in the rate at which new buildings are approved and/or reviewed by the relevant government authorities and an increase in administrative
costs for hiring or retaining qualified personnel, any of which may adversely affect our business and financial condition. Furthermore,
property developers that are better capitalized than we are may be more competitive in acquiring land through the auction process.
If we cannot respond to changes in market conditions as promptly and effectively as our competitors or effectively compete for
land acquisition through the auction systems and acquire other factors of production, our business and financial condition will
be adversely affected.
OVER-SUPPLY
OF REAL ESTATE PROPERTIES COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR RESULTS OF OPERATIONS.
Most
of our assets consist of real estate properties within the premise of our Logistics Center. While our business will primarily
revolve around the services provided by the Logistics Center, we expect to sell and/or lease properties to other businesses to
generate revenue. Although we expect the value of our real estate properties to appreciate , risk of property over-supply is increasing
in parts of China on a macro-level, where property investment, trading and speculation have become overly active. We are exposed
to the risk that in the event of actual or perceived over-supply, property prices may fall drastically, and our revenue and profitability
will be adversely affected. If we cannot sell or lease our properties at a favorable price, we may not have the necessary capital
resources to fully execute our business plan and therefore our results of operations will be adversely affected.
WE
MAY NOT HAVE SUFFICIENT EXPERIENCE AS A COMPANY CONDUCTING STORAGE AND PROCESSING SERVICES, INFORMATION SERVICES AND LOGISTICS
FINANCING, OR IN OTHER AREAS REQUIRED FOR THE SUCCESSFUL IMPLEMENTATION OF OUR BUSINESS PLAN.
We
may not have sufficient experience as a company in conducting storage and processing services, information services, logistics
financing or other areas required for the successful implementation of our business plan. This may result in the Company
experiencing difficulty in adequately operating and growing its business. If our operating or management abilities
consistently perform below expectations, then our business is unlikely to thrive.
WE
ARE HEAVILY DEPENDENT UPON THE SERVICES OF EXPERIENCED PERSONNEL WHO POSSESS SKILLS THAT ARE VALUABLE IN OUR INDUSTRY, AND WE
MAY HAVE TO ACTIVELY COMPETE FOR THEIR SERVICES.
We
are heavily dependent upon our ability to attract, retain and motivate skilled personnel to serve our customers. Many of our personnel
possess skills that would be valuable to all companies engaged in our industry. Consequently, we expect that we will have to actively
compete for these employees. Some of our competitors may be able to pay our employees more than we are able to pay to retain them.
Our ability to profitably operate is substantially dependent upon our ability to locate, hire, train and retain our personnel.
There can be no assurance that we will be able to retain our current personnel, or that we will be able to attract and assimilate
other personnel in the future. If we are unable to effectively obtain and maintain skilled personnel, the development and quality
of our services could be materially impaired.
DEFAULTING
ON BANK LOANS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS
We
plan to develop a full-service logistics center using the properties we have obtained land-use rights to. To finance the development,
part of Company’s properties held for development and land lots under development have been pledged as collateral for financial
institution loans. As of December 31, 2016, we have an outstanding loan payable to China Construction Bank totaling $41,456,074.
The loan has a maturity date of May 29, 2020. The loan is a floating rate loan whose rate (2016: 5.58% per annum and 2015: 6.33%
per annum) is set at 5% above the over 5 years base borrowing rate stipulated by the People’s Bank of China. The secured
bank loan with China Construction Bank contains certain protective contractual provisions that limit our activities in order to
protect the lender. The risk of default may increase in the event of an economic downturn or due to our failure to successfully
execute our business plan. Defaulting on our bank loans could result in loss of our collateralized assets and cause a material
adverse effect on our results of operations.
WE
HAVE LIMITED INSURANCE COVERAGE AGAINST DAMAGES OR LOSS WE MIGHT SUFFER.
We
do not carry business interruption insurance and therefore any business disruption or natural disaster could result in substantial
damages or losses to us. In addition, there are certain types of losses (such as losses from forces of nature) that are generally
not insured because either they are uninsurable or insurance cannot be obtained on commercially reasonable terms. Should an uninsured
loss or a loss in excess of insured limits occur, our business could be materially adversely affected. If we were to suffer any
losses or damages to our properties, our business, financial condition and results of operations would be materially and adversely
affected.
OUR
OPERATING COMPANIES MUST COMPLY WITH ENVIRONMENTAL PROTECTION LAWS THAT COULD ADVERSELY AFFECT OUR PROFITABILITY.
We
are required to comply with the environmental protection laws and regulations promulgated by the national and local governments
of the PRC. Some of these regulations govern the level of fees payable to government entities providing environmental protection
services and the prescribed standards relating to construction. Although construction technologies allow us to efficiently control
the level of pollution resulting from our construction process, due to the nature of our business, wastes are unavoidably generated
in the process. If we fail to comply with any of the environmental laws and regulations of the PRC, depending on the type and
severity of the violation, we may be subject to, among other things, warnings from relevant authorities, imposition of fines,
specific performance and/or criminal liability, forfeiture of profits made, or an order to close down our business operations
and suspension of relevant permits.
THE
OPERATING HISTORIES OF OUR OPERATING COMPANIES MAY NOT SERVE AS ADEQUATE BASES TO JUDGE OUR FUTURE PROSPECTS AND RESULTS OF OPERATIONS.
The
operating histories of Wuhan Newport may not provide a meaningful basis for evaluating our business following consummation of
the Second Share Exchange. Although the business of Wuhan Newport has grown rapidly since its inception, we cannot guarantee
that we can achieve profitability or that we will have net profit in the future. We will encounter risks and difficulties that
companies at a similar stage of development frequently experience, including the potential failure to:
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obtain
sufficient working capital to support our development and construction;
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manage
our expanding operations and continue to meet customers’ demands;
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maintain
adequate control of our expenses allowing us to realize anticipated income growth;
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implement,
adapt and modify our property development, sales, and business strategies as needed;
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successfully
integrate any future acquisitions; and
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anticipate
and adapt to changing conditions in the real estate industry resulting from changes in government regulations, mergers and
acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.
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If
we are not successful in addressing any or all of the foregoing risks, our business may be materially and adversely affected.
WE
MAY NOT BE ABLE TO SUCCESSFULLY EXECUTE OUR BUSINESS STRATEGY, WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
RESULTS OF OPERATIONS.
Since
China is a large and diverse market, consumer trends and demands can vary significantly by region and Wuhan Newport’s experience
in the markets in which it currently operates may not be applicable in other parts of China. As a result, we may not be able to
leverage Wuhan Newport’s experience to fully execute our business strategy and plan. When we enter new markets, we may face
intense competition from companies with greater experience or a more established presence in the targeted geographical areas or
from other companies with similar business strategies. Therefore, we may not be able to adequately grow our sales due to intense
competitive pressures and/or the substantial costs involved.
OUR
FAILURE TO EFFECTIVELY MANAGE GROWTH MAY CAUSE A DISRUPTION OF OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE REVENUE AT
THE LEVELS WE EXPECT.
In
order to maximize potential growth in Wuhan Newport’s current and potential markets, we believe that we must be able to
sell our properties and obtain clients to use the services provided by our Logistics Center to ensure the sustainable development
capability of the Company and to maintain our operations. This strategy may place a significant strain on our management and our
operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating
procedures, and management information systems. We will also need to effectively train, motivate, and manage our employees. Our
failure to effectively manage our operations could prevent us from generating the revenues we expect and therefore have a material
adverse effect on the results of our operations.
WE
MAY NEED ADDITIONAL EMPLOYEES TO MEET OUR OPERATIONAL NEEDS.
Our
future success also depends upon our ability to attract and retain highly qualified personnel. We may need to hire additional
managers and employees with industry experience from time to time, and our success will be highly dependent on our ability to
attract and retain skilled management personnel and other employees. There can be no assurance that we will be able to attract
or retain highly qualified personnel. Competition for skilled personnel in the real estate and logistics industries is significant.
This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees.
WE
WILL INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.
We
will incur significant costs associated with our public company reporting requirements, costs associated with newly applicable
corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by
the SEC. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance
costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may
make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to
accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result,
it may be more difficult for us to attract or retain qualified individuals to serve on our board of directors or as executive
officers. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
WE
HAVE IDENTIFIED MATERIAL WEAKNESSES IN OUR INTERNAL CONTROL OVER FINANCIAL REPORTING WHICH HAVE RESULTED IN MATERIAL MISSTATEMENTS
IN OUR PREVIOUSLY ISSUED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016.
We
have concluded that there are material weaknesses in our internal control over financial reporting for the fiscal year ended December
31, 2016. Management identified the following material weaknesses in its assessment of the effectiveness of internal control over
financial reporting as of December 31, 2016:
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Lack
of sufficient full-time accounting staff in our accounting department that have experience and knowledge in identifying and
resolving complex accounting issues under U.S. Generally Accepted Accounting Principles (“GAAP”); The weakness
resulted in the restatement of consolidated balance sheet and consolidated income statement to treat an extinguishment transaction
between related entities as a capital transaction in the Form 10-K for the year ended December 31, 2015; and
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Lack
of sufficient accounting personnel which would provide segregation of duties within our internal control procedures to support
the accurate reporting of our financial results; The weakness resulted in the amendment and additions of the disclosure of
real estate properties and land lots under development in the Form 10-K for the year ended December 31, 2015.
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Any
actions we have taken or may take to address the material weaknesses we had for the fiscal year ended December 31, 2016 are subject
to continued management review supported by testing, as well as oversight by the Audit Committee of our Board of Directors. Although
the Audit Committee and Nomination Committee of the Board will further take actions to remediate the weaknesses in our internal
control, we cannot assure you that these material weaknesses will not occur in the future and that we will be able to remediate
such weaknesses in a timely manner, which could impair our ability to accurately and timely report our financial position, results
of operations or cash flows. If our remedial measures are again insufficient to address the material weaknesses, or if additional
material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the
future, our consolidated financial statements may contain material misstatements and we could be required to further restate our
financial results. In addition, if we are unable to successfully remediate the material weaknesses in our internal controls or
if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be
unable to maintain compliance with applicable stock exchange listing requirements.
OUR
CERTIFICATES, PERMITS, AND LICENSES RELATED TO OUR OPERATIONS ARE SUBJECT TO GOVERNMENTAL CONTROL AND RENEWAL, AND FAILURE TO
OBTAIN OR RENEW SUCH CERTIFICATES, PERMITS, AND LICENSES WILL CAUSE ALL OR PART OF OUR OPERATIONS TO BE TERMINATED.
Our
operations require licenses, permits and, in some cases, renewals of these licenses and permits from various governmental authorities
in the PRC. Our ability to obtain, maintain, or renew such licenses and permits on acceptable terms is subject to change, as are,
among other things, the regulations and policies of applicable governmental authorities.
If
our land use permits are revoked or suspended or we are unable to renew the permits for any reason, we cannot assure you that
our business operations will not be stopped and, accordingly, our financial performance would be adversely affected.
IF
THE LEGALITY OR VALIDITY OF OUR LEASE OF THE COLLECTIVE-OWNED LAND USE RIGHTS IS CHALLENGED, THERE MAY BE DISRUPTION TO THE DEVELOPMENT
OF THE LAND AND SUCH DISRUPTION COULD HAVE A MATERIALLY ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.
We
leased collective-owned land use rights from the Chunfeng Villagers’ Committees. The right to operate and manage such land
is vested in the relevant local villagers’ committee or rural collective leadership who are allowed to divide the land into
parcels and contracts the rights to operate such parcels of land to individual farmer households or, subject to the approval of
local governments and the requisite vote of the farmer households, to any entity or person outside that village or rural collective.
Any
change in law and the administrative system could render our lease unenforceable. According to the PRC Law on Land Administration,
all lands in the PRC are either state-owned or collectively owned. Generally, lands in the urban areas of a city or town are state-owned,
whereas lands in the rural areas of a city or town and all rural lands are, unless otherwise specified by law, collectively owned.
When required, the state has the right to reclaim the collectively owned lands in accordance with law if such reclaim is beneficial
to the public.
Additionally,
the lease may subject to the preemptive rights of other farmers in the same village or rural collective. If the preemptive rights
are not exercised within two months from the date on which we start using the parcels of land, it is very likely that the PRC
courts will not enforce such preemptive rights. As of the date of this prospectus, two months or more have passed since we started
using the land we leased from Chunfeng villagers’ committee and we have not received any claim from person purporting to
assert the pre-emption rights.
If
the legality or validity of our leases become subject to disputes or challenges, we may need to suspend at least part of our constructions
on the respective land areas. We may incur costs and losses if we are required to remove our improvements, such as buildings and
facilities that we have constructed or purchased. We could also lose our rights to use the land and our business, financial condition
and results of operations could be materially and adversely affected.
OUR
FACILITIES AND INVENTORY MAY BE AFFECTED BY FIRE OR NATURAL CALAMITIES. OUR OPERATIONS ARE ALSO SUBJECT TO THE RISK OF POWER OUTAGES,
EQUIPMENT FAILURES OR LABOR DISTURBANCES AND OTHER BUSINESS INTERRUPTIONS. WE HAVE LIMITED INSURANCE COVERAGE AND DO NOT CARRY
ANY BUSINESS INTERRUPTION INSURANCE.
A
fire, floods or other natural calamity may result in significant damage to our production facilities and inventory. Our operations
are subject to risks of various business interruptions, including power outages, equipment failures or disturbances from labor
unrest. If we are unable to obtain timely replacements of damaged inventory or equipment, or if we are unable to find an acceptable
contract manufacturer in the event our production facilities are damaged by a catastrophic event, then major disruptions to our
production would result, which would have significant adverse effect on our operations and financial results. Our property insurance
may not be sufficient to cover damages to our production facilities, and we do not carry any business interruption insurance covering
lost profits as a result of the disruption to our production.
Risks
Relating to Doing Business in China
IF
OUR LAND USE RIGHTS ARE REVOKED, WE WOULD HAVE NO OPERATIONAL CAPABILITIES.
Under
the PRC law, land is owned by the state or rural collective economic organizations. The state issues to tenants the rights to
use property. Use rights can be revoked and the tenants may be forced to vacate at any time when redevelopment of the land is
in the public interest. The public interest rationale is interpreted quite broadly and the process of land appropriation may be
less than transparent. If this happens, we may be forced to (i) delay the construction of commercial facilities or (ii) curtail
or cease construction on that land. We relied on these land use rights as the cornerstone of our operations, and the loss of such
rights would have a material adverse effect on our business and results of operation.
IN
THE EVENT THE ACQUISITION OF WUHAN NEWPORT BY RICOFELIZ REQUIRES MOFCOM’S APPROVAL AND WE ARE NOT ABLE TO OBTAIN SUCH APPROVAL,
THE ACQUISITION MAY BE UNWOUND.
On
August 8, 2006, the PRC Ministry of Commerce (“
MOFCOM
”), the State Assets Supervision and Administration Commission,
the State Administration for Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission
and the State Administration of Foreign Exchange jointly promulgated the Provisions on the Acquisition of Domestic Enterprises
by Foreign Investors (the “
M&A Rules
”), as amended by the Ministry of Commerce of the PRC on June 22, 2009.
The M&A Rules require that a merger and acquisition of a domestic company with a “related party relationship”
by a domestic company, enterprise or natural person in the name of an overseas company legitimately incorporated or controlled
by the domestic company, enterprise or natural person shall be subject to examination and approval by MOFCOM. However, there is
no definition or explanation of what constitutes a “related party relationship” in the M&A Rules, and, as a result,
we are uncertain as to the interpretation of the M&A Rules with regard to the existing relationship between Mr. Xiangyao Liu,
Ricofeliz and Wuhan Newport at the moment immediately before the acquisition of Wuhan Newport by Ricofeliz. If such relationship
is considered as a “related party relationship”, the acquisition of Wuhan Newport by Ricofeliz, which has been approved
by the local Wuhan Bureau of MOFCOM, may be subject to the approval of the national MOFCOM. Although M&A Rules have been effective
since September 2006, we are not aware of any precedent for approval by MOFCOM of any related party acquisition conducted
by PRC domestic individuals. Since there is no clear guidance under the M&A Rules, it is difficult to determine
whether MOFCOM or other PRC regulatory agencies would consider such approval necessary and, if so, whether we would be able to
obtain MOFCOM approval, or if we fail to obtain such approval, what would be the consequence of such failure. Failure to obtain
MOFCOM’s approval may result in regulatory actions or other sanctions (including administrative order to unwind the acquisition)
from MOFCOM or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the
PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our financing, investment,
or operating activities into the PRC, or take other actions that could have a material adverse effect on our business, financial
condition, results of operations, reputation and prospects.
LABOR
LAWS IN THE PRC MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
On
June 29, 2007, the PRC’s government promulgated the Labor Contract Law of the PRC, which became effective on January 1,
2008. The Labor Contract Law imposes greater liabilities on employers and significantly affects the cost of an employer’s
decision to reduce its workforce. Further, the law requires certain terminations be based upon seniority and not merit. In the
event that we decide to significantly change or decrease our workforce, the Labor Contract Law could adversely affect our ability
to enact such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially
and adversely affecting our financial condition and results of operations.
WE
MAY BE EXPOSED TO LIABILITIES UNDER THE FOREIGN CORRUPT PRACTICES ACT AND CHINESE ANTI-CORRUPTION LAW.
In
connection with this offering, we will become subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), and other
laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by
U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are also subject to
Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. We have operations, agreements
with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized
payments or offers of payments by one of the employees, consultants or distributors of our company, because these parties are
not always subject to our control. We are in the process of implementing an anticorruption program, which will prohibit the offering
or giving of anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or retaining business.
The anticorruption program also requires that clauses mandating compliance with our policy be included in all contracts with foreign
sales agents, sales consultants and distributors and that they certify their compliance with our policy annually. It further requires
that all hospitality involving promotion of sales to foreign governments and government-owned or controlled entities be in accordance
with specified guidelines. In the meantime, we believe to date we have complied in all material respects with the provisions of
the FCPA and Chinese anti-corruption laws. However, our existing safeguards and any future improvements may prove to be less than
effective, and the employees, consultants and/or distributors of our Company may engage in conduct for which we might be held
responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may
be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition,
the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we
invest or that we acquire.
UNCERTAINTIES
WITH RESPECT TO THE PRC’S LEGAL SYSTEM COULD ADVERSELY AFFECT US.
We
conduct a substantial amount of our business through our subsidiary in China. Our operations in China are governed by PRC laws
and regulations. Our PRC subsidiary is generally subject to laws and regulations applicable to foreign investments in China and,
in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is based on statutes.
Prior court decisions may be cited for reference but have limited precedential value.
Since
1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments
in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently
cover all aspects of economic activities in China. In particular, because some of these laws and regulations are relatively new,
and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these
laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal
rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not
be aware of our violation of these policies and rules until sometime after the violation. In addition, any litigation in China
may be protracted and result in substantial costs and diversion of resources and management attention.
GOVERNMENTAL
CONTROL OF CURRENCY CONVERSION MAY AFFECT THE VALUE OF YOUR INVESTMENT.
The
PRC government imposes controls on the convertibility of the Renminbi, or “RMB” into foreign currencies and, in certain
cases, the remittance of currency out of China. We receive some revenue and incur some expenses in U.S. dollars but incur other
expenses primarily in RMB. Although our main business is based in mainland China or based in Hong Kong with Chinese operating
subsidiaries, some of our business may require us to use U.S. dollars. We choose quotations based on price competitiveness.
Under
our current corporate structure, our income is primarily derived from dividend payments from our PRC subsidiaries. Shortages in
the availability of foreign currency may restrict the ability of our PRC subsidiary to remit sufficient foreign currency to pay
dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from
trade-related transactions can be made in foreign currencies without prior approval from SAFE by complying with certain procedural
requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The
PRC government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions.
If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands,
we may not be able to pay dividends in foreign currencies to our security-holders.
WE
ARE A HOLDING COMPANY AND WE RELY ON FUNDING FOR DIVIDEND PAYMENTS FROM OUR SUBSIDIARIES, WHICH ARE SUBJECT TO RESTRICTIONS UNDER
PRC LAWS.
We
are a holding company incorporated in Nevada and we operate our core businesses through our subsidiaries in the PRC. Therefore,
the availability of funds for us to pay dividends to our shareholders and to service our indebtedness depends upon dividends received
from such PRC subsidiary. If our subsidiary incurs debt or losses, its ability to pay dividends or other distributions to us may
be impaired. As a result, our ability to pay dividends and to repay our indebtedness will be restricted. PRC laws require that
dividends be paid only out of the after-tax profit of our PRC subsidiary calculated according to PRC accounting principles, which
differ in many aspects from generally accepted accounting principles in other jurisdictions. PRC laws also require enterprises
established in the PRC to set aside part of their after-tax profits as statutory reserves. These statutory reserves are not available
for distribution as cash dividends. In addition, restrictive covenants in bank credit facilities or other agreements that we or
our subsidiary may enter into in the future may also restrict the ability of our subsidiary to pay dividends to us. These restrictions
on the availability of our funding may impact our ability to pay dividends to our shareholders and to service our indebtedness.
OUR
BUSINESS MAY BE MATERIALLY AND ADVERSELY AFFECTED IF ANY OF OUR PRC SUBSIDIARIES DECLARES BANKRUPTCY OR BECOMES SUBJECT TO A DISSOLUTION
OR LIQUIDATION PROCEEDING.
The
Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007. The Bankruptcy Law provides that
an enterprise will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise’s
assets are, or are demonstrably, insufficient to clear such debts.
Our
PRC subsidiaries hold certain assets that are important to our business operations. If our PRC subsidiaries undergo a voluntary
or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby
hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and
results of operations.
According
to the SAFE’s Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange
Administration Policies for Direct Investment, effective on December 17, 2012, and the Provisions for Administration of Foreign
Exchange Relating to Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if our PRC subsidiaries undergo a
voluntary or involuntary liquidation proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders
abroad is no longer required, but we still need to conduct a registration process with the SAFE local branch. It is not clear
whether “registration” is a mere formality or involves the kind of substantive review process undertaken by SAFE and
its relevant branches in the past.
FLUCTUATIONS
IN EXCHANGE RATES COULD ADVERSELY AFFECT OUR BUSINESS AND THE VALUE OF OUR SECURITIES.
Changes
in the value of the RMB against the U.S. dollar, Euro and other foreign currencies are affected by, among other things, changes
in China’s political and economic conditions. Any significant revaluation of the RMB may have a material adverse effect
on our revenues and financial condition, and the value of, and any dividends payable on our shares in U.S. dollar terms. For example,
to the extent that we need to convert U.S. dollars we receive from our offering into RMB for our operations, appreciation of the
RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if
we decide to convert our RMB into U.S. dollars for the purpose of paying dividends on our common stock or for other business purposes,
appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us.
Since
July 2005, the RMB is no longer pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the
foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate
significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities
may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.
Very
limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not
entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness
of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign
currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign
currencies.
IF
WE BECOME DIRECTLY SUBJECT TO THE RECENT SCRUTINY, CRITICISM AND NEGATIVE PUBLICITY INVOLVING U.S.-LISTED CHINESE COMPANIES, WE
MAY HAVE TO EXPEND SIGNIFICANT RESOURCES TO INVESTIGATE AND RESOLVE THE MATTER WHICH COULD HARM OUR BUSINESS OPERATIONS, THIS
OFFERING AND OUR REPUTATION AND COULD RESULT IN A LOSS OF YOUR INVESTMENT IN OUR SHARES, ESPECIALLY IF SUCH MATTER CANNOT BE ADDRESSED
AND RESOLVED FAVORABLY.
Recently,
U.S. public companies that have substantially all of their operations in China, have been the subject of intense scrutiny, criticism
and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism
and negative publicity has centered around financial and accounting irregularities, a lack of effective internal controls over
financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in some cases, allegations
of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese
companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject
to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations.
It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on our company, our business
and this offering. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or
untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company. This situation
may be a major distraction to our management. If such allegations are not proven to be groundless, our company and business operations
will be severely hampered and your investment in our shares could be rendered worthless.
CERTAIN
POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO THE PRC COULD ADVERSELY AFFECT OUR COMPANY.
While
the PRC’s government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of
the PRC’s economy is still operating under five-year plans and annual state plans. Through these plans and other economic
measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various
industries, the PRC’s government exerts considerable direct and indirect influence on the economy. Many of the economic
reforms carried out by the PRC’s government are unprecedented or experimental, and are expected to be refined and improved.
Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment
process may not necessarily have a positive effect on our operations or future business development. Our operating results may
be adversely affected by changes in the PRC’s economic and social conditions as well as by changes in the policies of the
PRC government, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced
to control inflation, changes in the interest rate or method of taxation, and the imposition of restrictions on currency conversion
in addition to those described below.
SINCE
MOST OF OUR ASSETS ARE LOCATED IN PRC, ANY DIVIDENDS OF PROCEEDS FROM LIQUIDATION WILL BE SUBJECT TO THE APPROVAL OF THE RELEVANT
CHINESE GOVERNMENT AGENCIES.
Our
operating assets are located inside the PRC. Under the laws governing Foreign Invested Enterprise (“FIE”) in the PRC,
dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividends
of proceeds from liquidation will be paid through Wuhan Newport, our PRC subsidiary, which is subject to the decision of the board
of directors and subject to foreign exchange rules governing such repatriation. Any liquidation of a FIE is subject to the relevant
commerce authority’s approval, registration in relevant Administration for Industry and Commerce and supervision as well
as the foreign exchange control. Though the dividends of proceeds from liquidation can be remitted out of China to the investor
after they have been approved by the commerce authority and SAFE, we cannot assure that we can always obtain such approvals. This
may generate additional risk for our investors in case of dividend payment and liquidation.
IT
MAY BE DIFFICULT TO EFFECT SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL JUDGMENTS UPON OUR COMPANY AND OUR OFFICERS AND DIRECTORS
BECAUSE THEY RESIDE OUTSIDE THE UNITED STATES.
As
our operations are based in the PRC and a majority of our directors and officers reside in the PRC, service of process on the
Company and such foreign directors and officers may be difficult to effect within the United States. Also, our main assets are
located in the PRC and any judgment obtained in the United States against us may not be enforceable outside the United States.
THE
CHINESE GOVERNMENT EXERTS SUBSTANTIAL INFLUENCE OVER THE MANNER IN WHICH WE MUST CONDUCT OUR BUSINESS ACTIVITIES.
We
are dependent on our relationship with the local government in the provinces in which we operate our business. The Chinese government
has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation
and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating
to taxation, environmental regulations, land use rights, property and other matters. We believe that Wuhan Newport’s operations
in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments
of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government
actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally
planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on
economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold
in Chinese properties.
Future
inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced
periods of rapid expansion and high rates of inflation. Rapid economic growth can lead to growth in the money supply and rising
inflation. If prices for our properties rise at a rate that is insufficient to compensate for the rise in the costs of supplies,
it may have an adverse effect on profitability. These factors have led to the adoption by Chinese government, from time to time,
of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High
inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action,
which could inhibit economic activity in China, and thereby harm the market for our products.
OUR
SALES AND OPERATING REVENUES COULD DECLINE DUE TO MACRO-ECONOMIC AND OTHER FACTORS OUTSIDE OF OUR CONTROL, SUCH AS CHANGES IN
CLIENT CONFIDENCE AND DECLINES IN EMPLOYMENT LEVELS.
The
real estate and logistics markets in China are susceptible to fluctuations in economic conditions. Our business substantially
depends on the prevailing economic conditions in China. Changes in national and regional economic conditions, as well as local
economic conditions where we conduct our operations and where prospective purchasers of the Company’s properties live, may
result in more caution on the part of market participants and consequently fewer purchases. These economic uncertainties involve,
among other things, conditions of supply and demand in local markets and changes in client confidence and income, employment levels,
and government regulations. These risks and uncertainties could periodically have an adverse effect on consumer demand for and
the pricing of our homes, which could cause our operating revenues to decline. A reduction in our revenues could in turn negatively
affect the market price of our securities.
LIMITATIONS
ON CHINESE ECONOMIC MARKET REFORMS MAY DISCOURAGE FOREIGN INVESTMENT IN CHINESE BUSINESSES.
The
value of investments in Chinese businesses could be adversely affected by political, economic and social uncertainties in China.
The economic reforms introduced in China in recent years are regarded by China’s national government as a way to introduce
economic market forces into China. Given the overriding desire of the national government leadership to maintain stability in
China amid rapid social and economic changes in the country, the economic market reforms of recent years could be slowed, or even
reversed.
PRC
REGULATIONS RELATING TO THE ESTABLISHMENT OF OFFSHORE SPECIAL PURPOSE COMPANIES BY PRC RESIDENTS MAY SUBJECT OUR PRC RESIDENT
SHAREHOLDERS TO PENALTIES AND LIMIT OUR ABILITY TO INJECT CAPITAL INTO OUR PRC SUBSIDIARIES, LIMIT OUR PRC SUBSIDIARIES’
ABILITY TO DISTRIBUTE PROFITS TO US, OR OTHERWISE ADVERSELY AFFECT US.
The
SAFE promulgated the Notice on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment
through Special Purpose Vehicles, or Notice 37, in July 2014 that requires PRC residents or entities to register with SAFE or
its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas
investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special
purpose vehicle undergoes material events relating to material change of capitalization or structure of the PRC resident itself
(such as capital increase, capital reduction, share transfer or exchange, merger or spin off). As of November 21, 2016, Mr. Xiangyao
Liu, Mr. Linyu Chen and Mr. Long Zhao who are Chinese residents have completed the registration with SAFE under this Notice.
FAILURE
TO COMPLY WITH THE INDIVIDUAL FOREIGN EXCHANGE RULES RELATING TO THE OVERSEAS DIRECT INVESTMENT OR THE ENGAGEMENT IN THE ISSUANCE
OR TRADING OF SECURITIES OVERSEAS BY OUR PRC RESIDENT STOCKHOLDERS MAY SUBJECT SUCH STOCKHOLDERS TO FINES OR OTHER LIABILITIES.
Other
than Notice 37, our ability to conduct foreign exchange activities in the PRC may be subject to the interpretation and enforcement
of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007
(as amended and supplemented, the “
Individual Foreign Exchange Rules
”). Under the Individual Foreign Exchange
Rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities
or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions. PRC individuals who fail to
make such registrations may be subject to warnings, fines or other liabilities.
We
may not be fully informed of the identities of all our beneficial owners who are PRC residents. For example, because the investment
in or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in
brokerage accounts, it is unlikely that we will know the identity of all of our beneficial owners who are PRC residents. Furthermore,
we have no control over any of our future beneficial owners and we cannot assure you that such PRC residents will be able to complete
the necessary approval and registration procedures required by the Individual Foreign Exchange Rules.
It
is uncertain how the Individual Foreign Exchange Rules will be interpreted or enforced and whether such interpretation or enforcement
will affect our ability to conduct foreign exchange transactions. Because of this uncertainty, we cannot be sure whether the failure
by any of our PRC resident stockholders to make the required registration will subject our PRC subsidiaries to fines or legal
sanctions on their operations, delay or restriction on repatriation of proceeds of this offering into the PRC, restriction on
remittance of dividends or other punitive actions that would have a material adverse effect on our business, results of operations
and financial condition.
PRC
REGULATIONS RELATING TO ACQUISITIONS OF PRC COMPANIES BY FOREIGN ENTITIES MAY LIMIT OUR ABILITY TO ACQUIRE PRC COMPANIES AND ADVERSELY
AFFECT THE IMPLEMENTATION OF OUR ACQUISITION STRATEGY AS WELL AS OUR BUSINESS AND PROSPECTS.
The
PRC State Administration of Foreign Exchange, or SAFE, issued a public notice in January 2005 concerning foreign exchange regulations
on mergers and acquisitions in China. The public notice states that if an offshore company controlled by PRC’s residents
intends to acquire a PRC company, such acquisition will be subject to strict examination by the relevant foreign exchange authorities.
The public notice also states that the approval of the relevant foreign exchange authorities is required for any sale or transfer
by the PRC’s residents of a PRC company’s assets or equity interests to foreign entities, such as us, for equity interests
or assets of the foreign entities.
In
April 2005, SAFE issued another public notice further explaining the January notice. In accordance with the April notice, if an
acquisition of a PRC company by an offshore company controlled by PRC residents has been confirmed by a Foreign Investment Enterprise
Certificate prior to the promulgation of the January notice, the PRC residents must each submit a registration form to the local
SAFE branch with respect to their respective ownership interests in the offshore company, and must also file an amendment to such
registration if the offshore company experiences material events, such as changes in the share capital, share transfer, mergers
and acquisitions, spin-off transactions or use of assets in China to guarantee offshore obligations.
On
May 31, 2007, SAFE issued another official notice known as “Circular 106,” which requires the owners of any Chinese
company to obtain SAFE’s approval before establishing any offshore holding company structure to facilitate foreign financing
or subsequent acquisitions in China.
If
we decide to acquire a company organized under the laws of the PRC, we cannot assure investors that we or the owners of such company,
as the case may be, will be able to obtain the necessary approvals, filings and registrations for the acquisition. This may restrict
our ability to implement our acquisition strategy and adversely affect our business and prospects.
CAPITAL
OUTFLOW POLICIES IN CHINA MAY HAMPER OUR ABILITY TO REMIT INCOME TO THE UNITED STATES AND RESTRICTIONS ON CURRENCY EXCHANGE MAY
LIMIT OUR ABILITY TO UTILIZE OUR REVENUES EFFECTIVELY.
The
PRC’s government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance
of currency out of China. We receive all of our revenue in RMB. Under our current corporate structure, our U.S. holding company
may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing
PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade
and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration
of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. Therefore, our PRC subsidiary is able
to pay dividends in foreign currencies to us without prior approval from SAFE by complying with certain procedural requirements.
However, approval from or registration with appropriate government authorities is required where RMB is to be converted into a
foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.
This could affect the ability of our PRC subsidiary to obtain foreign exchange through debt or equity financings, including by
means of loans or capital contributions from us. In the future, the PRC government may also, at its discretion, restrict access
to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient
foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our stockholders.
The
majority of our revenues and operating expenses are denominated in RMB. The PRC government imposes controls on the convertibility
of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Pursuant to the Foreign Currency
Administration Rules, promulgated on January 29, 1996 and amended on January 14, 1997, and various regulations issued by SAFE
and other relevant PRC government authorities, RMB is freely convertible only to the extent of current account items, such as
trade-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and
repatriation of investments, require the prior approval from SAFE or its local branch for conversion of RMB into a foreign currency
such as U.S. dollars, and remittance of the foreign currency outside the PRC. Shortages in the availability of foreign currency
may restrict the ability of our PRC subsidiary to remit sufficient foreign currency to pay dividends or other payments to us,
or otherwise satisfy its foreign currency-denominated obligations. Currently, each of our PRC subsidiary and affiliates may purchase
foreign exchange for settlement of “current account transactions,” including payment of dividends to us and payment
of licensing fees and service fees to foreign licensors and service providers, without the approval of SAFE. However, approval
from the SAFE or its local branch is required where RMB is to be converted into foreign currency and remitted out of China to
pay capital expenses, such as the repayment of loans denominated in foreign currencies.
BECAUSE
OUR FUNDS ARE HELD IN BANKS THAT DO NOT PROVIDE INSURANCE, THE FAILURE OF ANY BANK IN WHICH WE DEPOSIT OUR FUNDS MAY AFFECT OUR
ABILITY TO CONTINUE TO OPERATE.
Banks
and other financial institutions in the PRC do not provide insurance for funds held on deposit. As a result, in the event of a
bank failure, we may not have access to funds on deposit. Depending upon the amount of money we maintain in a bank that fails,
our inability to have access to our cash may impair our operations, and, if we are not able to access funds to pay our suppliers,
employees and other creditors, we may be unable to continue to operate.
IF
WE ARE UNABLE TO OBTAIN BUSINESS INSURANCE IN THE PRC, WE MAY NOT BE PROTECTED FROM RISKS THAT ARE CUSTOMARILY COVERED BY INSURANCE
IN THE UNITED STATES.
Business
insurance is not readily available in the PRC. To the extent that we suffer a loss of a type that would normally be covered by
insurance in the United States, such as product liability and general liability insurance, we would incur significant expenses
in both defending any action and in paying any claims that result from a settlement or judgment. We have not obtained fire, casualty
and theft insurance, and there is no insurance coverage for our raw materials, goods and merchandise, furniture or buildings in
China. Any losses incurred by us will have to be borne by us without any assistance, and we may not have sufficient capital to
cover material damage to, or the loss of, our production facility due to fire, severe weather, flood or other causes, and such
damage or loss may have a material adverse effect on our financial condition, business and prospects.
UNDER
THE NEW ENTERPRISE INCOME TAX LAW, WE MAY BE CLASSIFIED AS A “RESIDENT ENTERPRISE” OF CHINA. SUCH CLASSIFICATION MAY
RESULT IN UNFAVORABLE TAX CONSEQUENCES TO US AND OUR NON-PRC SHAREHOLDERS.
China
passed a New Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. Under the New EIT Law,
an enterprise established outside of China with de facto management bodies within China is considered a resident enterprise, meaning
that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules
of the New EIT Law define de facto management as “substantial and overall management and control over the production and
operations, personnel, accounting, and properties” of the enterprise. In addition, a circular issued by the State Administration
of Taxation on April 22, 2009 clarified that dividends and other income paid by such resident enterprises will be considered to
be the PRC’s source income and subject to the PRC’s withholding tax. This recent circular also subjects such resident
enterprises to various reporting requirements with the PRC’s tax authorities.
Although
substantially all of our management is currently located in the PRC, it remains unclear whether the PRC’s tax authorities
would require or permit our overseas registered entities to be treated as PRC resident enterprises. We do not currently consider
our company to be a PRC resident enterprise. However, if the PRC’s tax authorities determine that we are a resident enterprise
for the PRC’s enterprise income tax purposes, a number of unfavorable PRC tax consequences may follow. First, we may be
subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as the PRC’s enterprise income
tax reporting obligations. This would also mean that income such as interest on offering proceeds and non-China source income
would be subject to the PRC’s enterprise income tax at a rate of 25%. Second, although under the New EIT Law and its implementing
rules, dividends paid to us from our PRC subsidiary would qualify as tax-exempt income, we cannot guarantee that such dividends
will not be subject to a 10% withholding tax, as the PRC authorities responsible for enforcing the withholding tax have not yet
issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for
the PRC’s enterprise income tax purposes. Finally, dividends paid to stockholders with respect to their shares of our common
stock or any gains realized from transfer of such shares may generally be subject to the PRC’s withholding taxes on such
dividends or gains at a rate of 10% if the shareholders are deemed to be non-resident enterprises or at a rate of 20% if the shareholders
are deemed to be non-resident individuals.
PRICE
INFLATION IN CHINA COULD AFFECT OUR RESULTS OF OPERATIONS IF WE ARE UNABLE TO PASS ALONG RAW MATERIAL PRICE INCREASES TO OUR CUSTOMERS.
Inflation
in China has continued to rise over the last few years. Because we purchase raw materials from suppliers in China, price inflation
has caused an increase in the cost of our raw materials. Price inflation may affect the results of our operations if
we are unable to pass along the price increases to our customers. Similarly, the cost of constructing our new facility
and the installation of equipment may increase as a result of these recent inflationary trends, which are expected to continue
for the near future. In addition, if inflation continues to rise in China, China could lose its competitive advantage
as a low-cost manufacturing venue, which may in turn lessen the competitive advantages of our being based in China. Accordingly,
inflation in China may weaken our competitiveness domestically and in international markets.
WE
MAY RELY PRINCIPALLY ON DIVIDENDS AND OTHER DISTRIBUTIONS OF EQUITY PAID BY OUR PRC SUBSIDIARY TO FUND ANY CASH AND FINANCING
REQUIREMENTS WE MAY HAVE, AND ANY LIMITATION ON THE ABILITY OF OUR PRC SUBSIDIARY TO PAY DIVIDENDS TO US COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR ABILITY TO CONDUCT OUR BUSINESS.
We
are a holding company, and we may rely principally on dividends and other distributions of equity paid by our PRC subsidiary for
our cash and financing requirements, which include the funds necessary to pay dividends and other cash distributions to our stockholders
and to service any debt we may incur. In the future, if our PRC subsidiary incurs debt on its own behalf, the instruments governing
the debt may restrict its ability to pay dividends or make other distributions to us.
Under
PRC laws and regulations, our PRC subsidiary, as a foreign-invested enterprise in the PRC, may pay dividends only out of accumulated
profits as determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise
is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve
funds, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, it may allocate a portion
of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare
and bonus funds are not distributable as cash dividends.
Any
limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely
limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise
fund and conduct our business.
THE
PRC GOVERNMENT MAY ISSUE FURTHER RESTRICTIVE MEASURES IN THE FUTURE.
We
cannot assure you that the PRC’s government will not issue further restrictive measures in the future. The PRC government’s
restrictive regulations and measures could increase our operating costs in adapting to these regulations and measures, limit our
access to capital resources or even restrict our business operations, which could further adversely affect our business and prospects.
OUR
PRC SUBSIDIARY HAS TAKEN THE POSITION THAT IT IS COMPLIANT WITH THE TAXATION, ENVIRONMENTAL, EMPLOYMENT AND SOCIAL SECURITY RULES
OF CHINA, AND IF THAT POSITION TURNS OUT TO BE WRONG, THEY MAY FACE PENALTIES IMPOSED BY THE PRC GOVERNMENT.
While
we believe our PRC subsidiary has been in compliance with PRC taxation, environmental, employment and social security rules during
their operations in China, we have not obtained letters from the PRC government authorities confirming such compliance. If any
PRC government authority takes the position that there is non-compliance with the taxation, environmental protection, employment
and/or social security rules by our PRC subsidiary, they may be exposed to penalties from PRC government authorities, in which
case the operation of our PRC subsidiary in question may be adversely affected.
IF
RELATIONS BETWEEN THE UNITED STATES AND CHINA WORSEN, OUR STOCK PRICE MAY DECREASE AND WE MAY HAVE DIFFICULTY ACCESSING THE U.S.
CAPITAL MARKETS.
At
various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies
may arise in the future between these two countries. Any political or trade conflicts between the United States and China could
adversely affect the market price of our common stock and our ability to access U.S. capital markets.
INTERPRETATION
OF PRC LAWS AND REGULATIONS INVOLVES UNCERTAINTY.
Our
core business is conducted within China and is governed by PRC’s laws and regulations. The PRC’s legal system is based
on written statutes, and prior court decisions can only be used as a reference. Since 1979, the PRC’s government has promulgated
laws and regulations in relation to economic matters such as foreign investment, corporate organization and governance, commerce,
taxation and trade, with a view to developing a comprehensive system of commercial law, including laws relating to property ownership
and development. However, due to the fact that these laws and regulations have not been fully developed, and because of the limited
volume of published cases and the non-binding nature of prior court decisions, interpretation of PRC’s laws and regulations
involves a degree of uncertainty. Some of these laws may be changed without immediate publication or may be amended with retroactive
effect. Depending on the government agency or how an application or case is presented to such agency, we may receive less favorable
interpretations of laws and regulations than our competitors, particularly if a competitor has long been established in the locality
of, and has developed a relationship with such agency. In addition, any litigation in China may be protracted and result in substantial
costs and a diversion of resources and management attention. All of these uncertainties may cause difficulties in the enforcement
of our land use rights, entitlements under our permits and other statutory and contractual rights and interests.
Risks
Related to Our Offering and Ownership of Our Common stock
THE
MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE OR MAY DECLINE REGARDLESS OF OUR OPERATING PERFORMANCE, AND YOU MAY NOT BE ABLE
TO RESELL YOUR SHARES AT OR ABOVE THE OFFERING PRICE.
The
offering price for our common stock will be determined through negotiations between the underwriter and our Company and may vary
from the market price of our common stock following our offering. If you purchase our common stock in our offering, you may not
be able to resell those shares at or above the offering price. We cannot assure you that the offering price of our common stock,
or the market price following our offering, will equal or exceed prices in privately negotiated transactions of our shares that
have occurred from time to time prior to our offering. The market price of our common stock may fluctuate significantly in response
to numerous factors, many of which are beyond our control, including:
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actual
or anticipated fluctuations in our revenue and other operating results;
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the
financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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actions
of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts
who follow our company, or our failure to meet these estimates or the expectations of investors;
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announcements
by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships,
joint ventures, or capital commitments;
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price
and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
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lawsuits
threatened or filed against us; and
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other
events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
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In
addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the
market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or
disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action
litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us
to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
WE
HAVE BROAD DISCRETION IN THE USE OF THE NET PROCEEDS FROM OUR OFFERING AND MAY NOT USE THEM EFFECTIVELY.
To
the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds”
or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot
specify with any certainty the particular uses of such net proceeds that we will receive from our offering. Our management will
have broad discretion in the application of such net proceeds, including working capital, possible acquisitions, and other general
corporate purposes, and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our
management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest
the net proceeds from our offering in a manner that does not produce income or that loses value.
WE
DO NOT INTEND TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We
currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to
declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our common
stock if the market price of our common stock increases.
NEITHER
MANAGEMENT NOR THE UNDERWRITERS HAVE PERFORMED DUE DILIGENCE ON MARKET AND INDUSTRY DATA CITED IN THIS PROSPECTUS.
This
prospectus includes market and industry data that has been obtained from third-party sources, including industry publications,
as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which
we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management’s
knowledge of such industries has been developed through its experience and participation in these industries. Neither we nor our
management have conducted due diligence or independently verified any of the data from such sources referred to in this prospectus
or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third-party market forecasts,
in particular, are estimates only and may be inaccurate, especially over long periods of time. In addition, the underwriter has
not independently verified any of the industry data prepared by management or ascertained the underlying estimates and assumptions
relied upon by management. Furthermore, references in this prospectus to any publications, reports, surveys or articles prepared
by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article.
If such market and industry data turned out to be inaccurate, management’s belief and perception of our competitive strength
may need to be adjusted and, as a result, our business strategy may need to be changed which may have a negative effect on our
results of operations.
JASPER
LAKE HOLDINGS LIMITED, OUR MAJORITY STOCKHOLDER, MAY HAVE SIGNIFICANT INFLUENCE OVER THE OUTCOME OF MATTERS SUBMITTED TO OUR STOCKHOLDERS
FOR APPROVAL, WHICH MAY PREVENT US FROM ENGAGING IN CERTAIN TRANSACTIONS.
As
of May 1, 2017, 2017 Jasper Lake Holdings Limited beneficially owns 52.96% of our outstanding common stock. Mr. Xiangyao
Liu, our CEO and President, has sole voting and dispositive power of Jasper Lake Holdings Limited. As a result, this majority
stockholder may exercise significant influence over all matters requiring stockholder approval, including the appointment of our
directors and the approval of significant corporate transactions. This ownership and control may also have the effect of delaying
or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination that may be
in the best interest of the Company.
IF
WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR
PREVENT FRAUD.
The
SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management
report on such company’s internal controls over financial reporting in its annual report, which contains management’s
assessment of the effectiveness of internal controls over financial reporting.
Our
reporting obligations as a public company place a significant strain on our management and operational and financial resources
and systems. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable
financial reports and are important to prevent fraud. As a result, our failure to achieve and maintain effective internal controls
over financial reporting may result in the loss of investor confidence in the reliability of our financial statements, which in
turn may harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will continue
to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and
other requirements of the Sarbanes-Oxley Act.
THERE
IS A LIMITED MARKET FOR OUR COMMON STOCK, WHICH MAY MAKE IT DIFFICULT FOR HOLDERS OF OUR COMMON STOCK TO SELL THEIR STOCK.
We
plan to apply to be listed on NASDAQ Global Select Market, but there is no assurance that we will be approved for the listing
at this point. Our common stock currently trades on the OTC Markets under the symbol “YERR”. There is a limited trading
market for our common stock and at times there is no trading in our common stock. Accordingly, there can be no assurance as to
the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock to sell our common
stock, or the prices at which holders may be able to sell our common stock. Further, many brokerage firms will not process transactions
involving low price stocks, especially those that come within the definition of a “penny stock.” If we cease to be
quoted, holders of our common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the market
value of our common stock, and the market value of our common stock would likely decline.
WE
MAY BE SUBJECT TO THE PENNY STOCK RULES WHICH WILL MAKE SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.
We
may be subject now and in the future to the SEC’s “penny stock” rules if our shares of common stock sell below
$5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require
broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements
showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction
and must be given to the customer in writing before or with the customer’s confirmation.
In
addition, the penny stock rules require that prior to a transaction, the broker dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The
penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common
stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock
may find it more difficult to sell their securities.
IF
A MORE ACTIVE TRADING MARKET FOR OUR COMMON STOCK DEVELOPS, THE MARKET PRICE OF OUR COMMON STOCK IS LIKELY TO BE HIGHLY VOLATILE
AND SUBJECT TO WIDE FLUCTUATIONS, AND HOLDERS OF OUR COMMON STOCK MAY BE UNABLE TO SELL THEIR SHARES AT OR ABOVE THE PRICE AT
WHICH THEY WERE ACQUIRED.
The
market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number
of factors that are beyond our control, including:
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quarterly
variations in our revenues and operating expenses;
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developments
in the financial markets and worldwide economies;
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announcements
of innovations or new products or services by us or our competitors;
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announcements
by the PRC government relating to regulations that govern our industry;
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significant
sales of our common stock or other securities in the open market;
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variations
in interest rates;
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changes
in the market valuations of other comparable companies; and
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changes
in accounting principles.
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addition, the market for Chinese companies that went public in the U.S. through reverse mergers, such as ours, is currently extremely
volatile primarily due to recent allegations and, in some instances, findings of fraud among some of these companies. If
a stockholder were to file a class action suit against us following a period of volatility in the price of our securities, we
would incur substantial legal fees and our management’s attention and resources would be diverted from operating our business
to responding to such litigation, which may harm our business and reputation.
THE
RIGHTS OF THE HOLDERS OF OUR COMMON STOCK MAY BE IMPAIRED BY THE POTENTIAL ISSUANCE OF PREFERRED STOCK.
Our
board of directors has the right to create a new series of preferred stock. As a result, the Board of Directors may, without stockholder
approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights that may adversely affect the voting
power and equity interest of the holders of our common stock. Although we have no present intention to issue any additional shares
of preferred stock or to create any new series of preferred stock, we may issue such shares in the future.
SPECIAL
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve risks and uncertainties, principally in the sections entitled “Risk
Factors.” All statements other than statements of historical fact contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and objectives of management for future operations,
are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking
statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are
only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk
Factors” or elsewhere in this prospectus, which may cause our or our industry’s actual results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements.
Forward-looking
statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications
of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information
available at the time they are made and/or management’s good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual performance or results to differ materially from what is expressed
in or suggested by the forward-looking statements.
Forward-looking
statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume
no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors
affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more
forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking
statements.
USE
OF PROCEEDS
Except
as otherwise provided in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities
covered by this prospectus for general corporate purposes, which may include, but is not limited to, working capital, capital
expenditures, construction and development expenditures and acquisitions of land. The precise amount, use and timing of the application
of such proceeds will depend upon our funding requirements and the availability and cost of other capital. Additional information
on the use of net proceeds from an offering of securities covered by this prospectus may be set forth in the prospectus supplement
relating to the specific offering.
DESCRIPTION
OF CAPITAL STOCK
The
following description of our capital stock is not complete and may not contain all the information you should consider before
investing in our capital stock. This description is summarized from, and qualified in its entirety by reference to, our Certificate
of Incorporation and Bylaws, which have been publicly filed with the SEC. See “Where You Can Find More Information; Incorporation
by Reference.”
Introduction
In
the discussion that follows, we have summarized selected provisions of our Articles of Incorporation relating to our capital stock.
This summary is not complete. This discussion is subject to the relevant provisions of Nevada law and is qualified in its entirety
by reference to our Articles of Incorporation and our Bylaws. You should read our articles of incorporation and our bylaws as
currently in effect for provisions that may be important to you.
Authorized
Capital Stock
Our
authorized share capital consists of 500,000,000 shares of common stock, par value $0.0001 per share, and 100,000,000 shares of
preferred stock, par value $0.0001 per share. As of May 1, 2017, 172,269,446 shares of our common stock and no shares of
our preferred stock were outstanding.
Common
Stock
Each
share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally
by our stockholders, other than any matter that (1) solely relates to the terms of any outstanding series of preferred stock or
the number of shares of that series and (2) does not affect the number of authorized shares of preferred stock or the powers,
privileges and rights pertaining to the common stock. No share of our common stock affords any cumulative voting rights. This
means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors
to be elected if they choose to do so.
Holders
of our common stock will be entitled to dividends in such amounts and at such times as our Board of Directors in its discretion
may declare out of funds legally available for the payment of dividends. We currently intend to retain our entire available discretionary
cash flow to finance the growth, development and expansion of our business and do not anticipate paying any cash dividends on
the common stock in the foreseeable future. Any future dividends will be paid at the discretion of our Board of Directors after
taking into account various factors, including:
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general
business conditions;
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industry
practice;
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our
financial condition and performance;
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our
future prospects;
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our
cash needs and capital investment plans;
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our
obligations to holders of any preferred stock we may issue;
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income
tax consequences; and
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the
restrictions Nevada and other applicable laws and our credit arrangements then impose.
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If
we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available
for distribution to our stockholders after our creditors are paid in full and the holders of all series of our outstanding preferred
stock, if any, receive their liquidation preferences in full.
Our
common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase
fund.
Preferred
Stock
At
the direction of our Board of Directors, without any action by the holders of our common stock, we may issue one or more series
of preferred stock from time to time. Our Board of Directors can determine the number of shares of each series of preferred stock,
the designation, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations
or restrictions applicable to any of those rights, including dividend rights, voting rights, conversion or exchange rights, terms
of redemption and liquidation preferences, of each series.
Undesignated
preferred stock may enable our Board of Directors to render more difficult or to discourage an attempt to obtain control of our
company by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management.
The issuance of shares of preferred stock may adversely affect the rights of our common stockholders. For example, any preferred
stock issued may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited
voting rights and may be convertible into shares of common stock. As a result, the issuance of shares of preferred stock, or the
issuance of rights to purchase shares of preferred stock, may discourage an unsolicited acquisition proposal or bids for our common
stock or may otherwise adversely affect the market price of our common stock or any existing preferred stock.
Warrants
There
are no outstanding warrants.
The
NASDAQ Capital Market Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol “YERR.”
Transfer
Agent and Registrar
The
Transfer Agent for our common stock is VStock Transfer, LLC located at 18 Lafayette Pl, Woodmere, NY 11598. The telephone number
is: (212) 828-8436.
DESCRIPTION
OF THE DEBT SECURITIES
We
have summarized below general terms and conditions of the debt securities that we will offer and sell pursuant to this prospectus.
When we offer to sell a particular series of debt securities, we will describe the specific terms and conditions of the series
in a prospectus supplement to this prospectus. We will also indicate in the applicable prospectus supplement whether the general
terms and conditions described in this prospectus apply to the series of debt securities. The terms and conditions of the debt
securities of a series may be different in one or more respects from the terms and conditions described below. If so, those differences
will be described in the applicable prospectus supplement.
We
will issue the debt securities in one or more series under an indenture between us and a trustee to be specified in an accompanying
prospectus supplement. The following summary of provisions of the indenture does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the indenture, including, but not limited to, definitions
therein of certain terms. This summary may not contain all of the information that you may find useful. The terms and conditions
of the debt securities of each series will be set forth in those debt securities and in the indenture and in the applicable prospectus
supplement. For a comprehensive description of any series of debt securities being offered to you pursuant to this prospectus,
you should read both this prospectus and the applicable prospectus supplement.
The
indenture has been filed as an exhibit to the registration statement of which this prospectus forms a part. A form of each debt
security, reflecting the specific terms and provisions of that series of debt securities, will be filed with the SEC in connection
with each offering and will be incorporated by reference in the registration statement of which this prospectus forms a part.
You may obtain a copy of the indenture and any form of debt security that has been filed in the manner described under “Where
You Can Find More Information.”
Capitalized
terms used and not defined in this summary have the meanings specified in the indenture. For purposes of this section of this
prospectus, references to “we,” “us” and “our” are to Apple Inc. (parent company only) and
not to any of its subsidiaries. References to the “applicable prospectus supplement” are to the prospectus supplement
to this prospectus that describes the specific terms and conditions of a series of debt securities.
General
We
may offer the debt securities from time to time in as many distinct series as we may determine. The indenture does not limit the
amount of debt securities that we may issue under that indenture. We may, without the consent of the holders of the debt securities
of any series, issue additional debt securities ranking equally with, and otherwise similar in all respects to, the debt securities
of the series (except for the public offering price and the issue date) so that those additional debt securities will be consolidated
and form a single series with the debt securities of the series previously offered and sold.
The
debt securities of each series will be issued in fully registered form without interest coupons. We currently anticipate that
the debt securities of each series offered and sold pursuant to this prospectus will be issued as global debt securities as described
under “—Book-Entry; Delivery and Form; Global Securities” and will trade in book-entry form only.
Debt
securities denominated in U.S. dollars will be issued in denominations of $2,000 and any integral multiple of $1,000 in excess
thereof, unless otherwise specified in the applicable prospectus supplement. If the debt securities of a series are denominated
in a foreign or composite currency, the applicable prospectus supplement will specify the denomination or denominations in which
those debt securities will be issued.
Unless
otherwise specified in the applicable prospectus supplement, we will repay the debt securities of each series at 100% of their
principal amount, together with any premium and accrued and unpaid interest thereon at maturity, except if those debt securities
have been previously redeemed or purchased and cancelled.
Unless
otherwise specified in the applicable prospectus supplement, the debt securities of each series will not be listed on any securities
exchange.
Provisions
of Indenture
The
indenture provides that debt securities may be issued under it from time to time in one or more series. For each series of debt
securities, this prospectus and the applicable prospectus supplement will describe the following terms and conditions of that
series of debt securities:
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the
title of the series;
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the
maximum aggregate principal amount, if any, established for debt securities of the series, provided, however, that such amount
may from time to time be increased by a board resolution;
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the
price or prices at which the debt securities will be sold;
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the
person to whom any interest on a debt security of the series will be payable, if other than the person in whose name that
debt security (or one or more predecessor debt securities) is registered at the close of business on the regular record date
for such interest;
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the
date or dates on which the principal and premium, if any, of any debt securities of the series will be payable or the method
used to determine or extend those dates;
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the
rate or rates at which any debt securities of the series will bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which any such interest will accrue, or the method by which such date or dates
shall be determined, the interest payment dates on which any such interest will be payable and the regular record date, if
any, for any such interest payable on any interest payment date, or the method by which such date or dates shall be determined,
and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months, the right,
if any, to extend or defer interest payments and the duration of such extension or deferral;
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the
place or places where the principal of and any premium and interest on any debt securities of the series will be payable,
the place or places where the debt securities of such series may be presented for registration of transfer or exchange, the
place or places where notices and demands to or upon us in respect of the debt securities of such series may be made and the
manner in which any payment may be made;
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the
period or periods within which or the date or dates on which, the price or prices at which, the currency or currency units
in which, and the terms and conditions upon which any debt securities of the series may be redeemed, in whole or in part,
at our option and, if other than by a board resolution, the manner in which any election by us to redeem the debt securities
will be evidenced;
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our
obligation or right, if any, to redeem or purchase any debt securities of the series pursuant to any sinking fund, amortization
or analogous provisions or at the option of the holder thereof and the period or periods within which, the price or prices
at which, the currency or currency units in which, and the terms and conditions upon which any debt securities of the series
will be redeemed or purchased, in whole or in part, pursuant to such obligation;
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if
other than denominations of $2,000 and any integral multiple of $1,000 in excess thereof, the denominations in which any debt
securities of the series will be issuable;
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if
other than the trustee, the identity of each security registrar and/or paying agent;
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if
the amount of principal of or premium, if any, or interest on any debt securities of the series may be determined with reference
to a financial or economic measure or index or pursuant to a formula, the manner in which such amounts will be determined;
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if
other than U.S. dollars, the currency, currencies or currency units in which the principal of or premium, if any, or interest
on any debt securities of the series will be payable and the manner of determining the equivalent thereof in U.S. dollars
for any purpose;
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if
the principal of or premium, if any, or interest on any debt securities of the series is to be payable, at our election or
the election of the holder thereof, in one or more currencies or currency units other than that or those in which such debt
securities are stated to be payable, the currency, currencies or currency units in which the principal of or premium, if any,
or interest on such debt securities as to which such election is made will be payable, the periods within which or the dates
on which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which
such amount will be determined);
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if
the provisions of the indenture relating to satisfaction and discharge thereof shall apply to the debt securities of that
series as set forth therein, or if provisions for the satisfaction and discharge of the indenture other than as set forth
therein shall apply to the debt securities of that series;
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if
other than the entire principal amount thereof, the portion of the principal amount of any debt securities of the series which
will be payable upon declaration of acceleration of the maturity thereof pursuant to the indenture or the method by which
such portion shall be determined;
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if
the principal amount payable at the stated maturity of any debt securities of the series will not be determinable as of any
one or more dates prior to the stated maturity, the amount which will be deemed to be the principal amount of such debt securities
as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which will be due and
payable upon any maturity other than the stated maturity or which will be deemed to be outstanding as of any date prior to
the stated maturity (or, in any such case, the manner in which such amount deemed to be the principal amount will be determined);
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if
other than by a board resolution, the manner in which any election by us to defease any debt securities of the series pursuant
to the indenture will be evidenced; whether any debt securities of the series other than debt securities denominated in U.S.
dollars and bearing interest at a fixed rate are to be subject to the defeasance provisions of the indenture; or, in the case
of debt securities denominated in U.S. dollars and bearing interest at a fixed rate, if applicable, that the debt securities
of the series, in whole or any specified part, will not be defeasible pursuant to the indenture;
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if
applicable, that any debt securities of the series shall be issuable in whole or in part in the form of one or more global
securities and, in such case, the respective depositaries for such global securities, the form of any legend or legends which
shall be borne by any such global security in addition to or in lieu of that set forth in the indenture and any circumstances
in which any such global security may be exchanged in whole or in part for debt securities registered, and any transfer of
such global security in whole or in part may be registered, in the name or names of persons other than the depositary for
such global security or a nominee thereof;
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any
addition to, deletion from or change in the events of default applicable to any debt securities of the series and any change
in the right of the trustee or the requisite holders of such debt securities to declare the principal amount thereof due and
payable;
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any
addition to, deletion from or change in the covenants applicable to debt securities of the series;
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the
terms of any right to convert or exchange debt securities of such series into any other securities or property of ours or
of any other corporation or person, and the additions or changes, if any, to the indenture with respect to the debt securities
of such series to permit or facilitate such conversion or exchange;
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whether
the debt securities of the series will be guaranteed by any persons and, if so, the identity of such persons, the terms and
conditions upon which such debt securities will be guaranteed and, if applicable, the terms and conditions upon which such
guarantees may be subordinated to other indebtedness of the respective guarantors;
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whether
the debt securities of the series will be secured by any collateral and, if so, the terms and conditions upon which such debt
securities will be secured and, if applicable, upon which such liens may be subordinated to other liens securing other indebtedness
of us or of any guarantor;
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whether
the debt securities will be issued in a transaction registered under the Securities Act and any restriction or condition on
the transferability of the debt securities of such series;
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the
exchanges, if any, on which the debt securities may be listed; and
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any
other terms of the debt securities of the series (which terms will not be inconsistent with the provisions of the indenture,
except as permitted thereunder).
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Interest
and Interest Rates
General
In
the applicable prospectus supplement, we will designate the debt securities of a series as being either debt securities bearing
interest at a fixed rate of interest or debt securities bearing interest at a floating rate of interest. Each debt security will
begin to accrue interest from the date on which it is originally issued. Interest on each such debt security will be payable in
arrears on the interest payment dates set forth in the applicable prospectus supplement and as otherwise described below and at
maturity or, if earlier, the redemption date described below. Interest will be payable to the holder of record of the debt securities
at the close of business on the record date for each interest payment date, which record dates will be specified in such prospectus
supplement.
As
used in the indenture, the term “business day” means, with respect to debt securities of a series, unless otherwise
specified in the applicable prospectus supplement, any day, other than a Saturday or Sunday, that is not a day on which banking
institutions are authorized or obligated by law or executive order to close in the place where the principal of and premium, if
any, and interest on the debt securities are payable.
If
any interest payment date, redemption date, repayment date or stated maturity of a debt security, or any date on which a holder
has the right to convert such debt security, falls on a date that is not a business day, then payment of principal and premium,
if any, or interest, or the redemption price or conversion of such debt security, will be made on the next succeeding business
day at such place of payment with the same force and effect as if made on the interest payment date, redemption date or repayment
date, or at the stated maturity, or on such conversion date. In the case, however, of debt securities bearing interest at a floating
rate based on the London Interbank Offered Rate (LIBOR), if the interest payment date (other than the redemption date, repayment
date or stated maturity) falls on a date that is not a business day and the following business day falls in the next succeeding
calendar month, then the interest payment date for such debt securities shall be the business day immediately preceding the scheduled
interest payment date. No interest shall accrue for the period from and after any such interest payment date, redemption date,
repayment date, stated maturity or conversion date, as the case may be, to the date of such payment.
Optional
Redemption
Redemption
at Our Option
If
specified in the applicable prospectus supplement, we may elect to redeem all or part of the outstanding debt securities of a
series from time to time before the maturity date of the debt securities of that series. Upon such election, we will notify the
trustee of the redemption date and the principal amount of debt securities of the series to be redeemed. If less than all the
debt securities of the series are to be redeemed, the particular debt securities of that series to be redeemed will be selected
by the trustee by such method as the trustee deems fair and appropriate. If we shall so direct, debt securities registered in
our name or the name of any of our affiliates or subsidiaries shall not be included in the debt securities for redemption. The
applicable prospectus supplement will specify the redemption price for the debt securities to be redeemed (or the method of calculating
such price), in each case in accordance with the terms and conditions of those debt securities.
Notice
of redemption will be given to each holder of the debt securities to be redeemed not less than 30 nor more than 60 days prior
to the date set for such redemption (or within such period as otherwise specified as contemplated by the indenture for debt securities
of a series). This notice will identify the debt securities to be
redeemed
and will include the following information: the redemption date; the redemption price (or the method of calculating such price);
if less than all of the outstanding debt securities of such series are to be redeemed, the identification (and, in the case of
partial redemption, the respective principal amounts) of the particular debt securities to be redeemed; the place or places where
such debt securities are to be surrendered for payment of the redemption price; and, if applicable, the CUSIP number of the debt
securities to be redeemed.
By
no later than 11:00 a.m. (New York City time) on the redemption date, we will deposit or cause to be deposited with the trustee
or with a paying agent (or, if we are acting as our own paying agent with respect to the debt securities being redeemed, we will
segregate and hold in trust as provided in the indenture) an amount of money sufficient to pay the aggregate redemption price
of, and (except if the redemption date shall be an interest payment date or the debt securities of such series provide otherwise)
accrued interest on, all of the debt securities or the part thereof to be redeemed on that date. On the redemption date, the redemption
price will become due and payable upon all of the debt securities to be redeemed, and interest, if any, on the debt securities
to be redeemed will cease to accrue from and after that date. Upon surrender of any such debt securities for redemption, we will
pay those debt securities surrendered at the redemption price together, if applicable, with accrued interest to the redemption
date. If the redemption date is after a regular record date and on or prior to the applicable interest payment date, the accrued
and unpaid interest shall be payable to the holder of the redeemed securities registered on the relevant regular record date.
Any
debt securities to be redeemed only in part must be surrendered at the office or agency established by us for such purpose, and
we will execute, and the trustee will authenticate and deliver to a holder without service charge, new debt securities of the
same series and of like tenor, of any authorized denominations as requested by that holder, in a principal amount equal to and
in exchange for the unredeemed portion of the debt securities that holder surrenders.
Repayment
at Holder’s Option
If
specified in the applicable prospectus supplement, the holders of the debt securities of a series will have the option to elect
repayment of those debt securities by us prior to the stated maturity of the debt securities of that series at time or times and
subject to the conditions specified in the applicable prospectus supplement. If the holders of those debt securities have that
option, the applicable prospectus supplement will specify the optional repayment date or dates on which the debt security may
be repaid and the optional repayment price, or the method by which such price will be determined. The optional repayment price
is the price at which, together with accrued interest to the optional repayment date, the debt security may be repaid at the holder’s
option on each such optional repayment date.
Except
as otherwise may be provided by the terms of the debt securities, any tender of a debt security by the holder for repayment will
be irrevocable unless waived by us. Any repayment option of a holder may be exercised by the holder of debt securities for less
than the entire principal amount of the debt security; provided that the principal amount of the debt security remaining outstanding
after repayment will be an authorized denomination. Upon such partial repayment, the debt securities will be canceled and new
debt securities for the remaining principal amount will be issued in the name of the holder of the repaid debt securities.
If
debt securities are represented by a global security as described under “—Book-Entry; Delivery and Form; Global Securities,”
the securities depository for the global security or its nominee will be the holder of the debt security and, therefore, will
be the only person that can exercise a right to repayment. In order to ensure that the depository or its nominee will timely exercise
a right to repayment relating to a particular debt security, the beneficial owner of the debt security must instruct the broker
or other direct or indirect participant in the depository through which it holds an interest in the debt security to notify the
depository of its desire to exercise a right to repayment by the appropriate cut-off time for notifying the participant. Different
firms have different cut-off times for accepting instructions from their customers. Accordingly, you should consult the broker
or other direct or indirect participant through which you hold an interest in a debt security in order to ascertain the cut-off
time by which such an instruction must be given for timely notice to be delivered to the appropriate depository.
Payment
and Transfer or Exchange
Principal
of and premium, if any, and interest on the debt securities of each series will be payable, and the debt securities may be exchanged
or transferred, at the office or agency maintained by us for such purpose, which will be named in any applicable prospectus supplement.
Payment of principal of and premium, if any, and interest on a global security registered in the name of or held by The Depository
Trust Company, or DTC, or its nominee will be made in immediately available funds to DTC or its nominee, as the case may be, as
the registered holder of such global security. If any of the debt securities is no longer represented by a global security, payment
of interest on certificated debt securities in definitive form may, at our option, be made by check mailed directly to holders
at their registered addresses. See “—Book-Entry; Delivery and Form; Global Securities.”
A
holder may transfer or exchange any certificated debt securities in definitive form at the same location given in the preceding
paragraph. No service charge will be made for any registration of transfer or exchange of debt securities, but we may require
payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.
We
are not required to transfer or exchange any debt security selected for redemption for a period of 15 days before mailing of a
notice of redemption of the debt security to be redeemed.
The
registered holder of a debt security will be treated as the owner of it for all purposes.
All
amounts of principal of and premium, if any, or interest on the debt securities paid by us that remain unclaimed two years after
such payment was due and payable will be repaid to us, and the holders of such debt securities will thereafter look solely to
us for payment.
Covenants
The
indenture sets forth limited covenants that will apply to each series of debt securities issued under the indenture, unless otherwise
specified in the applicable prospectus supplement. However, these covenants do not, among other things:
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limit
the amount of indebtedness or lease obligations that may be incurred by us and our subsidiaries;
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limit
our ability or that of our subsidiaries to issue, assume or guarantee debt secured by liens; or
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restrict
us from paying dividends or making distributions on our capital stock or purchasing or redeeming our capital stock.
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Consolidation,
Merger and Sale of Assets
The
indenture provides that we may consolidate with or merge with or into any other person, and may sell, transfer, or lease or convey
all or substantially all of our properties and assets to another person; provided that the following conditions are satisfied:
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we
are the continuing entity, or the resulting, surviving or transferee person (the “Successor”) is a person (if
such person is not a corporation, then the Successor will include a corporate co-issuer of the debt securities) organized
and existing under the laws of the United States of America, any state thereof or the District of Columbia and the Successor
(if not us) will expressly assume, by supplemental indenture, all of our obligations under the debt securities and the indenture
and, for each security that by its terms provides for conversion, provide for the right to convert such security in accordance
with its terms;
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immediately
after giving effect to such transaction, no default or event of default under the indenture has occurred and is continuing;
and
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the
trustee receives from us an officers’ certificate and an opinion of counsel that the transaction and such supplemental
indenture, as the case may be, complies with the applicable provisions of the indenture.
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If
we consolidate or merge with or into any other person or sell, transfer, lease or convey all or substantially all of our properties
and assets in accordance with the indenture, the Successor will be substituted for us in the indenture, with the same effect as
if it had been an original party to the indenture. As a result, the Successor may exercise our rights and powers under the indenture,
and we will be released from all our liabilities and obligations under the indenture and under the debt securities.
Any
substitution of the Successor for us might be deemed for federal income tax purposes to be an exchange of the debt securities
for “new” debt securities, resulting in recognition of gain or loss for such purposes and possibly certain other adverse
tax consequences to beneficial owners of the debt securities. Holders should consult their own tax advisors regarding the tax
consequences of any such substitution.
For
purposes of this covenant, “person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision
thereof or any other entity.
Events
of Default
Each
of the following events are defined in the indenture as an “event of default” (whatever the reason for such event
of default and whether or not it will be voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative or governmental body) with respect to the
debt securities of any series:
(1)
default in the payment of any installment of interest on any debt securities of such series for 30 days after becoming due;
(2)
default in the payment of principal of or premium, if any, on any debt securities of such series when it becomes due and payable
at its stated maturity, upon optional redemption, upon declaration or otherwise;
(3)
default in the performance, or breach, of any covenant or agreement of ours in the indenture with respect to the debt securities
of such series (other than a covenant or agreement, a default in the performance of which or a breach of which is elsewhere in
the indenture specifically dealt with or that has expressly been included in the indenture solely for the benefit of a series
of debt securities other than such series), which continues for a period of 90 days after written notice to us by the trustee
or to us and the trustee by the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that
series;
(4)
we pursuant to or within the meaning of the Bankruptcy Law:
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commence
a voluntary case or proceeding;
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consent
to the entry of an order for relief against us in an involuntary case or proceeding;
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consent
to the appointment of a custodian of us or for all or substantially all of our property;
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make
a general assignment for the benefit of our creditors;
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file
a petition in bankruptcy or answer or consent seeking reorganization or relief;
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consent
to the filing of such petition or the appointment of or taking possession by a custodian; or
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take
any comparable action under any foreign laws relating to insolvency;
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(5)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
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is
for relief against us in an involuntary case, or adjudicates us insolvent or bankrupt;
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appoints
a custodian of us or for all or substantially all of our property; or
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orders
the winding-up or liquidation of us (or any similar relief is granted under any foreign laws);
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and the order or decree remains
unstayed and in effect for 90 days; or
(6)
any other event of default provided with respect to debt securities of such series occurs.
“Bankruptcy
Law” means Title 11, United States Code or any similar federal or state or foreign law for the relief of debtors. “Custodian”
means any custodian, receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law.
If
an event of default with respect to debt securities of any series (other than an event of default relating to certain events of
bankruptcy, insolvency, or reorganization of us) occurs and is continuing, the trustee by notice to us, or the holders of at least
25% in aggregate principal amount of the outstanding debt securities of such series by notice to us and the trustee, may, and
the trustee at the request of these holders will, declare the principal of and premium, if any, and accrued and unpaid interest
on all the debt securities of such series to be due and payable. Upon such a declaration, such principal, premium and accrued
and unpaid interest will be due and payable immediately. If an event of default relating to certain events of bankruptcy, insolvency,
or reorganization of us occurs and is continuing, the principal of and premium, if any, and accrued and unpaid interest on the
debt securities of such series will become and be immediately due and payable without any declaration or other act on the part
of the trustee or any holders.
The
holders of not less than a majority in aggregate principal amount of the outstanding debt securities of any series may rescind
a declaration of acceleration and its consequences, if we have deposited certain sums with the trustee and all events of default
with respect to the debt securities of such series, other than the non-payment of the principal or interest which have become
due solely by such acceleration, have been cured or waived, as provided in the indenture.
An
event of default for a particular series of debt securities does not necessarily constitute an event of default for any other
series of debt securities issued under the indenture.
We
are required to furnish the trustee annually within 120 days after the end of our fiscal year a statement by one of our officers
to the effect that, to the best knowledge of such officer, we are not in default in the fulfillment of any of our obligations
under the indenture or, if there has been a default in the fulfillment of any such obligation, specifying each such default and
the nature and status thereof.
No
holder of any debt securities of any series will have any right to institute any judicial or other proceeding with respect to
the indenture, or for the appointment of a receiver or trustee, or for any other remedy unless:
(1)
an event of default has occurred and is continuing and such holder has given the trustee prior written notice of such continuing
event of default with respect to the debt securities of such series;
(2)
the holders of not less than 25% of the aggregate principal amount of the outstanding debt securities of such series have requested
the trustee to institute proceedings in respect of such event of default;
(3)
the trustee has been offered indemnity reasonably satisfactory to it against its costs, expenses and liabilities in complying
with such request;
(4)
the trustee has failed to institute proceedings 60 days after the receipt of such notice, request and offer of indemnity; and
(5)
no direction inconsistent with such written request has been given for 60 days by the holders of a majority in aggregate principal
amount of the outstanding debt securities of such series.
The
holders of a majority in aggregate principal amount of outstanding debt securities of a series will have the right, subject to
certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the trustee
with respect to the debt securities of that series or exercising any trust or power conferred to the trustee, and to waive certain
defaults. The indenture provides that if an event of default occurs and is continuing, the trustee will exercise such of its rights
and powers under the indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs. Subject to such provisions, the trustee will
be under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of the
debt securities of a series unless they will have offered to the trustee security or indemnity satisfactory to the trustee against
the costs, expenses and liabilities which might be incurred by it in compliance with such request.
Notwithstanding
the foregoing, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal
of and premium, if any, and interest on that debt security on or after the due dates expressed in that debt security and to institute
suit for the enforcement of payment.
Modification
and Waivers
Modification
and amendments of the indenture and the debt securities of any series may be made by us and the trustee with the consent of the
holders of not less than a majority in aggregate principal amount of the outstanding debt securities of that series affected thereby;
provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding debt security
of that series affected thereby:
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change
the stated maturity of the principal of, or installment of interest on, any debt security;
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reduce
the principal amount of any debt security or reduce the amount of the principal of any debt security which would be due and
payable upon a declaration of acceleration of the maturity thereof or reduce the rate of interest on any debt security;
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reduce
any premium payable on the redemption of any debt security or change the date on which any debt security may or must be redeemed;
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change
the coin or currency in which the principal of, premium, if any, or interest on any debt security is payable;
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impair
the right of any holder to institute suit for the enforcement of any payment on or after the stated maturity of any debt security
(or, in the case of redemption, on or after the redemption date);
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reduce
the percentage in principal amount of the outstanding debt securities, the consent of whose holders is required in order to
take certain actions;
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reduce
the requirements for quorum or voting by holders of debt securities in the indenture or the debt security;
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modify
any of the provisions in the indenture regarding the waiver of past defaults and the waiver of certain covenants by the holders
of debt securities except to increase any percentage vote required or to provide that certain other provisions of the indenture
cannot be modified or waived without the consent of the holder of each debt security affected thereby;
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make
any change that adversely affects the right to convert or exchange any debt security or decreases the conversion or exchange
rate or increases the conversion price of any convertible or exchangeable debt security, unless such decrease or increase
is permitted by the terms of the debt securities; or
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modify
any of the above provisions.
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We
and the trustee may, without the consent of any holders, modify or amend the terms of the indenture and the debt securities of
any series with respect to the following:
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to
add to our covenants for the benefit of holders of the debt securities of all or any series or to surrender any right or power
conferred upon us;
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to
evidence the succession of another person to, and the assumption by the successor of our covenants, agreements and obligations
under, the indenture pursuant to the covenant described under “—Covenants—Consolidation, Merger and Sale
of Assets”;
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to
add any additional events of default for the benefit of holders of the debt securities of all or any series;
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to
add one or more guarantees for the benefit of holders of the debt securities;
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to
secure the debt securities pursuant to the covenants of the indenture;
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to
add or appoint a successor or separate trustee or other agent;
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to
provide for the issuance of additional debt securities of any series;
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to
establish the form or terms of debt securities of any series as permitted by the indenture;
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to
comply with the rules of any applicable securities depository;
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to
provide for uncertificated debt securities in addition to or in place of certificated debt securities;
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to
add to, change or eliminate any of the provisions of the indenture in respect of one or more series of debt securities; provided
that any such addition, change or elimination (a) shall neither (1) apply to any debt security of any series created
prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (2) modify the
rights of the holder of any such debt security with respect to such provision or (b) shall become effective only when
there is no debt security described in clause (a)(1) outstanding;
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to
cure any ambiguity, omission, defect or inconsistency;
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to
change any other provision; provided that the change does not adversely affect the interests of the holders of debt securities
of any series in any material respect;
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to
supplement any of the provisions of the indenture to such extent as shall be necessary to permit or facilitate the defeasance
and discharge of any series of debt securities pursuant to the indenture; provided that any such action shall not adversely
affect the interests of the holders of debt securities of such series or any other series of debt securities in any material
respect;
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to
comply with the rules or regulations of any securities exchange or automated quotation system on which any of the debt securities
may be listed or traded; and
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to
add to, change or eliminate any of the provisions of the indenture as shall be necessary or desirable in accordance with any
amendments to the Trust Indenture Act, provided that such action does not adversely affect the rights or interests of any
holder of debt securities in any material respect.
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The holders of at least a majority in aggregate principal
amount of the outstanding debt securities of any series may, on behalf of the holders of all debt securities of that series, waive
compliance by us with certain restrictive provisions of the indenture. The holders of not less than a majority in aggregate principal
amount of the outstanding debt securities of a series may, on behalf of the holders of all debt securities of that series, waive
any past default and its consequences under the indenture with respect to the debt securities of that series, except a default
(1) in the payment of principal or premium, if any, or interest on debt securities of that series or (2) in respect
of a covenant or provision of the indenture that cannot be modified or amended without the consent of the holder of each debt
security of that series. Upon any such waiver, such default will cease to exist, and any event of default arising therefrom will
be deemed to have been cured, for every purpose of the indenture; however, no such waiver will extend to any subsequent or other
default or event of default or impair any rights consequent thereon.
Discharge, Defeasance and Covenant Defeasance
We may discharge certain obligations to holders of
the debt securities of a series that have not already been delivered to the trustee for cancellation and that either have become
due and payable or will become due and payable within one year (or scheduled for redemption within one year) by depositing with
the trustee, in trust, funds in U.S. dollars in an amount sufficient to pay the entire indebtedness including, but not limited
to, the principal and premium, if any, and interest to the date of such deposit (if the debt securities have become due and payable)
or to the maturity thereof or the redemption date of the debt securities of that series, as the case may be. We may direct the
trustee to invest such funds in U.S. Treasury securities with a maturity of one year or less or in a money market fund that invests
solely in short-term U.S. Treasury securities.
The indenture provides that we may elect either (1) to
defease and be discharged from any and all obligations with respect to the debt securities of a series (except for, among other
things, obligations to register the transfer or exchange of the debt securities, to replace temporary or mutilated, destroyed,
lost or stolen debt securities, to maintain an office or agency with respect to the debt securities and to hold moneys for payment
in trust) (“legal defeasance”) or (2) to be released from our obligations to comply with the restrictive covenants
under the indenture, and any omission to comply with such obligations will not constitute a default or an event of default with
respect to the debt securities of a series and clauses (3) and (6) under “—Events of Default” will
no longer be applied (“covenant defeasance”). Legal defeasance or covenant defeasance, as the case may be, will be
conditioned upon, among other things, the irrevocable deposit by us with the trustee, in trust, of an amount in U.S. dollars,
or U.S. government obligations, or both, applicable to the debt securities of that series which through the scheduled payment
of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal or premium,
if any, and interest on the debt securities on the scheduled due dates therefor.
If we effect covenant defeasance with respect to the
debt securities of any series, the amount in U.S. dollars, or U.S. government obligations, or both, on deposit with the trustee
will be sufficient, in the opinion of a nationally recognized firm of independent accountants, to pay amounts due on the debt
securities of that series at the time of the stated maturity but may not be sufficient to pay amounts due on the debt securities
of that series at the time of the acceleration resulting from such event of default. However, we would remain liable to make payment
of such amounts due at the time of acceleration.
We will be required to deliver to the trustee an opinion
of counsel that the deposit and related defeasance will not cause the holders and beneficial owners of the debt securities of
that series to recognize income, gain or loss for federal income tax purposes. If we elect legal defeasance, that opinion of counsel
must be based upon a ruling from the U.S. Internal Revenue Service or a change in law to that effect.
We may exercise our legal defeasance option notwithstanding
our prior exercise of our covenant defeasance option.
Same-Day Settlement and Payment
Unless otherwise provided in the applicable prospectus
supplement, the debt securities will trade in the same-day funds settlement system of DTC until maturity or until we issue the
debt securities in certificated form. DTC will therefore require secondary market trading activity in the debt securities to settle
in immediately available funds. We can give no assurance as to the effect, if any, of settlement in immediately available funds
on trading activity in the debt securities.
Book-Entry; Delivery and Form; Global Securities
Unless otherwise specified in the applicable prospectus
supplement, the debt securities of each series will be issued in the form of one or more global debt securities, in definitive,
fully registered form without interest coupons, each of which we refer to as a “global security.” Each such global
security will be deposited with the trustee as custodian for DTC and registered in the name of a nominee of DTC in New York, New
York for the accounts of participants in DTC.
Investors may hold their interests in a global security
directly through DTC if they are DTC participants, or indirectly through organizations that are DTC participants. Except in the
limited circumstances described below, holders of debt securities represented by interests in a global security will not be entitled
to receive their debt securities in fully registered certificated form.
DTC has advised us as follows: DTC is a limited-purpose
trust company organized under New York Banking Law, a “banking organization” within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial
Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was
created to hold securities of institutions that have accounts with DTC (“participants”) and to facilitate the clearance
and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts
of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations.
Access to DTC’s book-entry system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a participant, whether
directly or indirectly.
Ownership of Beneficial Interests
Upon the issuance of each global security, DTC will
credit, on its book-entry registration and transfer system, the respective principal amount of the individual beneficial interests
represented by the global security to the accounts of participants. Ownership of beneficial interests in each global security
will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in
each global security will be shown on, and the transfer of those ownership interests will be effected only through, records maintained
by DTC (with respect to participants’ interests) and such participants (with respect to the owners of beneficial interests
in the global security other than participants).
So long as DTC or its nominee is the registered holder
and owner of a global security, DTC or such nominee, as the case may be, will be considered the sole legal owner of the debt security
represented by the global security for all purposes under the indenture, the debt securities and applicable law. Except as set
forth below, owners of beneficial interests in a global security will not be entitled to receive certificated debt securities
and will not be considered to be the owners or holders of any debt securities represented by the global security. We understand
that under existing industry practice, in the event an owner of a beneficial interest in a global security desires to take any
actions that DTC, as the holder of the global security, is entitled to take, DTC would authorize the participants to take such
action, and that participants would authorize beneficial owners owning through such participants to take such action or would
otherwise act upon the instructions of beneficial owners owning through them. No beneficial owner of an interest in a global security
will be able to transfer such interest except in accordance with DTC’s applicable procedures, in addition to those provided
for under the indenture. Because DTC can only act on behalf of participants, who in turn act on behalf of others, the ability
of a person having a beneficial interest in a global security to pledge that interest to persons that do not participate in the
DTC system, or otherwise to take actions in respect of that interest, may be impaired by the lack of a physical certificate representing
that interest.
All payments on the debt securities represented by
a global security registered in the name of and held by DTC or its nominee will be made to DTC or its nominee, as the case may
be, as the registered owner and holder of the global security.
We expect that DTC or its nominee, upon receipt
of any payment of principal, premium, if any, or interest in respect of a global security, will credit participants’
accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the
global security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global security held through such participants will be governed by standing instructions and
customary practices as is now the case with securities held for accounts for customers registered in the names of nominees
for such customers. These payments, however, will be the responsibility of such participants and indirect participants, and
neither we, the trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in any global security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC
and its participants or the relationship between such participants and the owners of beneficial interests in the global
security.
Unless and until it is exchanged in whole or in part
for certificated debt securities, each global security may not be transferred except as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC or another nominee of DTC. Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
We expect that DTC will take any action permitted
to be taken by a holder of debt securities only at the direction of one or more participants to whose account the DTC interests
in a global security are credited and only in respect of such portion of the aggregate principal amount of the debt securities
as to which such participant or participants has or have given such direction. However, if there is an event of default under
the debt securities, DTC will exchange each global security for certificated debt securities, which it will distribute to its
participants.
Although we expect that DTC will agree to the foregoing
procedures in order to facilitate transfers of interests in each global security among participants of DTC, DTC is under no obligation
to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of we, the underwriters
or the trustee will have any responsibility for the performance or nonperformance by DTC or its participants or indirect participants
of their respective obligations under the rules and procedures governing their operations.
The indenture provides that the global securities
will be exchanged for debt securities in certificated form of like tenor and of an equal principal amount, in authorized denominations
in the following limited circumstances:
(1) DTC notifies us that it
is unwilling or unable to continue as depository or if DTC ceases to be eligible under the indenture and we do not appoint a successor
depository within 90 days;
(2) we determine that the debt
securities will no longer be represented by global securities and execute and deliver to the trustee an order to such effect;
or
(3) an event of default with
respect to the debt securities will have occurred and be continuing.
These certificated debt securities will be registered
in such name or names as DTC will instruct the trustee. It is expected that such instructions may be based upon directions received
by DTC from participants with respect to ownership of beneficial interests in global securities.
The information in this section of this prospectus
concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we do not
take responsibility for this information.
Euroclear and Clearstream
If the depositary for a global security is DTC, you
may hold interests in the global security through Clearstream Banking,
société anonyme
, which we refer to
as “Clearstream,” or Euroclear Bank SA/NV, as operator of the Euroclear System, which we refer to as “Euroclear,”
in each case, as a participant in DTC. Euroclear and Clearstream will hold interests, in each case, on behalf of their participants
through customers’ securities accounts in the names of Euroclear and Clearstream on the books of their respective depositaries,
which in turn will hold such interests in customers’ securities in the depositaries’ names on DTC’s books.
Payments, deliveries, transfers, exchanges, notices
and other matters relating to the debt securities made through Euroclear or Clearstream must comply with the rules and procedures
of those systems. Those systems could change their rules and procedures at any time. We have no control over those systems or
their participants, and we take no responsibility for their activities. Transactions between participants in Euroclear or Clearstream,
on one hand, and other participants in DTC, on the other hand, would also be subject to DTC’s rules and procedures.
Investors will be able to make and receive through
Euroclear and Clearstream payments, deliveries, transfers, exchanges, notices and other transactions involving any securities
held through those systems only on days when those systems are open for business. Those systems may not be open for business on
days when banks, brokers and other institutions are open for business in the United States.
In addition, because of time-zone differences, U.S.
investors who hold their interests in the debt securities through these systems and wish on a particular day, to transfer their
interests, or to receive or make a payment or delivery or exercise any other right with respect to their interests, may find that
the transaction will not be effected until the next business day in Luxembourg or Brussels, as applicable. Thus, investors who
wish to exercise rights that expire on a particular day may need to act before the expiration date. In addition, investors who
hold their interests through both DTC and Euroclear or Clearstream may need to make special arrangements to finance any purchase
or sales of their interests between the U.S. and European clearing systems, and those transactions may settle later than transactions
within one clearing system.
Governing Law
The indenture and the debt securities will be governed
by, and construed in accordance with, the laws of the State of New York.
Regarding the Trustee
The trustee or trustees under the indentures will be named in any applicable
prospectus supplement.
The trustee is permitted to engage in transactions,
including commercial banking and other transactions, with us and our subsidiaries from time to time; provided that if the trustee
acquires any conflicting interest it must eliminate such conflict upon the occurrence of an event of default, or else resign.
DESCRIPTION
OF WARRANTS
General
We
may issue warrants to purchase shares of our common stock and preferred stock in one or more series together with other securities
or separately, as described in the applicable prospectus supplement. Below is a description of certain general terms and provisions
of the warrants that we may offer. Particular terms of the warrants will be described in the warrant agreements to be entered
into by the Company, a warrant agent to be named by the Company, and the holders from time to time of the warrants and the prospectus
supplement relating to the warrants. Copies of the form agreement for each warrant and the warrant certificate, if any, reflecting
the provisions to be included in such agreements that will be entered into with respect to a particular offering of each type
of warrant, will be filed with the SEC and incorporated by reference as exhibits to the registration statement of which this prospectus
forms a part. You should read the applicable warrant agreement for additional information before you purchase any of our warrants.
The
prospectus supplement relating to any warrants we offer will describe the specific terms relating to the offering. These terms
may include some or all of the following:
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the
specific designation and aggregate number of, and the price at which we will issue, the warrants;
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the
currency or currency units in which the offering price, if any, and the exercise price are payable;
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the
designation, amount and terms of the securities purchasable upon exercise of the warrants;
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if
applicable, the exercise price for shares of our common stock and the number of shares of common stock to be received upon
exercise of the warrants;
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if
applicable, the exercise price for shares of our preferred stock, the number of shares of preferred stock to be received upon
exercise, and a description of that series of our preferred stock;
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the
date on which the right to exercise the warrants will begin and the date on which that right will expire or, if you may not
continuously exercise the warrants throughout that period, the specific date or dates on which you may exercise the warrants;
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whether
the warrants will be issued in fully registered form or bearer form, in definitive or global form or in any combination of
these forms, although, in any case, the form of a warrant included in a unit will correspond to the form of the unit and of
any security included in that unit;
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any
applicable material U.S. federal income tax consequences;
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the
identity of the warrant agent for the warrants and of any other depositaries, execution or paying agents, transfer agents,
registrars or other agents;
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the
proposed listing, if any, of the warrants or any securities purchasable upon exercise of the warrants on any securities exchange;
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if
applicable, the date from and after which the warrants and the common stock and preferred stock will be separately transferable;
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if
applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;
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the
procedures and conditions relating to the exercise of the warrants;
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information
with respect to book-entry procedures, if any;
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the
triggering event and the terms upon which the exercise price and the number of underlying securities that the warrants are
exercisable into may be adjusted;
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the
anti-dilution provisions of the warrants, if any;
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any
redemption or call provisions;
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whether
the warrants may be sold separately or with other securities as parts of units; and
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any
additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the
warrants.
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Until
the warrants are exercised, holders of the warrants will not have any rights of holders of the underlying securities.
Outstanding
Warrants
As
of May 4, 2017, we have no outstanding warrants.
DESCRIPTION
OF RIGHTS
We
may issue rights to our stockholders to purchase shares of our common stock or preferred stock described in this prospectus. We
may offer rights separately or together with one or more additional rights, preferred stock, common stock, warrants or any combination
of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be
issued under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights
agent for any rights we offer will be set forth in the applicable prospectus supplement. The rights agent will act solely as our
agent in connection with the certificates relating to the rights of the series of certificates and will not assume any obligation
or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular
terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may
apply to the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms
of the rights, rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described
below, then the terms described below will be deemed to have been superseded by that prospectus supplement. We encourage you to
read the applicable rights agreement and rights certificate for additional information before you decide whether to purchase any
of our rights.
The
prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among
other matters:
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the
date of determining the stockholders entitled to the rights distribution;
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the
aggregate number of shares of common stock, preferred stock or other securities purchasable upon exercise of the rights;
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the
exercise price;
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the
aggregate number of rights issued;
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whether
the rights are transferrable and the date, if any, on and after which the rights may be separately transferred;
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the
date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will
expire;
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the
method by which holders of rights will be entitled to exercise;
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the
conditions to the completion of the offering;
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the
withdrawal, termination and cancellation rights;
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whether
there are any backstop or standby purchaser or purchasers and the terms of their commitment;
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whether
stockholders are entitled to oversubscription right;
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any
U.S. federal income tax considerations; and
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any
other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise
of the rights.
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If
less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to
persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including
pursuant to standby arrangements, as described in the applicable prospectus supplement. In connection with any rights offering,
we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which
such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such rights offering.
DESCRIPTION
OF UNITS
We
may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series.
We may evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter into unit
agreements with a unit agent. We will indicate the name and address of the unit agent in the applicable prospectus supplement
relating to a particular series of units.
The
following description, together with the additional information included in any applicable prospectus supplement, summarizes the
general features of the units that we may offer under this prospectus. You should read any prospectus supplement and any free
writing prospectus that we may authorize to be provided to you related to the series of units being offered, as well as the complete
unit agreements that contain the terms of the units. Specific unit agreements will contain additional important terms and provisions
and we will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference
from another report that we file with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If
we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including,
without limitation, the following, as applicable:
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the
title of the series of units;
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identification
and description of the separate constituent securities comprising the units;
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the
price or prices at which the units will be issued;
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the
date, if any, on and after which the constituent securities comprising the units will be separately transferable;
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a
discussion of certain United States federal income tax considerations applicable to the units; and
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any
other terms of the units and their constituent securities.
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PLAN
OF DISTRIBUTION
We
may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or
a combination of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The
securities may be distributed from time to time in one or more transactions:
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at
a fixed price or prices, which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices; or
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at
negotiated prices.
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Each
time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe
the method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price
of the securities and the proceeds to us, if applicable.
Offers
to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated to solicit
offers to purchase the securities from time to time. Any agent involved in the offer or sale of our securities will be identified
in a prospectus supplement.
If
a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer,
as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the
time of resale.
If
an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed
with the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that the
underwriter will use to make resales of the securities to the public. In connection with the sale of the securities, we or the
purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting
discounts or commissions. The underwriter may sell the securities to or through dealers, and those dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for which they
may act as agent. Unless otherwise indicated in a prospectus supplement, an agent will be acting on a best efforts basis and a
dealer will purchase securities as a principal, and may then resell the securities at varying prices to be determined by the dealer.
Any
compensation paid to underwriters, dealers or agents in connection with the offering of the securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers will be provided in the applicable prospectus supplement. Underwriters,
dealers and agents participating in the distribution of the securities may be deemed to be underwriters within the meaning of
the Securities Act of 1933, as amended, and any discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify
underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, or to contribute to
payments they may be required to make in respect thereof and to reimburse those persons for certain expenses.
Any
common stock will be listed on the Nasdaq Capital Market, but any other securities may or may not be listed on a national securities
exchange. To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities,
which involve the sale by persons participating in the offering of more securities than were sold to them. In these circumstances,
these persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their
over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities by bidding for
or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating
in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might
otherwise prevail in the open market. These transactions may be discontinued at any time.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act.
In
addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives,
the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales
or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives
to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not
identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition,
we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities
short using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer
its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
We
do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above
might have on the price of the securities. In addition, we do not make any representation that underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued without notice.
The
specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
To
comply with applicable state securities laws, the securities offered by this prospectus will be sold, if necessary, in such jurisdictions
only through registered or licensed brokers or dealers. In addition, securities may not be sold in some states unless they have
been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business
for which they receive compensation.
LEGAL
MATTERS
Lucosky
Brookman LLP will pass upon certain legal matters relating to the issuance and sale of the securities offered hereby on behalf
of YERR. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name
in the applicable prospectus supplement.
EXPERTS
Centurion
ZD CPA Limited (previously DCAW (CPA) Limited, as successor to Dominic K.F. Chan & Co), an independent registered public accounting
firm, has audited the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016, as
set forth in their report which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Centurion ZD CPA Limited, given on their authority as experts
in accounting and auditing.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following is an estimate of the expenses (all of which are to be paid by the registrant) that we may incur in connection with
the securities being registered hereby.
SEC registration fee
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$
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34,770
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FINRA filing fee
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*
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Printing expenses
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*
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Legal fees and expenses
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$
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25,000
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Accounting fees and expenses
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*
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Blue Sky, qualification fees and expenses
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*
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Transfer agent fees and expenses
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*
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Trustee fees and expenses
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*
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Warrant agent fees and expenses
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*
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*
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Total
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*
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*
|
These
fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this
time.
|
Item
15. Indemnification of Directors and Officers
Subsection
7 of Section 78.138 of the Nevada Revised Statutes (the “Nevada Law”) provides that, subject to certain very limited
statutory exceptions, a director or officer is not individually liable to the corporation or its stockholders or creditors for
any damages as a result of any act or failure to act in his or her capacity as a director or officer, unless it is proven that
the act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and such breach of those
duties involved intentional misconduct, fraud or a knowing violation of law. The statutory standard of liability established by
Section 78.138 controls even if there is a provision in the corporation’s articles of incorporation unless a provision in
the Company’s Articles of Incorporation provides for greater individual liability.
Subsection
1 of Section 78.7502 of the Nevada Law empowers a corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise (any such person, a “Covered Person”),
against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred
by the Covered Person in connection with such action, suit or proceeding if the Covered Person is not liable pursuant to Section
78.138 of the Nevada Law or the Covered Person acted in good faith and in a manner the Covered Person reasonably believed to be
in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceedings, had no reasonable
cause to believe the Covered Person’s conduct was unlawful.
Subsection
2 of Section 78.7502 of the Nevada Law empowers a corporation to indemnify any Covered Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that such person acted in the capacity of a Covered Person against expenses, including amounts
paid in settlement and attorneys’ fees actually and reasonably incurred by the Covered Person in connection with the defense
or settlement of such action or suit, if the Covered Person is not liable pursuant to Section 78.138 of the Nevada Law or the
Covered Person acted in good faith and in a manner the Covered Person reasonably believed to be in or not opposed to the best
interests of the Corporation. However, no indemnification may be made in respect of any claim, issue or matter as to which the
Covered Person shall have been adjudged by a court of competent jurisdiction (after exhaustion of all appeals) to be liable to
the corporation or for amounts paid in settlement to the corporation unless and only to the extent that the court in which such
action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances
the Covered Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
Section
78.7502 of the Nevada Law further provides that to the extent a Covered Person has been successful on the merits or otherwise
in the defense of any action, suit or proceeding referred to in Subsection 1 or 2, as described above, or in the defense of any
claim, issue or matter therein, the corporation shall indemnify the Covered Person against expenses (including attorneys’
fees) actually and reasonably incurred by the Covered Person in connection with the defense.
Subsection
1 of Section 78.751 of the Nevada Law provides that any discretionary indemnification pursuant to Section 78.7502 of the Nevada
Law, unless ordered by a court or advanced pursuant to Subsection 2 of Section 78.751, may be made by a corporation only as authorized
in the specific case upon a determination that indemnification of the Covered Person is proper in the circumstances. Such determination
must be made (a) by the stockholders, (b) by the board of directors of the corporation by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding, (c) if a majority vote of a quorum of such non-party directors
so orders, by independent legal counsel in a written opinion, or (d) by independent legal counsel in a written opinion if a quorum
of such non-party directors cannot be obtained.
Subsection
2 of Section 78.751 of the Nevada Law provides that a corporation’s articles of incorporation or bylaws or an agreement
made by the corporation may require the corporation to pay as incurred and in advance of the final disposition of a criminal or
civil action, suit or proceeding, the expenses of officers and directors in defending such action, suit or proceeding upon receipt
by the corporation of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined
by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. Subsection 2 of Section
78.751 further provides that its provisions do not affect any rights to advancement of expenses to which corporate personnel other
than officers and directors may be entitled under contract or otherwise by law.
Subsection
3 of Section 78.751 of the Nevada Law provides that indemnification pursuant to Section 78.7502 of the Nevada Law and advancement
of expenses authorized in or ordered by a court pursuant to Section 78.751 does not exclude any other rights to which the Covered
Person may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, for either an action in his or her official capacity or in another capacity while holding his or her office. However,
indemnification, unless ordered by a court pursuant to Section 78.7502 or for the advancement of expenses under Subsection 2 of
Section 78.751 of the Nevada Law, may not be made to or on behalf of any director or officer of the corporation if a final adjudication
establishes that his or her acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were
material to the cause of action. Additionally, the scope of such indemnification and advancement of expenses shall continue for
a Covered Person who has ceased to be a director, officer, employee or agent of the corporation, and shall inure to the benefit
of his or her heirs, executors and administrators.
Section
78.752 of the Nevada Law empowers a corporation to purchase and maintain insurance or make other financial arrangements on behalf
of a Covered Person for any liability asserted against such person and liabilities and expenses incurred by such person in his
or her capacity as a Covered Person or arising out of such person’s status as a Covered Person whether or not the corporation
has the authority to indemnify such person against such liability and expenses.
The
Bylaws of the Company provide for indemnification of Covered Persons substantially identical in scope to that permitted under
the Nevada Law. Such Bylaws provide that the expenses of directors and officers of the Company incurred in defending any action,
suit or proceeding, whether civil, criminal, administrative or investigative, must be paid by the Company as they are incurred
and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such
director or officer to repay all amounts so advanced if it is ultimately determined by a court of competent jurisdiction that
the director or officer is not entitled to be indemnified by the Company.
Item
16. Exhibits
(a)
Exhibits
A
list of exhibits filed with this registration statement on Form S-3 is set forth on the Exhibit Index and is incorporated herein
by reference.
Item
17. Undertakings
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
Provided,
however
,
that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required
to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by
the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration
statement.
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial
bona fide
offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as
of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale
of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and
any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial
bona fide
offering thereof.
Provided, however,
that no statement
made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such effective date.
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b)
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial
bona fide
offering thereof.
(h)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Xiangyao Liu, as his true and
lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to file and sign any and all amendments, including post-effective amendments and any registration statement
for the same offering that is to be effective under Rule 462(b) of the Securities Act, to this registration statement, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York, New York State, on May 4, 2017.
|
YANGTZE
RIVER DEVELOPMENT LIMITED
|
|
|
|
|
By:
|
/s/
Xiangyao Liu
|
|
|
Xiangyao
Liu
|
|
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
|
|
|
Date:
|
May
4, 2017
|
|
|
|
|
By:
|
/s/
Xin Zheng
|
|
|
Xin
Zheng
|
|
|
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
|
|
|
|
Date:
|
May
4, 2017
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Xiangyao Liu
|
|
President,
Chief Executive Officer and Director
|
|
May
4
, 2017
|
Xiangyao
Liu
|
|
(Principal
Executive Officer)
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
/s/
Xin Zheng
|
|
(Principal
Financial and Accounting Officer)
|
|
May
4, 2017
|
Xin
Zheng
|
|
|
|
|
|
|
|
|
|
/s/
James Stuart Coleman
|
|
Director
|
|
May
4, 2017
|
James
Stuart Coleman
|
|
|
|
|
|
|
|
|
|
/s/
Zhanhuai Cheng
|
|
Director
|
|
May
4, 2017
|
Zhanhuai
Cheng
|
|
|
|
|
|
|
|
|
|
/s/
Yanliang Wu
|
|
Director
|
|
May
4, 2017
|
Yanliang
Wu
|
|
|
|
|
|
|
|
|
|
/s/
Yu Zong
|
|
Director
|
|
May
4, 2017
|
Yu
Zong
|
|
|
|
|
|
|
|
|
|
/s/
Harvey Leibowitz
|
|
Independent
Director
|
|
May
4, 2017
|
Harvey
Leibowitz
|
|
|
|
|
|
|
|
|
|
/s/
Zhixue Liu
|
|
Independent
Director
|
|
May
4, 2017
|
Zhixue
Liu
|
|
|
|
|
|
|
|
|
|
/s/Tongmin
Wang
|
|
Independent
Director
|
|
May
4, 2017
|
Tongmin
Wang
|
|
|
|
|
|
|
|
|
|
/s/
Adam Goldberg
|
|
Independent
Director
|
|
May
4, 2017
|
Adam
Goldberg
|
|
|
|
|
|
|
|
|
|
/s/
Daniel W. Heffernan
|
|
Independent
Director
|
|
May
4, 2017
|
Daniel
W. Heffernan
|
|
|
|
|
|
|
|
|
|
/s/
Zhihong Su
|
|
Independent
Director
|
|
May
4, 2017
|
Zhihong
Su
|
|
|
|
|
EXHIBIT
INDEX
Item
16. Exhibits.
Exhibit
Number
|
|
Description
|
|
|
|
1.1*
|
|
Form
of Underwriting Agreement
|
3.1
|
|
(a) Original Articles of Incorporation dated December 23, 2009 (Incorporated by reference to Exhibit 3.1(a) filed on Company’s Registration Statement on Form S-1 filed with the SEC on February 18, 2016)
|
|
|
Certificate of Correction dated April 21, 2010 (Incorporated by reference to Exhibit 3.1(b) filed on Company’s Registration Statement on Form S-1 filed with the SEC on February 18, 2016)
|
|
|
(c) Certificate of Amendment dated March 10, 2011 (Incorporated by reference to Exhibit 3.1© filed on Company’s Registration Statement on Form S-1 filed with the SEC on February 18, 2016)
|
|
|
(d) Certificate of Correction dated March 14, 2011(Incorporated by reference to Exhibit 3.1(d) filed on Company’s Registration Statement on Form S-1 filed with the SEC on February 18, 2016)
|
|
|
(e) Certificate of Amendment dated January 13, 2016 (Incorporated by reference to Exhibit 3.1(e) filed on Company’s Registration Statement on Form S-1 filed with the SEC on February 18, 2016)
|
3.2
|
|
Bylaws (Incorporated by reference to Exhibit 3.3 filed on Company’s Registration Statement on Form S-1 filed with the SEC on April 28, 2010)
|
4.1*
|
|
Form
of Certificate of Designation
|
4.2*
|
|
Form
of Preferred Stock Certificate
|
4.3*
|
|
Form
of Warrant Agreement
|
4.4*
|
|
Form
of Warrant Certificate
|
4.5*
|
|
Form
of Rights Agreement
|
4.6*
|
|
Form
of Units Agreement
|
4.7*
|
|
Form
of Note
|
4.8*
|
|
Form
of Indenture
|
5.1*
|
|
Opinion
of Lucosky Brookman LLP
|
23.1
|
|
Consent of Centurion ZD CPA Limited (as successor to Dominic K.F. Chan & Co.)
|
23.2*
|
|
Consent
of Lucosky Brookman LLP (Included in Exhibit 5.1)
|
24.1
|
|
Powers of Attorney (incorporated by reference to the signature page hereto)
|
*
To be filed by amendment or incorporated by reference in connection with the offering of the securities.
II-7
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