As filed with the Securities and Exchange Commission on September 2, 2014

Registration Number 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

U.S. Dry Cleaning Services Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	81323	77-0357037
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

20250 Acacia Street, Suite 230

Newport Beach, CA 92660

(949) 734-7310

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Alexander Bond

Chief Executive Officer

U.S. Dry Cleaning Services Corporation

20250 Acacia Street, Suite 230

Newport Beach, CA 92660

(949) 734-7310

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Larry A. Cerutti, Esq.	Sarah E. Williams, Esq.
Rushika Kumararatne de Silva, Esq.	Tamar Aydin Donikyan, Esq.
Troutman Sanders LLP	Ellenoff Grossman & Schole LLP
5 Park Plaza, Suite 1400	1345 Avenue of the Americas, 11th Floor
Irvine, California	New York, New York 10105
(949) 622-2700/(949) 622-2739 (fax)	(212) 370-1300

Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date hereof.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Larger accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)			Amount of Registration Fee (2)
Common Stock, $0.001 par value per share (3)	$	13,800,000		$	1,777.44
Warrants to purchase common stock (3)			(4)			(5)
Shares of common stock underlying warrants (3) (6)
Representative’s warrants (7)	—					(5)
Shares of common stock underlying Representative’s warrants (6)(7)(8)	$	1,214,400		$	156.41
Total	$	15,014,400		$	1,933.85

(1)		Estimated solely for the purpose of calculating the registration fee under Rule 457(o) under the Securities Act of 1933, as amended, or Securities Act.
(2)		Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the registrant.
(3)		Includes the offering price of the additional securities which may be issued upon full exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
(4)		The warrants to be issued to investors hereunder are included in the price of the common stock above.
(5)		No separate registration fee is required pursuant to Rule 457(g) under the Securities Act.
(6)		Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
(7)		Assumes that the underwriters’ over-allotment option is fully exercised.
(8)		Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The underwriter’s warrants are exercisable at a per share exercise price equal to 110% of the public offering price. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the representative’s warrant is $1,214,400 (which is equal to 110% of $1,104,000 (8% of $13,800,000).

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold until the registration statement becomes effective. This prospectus is not an offer to sell and is not a solicitation of an offer to buy in any state in which an offer, solicitation, or sale is not permitted.

Subject To Completion, Dated September 2, 2014

PROSPECTUS

SHARES OF COMMON STOCK AND

WARRANTS TO PURCHASE SHARES OF COMMON STOCK

This is a firm commitment public offering of shares of common stock and warrants to purchase shares of common stock of U.S. Dry Cleaning Services Corporation, which will be sold in combination consisting of one share of common stock and one warrant. We expect that the public offering price for one combination consisting of one share of common stock and one warrant will be between $ and $ . Although issued together, the shares of common stock and warrants may be transferred separately immediately upon issuance.

Each warrant is immediately exercisable for one share of common stock at an exercise price of 100% of the public offering price of one combination in this offering. The warrants will expire 60 months after the issuance date.

The shares of common stock issuable from time to time upon the exercise of the warrants are also being offered pursuant to this prospectus.

We have applied to list our common stock and our warrants on The NASDAQ Capital Market under the symbols “DCLN” and “DCLNW”, respectively.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 15 to read about factors you should consider before buying our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Combination	Total
Public offering price	$	$
Underwriting discounts and commissions (1)	$	$
Proceeds, before expenses, to us (2)	$	$

(1) We have agreed to issue warrants to the representative of the underwriters and to reimburse the underwriters for certain expenses. See “Underwriting” on page 105 of this prospectus for a description of these arrangements.

(2) We estimate the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $ .

The underwriters expect to deliver our securities, against payment, on or about , 2014.

We have granted the underwriters a 45-day option to purchase up to additional shares of common stock and/or up to additional warrants to purchase additional shares of common stock from us at the offering price for each security, less underwriting discounts and commissions, to cover over-allotments, if any.

Sole Book Running Manager

Maxim Group LLC

Co-Managers

The date of this prospectus is , 2014.

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TABLE OF CONTENTS

PROSPECTUS SUMMARY	1
RISK FACTORS	15
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS	30
USE OF PROCEEDS	31
DILUTION	32
DIVIDEND POLICY	33
CAPITALIZATION	33
UNAUDITED PRO FORMA FINANCIAL INFORMATION	35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
BUSINESS	59
MANAGEMENT	70
RELATED PARTY TRANSACTIONS	87
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	94
DESCRIPTION OF CAPITAL STOCK	97
DESCRIPTION OF SECURITIES WE ARE OFFERING	100
SHARES ELIGIBLE FOR FUTURE SALE	102
UNDERWRITING	105
LEGAL MATTERS	109
EXPERTS	109
INTERESTS OF NAMED EXPERTS AND COUNSEL	109
WHERE YOU CAN FIND MORE INFORMATION	110
INDEX TO FINANCIAL STATEMENTS	F-1

We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data.

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PROSPECTUS SUMMARY

This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider before buying our securities. You should read the entire prospectus carefully, especially the “Risk Factors” section and our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our securities. Some of the statements in this prospectus constitute forward-looking statements. See “Information Regarding Forward-Looking Statements.” Unless the context requires otherwise, references in this prospectus to “the Company, ““we,” “us” and “our” refer to U.S. Dry Cleaning Services Corporation.

Our Company

We believe we are the largest owner-operator of dry cleaning and laundry stores in the United States, with 70 retail locations located in Arizona, Central California, Southern California, Hawaii, Indiana and Virginia. Given the relatively large size and extremely fragmented nature of our industry, our net sales of $21.4 million in fiscal 2013 represent a market share that is less than 0.3% of the approximately $9.0 billion dry cleaning and laundry market, as reported in the IBISWorld Industry Report (November 2013). We believe these market dynamics provide us with tremendous opportunities for growth.

We established our business through several acquisitions completed between 2005 and 2008. We financed each of these acquisitions using cash raised through the sale of debt instruments with relatively short maturities. However, given the financial crisis and the associated difficulties with raising capital in late 2008, we were unable to repay or restructure our debt obligations. As a result, we filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. On September 23, 2011, the Bankruptcy Court approved our plan of reorganization, or Bankruptcy Plan, which enabled us to eliminate a significant amount of our outstanding debt and close or relocate 12 unprofitable stores, while still allowing stockholders to maintain a continuing equity interest in our company.

After emerging from bankruptcy, we continued to focus on improving our balance sheet and operations by converting additional debt to equity; making changes in management and field personnel; upgrading stores and production plants; expanding the use of eco-friendly solvents and “green” dry cleaning processes; pursuing new store locations and free door-to-door home and office delivery in order to leverage existing production capacity; expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning; expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations; and expanding our existing dry cleaning and laundry services related to fire and flood restoration. We now believe that we have a compelling opportunity to expand our position as the largest owner-operator of retail dry cleaning and laundry stores nationwide. To this end, we recently entered into an agreement to purchase substantially all the assets of a 17-store dry cleaning and commercial laundry operator located in Las Vegas, Nevada (see “Prospectus Summary—Recent Developments—Advent Cleaners Acquisition”) and are currently negotiating potential acquisitions of other dry cleaning operators across the nation.

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Our Operating Plan

The dry cleaning industry in the United States is an amalgamation of small independent brands and “mom and pop” retail stores. According to the IBISWorld Industry Report, a majority of dry cleaning companies employ less than five people and over 90% of all dry cleaning companies consist of just one facility. In this context, we believe we have a unique operating platform. With between five and 25 stores in each of our five primary geographical markets, we believe that our larger operating base provides a strong foundation for future growth. We have identified the following areas of operational focus to advance this growth:

· leveraging excess production capacity in our existing markets;

· promoting “green” dry cleaning processes, which are gentler on fabrics and healthier for our customers and the environment;

· expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning;

· expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations;

· expanding our existing dry cleaning and laundry services related to fire and flood restoration; and

· further developing a customer-focused culture that strengthens our brands.

We operate a hub-and-spoke model, utilizing a large centralized processing plant, or “hub,” to provide dry cleaning and laundry services to several smaller company-owned retail stores, or “spokes,” rather than each store having its own equipment and performing its own dry cleaning and laundry. While the implementation varies from market to market, we believe this approach is the best way to (i) ensure consistent production quality, (ii) allow for more efficient equipment maintenance and repairs, and (iii) leverage labor, supplies, and utilities in order to lower production costs. Moreover, the cost to build a hub is quite high, whereas the cost to open new stores (assuming they will be serviced by an existing hub) is quite low. Therefore, once a hub exists and there is excess capacity, we believe the opportunity to add stores is compelling. We currently operate central hubs in Southern California, Virginia and Hawaii. These central hubs occupy, in the aggregate, approximately 62,500 square feet and service 31 retail stores. We believe that our central hubs have capacity to service, in the aggregate, an additional 60 retail stores plus additional routes. We believe that adding additional stores and delivery routes will drive operating efficiencies, lower the production cost per unit, and increase profitability. We intend to open “dry” stores for the drop-off and pick-up of garments that do not contain dry cleaning equipment, acquire existing stores and chains that consist primarily of dry stores, and establish new delivery routes in areas surrounding these central hubs in order to make use of this excess capacity.

In larger and more geographically spread-out markets, such as Arizona, Central California and Indiana, we operate a modified version of the hub-and-spoke model, where smaller mini-hubs service a few neighboring stores rather than a single hub servicing the entire market. While this approach typically requires more equipment, it is superior when the drive-times are long (i.e., more than 30-40 minutes between the hub and the spoke). We currently operate 16 mini-hubs in Arizona, Central California and Indiana which service, in the aggregate, 39 retail stores. We believe that they have capacity to service an additional 40 retail stores and additional delivery routes, which would drive operating efficiencies, lower the production cost per unit, and increase profitability. We intend to utilize the excess capacity of mini-hubs by opening dry stores, acquiring existing stores and chains that consist primarily of dry stores, and establishing new delivery routes in areas surrounding these mini-hubs.

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Our Commitment to Eco-Friendly Production

State and federal regulatory agencies have targeted the practices of the dry cleaning industry over the past two decades due to the use of certain solvents in the cleaning process, with perchloroethylene, or perc, being the most widely scrutinized. Of the 73 total locations we lease (70 retail stores and three productions plants), 33 are used for processing clothes and of those locations only four currently use perc (one of which is being converted to eliminate the use of perc by the end of 2014), while the other locations use eco-friendly solvents and “green” dry cleaning processes. We use a number of eco-friendly solvents including those manufactured by GreenEarth® Cleaning. We promote our “green” cleaning processes in many of our marketing materials designed to appeal to customers seeking environmentally sensitive dry cleaning options.

Our Customer-Focused Culture

We strive to promote a customer-focused culture in which customer satisfaction is the paramount objective. While certain aspects of our operations vary from region to region, we nonetheless require that every store or route manager deliver on the basic consumer proposition of providing consistently clean clothes, ready on time, at a great value, delivered with genuinely warm and friendly customer service. As part of our value proposition, we believe we provide quality and services that surpasses many of our competitors, such as expert stain identification and removal, hand pressing of all garments (as opposed to simply sending them through a steam tunnel), detailed garment inspection with free minor repairs and button replacement, same-day service, e-mail notifications when an order is ready, and free delivery to home or office. We believe that the incremental cost of labor required to provide these additional customer benefits is outweighed by the opportunity to engender customer loyalty and increase referrals.

We believe that our core customer proposition of eco-friendly solvents and processes that are not just “green” but also gentler on fabrics and healthier for our customers and the environment, combined with excellent quality, value and service will assist us in attracting customers and improving market share over time. We have recently begun testing the effectiveness of different methods of advertising and marketing and will continue to aggressively promote our focus on these core customer propositions. As part of our marketing strategy, we recently sought to improve our customer relationships and the positive association of our brands by upgrading our online and social media platforms. We utilize branded websites, third party providers for search-engine-optimization and Facebook pages that keep us in front of customers while also offering garment care tips, contests, and discounts/coupons. We have also enabled “Talk to the Manager” access on our websites for each region, providing customers with direct and anonymous text message access to each store manager, district manager and regional manager. As a result of our daily focus on executing against the most important customer criteria, we believe we now offer an improved customer experience and are now better able to market that experience.

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Our Growth Strategy

We intend to increase our market share through a combination of organic and strategic growth. We seek to achieve organic growth by increasing sales in our existing stores and also by opening select new stores in order to leverage excess production capacity from existing central hubs or mini-hubs. We also believe that we can increase sales in our existing stores by expanding our service offerings and by promoting our brands more effectively. Since many of our costs, including rent, salaried-labor and delivery are relatively fixed, we believe that incremental sales will improve our profitability.

In addition to increasing revenue in existing stores and routes, we plan to open new stores and establish new routes, especially dry stores in areas that can be serviced by one of our existing central hubs or mini-hubs. In certain new markets or trade areas where new housing and retail shopping centers are being developed outside existing service areas, we will also consider establishing new mini-hub type stores, especially if we anticipate being able to leverage that investment by opening several additional stores in the same trade area or geographic region. Because of their significantly smaller initial investment compared to larger central hubs, we believe that mini-hubs provide excellent flexibility for scaled growth.

We also intend to grow through strategic acquisitions, especially in more mature markets and trade areas, where there are fewer new retail centers being developed and where existing competition is already entrenched. We seek to acquire leading operators in attractive markets, but we also plan to be opportunistic as it relates to underperforming operations that we believe have significant potential for improvement. We believe we can offer an intriguing exit alternative to targets that do not otherwise have an attractive exit option, especially upon completing this offering, which will provide cash for acquisitions and improve our access to capital going forward. Since there are currently no other publicly-traded dry cleaning companies, we would be the only company in our industry able to offer equity securities that would allow targets to participate in the appreciation of such securities. In addition, we believe that having publicly-traded securities will enable us to incentivize key employees with equity securities, including stock options, which would be a competitive advantage.

We routinely analyze and target markets for development and then screen specific areas based on demographic and company-specific variables to identify local chains for acquisition. We intend to use this approach to cluster stores in specific geographic areas of demand, which we believe will increase brand awareness and improve our operating and marketing efficiencies, especially where we are able to leverage other operating costs associated with our existing central and mini-hubs and regional management structure.

Recent Developments

Advent Cleaners Acquisition

On August 25, 2014, we entered into an agreement to purchase, upon the closing of this offering and subject to other customary closing conditions, substantially all of the assets of Advent Cleaners, LLC, or Advent Cleaners, for $4.0 million in cash, subject to adjustment. We refer to this potential acquisition of Advent Cleaners as the Advent Cleaners Acquisition. Upon the closing of the Advent Cleaners Acquisition, we will add 14 dry stores, three mini-hubs with retail operations and a 20,230 square foot central hub, all located in the greater Las Vegas, Nevada area and operated under the brands “Al Phillips” and “Thrift DLux Cleaners.” The acquired assets also include contracts for commercial laundry accounts with some of the largest resorts and hotels in Las Vegas. We intend to hire substantially all of Advent Cleaners’ employees, including existing managers with significant operating experience in both retail and commercial dry cleaning and laundry. In addition, we have agreed to enter into, at the closing of the Advent Cleaners Acquisition, a five-year exclusive supply agreement with United Cleaners Supply, LLC to purchase the dry cleaning and laundry supplies used in the Advent Cleaners operations. This offering will not be consummated if the Advent Cleaners Acquisition cannot be consummated concurrently. Conversely, the Advent Cleaners Acquisition will not be consummated if this offering cannot be consummated concurrently. See “Business—Our Proposed Strategic Acquisition” for additional information regarding this proposed acquisition.

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Debt Restructuring and Recapitalization

On July 23, 2014, we entered into an exchange agreement, or Exchange Agreement, with certain holders of our debt instruments, warrants and rights to purchase common stock to (i) exchange certain of our secured and unsecured notes and loan agreements, under which an aggregate amount of $11,184,164 in principal and interest was outstanding as of August 22, 2014, for an aggregate of shares of our common stock upon the closing of this offering, based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus; and (ii) exchange warrants and rights to purchase an aggregate of 224,059 shares of our common stock at exercise prices ranging from $ (which is the midpoint of the range set forth on the cover page of this prospectus) to $32.00 per share for an aggregate of 112,032 shares of our common stock upon the closing of this offering (i.e., one share of common stock for each warrant representing the right to purchase two shares of common stock). We refer to the exchange of this outstanding debt, warrants and rights to purchase shares of our common stock pursuant to the terms of the Exchange Agreement as the Exchange Offer.

As a result of the Exchange Offer, upon the closing of this offering and prior to application of the net proceeds of this offering, we expect to have a total of approximately $ in debt outstanding and no warrants or rights to purchase shares of our common stock outstanding (other than warrants to purchase shares of common stock issued in this offering). We expect to repay up to $1.0 million of the $ in debt that will be outstanding after the Exchange Offer with the proceeds of this offering.

In addition, under the terms of the Exchange Agreement, certain holders of our common stock have agreed to cancel 1,098,445 shares of our common stock, including 871,882 shares of common stock initially issued under the terms of the Reorganization Agreement described below.

The closing of the Exchange Agreement is conditioned upon and shall close concurrently with this offering.

Risks Associated with Our Business

We are subject to a number of risks which you should be aware of before you decide to buy our securities. In particular, you should consider the following risks, which are discussed more fully in the section entitled “Risk Factors”:

· We have incurred significant losses, expect continued losses and may never achieve profitability. If we continue to incur losses, we may have to curtail our operations, which may prevent us from successfully achieving our operating plan and expanding our business.

· Our independent registered public accounting firm has issued a report on our audited financial statements which raises substantial doubt about our ability to continue as a going concern. This may impair our ability to raise additional financing and adversely affect the price of our common stock.

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· There can be no assurance that we will be able to generate or secure sufficient funding to support our growth strategy.

· Our independent registered public accounting firm has identified material weaknesses in our internal controls for the years ended September 30, 2012 and 2013 that, if not properly remediated, could result in material misstatements in our financial statements in future periods and impair our ability to comply with the accounting and reporting requirements applicable to public companies.

· Our industry is highly competitive.

· Our ability to implement our growth strategy may be limited by our ability to consummate acquisitions, and there can be no assurance that future acquisitions, including the Advent Cleaners Acquisition, will have a beneficial effect on our operating results.

· Our financial results after the Advent Cleaners Acquisition may differ materially from the unaudited pro forma financial statements included in this prospectus.

· Our future results will suffer if we do not effectively manage our expanded operations following the Advent Cleaners Acquisition.

· Third parties may terminate or alter existing assigned contracts under the Advent Cleaners Acquisition.

· After the Advent Cleaners Acquisition is completed, we may be subject to work stoppages at Advent facilities, which could seriously impact our operations and the profitability of our business.

· Competition for acquisitions could adversely affect our ability to continue our growth.

· Our long-term success is also dependent on our ability to open new stores and is subject to many unpredictable factors.

· We rely on licensed third-party point-of-sale software and systems to manage customer orders and operate our back office management systems. The failure of this software and systems could harm our business

· Our business could suffer if we lose key management or are unable to attract and retain the talent required for our business.

· If we are unable to attract and retain qualified personnel with dry cleaning service-related experience, our business could suffer.

· No independent market studies have been made to confirm the continued demand for our dry cleaning services.

· The success of our expansion strategy depends on the continued loyalty of the customers of the acquired stores.

· Pricing pressures from existing competitors and an influx of new competitors may have an adverse effect on our operating results.

· Many of our competitors and potential competitors could have superior resources, which could place us at a cost and price disadvantage. Thus, we may never realize revenues sufficient to sustain our operations, and we may fail in our business and cease operations.

· Changes in the cost of supplies, utilities and other operating costs beyond our control could adversely affect our results of operations.

· Our business is seasonal and is also affected by severe weather.

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· Changes in economic conditions and other unforeseen conditions could materially affect our ability to maintain or increase sales.

· Compliance with environmental laws may negatively affect our business.

· The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.

· If we face labor shortages or increased labor costs, our growth and operating results could be adversely affected.

· We may pursue businesses in which we have limited or no experience, including tuxedo and eveningwear rental, and such businesses could fail to generate anticipated returns.

Corporate Information

We were incorporated in Delaware on October 29, 1997 under the name First Virtual Merger Corporation. On December 30, 2005, we entered into a reverse merger transaction with U.S. Dry Cleaning Corporation which was incorporated in Delaware on July 19, 2005. Prior to the reverse merger, we were a shell company with shares of common stock quoted on the OTC Bulletin Board. We ceased being a shell company on December 30, 2005 upon consummation of the reverse merger. Subsequently, we changed our name to U.S. Dry Cleaning Services Corporation. On March 20, 2012, the Securities and Exchange Commission issued an order revoking the registration of our securities under the Securities Exchange Act of 1934, as amended, or Exchange Act, pursuant to Section 12(j) of the Exchange Act as a result of our failure to file annual and quarterly reports with the Securities and Exchange Commission.

Our fiscal year end is September 30. Our principal executive offices are located at 20250 Acacia Street, Suite 230, Newport Beach, California. Our telephone number is (949) 734-7310. Our website address is www.usdrycleaning.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

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The Offering

Securities offered by us:		shares of common stock and warrants to purchase shares of common stock. We are offering shares of our common stock together with warrants to purchase shares of our common stock, which will be sold in combination consisting of one share of common stock and one warrant. Although issued together, the shares of common stock and warrants may be transferred separately immediately upon issuance. Each warrant is exercisable for one share of common stock. The warrants are immediately exercisable upon issuance in this public offering at an initial exercise price of 100% of the initial public offering price of one combination in this offering. The warrants will expire on the 60 month anniversary of the date of issuance. The shares of common stock issuable from time to time upon the exercise of the warrants are also being offered pursuant to this prospectus.

Public offering price:		$ (the midpoint of the range set forth on the cover page of this prospectus) per combination of one share of common stock and one warrant.

Common stock to be outstanding after the offering		shares

Underwriters’ Over-Allotment Option		We have granted the underwriters an option, exercisable within 45 days after the closing of this offering, to purchase up to an additional shares of common stock and/or up to additional warrants to purchase up to additional shares of common stock, solely for the purpose of covering over-allotments.

Use of proceeds:		We estimate that the net proceeds from the sale of shares of our common stock and warrants to purchase shares of our common stock that we are selling in this offering will be approximately $ million (or approximately $ million if the underwriters’ option to purchase additional shares of common stock and warrants in this offering is exercised in full), based upon an assumed public offering price of $ per combination of one share of common stock and one warrant, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to fund acquisitions, including $4.0 million for the Advent Cleaners Acquisition, repay up to $1.0 million of existing debt, open new stores and establish new delivery routes, fund capital expenditures at existing stores and production plants, and for general corporate purposes. See “Use of Proceeds” on page 31.

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Proposed Symbols:

We have applied for listing of our common stock and the warrants sold in this offering on The NASDAQ Capital Market under the symbols “DCLN” and “DCLNW”, respectively. No assurance can be given that such listings will be approved.

The number of shares of our common stock to be outstanding after this offering is based on:

· 2,685,924 shares of our common stock outstanding on August 22, 2014,

· the issuance of 351,290 shares of common stock into which all of our Series A Cumulative Convertible Preferred Stock, or Series A Preferred Stock, outstanding as of August 22, 2014, will be automatically converted upon the closing of this offering;

· the cancellation of 1,098,445 shares of common stock under the terms of the Exchange Agreement upon the closing of this offering;

· the issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus); and

· the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus).

The number of shares of our common stock to be outstanding after this offering excludes as of August 22, 2014:

· 1,250,000 shares of common stock reserved for issuance under the U.S. Dry Cleaning Services Corporation 2014 Omnibus Incentive Plan, or 2014 Plan, of which options to purchase 636,000 shares were outstanding as of August 22, 2014, at an exercise price per share equal to $4.80;

· 21,753 shares of common stock reserved for issuance under a 10% Senior Secured Promissory Note initially issued to Wattles Capital Management in the principal amount of $549,890 that is currently held by Setal 10 Trust, or Setal 10 Note, based on the principal and interest outstanding under the Setal 10 Note on August 22, 2014, which we anticipate repaying in full upon the closing of this offering;

· an aggregate of shares of common stock issuable upon exercise of the warrants issued to the public and the warrants issued to the representative of the underwriters in connection with this offering; and

· assuming the over-allotment option is fully exercised, (i) shares of common stock, (ii) shares of common stock issuable upon exercise of warrants and (iii) shares of common stock issuable upon exercise of the warrants to be issued to the representative of the underwriters in connection with the full exercise of the over-allotment option.

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Except as otherwise indicated herein, all information in this prospectus (i) gives effect to a one-for-sixteen reverse stock split of our shares of common stock effective on June 19, 2014, (ii) assumes that the underwriters do not exercise the over-allotment option and (iii) assumes that that the warrants offered hereby are not exercised.

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Historical Financial and Operating Data and
Summary Unaudited Pro Forma Data

The following table provides a summary of our financial information and does not contain all of the financial information that may be important to you. Therefore, you should carefully read all of the information in this prospectus, including the respective financial statements of U.S. Dry Cleaning Services Corporation and Advent Cleaners, LLC included elsewhere in this prospectus and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before making a decision to invest in our securities.

Advent Cleaners has a fiscal year end of December 31. Included in this filing are the audited financial statements of Advent Cleaners for the years ended December 31, 2013 and 2012, as well as unaudited financial statements for the six months ended June 30, 2014 and 2013. However, for the purposes of this pro forma presentation, the year end of Advent Cleaners has been conformed to that of U.S. Dry Cleaning Services Corporation.

The summary statements of operations data for the years ended September 30, 2012 and 2013 have been derived from our audited financial statements included elsewhere in this prospectus. The summary statements of operations data for the nine months ended June 30, 2013 and 2014 and the summary balance sheet data as of June 30, 2014 have been derived from our unaudited financial statements included elsewhere in this prospectus. Our unaudited financial statements have been prepared on a basis consistent with our audited financial statements included elsewhere in this prospectus. In the opinion of management, our unaudited financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly our results of operations and financial position for such periods and at such date. The historical results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

The summary unaudited pro forma statements of operations data for the years ended September 30, 2012 and 2013 and for the nine months ended June 30, 2014, and the summary unaudited pro forma balance sheet data as of June 30, 2014, are derived from the unaudited pro forma financial statements set forth under “Unaudited Pro Forma Financial Information.” The summary unaudited pro forma statements of operations gives effect to the Advent Cleaners Acquisition as if it had occurred as of the beginning of our fiscal year ended September 30, 2013. The summary unaudited pro forma balance sheet gives effect to the Advent Cleaners Acquisition and this offering (including the application of the net proceeds thereof) as if it had occurred as of June 30, 2014.

The unaudited pro forma financial data are included for informational purposes only and do not purport to represent what our actual financial position or results of operations would have been had the transactions referenced above occurred on the dates indicated. In addition, the pro forma adjustments described herein are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of the above transactions on our historical financial data. The unaudited pro forma financial data also do not purport to represent, and may not be indicative of, our results of operations for any future period or our financial position as of any future date. The unaudited pro forma statements of operations do not include adjustments for any revenue or cost saving synergies that may be achievable subsequent to the completion of the Advent Cleaners Acquisition or the costs that may be incurred to achieve those synergies.

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U.S. Dry Cleaning Services Corporation

Selected Historical and Unaudited Pro Forma Financial Data

							Unaudited Pro Forma
	Year Ended September 30,						Year Ended September 30,
	2012			2013			2013
Statements of Operations Data:
Net Sales	$	21,374,671		$	21,408,049		$	31,273,009
Cost of sales (exclusive of depreciation and amortization shown separately below)	9,637,552			9,360,266			14,735,439
Gross profit (exclusive of depreciation and amortization shown separately below)	11,737,119			12,047,783			16,537,570
Operating expenses:
Stores and plant	8,428,456			8,367,537			11,515,178
Regional	2,464,607			2,224,889			2,914,742
Corporate	2,418,539			1,725,664			1,829,952
Depreciation and amortization	432,331			469,547			656,118
Operating loss	(2,006,814		)	(739,854		)	(378,420		)
Other income (expense), net
Interest expense	(3,347,182		)	(2,510,495		)	(2,514,094		)
Gain on extinguishment of debt	833,873			654,935			654,935
Gain (loss) other	13,477			895			(30,652		)
Other expense net	(2,499,832		)	(1,854,665		)	(1,889,811		)
Loss before provision for income taxes	(4,506,646		)	(2,594,519		)	(2,268,231		)
Provision for income taxes	9,100			9,100			9,100
Net loss	$	(4,515,746	)	$	(2,603,619	)	$	(2,277,331	)
Net loss attributable to common stockholders	$	(4,515,746	)	$	(2,603,619	)	$	(2,277,331	)
Net loss per share — basic and diluted	$	(16.06	)	$	(3.85	)	$	(3.37	)

Weighted average shares outstanding — basic and diluted	281,218			676,699			676,699

Pro forma net loss per share — basic and diluted (unaudited)				$	(3.85	)	$	(3.37	)

Pro forma weighted average common shares outstanding — basic and diluted (unaudited)				676,699			676,699

Other Financial Information:
EBITDA (1)	$	(1,574,483	)	$	(270,307	)	$	277,698

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U.S. Dry Cleaning Services Corporation

Selected Historical and Unaudited Pro Forma Financial Data

							Unaudited Pro Forma
	Nine Months Ended June 30						Nine Months Ended June 30,
	2013			2014			2014
Statements of Operations Data:
Net Sales	$	16,281,848		$	15,804,521		$	23,483,419
Cost of sales (exclusive of depreciation and amortization shown separately below)	7,093,772			6,798,241			10,971,460
Gross profit (exclusive of depreciation and amortization shown separately below)	9,188,076			9,006,280			12,511,959
Operating expenses:
Stores and plant	6,223,346			6,358,005			8,854,703
Regional	1,702,414			1,551,211			2,126,504
Corporate	1,260,095			1,579,768			1,674,470
Depreciation and amortization	349,447			346,658			517,156
Operating loss	(347,226		)	(829,362		)	(660,874		)
Other income (expense), net
Interest expense	(1,855,496		)	(1,549,063		)	(1,551,214		)
Gain on extinguishment of debt	122,945			55,558			55,558
Gain other	855			6,007			9,507
Other income (expense) net	(1,731,696		)	(1,487,498		)	(1,486,149		)
Loss before provision for income taxes	(2,078,922		)	(2,316,860		)	(2,147,023		)
Provision for income taxes	9,100			9,100			9,100
Net loss	$	(2,088,022	)	$	(2,325,960	)	$	(2,156,123	)
Series A Cumulative Convertible Preferred Stock Dividends	—			(512,103		)	—
Net loss attributable to common stockholders	$	(2,088,022	)	$	(2,838,063	)	$	(2,156,123	)
Net loss per share — basic and diluted	$	(3.27	)	$	(1.48	)	$	(1.01	)

Weighted average shares outstanding — basic and diluted	638,855			1,923,490			2,134,521

Pro forma net loss per share — basic and diluted (unaudited)				$	(1.09	)	$	(1.01	)

Pro forma weighted average common shares outstanding — basic and diluted (unaudited)				2,134,521			2,134,521

Other Financial Information:
EBITDA (1)	$	2,221		$	(482,704	)	$	(143,718	)

(1) EBITDA, which we define as net income excluding net interest expense, income tax expense, gain on extinguishment of debt, other gain (loss) and depreciation and amortization expense, is a supplemental measure to help management and our investors understand our operating performance. For the nine months ended June 30, 2014, EBITDA includes significant and necessary expenses incurred in connection with our preparation to file a registration statement for our initial public offering, or IPO. These expenses include $152,941 for audit and review fees of our financial statements, $183,714 for accounting and tax consultants to provide various technical, accounting, and tax advisory services, $45,000 for third party valuation specialists to perform valuations of our company and various complex financial instruments we issued, and $28,143 in other advisory services.

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U.S. Dry Cleaning Services Corporation

Selected Historical and Unaudited Pro Forma Financial Data

	June 30, 2014
	Actual			Unaudited Pro Forma
Balance Sheet Data:
Cash	$	342,167		$	342,167
Total assets	3,810,197			8,038,233
Related party and other long-term debt net (1)	12,528,096			12,648,775
Other noncurrent liabilities	541,226			541,226
Capital lease obligations	48,711			48,711
Total stockholders’ deficit	(13,308,700		)	(12,984,700		)

(1) On July 23, 2014, we entered into the Exchange Agreement with certain holders of our debt instruments, warrants and rights to purchase shares of common stock to, among other things, exchange certain of our secured and unsecured notes and loan agreements, under which an aggregate amount of $11,184,164 in principle and interest was owed as of August 22, 2014, for an aggregate of shares of our common stock upon the closing of this offering, based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus. In addition, we intend to repay up to $1,000,000 of existing debt with proceeds from this offering. See “Use of Proceeds” on page 31.

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RISK FACTORS

Investing in our securities involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus, before making your decision to invest in our securities. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition or prospects. If that were to happen, the trading price of our common stock and warrants could decline, and you could lose all or part of your investment.

This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus. See “Information Regarding Forward-Looking Statements” for information relating to these forward-looking statements.

Risks Related to Our Business

We have incurred significant losses, expect continued losses and may never achieve profitability. If we continue to incur losses, we may have to curtail our operations, which may prevent us from successfully achieving our operating plan and expanding our business.

We have not been profitable and expect continued losses. Historically, we have relied upon cash from financing activities to fund substantially all of the cash requirements of our activities and have incurred significant losses and experienced negative cash flows. As of June 30, 2014, we had an accumulated deficit of $35.9 million. For our fiscal years ended September 30, 2012 and 2013 and the nine months ended June 30, 2014, we incurred net losses of $4.5 million, $2.6 million and $2.3 million, respectively. We cannot predict when we will become profitable or if we ever will become profitable. We may continue to incur losses for an indeterminate period of time and may never achieve or sustain profitability. Even if we are able to achieve profitability, we may be unable to sustain or increase our profitability on a quarterly or annual basis. An extended period of losses and negative cash flow may prevent us from successfully achieving our operating plan.

Our independent registered public accounting firm has issued a report on our audited financial statements which raises substantial doubt about our ability to continue as a going concern. This may impair our ability to raise additional financing and adversely affect the price of our common stock.

The report of our independent registered public accounting firm on our audited financial statements for the years ended September 30, 2012 and 2013 includes a paragraph that explains that we have incurred substantial losses and have a net capital deficiency that raises substantial doubt about our ability to continue as a going concern. Reports of independent registered public accounting firms including such doubt about a company’s ability to continue as a going concern are generally viewed unfavorably by analysts and investors. This may make it difficult for us to raise additional debt or equity financing necessary to continue our operations. We urge potential investors to review this report before making a decision to invest in our company.

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There can be no assurance that we will be able to generate or secure sufficient funding to support our growth strategy.

We intend to finance future acquisitions, including the Advent Cleaners Acquisition, and new store openings with cash from operations, the issuance of capital stock, borrowings, and the net proceeds from the sale of debt and/or equity securities, including the sale of securities hereby. If we do not have sufficient cash from operations, funds available under credit facilities and/or the ability to raise cash through the sale of debt and/or equity securities, or cannot issue our capital stock on suitable terms, we will be unable to pursue our growth strategy, which could have a material adverse effect on our ability to increase revenue and net income (or reduce net loss, as applicable), and on our financial condition and ability to sustain our operations.

Our independent registered public accounting firm has identified material weaknesses in our internal controls for the years ended September 30, 2012 and 2013 that, if not properly remediated, could result in material misstatements in our financial statements in future periods and impair our ability to comply with the accounting and reporting requirements applicable to public companies.

In connection with the audit of our financial statements for fiscal years 2012 and 2013, our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting. As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified by our independent registered accounting firm are the following: (i) we have an inadequate segregation of duties consistent with control objectives; (ii) we have inadequate written documentation of internal control policies and procedures; (iii) we have inadequate controls over the identification, assessment and accounting for complex financial instruments and transactions and unusual and non-recurring transactions and (iv) we have ineffective controls over period end financial disclosure and reporting processes resulting in a significant number of post-closing adjustments.

Our remediation efforts are still in process and have not yet been completed. Because of these material weaknesses, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate these material weaknesses, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weaknesses. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting.

We will be required to evaluate and disclose changes made to our internal control and procedures on a quarterly basis. As a result of our evaluation of our internal controls and procedures, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff. Our remediation efforts may not enable us to avoid material weaknesses in the future. Ensuring that we have adequate internal financial and accounting controls and procedures in place to help produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be evaluated frequently.

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If we are unable to adequately remediate the foregoing material weaknesses or comply or continue to comply with the foregoing obligations, it could subject us to a variety of administrative sanctions, including the suspension or delisting of our common stock from the NASDAQ Capital Market and the inability of registered broker-dealers to make a market in our common stock, which could reduce the market price of our common stock. In addition, in the event that we do not adequately remediate these material weaknesses, or if we fail to maintain proper and effective internal controls in future periods, our business, results of operations and financial condition and our ability to run our business effectively could be adversely affected and investors could lose confidence in our financial reporting.

Our industry is highly competitive.

The dry cleaning industry is highly competitive. We believe there could be as many as 40,000 dry cleaning stores in the United States, and we face intense competition for customers and access to suitable store locations. We will compete with other dry cleaner operators in each of our projected markets. Some of our competitors could have greater financial and marketing resources, market share, and/or name recognition than us. In addition, our proposed business could be affected by fashion trends, the economy, and a reduction in our markets’ population growth and/or financial conditions and habits. There can be no assurance that we will be able to compete successfully with such entities in the future.

Pricing pressures from existing competitors and/or an influx of new competitors may have an adverse effect on our operating results.

The competition in our market from the incumbent providers of dry cleaning services, especially discount or single price per piece operators, may place downward pressure on prices for our services, which can adversely affect our operating results. In addition, we could face competition from other companies we have not yet identified or which may later enter into our existing operating regions. If we are not able to compete effectively with these industry participants, or if our potential customer base is diluted by an influx of new stores, our operating results would be adversely affected.

Many of our competitors and potential competitors could have superior resources, which could place us at a cost and price disadvantage. Thus, we may never realize revenues sufficient to sustain our operations, and we may fail in our business and cease operations.

Many of our competitors, including those with franchised operations, and potential competitors may have significant competitive advantages, including greater market presence; name recognition; superior financial, technological and personnel resources; superior services and marketing capabilities; and significantly larger customer bases. As a result, some of our competitors and potential competitors could raise capital at a lower cost than we can, and they may be able to adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily, and devote greater resources to the development, marketing, and sale of services than we can. Also, our competitors’ and potential competitors’ greater brand-name recognition may require us to price our services at lower levels in order to win business. Our competitors’ and potential competitors’ financial advantages may give them the ability to reduce their prices for an extended period of time if they so choose.

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Our ability to implement our growth strategy may be limited by our ability to consummate acquisitions, and there can be no assurance that future acquisitions, including the Advent Cleaners Acquisition, will have a beneficial effect on our operating results.

Our growth strategy includes acquisitions. We will have limited knowledge about the specific operating history, trends, and customer patterns of the dry cleaning stores to be acquired in connection with future acquisitions, including the Advent Cleaners Acquisition. Management will also be relying upon certain representations, warranties, and indemnities made by the sellers with respect to the acquisitions, as well as our own due diligence investigation. There can be no assurance that such representations and warranties will be true and correct or that our due diligence will uncover all material adverse facts relating to the operations and financial condition of the store acquired. Any material misrepresentation could have a material adverse effect on our financial condition and results of operations. Consequently, there can be no assurance that we will make future acquisitions at favorable prices, that acquired stores will perform as well as they had performed historically, or that we will have sufficient information to accurately analyze the markets in which we elect to make acquisitions. Further, while the acquired operations are being integrated into our existing operations, and even thereafter, the acquired operations may not achieve levels of revenue or profitability comparable to our existing operations, or otherwise perform as expected, particularly in the fiscal quarters immediately following the consummation of such transactions.

Our financial results after the Advent Cleaners Acquisition may differ materially from the unaudited pro forma financial statements included in this prospectus.

The pro forma financial statements contained in this prospectus are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates and may not be an indication of the combined financial condition or results of operations following consummation of the Advent Cleaners Acquisition for several reasons. See the sections entitled “Prospectus Summary—Historical Financial and Operating Data and Summary Unaudited Pro Forma Data” and “Unaudited Pro Forma Financial Information.” Thus, the actual financial condition and results of operations of the Advent Cleaners Acquisition may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect our financial condition or results of operations following the Advent Cleaners Acquisition. Any potential decline in our financial condition or results of operations may cause significant variations in the stock price of our company after the Advent Cleaners Acquisition. See “Prospectus Summary—Recent Developments—Advent Cleaners Acquisition.”

Our future results will suffer if we do not effectively manage our expanded operations following the Advent Cleaners Acquisition.

Following the Advent Cleaners Acquisition, the size of our operations will increase significantly, adding 14 dry stores, three mini-hubs with retail operations and a central processing hub. We will also acquire several large commercial laundry contracts with some of the largest resorts and hotels in Las Vegas, Nevada. Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the integration of point of service systems, billing, collections and accounting and associated increased costs and complexities. There can be no assurances that we will realize the expected operating efficiencies, revenue enhancements or other benefits currently anticipated from Advent Cleaners Acquisition.

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Third parties may terminate or alter existing assigned contracts under the Advent Cleaners Acquisition.

Advent Cleaners has contracts with suppliers, lessors, and other business partners that have “change of control” or similar clauses that may make it difficult for Advent Cleaners to directly assign such contracts to us. In several instances, we will be required to enter into new contracts with these business partners. We may seek to obtain consent from these other parties, but if these third party consents cannot be obtained, or we are required to enter into new contracts on unfavorable terms, we may incur unanticipated expenses that have material impact on our future financial results.

After the Advent Cleaners Acquisition is completed, we may be subject to work stoppages at Advent facilities, which could seriously impact our operations and the profitability of our business.

Currently, of Advent Cleaners’ 235 employees, 130 are members of the Culinary Local 226 labor union, or Local 226 Union, and Advent Cleaners is a party to a collective bargaining agreement with the Local 226 Union, or Advent CBA. While we do not intend to terminate any of Advent Cleaners’ unionized employees upon the closing of the Advent Cleaners Acquisition, the Advent CBA is not automatically assignable. Although we intend to enter into a new collective bargaining agreement with the Local 226 Union, we may not be able to enter into a new agreement on terms that are satisfactory to us, if at all. In addition, the terms of a new collective bargaining agreement could significantly increase our labor costs or negatively affect our ability to increase operational efficiency.

Our unionized workers could engage in a strike, work stoppage or other slowdown in the future for any number of reasons, including disputes that may arise from negotiating the new collective bargaining agreement, disputes under collective bargaining agreements with labor unions in the future, or other reasons. A work stoppage or other disruption at our facilities for any reason (including but not limited to labor disputes, natural or man-made disasters, tight credit markets or other financial distresses) could have a substantial adverse effect on our financial condition and results of operation.

Competition for acquisitions could adversely affect our ability to continue our growth.

If other companies seek to acquire the same dry cleaning operations that we seek to acquire, acquisition prices would likely increase, resulting in fewer acquisition opportunities, which could have a material adverse effect on our growth.

Our long-term success is also dependent on our ability to open new stores and is subject to many unpredictable factors.

One of the key means of achieving our organic growth strategy will be through opening new stores and operating those stores on a profitable basis. We intend to develop new stores in our existing markets, especially in geographic regions that can be serviced by our existing hubs or mini-hubs, expand our footprint into adjacent markets and selectively enter into new markets. However, there are numerous factors involved in identifying and securing appropriate sites, including, but not limited to, the identification and availability of suitable locations with the appropriate population demographics, traffic patterns, local retail and business attractions and infrastructure that will drive high levels of customer traffic and store level sales. Further, competition for identified sites is intense, and other dry cleaning operators and retail concepts that compete for those sites may have unit economic models that permit them to bid more aggressively for those sites than we can. Our ability to open stores also depends on other factors, including, negotiating leases with acceptable terms, identifying, hiring and training qualified employees in each local market, and securing required governmental permits in a timely manner.

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There is no guarantee that a sufficient number of suitable sites will be available in desirable areas or on terms that are acceptable to us in order to achieve our organic growth plan. We may not be able to successfully develop critical market presence in new geographical markets, as we may be unable to find and secure attractive locations and attract new customers. If we are unable to fully implement our organic growth plans, our business, financial condition and results of operations could be materially adversely affected.

The success of our expansion strategy depends on the continued loyalty of the customers of the acquired stores.

The success of the dry cleaning stores to be acquired in any acquisition, including the Advent Cleaners Acquisition, depends in large part on our ability to retain customers from the operations we acquire. To the extent that customers have developed loyalty to former owners/operators, such transitions could result in a loss of customers. A significant loss of customers would have a material adverse effect on our financial condition and results of operations.

No independent market studies have been made to confirm the continued demand for our dry cleaning services.

No independent market studies have been made that confirm the demand for our dry cleaning services. If there is not a sufficient market for our dry cleaning services, we may suffer or fail in our business and cease operations.

Changes in the cost of supplies, utilities and other operating costs beyond our control could adversely affect our results of operations.

We purchase our supplies, including dry cleaning solvents, wire hangers and packaging materials from several large suppliers and the price for such supplies is subject to change. Our utility costs fluctuate during certain peak seasons, primarily during prolonged periods of cold in Virginia and Indiana and heat in California and Arizona. Because we provide competitively priced dry cleaning and laundry services, our ability to pass along commodity price increases to our customers is limited. Significant increases in gasoline prices could also result in a decrease of customer traffic at our stores and increases in expenses attributed to our delivery routes, each of which could adversely affect our profit margins.

If we face labor shortages or increased labor costs, our growth and operating results could be adversely affected.

Labor is a primary component in the cost of operating our stores. If we face labor shortages or increased labor costs because of increased competition for employees, higher employee turnover rates, increases in the federal, state or local minimum wage or other employee benefits costs (including costs associated with health insurance coverage), our operating expenses could increase and our growth could be adversely affected. In addition, our growth depends in part upon our ability to attract, motivate and retain a sufficient number of well-qualified management personnel, as well as a sufficient number of other qualified employees, including customer service and equipment maintenance personnel. Difficulty in recruiting employees or high employee turnover in existing stores could have a material adverse effect on our business, financial condition and results of operations.

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In addition, some of our employees are paid at rates related to the United States federal minimum wage, and increases in the minimum wage would increase our labor costs. Further, costs associated with workers’ compensation are rising, and these costs may continue to rise in the future. We may be unable to increase our prices in order to pass these increased labor costs on to consumers, in which case our margins would be negatively affected, which could materially adversely affect our business, financial condition and results of operations.

We rely on licensed third-party point-of-sale software and systems to manage customer orders and operate our back office management systems. The failure of this software and systems could harm our business.

We rely on point-of-sale software and systems licensed from third-parties to operate our point-of-sale transactions including issuing pick-up and delivery receipts and tracking dry cleaning and laundry inventory while being processed. A substantial failure of the software and systems could restrict and limit our ability to track orders and fulfill orders in a timely manner. This could reduce the attractiveness of our services and cause our patrons to visit other dry cleaners. In addition, we rely on this software to transmit data required to coordinate payroll, track sales, generate operating reports to analyze store and regional performance and monitor loss prevention. Disruption in, changes to, or a failure of the software and systems could result in the loss of important data, and increase our expenses.

Our business could suffer if we lose key management or are unable to attract and retain the talent required for our business.

Our performance is significantly impacted by the efforts and abilities of our senior management team. We are highly dependent upon the members of our management team, including Mr. Alexander Bond, Ms. Kari Minton and Mr. Timothy Stickler, and each of our regional managers. Our executives have significant regulatory, industry, sales and marketing, operational and/or corporate finance experience. If we lose the services of one or more of our key executives, we may not be able to successfully manage our business or achieve our business objectives. If we are unable to recruit and retain qualified management personnel in a timely manner our results of operations and financial condition could suffer.

If we are unable to attract and retain qualified personnel with dry cleaning service-related experience, our business could suffer.

Our current and future success depends in part on our ability to identify, attract, hire, assimilate, train, retain, and motivate professional, highly-skilled technical, managerial, sales, marketing, and customer service personnel with dry cleaning service-related experience. If we fail to attract and retain the necessary managerial, sales and marketing, technical, and customer service personnel, we may not develop a sufficient customer base to adequately develop our proposed operations and our business could suffer or fail.

Our business is seasonal and is also affected by severe weather.

Our business is seasonal. Demand for our services, and therefore our sales, is lower during the summer months when customers tend to take more time off work and therefore require less occupation-related dry cleaning and laundry. Our business is also affected by weather, especially severe weather conditions such as hurricanes and tropical storms in Virginia and Hawaii, snow storms in Indiana and high temperatures in California and Arizona.

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Changes in economic conditions and other unforeseen conditions could materially affect our ability to maintain or increase sales.

The dry cleaning industry depends, in large part, on consumer discretionary spending. The United States in general and the specific markets in which we operate, may suffer from depressed economic activity, recessionary economic cycles, higher fuel or energy costs, low consumer confidence, high levels of unemployment, reduced home values, increases in home foreclosures, investment losses, personal bankruptcies, reduced access to credit or other economic factors that may affect consumer discretionary spending. Sales in our stores could decline if consumers are unemployed reducing the demand for dry cleaning services, including uniforms, or choose to reduce the amount they spend on dry cleaning. Negative economic conditions and trends may cause consumers to make long-term changes to their discretionary spending behavior, including the continued adoption of “business-casual” and other workplace changes. In addition, given our geographic concentrations in specific regions of the United States, economic conditions in those particular areas of the country could have a disproportionate impact on our overall results of operations, and regional occurrences such as local strikes, terrorist attacks, increases in energy prices, and natural or man-made disasters could materially adversely affect our business, financial condition and results of operations. If sales decrease, our profitability could decline as we spread fixed costs across a lower level of sales. Reductions in staff levels, asset impairment charges and potential store closures could result from prolonged negative sales, which could materially adversely affect our business, financial condition and results of operations.

Compliance with environmental laws may negatively affect our business.

We are subject to federal, state and local laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling, release and disposal of, and exposure to, hazardous or toxic substances. These environmental laws provide for significant fines and penalties for noncompliance and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous or toxic substances. Third parties may also make claims against owners or tenants of properties or businesses for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our stores. Environmental conditions relating to releases of hazardous substances at prior, existing or future store sites could materially adversely affect our business, financial condition and results of operations. Further, environmental laws, and the administration, interpretation and enforcement thereof, are subject to change and may become more stringent in the future, each of which could materially adversely affect our business, financial condition and results of operations.

The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.

In 2010, the Patient Protection and Affordable Care Act, or PPACA, was signed into law in the United States to require health care coverage for many uninsured individuals and expand coverage to those already insured. The healthcare reform law will require us to offer healthcare benefits to all full-time employees (including full-time hourly employees) that meet certain minimum requirements of coverage and affordability, or face penalties. If we elect to offer such benefits, we may incur substantial additional expense. If we fail to offer such benefits, or the benefits we elect to offer do not meet the applicable requirements, we may incur penalties. The healthcare reform law also requires individuals to obtain coverage or face individual penalties, so employees who are currently eligible but elect not to participate in our healthcare plans may find it more advantageous to do so when such individual mandates take effect. It is also possible that by making changes or failing to make changes in the healthcare plans offered by us, we will become less competitive in the market for our labor. Finally, implementing the requirements of healthcare reform applicable to us, including the requirement to offer affordable, minimum essential coverage to our full time employees beginning in 2015, is likely to impose additional administrative costs. The costs and other effects of these new healthcare requirements cannot be determined with certainty, but they may significantly increase our healthcare coverage costs and could materially adversely affect our business, financial condition and results of operations.

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We may pursue businesses in which we have limited or no experience, including tuxedo and eveningwear rental, and such businesses could fail to generate anticipated returns.

Several of our competitors incorporate additional businesses into their dry cleaning and laundry operations. We may pursue similar businesses, and, in particular, are contemplating introducing tuxedo and eveningwear rentals into certain of our retail stores, even though we do not have experience operating such additional businesses. If we are not able to successfully integrate these additional business opportunities or if the costs associated with such businesses opportunities are greater than we project, our operating results could be adversely affected.

Risks Relating to this Offering

We may allocate net proceeds from this offering in ways which differ from our estimates based on our current plans and assumptions discussed in the section entitled “Use of Proceeds” and with which you may not agree.

The allocation of net proceeds of the offering set forth in the “Use of Proceeds” section below represents our estimates based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, cash generated by our operations, business developments, suitable acquisition opportunities and related rate of growth. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used are discussed in the section entitled “Use of Proceeds” below. You may not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. As a result, you and other stockholders may not agree with our decisions. See “Use of Proceeds” section for additional information.

Future sales by our stockholders may adversely affect our stock price and our ability to raise funds in new stock offerings.

Sales of our common stock by our stockholders and option holders following this offering could lower the market price of our common stock. Sales may also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that our management deems acceptable or at all. Of the 2,685,924 shares of common stock outstanding as of August 22, 2014, 1,559,501 shares are not restricted and will be freely tradable without restriction, unless held by our “affiliates.”

You will experience immediate and substantial dilution in the book value per share of the common stock you purchase and may experience additional dilution in the future.

Because the public offering price is expected to be substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on an assumed public offering price of $ per combination of one share of common stock and one warrant which is the midpoint of the range set forth on the cover of this prospectus, after giving effect to the sale by us of up to shares of common stock and attributing no value to the warrants and after deducting underwriter commissions and estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of $ per share, or %, at the public offering price, assuming no exercise of the warrants issued in this offering. Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment. See the section entitled “Dilution” elsewhere in this prospectus for a more detailed discussion of the dilution you will incur if you purchase securities in this offering.

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The issuance of warrants in this offering will cause you to experience additional dilution if those warrants are exercised for shares of our common stock.

In addition to the shares of common stock we are issuing in this offering, we are also issuing an equal number of warrants. The warrants being issued are exercisable for an equal number of additional shares of common stock. If the holders of our warrants exercise their warrants, you will experience dilution at the time they exercise warrants. In addition to the warrants we are offering to purchasers in this offering, we are issuing a warrant to the representative of the underwriters in this offering that is exercisable for % of the shares of common stock sold in this offering, including the shares of common stock sold pursuant to the over-allotment option, if any. If the representative of the underwriters exercises these warrants, you will experience additional dilution. Furthermore, we have granted the representative of the underwriters in this offering the right to purchase additional shares of common stock and warrants from us to cover over-allotments, if any. If the representative of the underwriters exercises this option in whole or in part, you will experience additional dilution.

Holders of warrants will have no rights as common stockholders until such holders exercise their warrants and acquire our common stock.

Until holders of warrants acquire shares of our common stock upon exercise of the warrants, holders of warrants will have no rights with respect to the shares of our common stock underlying such warrants. Upon exercise of the warrants, the holders will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

Risks Relating to Our Common Stock and Warrants

An active trading market for our common stock and warrants may not develop, and you may not be able to sell your common stock or warrants at or above the initial public offering price.

There was no public market for our common stock or warrants immediately prior to the completion of this offering. An active trading market for our common stock and warrants may never develop or be sustained following this offering. If an active trading market does not develop, you may have difficulty selling your common stock or warrants at an attractive price, or at all. The price for our securities in this offering will be determined by negotiations among us and the representative of the underwriters, and it may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell your common stock or warrants at or above the initial public offering price or at any other price or at the time that you would like to sell. An inactive market may also impair our ability to raise capital by selling our securities, and it may impair our ability to attract and motivate our employees through equity incentive awards and our ability to acquire other companies by using our securities as consideration.

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The market prices of our common stock and warrants may fluctuate substantially.

The market prices of our common stock and warrants could be subject to significant fluctuations after this offering. You should consider an investment in our securities to be risky, and you should invest in our securities only if you can withstand a significant loss and wide fluctuations in the market value of your investment. Some factors that may cause the market prices of our common stock and warrants to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:

· variations in our operating results;

· sale of our common stock by our stockholders, executives, and directors;

· sale of our warrants by our warrant holders;

· volatility and limitations in trading volumes of our shares of common stock and warrants;

· our ability to obtain financings;

· our cash position;

· changes in general economic, political and market conditions in any of the regions in which we conduct our business;

· changes in industry conditions or perceptions;

· changes in valuations of similar companies or groups of companies;

· departures and additions of key personnel;

· disputes and litigation related to contractual obligations;

· changes in applicable laws, rules, regulations, or accounting practices and other dynamics; and

· other events or factors, many of which may be out of our control.

Upon the completion of this offering we will have significant “equity overhang” which could adversely affect the market price of our common stock and impair our ability to raise additional capital through the sale of equity securities.

Upon completion of this offering, shares of our common stock will be issuable upon exercise of the warrants issued to investors and the representative of the underwriters in this offering. The possibility that substantial amounts of our common stock may be issued to and then sold by investors or the perception that such issuances and sales could occur, often called “equity overhang,” could adversely affect the market price of our common stock and could impair our ability to raise additional capital through the sale of equity securities in the future. The consummation of the exercise of warrants for common stock would significantly increase the amount of our common stock outstanding and the amount of the equity overhang.

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Raising additional capital, including through future sales and issuances of our common stock, the exercise of warrants or the exercise of rights to purchase common stock pursuant to our equity incentive plan could result in additional dilution of the percentage ownership of our stockholders, could cause our share price to fall and could restrict our operations.

We expect that significant additional capital will be needed in the future to continue our planned operations, including acquisitions, purchasing of capital equipment, hiring new personnel, and continuing activities as an operating public company. To the extent we seek additional capital through a combination of public and private equity offerings, debt financings and strategic partnerships and alliances, our stockholders may experience substantial dilution. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt and receivables financings may be coupled with an equity component, such as warrants to purchase shares of our common stock, which could also result in dilution of our existing stockholders’ ownership. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt and other operating restrictions that could adversely impact our ability to conduct our business. A failure to obtain adequate funds may cause us to curtail certain operational activities, including sales and marketing, in order to reduce costs and sustain the business, and would have a material adverse effect on our business and financial condition.

Under our 2014 Plan, we may grant equity awards covering up to an additional 1,250,000 shares of our common stock. As of the date of this offering, we have granted options to purchase up to 636,000 shares of common stock under the 2014 Plan. We plan to register the number of shares issuable upon outstanding awards and available for issuance under our 2014 Plan. Sales of shares issued upon exercise of options or granted under our 2014 Plan may result in material dilution to our existing stockholders, which could cause our share price to fall.

Our issuance of shares of preferred stock could adversely affect the market value of our common stock, dilute the voting power of common stockholders and delay or prevent a change of control.

Upon the completion of this offering and the conversion of all shares of our Series A Preferred Stock into shares of our common stock, our board of directors will have the authority to cause us to issue, without any further vote or action by the stockholders, up to 6,000,000 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.

The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.

Further, the issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock either by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of our other classes of voting stock. The issuance of shares of preferred stock may also have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.

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We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares of common stock.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price.

We have applied for listing of our common stock and the warrants issued in this offering on The NASDAQ Capital Market in connection with this offering. There is no guarantee that our common stock and/or warrants will be listed on The NASDAQ Capital Market.

We have applied to have our shares of common stock and the warrants we plan to issue in this offering listed for trading on The NASDAQ Capital Market. On the date of this prospectus, we believe that we will satisfy the listing requirements and expect that our common stock and warrants we plan to issue in this offering will be listed on The NASDAQ Capital Market. These listings, however, are not guaranteed. If our application is not approved, we will seek to have our common stock and warrants issued in this offering quoted on the OTC Bulletin Board. Even if such listing is approved, there can be no assurance any broker will be interested in trading our common stock or warrants issued in this offering. Therefore, it may be difficult to sell any shares or warrants you purchase in this offering if you desire or need to sell them. Our lead underwriter, Maxim Group LLC, is not obligated to make a market in our common stock or warrants, and even after making a market, can discontinue market making at any time without notice. Neither we nor the underwriters can provide any assurance that an active and liquid trading market in our common stock or warrants will develop or, if developed, that the market will continue.

Due to the speculative nature of warrants, there is no guarantee that it will ever be profitable for holders of the warrants to exercise the warrants.

The warrants being offered hereby do not confer any rights of common stock ownership on its holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of common stock at a formulaic price that is subject to adjustment for a limited period of time. Specifically, commencing on the pricing of this offering when the warrants are issued, holders of the warrants may exercise their right to acquire additional shares of our common stock. In order to do so, they must pay an exercise price equal to 100% of the public offering price in this offering within the 60 months following the date of issuance, after which date any unexercised warrants will expire and have no further value. There can be no assurance that the market price of our common stock will equal or exceed the exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercise the warrants.

Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters.

As a public company, we expect to incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, have created uncertainty for public companies and increased costs and time that boards of directors and management must devote to complying with these rules and regulations. The Sarbanes-Oxley Act and related rules of the Securities and Exchange Commission and The NASDAQ Stock Market regulate corporate governance practices of public companies. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly. In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.

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Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

We are not currently required to comply with the rules of the Securities and Exchange Commission implementing Section 404 of the Sarbanes-Oxley Act and therefore are not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the Securities and Exchange Commission’s rules implementing Section 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the Securities and Exchange Commission. At this time, our independent registered public accounting firm is not required to conduct an audit of the effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act.

To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. As described above, in connection with the audit of our financial statements for fiscal years 2012 and 2013, our independent registered public accounting firm identified four material weaknesses in our internal control over financial reporting. In addition to the current material weaknesses that have been identified by our independent registered public accounting firm, we or they may identify additional material weaknesses in our internal control over financial reporting that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.

If we identify weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the exchange on which our securities are listed, the Securities and Exchange Commission or other regulatory authorities, which could require additional financial and management resources.

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Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Provisions in our restated certificate of incorporation and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our board of directors has the right to determine the authorized number of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to control the size of or fill vacancies on our board of directors. Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this prospectus regarding our strategy, future events, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

· our ability to generate or secure sufficient funding to support our growth strategy;

· our ability to identify accretive acquisitions and close and assimilate acquired dry cleaning and laundry operations;

· the effect of certain exercises or conversions of certain securities may have on us;

· future sales of our common stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital;

· our ability to compete effectively;

· regulatory compliance costs; and

· the other matters described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this prospectus, particularly in the “Risk Factors” section beginning on page 15, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

You should read this prospectus, the documents that we reference in this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of shares of our common stock and warrants in this offering will be approximately $ million, assuming a public offering price of $ per combination of one share of common stock and one warrant, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds from this offering will be approximately $ million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase or decrease in the assumed public offering price of $ per combination of one share of common stock and one warrant would increase or decrease the net proceeds from this offering by approximately $ million, assuming that the number of shares and warrants offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. Similarly, each increase or decrease of $1.0 million in the amount of securities offered by us would increase or decrease the net proceeds that we receive from this offering by approximately $ million, assuming the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions.

We currently intend to use $4.0 million of the net proceeds from the offering to acquire Advent Cleaners, up to $1.0 million of the net proceeds from this offering to repay existing debt, including debt owed under the Setal 10 Note and under a loan agreement with the Taylor Family Trust and the Wilson Family Trust, or Taylor Family Trust Note. After applying the proceeds of this offering as intended, we will have $ in debt outstanding. We currently intend to use the remaining net proceeds from this offering, together with our existing cash resources to fund additional acquisitions, open new stores and establish new delivery routes, fund capital expenditures at several of our stores and production plants, and for working capital and other general corporate purposes.

This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including, among other things, the cash generated by our operations and the rate of growth, if any, of our business. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and we will have broad discretion in the application of net proceeds.

Although it is difficult to predict future liquidity requirements, we believe that the net proceeds from this offering and our existing cash, together with interest thereon, will be sufficient to fund our operations through 2015.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments, certificates of deposit, and direct or guaranteed obligations of the U.S. government.

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DILUTION

If you purchase securities in this offering, your interest will be diluted immediately to the extent of the difference between the public offering price of $ per share of common stock and the as adjusted net tangible book value per share of our common stock immediately following this offering.

Our net tangible book value as of June 30, 2014 was $(13,602,700), or $(5.06) per share. Net tangible book value per share represents our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of June 30, 2014.

Net tangible book value dilution per share of common stock to new investors represents the difference between the amount per share paid by purchasers in this offering and the as adjusted net tangible book value per share of common stock immediately after completion of this offering. After giving effect to our sale of shares of common stock in this offering at a public offering price of $ per share of common stock, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting the underwriter commissions and estimated offering expenses, our as adjusted net tangible book value as of June 30, 2014 would have been $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to existing stockholders and an immediate dilution in net tangible book value of $ per share to purchasers of shares in this offering, as illustrated in the following table:

Public offering price per share	$
Net tangible book value per share as of June 30, 2014	$	(5.06	)
Increase in net tangible book value per share attributable to new investors	$
Adjusted net tangible book value per share as of June 30, 2014, after giving effect to the offering	$
Dilution per share to new investors in the offering	$

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DIVIDEND POLICY

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness. Therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors, and will depend upon our results of operations, financial condition, capital requirements and other factors including contractual obligations that our board of directors deems relevant.

CAPITALIZATION

The following table sets forth our cash and our capitalization as of June 30, 2014:

· on an actual basis;

· on a pro forma basis after giving effect to the automatic conversion of all our outstanding Series A Preferred Stock into 351,290 shares of common stock upon the closing of this offering as if such conversion had occurred on June 30, 2014; and

· on a pro forma, as adjusted basis after giving effect to the following:

· the effect of the pro forma adjustments;

· the sale of shares of common stock and warrants in this offering at the assumed initial public offering price of $ per combination of one share of common stock and one warrant, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us;

· the payment of $4.0 million for the purchase consideration of the Advent Cleaners Acquisition;

· the cancellation of 1,098,445 shares of common stock under the terms of the Exchange Agreement upon the closing of this offering;

· the cancellation of $ in debt in connection with the Exchange Offer upon the closing of this offering;

· the issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus); and

· the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus).

The pro forma information below is only for illustrative purposes and our capitalization following the completion of this offering will be adjusted based on the actual offering price and other terms of this offering determined at pricing. You should read this table in conjunction with “Use of Proceeds” above as well as our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and financial statements and the related notes appearing elsewhere in this prospectus.

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	As of June 30, 2014 (Unaudited)
	Actual			Pro Forma			Pro Forma, As Adjusted

Cash	$	342,167		$	342,167		$

Related party and other long-term debt, net	12,528,096			12,528,096
Capital lease obligations	48,711			48,711

Preferred stock, $0.001 par value: 6,000,000 authorized; 6,000,000 authorized pro forma and pro forma, as adjusted; no shares issued or outstanding, pro forma and pro forma, as adjusted.	—			—
Series A cumulative convertible preferred stock, $0.001 par value: 5,800,000 authorized, 5,620,514 issued and outstanding at June 30, 2014; no shares authorized, issued or outstanding, pro forma and pro forma, as adjusted.	324,000			—
Stockholders’ deficit
Common stock, $0.001 par value: 30,000,000 shares authorized, 2,685,924 shares issued and outstanding at June 30, 2014; 30,000,000 authorized, issued and outstanding, pro forma; and 30,000,000 authorized, shares issued and outstanding, pro forma, as adjusted	2,686			3,037
Additional paid-in capital	22,570,264			22,893,913
Accumulated deficit	(35,881,650		)	(35,881,650		)
Total stockholder’s deficit	(13,308,700		)	(12,984,700		)
Total capitalization	$	(407,893	)	$	(407,893	)

The above discussion and table do not include the following:

· 1,250,000 shares of common stock reserved for issuance under the 2014 Plan, of which options to purchase 636,000 shares were outstanding as of August 22, 2014, at an exercise price of $4.80 per share;

· 21,753 shares of common stock reserved for issuance under the Setal 10 Note, based on the principal and interest outstanding under the Setal 10 Note on August 22, 2014 which we anticipate repaying in full upon the closing of this offering;

· an aggregate of shares of common stock issuable upon exercise of the warrants issued to the public and warrants issued to the representative of the underwriters in connection with this offering; and

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial data for the year ended September 30, 2013, as of, and for the nine months ended June 30, 2014 are based upon the respective financial statements of U.S. Dry Cleaning Services Corporation and Advent Cleaners, LLC. Advent Cleaners has a fiscal year end of December 31. Included in this filing are the audited financial statements of Advent Cleaners for the years ended December 31, 2013 and 2012, as well as unaudited financial statements for the six months ended June 30, 2014 and 2013. However, for the purposes of this pro forma presentation, the year end of Advent Cleaners has been conformed to that of U.S. Dry Cleaning Services Corporation.

The pro forma balance sheet presented is the unaudited balance sheet as of June 30, 2014. The pro forma statement of operations for the year ended September 30, 2013 includes the U.S. Dry Cleaning Services Corporation results derived from the audited statement of operations for the year ended September 30, 2013 and the Advent Cleaners, LLC unaudited statement of operations for the twelve months from October 1, 2012 to September 30, 2013. The pro forma statement of operations for the nine months ended June 30, 2014 includes the unaudited statement of operations of U.S. Dry Cleaning Services Corporation and Advent Cleaners, LLC for the nine month period from October 1, 2013 to June 30, 2014. The unaudited pro forma statement of operations data for the nine months ended June 30, 2014 give effect to the Advent Cleaners Acquisition, this offering and the application of the net proceeds thereof as if they had each occurred as of the beginning of our fiscal year ended September 30, 2013.

The acquisition price for the Advent Cleaners Acquisition will be paid entirely in cash. The following unaudited pro forma financial data are based upon the initial public offer price of $ per combination of one share of common stock and one warrant, which is the midpoint of the range set forth on the cover page of this prospectus.

We plan to account for the Advent Cleaners Acquisition as a business combination using the acquisition method in accordance with ASC 805—“Business Combinations” (ASC 805). In accordance with ASC 805, the purchase consideration is required to be allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values. If the purchase consideration exceeds the fair value of the assets acquired, net of liabilities assumed, the excess will be recognized as goodwill. Alternatively, if the fair value of the assets acquired, net of liabilities assumed, exceeds the purchase consideration, the difference will be recorded as a gain on bargain acquisition. We have engaged an independent third party valuation firm to assist management in estimating the fair value of the assets and liabilities acquired. The identifiable intangible assets that meet the separability criteria of ASC 805 include contractual customer relationships, trade names and non-compete agreement. The valuation methodology being used for the contractual customer relationships is the Multi-Period Excess Earnings Method taking into consideration the contributory asset charges and probability of contract renewal. The Al Phillips and Thrift DLux trade names are being valued using a Relief-from-Royalty method with the former having a longer tenure and branding presence in the market. The methodology being used for the non-compete agreement with the seller is based on a Differential Discounted Cash Flow analysis for with and without competition scenarios. An assessment of competition is a key driver in this analysis and is typically developed based on a qualitative assessment of likelihood of competition by the seller. As we continue the formal valuation process, other intangible assets that meet the separability criteria of ASC 805 may be identified and allocated a portion of the consideration which would decrease the residual recorded as goodwill.

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With respect to the preliminary fair value and other adjustments related to the Advent Cleaners Acquisition, the unaudited pro forma financial data have been prepared using the acquisition method in accordance with ASC 805, as if the Advent Cleaners Acquisition had been completed as of October 1, 2012 for the purposes of the unaudited pro forma statements of operations, and as of June 30, 2014 for the purposes of the unaudited pro forma balance sheet. The allocation of the purchase consideration as reflected in the unaudited pro forma financial data is based upon management’s internally developed estimates of the fair value of the assets acquired and liabilities assumed as if the Advent Cleaners Acquisition had been completed as of the above dates. This allocation of the purchase consideration depends upon certain estimates and assumptions, all of which are preliminary and have been made solely for the purpose of developing the unaudited pro forma financial data. The final purchase price allocations will be based upon the fair values as of the actual closing date of the Advent Cleaners Acquisition, at which time the final allocation of the purchase consideration will be determined. The final purchase price allocation may be different than the estimated allocation reflected in the accompanying pro forma financial data, and those differences may be material.

The unaudited pro forma statements of operations do not include adjustments for any revenue or cost saving synergies that may be achievable subsequent to the completion of the Advent Cleaners Acquisition or the costs that may be incurred to achieve those synergies.

The following unaudited pro forma statements of operations should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the respective financial statements of U.S. Dry Cleaning Services Corporation and Advent Cleaners, LLC, in each case included elsewhere in this prospectus.

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U.S. DRY CLEANING SERVICES CORPORATION

UNAUDITED PRO FORMA BALANCE SHEET

AS OF JUNE 30, 2014

	Historical					Advent
	U.S. Dry Cleaning Services Corp.			Advent Cleaners, LLC (1)		Cleaners, LLC Preliminary Acquisition Adjustments			Offering Adjustments			Pro Forma
ASSETS
Current assets
Cash	$	342,167		$	210,224	$	(210,224	)(2)	$	—		$	342,167
Accounts receivable trade, net	822,215			580,222		(580,222		)(2)	—			822,215
Prepaids and other current assets	699,921			158,159		—			—			858,080
Total current assets	1,864,303			948,605		(790,446		)	—			2,022,462
Property, machinery and equipment, net	1,051,477			573,699		—			—			1,625,176
Intangible assets	618,000			—		1,620,000		(5)	—			2,238,000
Goodwill	—			—		1,813,340		(5)	—			1,813,340
Deposits and other assets	276,417			62,838		—			—			339,255
Total assets	$	3,810,197		$	1,585,142	$	2,642,894		$	—		$	8,038,233
LIABILITIES, SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK AND STOCKHOLERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1,165,338		$	211,220	$	(211,220	)(2)	$	—		$	1,165,338
Accrued liabilities	1,768,467			126,675		(126,675		)(2)	—			1,768,467
Current portion of related party and other long-term debt, net	1,188,107			47,906		—			—		(8)	1,236,013
Deferred revenue	203,925			—		107,357		(3)				311,282
Capital lease obligations - current	37,348			6,768		(6,768		)(2)	—			37,348
Purchase consideration payable	—			—		4,000,000		(6)	—			4,000,000
Accrued income taxes	220,225			—		—			—			220,225
Total current liabilities	4,583,410			392,569		3,762,694			—			8,738,673
Related party and other long-term debt, net	11,339,989			61,065		11,708		(3)	—		(8)	11,412,762
Deferred rent	318,909			—		—			—			318,909
Capital lease obligations - noncurrent	11,363								—			11,363
Other noncurrent liabilities	541,226			—		—			—			541,226
Total liabilities	16,794,897			453,634		3,774,402			—			21,022,933

Series A cumulative convertible preferred stock, par value $0.001	324,000								(324,000		)(7)	—
Stockholders’ equity (deficit)
Common stock, par value $0.001	2,686			—		—			351		(7)(8)	3,037
Additional paid-in capital	22,570,264			1,131,508		(1,131,508		)(4)	323,649		(7)	22,893,913
Accumulated deficit	(35,881,650		)	—		—			—			(35,881,650		)
Total stockholders’ equity (deficit)	(13,308,700		)	1,131,508		(1,131,508		)	324,000			(12,984,700		)
Total liabilities, Series A cumulative convertible preferred stock and stockholders’ equity (deficit)	$	3,810,197		$	1,585,142	$	2,642,894		$	—		$	8,038,233

See notes to unaudited pro forma balance sheet.

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Notes to unaudited pro forma balance sheet

(1) On August 25, 2014, we entered into an asset purchase agreement with Advent Cleaners, LLC and the owner of such entity, pursuant to which we have agreed to purchase, upon the closing of this offering and subject to other customary closing conditions, substantially all of the assets of Advent Cleaners. The purchase consideration for the Advent Cleaners Acquisition is $4,000,000 plus the assumption of specified liabilities related to the acquired assets and will be paid entirely in cash. See “Business—Our Proposed Strategic Acquisition” below for additional information regarding the Advent Cleaners Acquisition, including the calculation of the acquisition price.

(a) We expect that the Advent Cleaners Acquisition will occur concurrently with the closing of this offering, and we expect to use a portion of the proceeds from this offering to fund the cash purchase price for this acquisition.

(b) The amounts represent pro forma adjustments relating to the assets acquired and liabilities to be assumed pursuant to the Advent Cleaners Acquisition at the acquisition date based on a preliminary purchase price allocation as follows:

	Fair Value Based on Preliminary Purchase Price Allocation
Consideration:
Cash, subject to adjustment	$	4,000,000

Recognized amounts of assets acquired and liabilities assumed as of the acquisition date:
Prepaid expenses and other current assets	158,159
Property, machinery and equipment	573,699
Deposits and other noncurrent assets	62,838
Intangible assets	1,620,000
Goodwill	1,813,340
Total assets acquired at preliminary fair value	4,228,036
Liabilities assumed at preliminary fair value	228,036

(2) Represents assets and liabilities specifically excluded in the Advent Cleaners asset purchase agreement.

(3) Represents deferred revenue and other liabilities to be assumed upon completion of the Advent Cleaners Acquisition.

(4) Elimination of Advent Cleaners’ predecessor equity balance to be recorded at close of the Advent Cleaners acquisition.

(5) Preliminary excess of purchase consideration over the fair value of net assets acquired. This excess is subject to adjustment upon completion of the Advent Cleaners Acquisitions purchase price allocation based on an independent valuation to be performed for all assets acquired and liabilities assumed in accordance with ASC 805, Business Combinations. Management is in the process of obtaining and performing these purchase price allocation subject to the completion of this offering and the successful close of the Advent Cleaners Acquisition.

(6) Total purchase consideration to payable in cash upon the closing of the Advent Cleaners Acquisition and with the proceeds from this offering.

(7) Gives effect to the automatic conversion of all our outstanding Series A cumulative convertible preferred stock into an aggregate of 351,290 shares of common stock at $0.001 par value upon the closing of this offering as if such conversion had occurred on June 30, 2014.

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(8) Gives effect to:

· The sale of shares of common stock and warrants in this offering at the assumed initial public offering price of $ per combination of one share of common stock and one warrant, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated; underwriting discounts and commissions and estimate offering expenses payable by us.

· The cancellation of 1,098,445 shares of common stock under the terms of the Exchange Agreement upon the closing of this offering;

· The cancellation of $ in debt in connection with the Exchange Offer upon the closing of this offering;

· The issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus); and

· The issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus).

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U.S. DRY CLEANING SERVICES CORPORATION
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2013

	Historical						Advent
	U.S. Dry Cleaning Services Corp.			Advent Cleaners, LLC			Cleaners, LLC Preliminary Acquisition Adjustments			Offering Adjustments			Pro Forma
Net Sales	$	21,408,049		$	9,864,960		$	—		$	—		$	31,273,009
Cost of sales (exclusive of depreciation and amortization shown separately below)	9,360,266			5,375,173			—			—			14,735,439
Gross profit (exclusive of depreciation and amortization shown separately below)	12,047,783			4,489,787			—			—			16,537,570
Operating expenses:
Stores and plant	8,367,537			3,147,641			—			—			11,515,178
Regional	2,224,889			689,853			—			—			2,914,742
Corporate	1,725,664			357,757			(253,469		)(1)	—		(2)	1,829,952
Depreciation and amortization	469,547			186,571			—			—			656,118
Operating income (loss)	(739,854		)	107,965			253,469			—			(378,420		)
Other income (expense), net
Interest expense	(2,510,495		)	(3,599		)	—			—		(3)	(2,514,094		)
Gain on extinguishment of debt	654,935			—			—			—			654,935
Gain (loss) other	895			(31,547		)	—			—			(30,652		)
Other income (expense) net	(1,854,665		)	(35,146		)	—			—			(1,889,811		)
Income (loss) before provision for income taxes	(2,594,519		)	72,819			253,469			—			(2,268,231		)
Provision for income taxes	9,100			—			—			—			9,100
Net income (loss)	$	(2,603,619	)	$	72,819		$	253,469		$	—		$	(2,277,331	)
Net income (loss) attributable to common stockholders	$	(2,603,619	)	$	72,819		$	253,469		$	—		$	(2,277,331	)
Net income (loss) per share - basic and diluted	$	(3.85	)	$	—		$	—		$	—		$	(3.37	)
Weighted average shares outstanding - basic and diluted	676,699			—			—			—			676,699
Pro forma net income (loss) per share basic and diluted (unaudited)	$	(3.85	)										$	(3.37	)
Pro forma weighted average common shares outstanding basic and diluted (unaudited)	676,699			—			—			—			676,699
Other Financial Information
EBITDA	$	(270,307	)	$	294,536		$	253,469	(2)(4)	$	—		$	277,698

See notes to unaudited pro forma statements of operations.

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U.S. DRY CLEANING SERVICES CORPORATION

UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED JUNE 30, 2014

	Historical						Advent Cleaners, LLC
	U.S. Dry Cleaning Services Corp.			Advent Cleaners, LLC			Preliminary Acquisition Adjustments			Offering Adjustments			Pro Forma

Net Sales	$	15,804,521		$	7,678,898		$	—		$	—		$	23,483,419
Cost of sales (exclusive of depreciation and amortization shown separately below)	6,798,241			4,173,219			—			—			10,971,460
Gross profit(exclusive of depreciation and amortization shown separately below)	9,006,280			3,505,679			—			—			12,511,959
Operating expenses:
Stores and plant	6,358,005			2,496,698			—			—			8,854,703
Regional	1,551,211			575,293			—			—			2,126,504
Corporate	1,579,768			285,947			(191,245		)(1)	—		(2)	1,674,470
Depreciation and amortization	346,658			170,498			—			—			517,156
Operating loss	(829,362		)	(22,757		)	191,245			—			(660,874		)
Other income (expense), net
Interest expense	(1,549,063		)	(2,151		)	—			—		(3)	(1,551,214		)
Gain on extinguishment of debt	55,558			—			—			—			55,558
Gain (loss) other	6,007			3,500			—			—			9,507
Other income (expense) net	(1,487,498		)	1,349			—			—			(1,486,149		)
Loss before provision for income taxes	(2,316,860		)	(21,408		)	191,245			—			(2,147,023		)
Provision for income taxes	9,100			—			—			—			9,100
Net Loss	$	(2,325,960	)	$	(21,408	)	$	191,245		$	—		$	(2,156,123	)

Series A Cumulative Convertible Preferred Stock Dividends	(512,103		)	—			—			512,103			—
Net loss attributable to common stockholders	$	(2,838,063	)	$	(21,408	)	$	191,245		$	512,103		$	(2,156,123	)

Net loss per share - basic and diluted	$	(1.48	)										$	(1.01	)

Weighted average shares outstanding - basic and diluted	1,923,490									211,031			2,134,521

Pro forma net loss per share basic and diluted (unaudited)	$	(1.09	)							$	2.43		$	(1.01	)

Pro forma weighted average common shares outstanding basic and diluted (unaudited)	2,134,521			—			—			211,031			2,134,521

Other Financial Information
EBITDA	$	(482,704	)	$	147,741		$	191,245	(2)(4)	$	—		$	(143,718	)

See notes to unaudited pro forma statements of operations.

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Notes to Unaudited Pro Forma Statements of Operations

(1) Adjusts out the salary and related direct expenses incurred for the majority shareholder of Advent Cleaners. These expenses will neither continue nor be replaced at, and subsequent to, the close of the Advent Cleaners Acquisition.

(2) Gives effect to amortization expense of definite-lived intangible assets acquired upon the completion of the Advent Cleaners Acquisition.

(3) Gives effect to the elimination of interest expense upon the exchange of certain of our secured and unsecured notes and loan agreements upon the closing of this offering under the terms of the Exchange Agreement.

(4) EBITDA, which we define as net income excluding net interest expense, income tax expense, gain on extinguishment of debt, other gain (loss) and depreciation and amortization expense, is a supplemental measure to help management and our investors understand our operating performance. For the nine months ended June 30, 2014, EBITDA includes significant and necessary expenses incurred in connection with our preparation to file a registration statement for our initial public offering, or IPO. These expenses include $152,941 for audit and review fees of our financial statements, $183,714 for accounting and tax consultants to provide various technical, accounting, and tax advisory services, $45,000 for third party valuation specialists to perform valuations of our company and various complex financial instruments we issued, and $28,143 in other advisory services.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” beginning on page 15.

Overview

We believe we are the largest owner-operator of dry cleaning and laundry stores in the United States, with 70 stores and three production plants located in Arizona, Central California, Southern California, Hawaii, Indiana and Virginia.

We established our business through several acquisitions completed between 2005 and 2008. We financed each of these acquisitions using cash raised through the sale of debt instruments with relatively short maturities. However, given the financial crisis and the associated difficulties with raising capital in late 2008, we were unable to repay or restructure our debt obligations. As a result, we filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code. On September 23, 2011, the Bankruptcy Court approved our Bankruptcy Plan, which enabled us to eliminate a significant amount of our outstanding debt and close or relocate 12 unprofitable stores, while still allowing stockholders to maintain a continuing equity interest in our company.

We believe we have a unique operating platform which will provide the foundation for growth and consolidation in the fragmented dry cleaning industry. We have identified the following areas of operational focus to advance this growth:

· leveraging excess production capacity in our existing markets;

· promoting “green” dry cleaning processes, which are gentler on fabrics and healthier for our customers and the environment;

· expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning;

· expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations;

· expanding existing dry cleaning and laundry services related to fire and flood restoration; and

· further developing a customer-focused culture that strengthens our brands.

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State and federal regulatory agencies have targeted the practices of the dry cleaning industry over the past two decades due to the use of certain solvents in the cleaning process, with perc being the most widely scrutinized. Of the 73 total locations we lease, 33 are used for processing clothes and of those locations only four currently use perc, while the other locations use eco-friendly “green” solvents and dry cleaning processes. We are in the process of eliminating the use of perc at one of these four locations by the end of 2014. We use a number of eco-friendly solvents including those manufactured by GreenEarth Cleaning. We promote our “green” cleaning products in many of our marketing materials designed to appeal to customers seeking eco-friendly dry cleaning options.

We intend to increase our market share through a combination of organic and strategic growth. We seek to achieve organic growth through a combination of increasing sales in our existing stores and also by opening select new stores. We believe we can increase sales in our existing stores by expanding our service offerings and by promoting our brands more effectively.

Consistent with our growth strategy, on August 25, 2014, we entered into an agreement to purchase, upon the closing of this offering and subject to other customary closing conditions, substantially all of the assets of Advent Cleaners. Upon the closing of the Advent Cleaners Acquisition, we will add 14 dry stores, three mini-hubs with retail operations and a 20,230 square foot central hub, all located in the greater Las Vegas, Nevada area and operated under the brands “Al Phillips” and “Thrift DLux Cleaners.” The acquired assets also include contracts for commercial laundry accounts with some of the largest resorts and hotels in Las Vegas.

Components of Operating Results

The following is a description of some of the components used in determining our results of operations:

Net Sales. Net sales is comprised of total gross sales from dry cleaning, laundry, alterations, and other ancillary services such as shoe repair, fire restoration, and drapery cleaning, less any refunds, discounts, and cash payouts or store credits given for damage claims, including any claims or store credits given in the case of a dry cleaning or laundry garment that is damaged while in our care.

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Cost of Sales (exclusive of depreciation and amortization shown separately below). Cost of sales includes production supplies, such as dry cleaning solvent, laundry detergent, hangers, plastic or “poly” bags, and outside services such as shoe repair performed by a third party, as well as all labor associated with production and customer service (but excluding any labor associated with delivery, maintenance and repairs, and regional supervision).

Stores and Plant Expenses. Stores and plant expenses include occupancy expense (e.g., rent, common area maintenance, and real estate taxes), utilities, including telephone and data, employee benefits such as paid time off and medical insurance, workers’ comp insurance, delivery labor, gasoline, and vehicle licensing fees, repair and maintenance of production equipment and store leasehold improvements, and credit card processing fees.

Regional Expenses. Regional expenses include payroll associated with regional supervision, marketing and advertising, rent and other occupancy expenses associated with regional offices, property and casualty insurance, licenses, and personal property taxes.

Corporate Expenses. Corporate expenses include all payroll and benefits for employees who are not located in or working in a region, including our Chief Executive Officer, Chief Financial Officer and General Counsel, rent and other occupancy expenses for our corporate office, professional fees including for accounting and legal services, banking fees, and Directors & Officers liability insurance.

Depreciation and Amortization Expenses. Depreciation and amortization expense includes depreciation and amortization of all of our assets, including leasehold improvements, at the stores, regional and corporate headquarters

Results of Operations

Comparison of the Nine Months Ended June 30, 2014 and the Nine Months Ended June 30, 2013

Net Sales. Net sales for the quarter ended June 30, 2014 were $15,804,521, as compared to $16,281,848 in for the nine months ended June 30, 2013, a decrease of $477,327, or 2.9%. This decrease was primarily attributable to a decrease in retail sales which was caused by extreme winter weather in two of our markets.

Cost of Sales (exclusive of depreciation and amortization shown separately below). Cost of sales was $6,798,241 for the first nine months of fiscal 2014, as compared to $7,093,772 for the first nine months of fiscal 2013, a decrease of $300,531, or 4.2%. This decrease was primarily attributable to lower payroll and supplies, driven primarily by the lower sales volume.

Gross Profit (exclusive of depreciation and amortization shown separately below). Gross profit was $9,006,280 for the first nine months of fiscal 2014, as compared to $9,188,076 in the first nine months of fiscal 2013, a decrease of $181,796, or 2.0%. This decrease was primarily attributable to the 2.9% decline in sales, partially offset by the 4.2% reduction to cost of sales. Gross profit (exclusive of depreciation and amortization shown separately below) as a percentage of net sales improved slightly, to 56.9% for the current year period, from 56.4% in the prior year.

Stores and Plant Expenses. Stores and plant expenses during the first nine months of fiscal 2014 were $6,358,005, compared to $6,223,346 for the first nine months of fiscal 2013, an increase of $134,659, or 2.2%. This increase was primarily attributable to higher utility costs, especially in markets impacted by severe winter weather, and higher workers’ compensation expenses.

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Regional Expenses. Regional expenses were $1,551,211 for first nine months of fiscal 2014, as compared to $1,702,414 for the first nine months of fiscal 2013, a decrease of $151,203, or 8.9%. This decrease was primarily attributable to reductions in payroll-related expenses.

Corporate Expenses. Corporate expenses for the first nine months of fiscal 2014 were $1,579,768, as compared to $1,260,095 in the first nine months of fiscal 2013, an increase of $319,673, or 25.4%. The increase is attributable to significant and necessary expenses incurred in connection with our preparation to file a registration statement for our IPO. These expenses include $152,941 for audit and review fees of our financial statements, $183,714 for accounting and tax consultants to provide various technical, accounting, and tax advisory services, $45,000 for third party valuation specialists to perform valuations of our company and various complex financial instruments, and $28,143 in other advisory services. These types of expenses were either not incurred or were insignificant during the nine months ended June 30, 2013. These increases were partially offset by a reduction in corporate payroll expenses.

Depreciation and Amortization Expenses. Depreciation and amortization expense was $346,658 during the first nine months of fiscal 2014, as compared to $349,447 in the first nine months of fiscal 2013, essentially flat on a year over year basis.

Interest Expense. Interest expense during the first nine months of fiscal 2014 was $1,549,063, compared to $1,855,496 for the first nine months of 2013, a decrease of $306,433, or 16.5%. This decrease was primarily attributable to reduction in overall debt levels as a result of the terms of a Reorganization Agreement we entered into with several existing creditors in January 2014.

Gain on Extinguishment of Debt: During the first nine months of 2014 we reported a gain on extinguishment of debt of $55,558, as compared to $122,945 in the first nine months of 2013, resulting from the retirement of certain debt instruments during these periods. In connection with the Reorganization Agreement described below, the $9,100,000 in aggregate principal debt extinguishment of the Subordinated Convertible Debentures (described below) resulted in a gain for $10,240,860 which was recorded in additional paid-in capital since that gain was, in substance, a capital contribution from our related party note holders.

Provision for Income Taxes. We have recorded a nominal provision for state minimum income taxes and penalties for the for the nine months ended June 30, 2013 and 2014, included in our accrued income taxes on the balance sheet. Due to a full valuation allowance against our deferred tax assets, no provision for income tax benefit has been recorded for any period presented. Furthermore, due to the losses we have generated for the year ended September 30, 2013 and the losses we expect to generate for the year ending September 30, 2014, our unaudited annual effective income tax rate applied for the nine months ended June 30, 2013 and 2014 is (0.4%).

Comparison of the Year Ended September 30, 2013 and the Year Ended September 30, 2012

Net Sales. Net sales for fiscal 2013 were $21,408,049 as compared to $21,374,671 in fiscal 2012, an increase of 0.2%. The increase was primarily attributable to an increase in sales for stores operated by us for more than a year.

Cost of Sales (exclusive of depreciation and amortization shown separately below). Cost of sales was $9,360,266 for fiscal 2013, as compared to $9,637,552 in fiscal 2012, a decrease of $277,286, or 2.9%. This decrease was primarily attributable to lower payroll and production supplies expense resulting from our efforts to improve operational efficiency.

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Gross Profit (exclusive of depreciation and amortization shown separately below). Gross profit was $12,047,783 for fiscal 2013, as compared to $11,737,119 in fiscal 2012, an increase of $310,664, or 2.6%. The increase was primarily attributable to lower expense for dry cleaning labor and production supplies. Gross profit (exclusive of depreciation and amortization shown separately below) as a percentage of net sales improved to 56.3% in fiscal 2013 from 54.9% in fiscal 2012.

Stores and Plant Expenses. Stores and plant expenses decreased slightly to $8,367,537 in 2013, as compared to $8,428,456 in 2012, a decrease of $60,919, or 0.7%. The decrease was primarily attributable to lower maintenance and repair expenses, partially offset by higher occupancy related costs.

Regional Expenses. Regional expenses were $2,224,889 for fiscal 2013, as compared to $2,464,607 for fiscal 2012, a decrease of $239,718, or 9.7%. This decrease was primarily attributable to reductions in marketing and payroll-related expenses.

Corporate Expenses. Corporate expenses were $1,725,664 in fiscal 2013, as compared to $2,418,539 in fiscal 2012, a decrease of $692,875, or 28.6%. This decrease was primarily attributable to reductions in payroll-related costs, professional fees, and occupancy-related costs.

Depreciation and Amortization Expense. Depreciation and amortization expense was $469,547 in fiscal 2013, as compared to $432,331 in fiscal 2012, a decrease of $37,216 or 8.6%. The largely flat year over year expense reflects a modest level of new capital expenditures relative to existing assets reaching the end of their depreciable lives.

Interest Expense. Interest expense was $2,510,495 in fiscal 2013, as compared to $3,347,182 in fiscal 2012, a decrease of $836,687, or 25.0%. The decrease was primarily attributable to concessions reached with holders of certain debt instruments resulting in a decrease in the effective interest rate.

Gain on extinguishment of debt. Gain on extinguishment of debt was $654,935 in fiscal 2013, as compared to $833,873 in fiscal 2012, a decrease of $178,938, or 21.5%. The gain is the result of the retirement of certain debt instruments during these periods.

Gain (loss) — Other: Other gain on assets was $895 for the year ended June 2013, as compared to $13,477 for the comparable period in 2012.

Provision for Income Taxes. We have recorded a nominal provision for state minimum income taxes and penalties for the years ended September 30, 2012 and 2013, included in our accrued income taxes on the balance sheet. Due to a full valuation allowance against our deferred tax assets, no provision for income tax benefit has been recorded for either period and our annual effective income tax rate was (0.2%) and (0.4%) for 2012 and 2013, respectively.

Liquidity and Capital Resources

Sources of Liquidity

During the year ended September 30, 2013 and the nine months ended June 30, 2014, we funded our operations primarily with the net proceeds from debt financing and term loans with related party creditors of $546,447 and $1,765,443, respectively. As of September 30, 2013, we had a working capital deficit of $2.9 million as compared to a working capital deficit of $2.7 million at June 30, 2014. At September 30, 2013 and June 30, 2014 we had an accumulated deficit of $33,555,690 and $35,881,650, respectively, and cash of $82,635 and $342,167, respectively.

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Our available capital resources at June 30, 2014 consisted of $342,167 in cash. We expect that our future available capital resources will consist primarily of cash on hand, debt or other form of financing, if any is available, and cash generated from our business, if any.

Credit Facilities

On September 23, 2011 and September 27, 2011, as part of our exit financing under our Bankruptcy Plan, we sold and issued a series of 10% Senior Secured Original Issue Discount Convertible Debentures, or Senior Convertible Debentures, originally due September 23, 2013, to seven accredited investors in the aggregate principal amount of $5,720,000. The Senior Convertible Debentures were issued at a $518,000 discount, or approximately 9%. We were originally obligated to pay interest on the aggregate unconverted and outstanding principal of the Senior Convertible Debentures at the rate of 10% per annum, payable quarterly on the last day of each calendar quarter beginning with the quarter ended September 30, 2012. The Senior Convertible Debentures were amended on September 27, 2012 to extend the maturity date from September 23, 2013 to March 31, 2015 and for all accrued interest on the Senior Convertible Debentures to be paid at the new maturity date (March 31, 2015) together with principal in cash, eliminating periodic interest payments under the Senior Convertible Debentures. On March 20, 2014, the Senior Convertible Debentures were amended again to extend the maturity date to July 31, 2015. All principal and accrued but unpaid interest under the Senior Convertible Debentures may be converted, at the election of the holder, into shares of our common stock at a conversion price equal to $32.00 per share, and the repayment of all obligations under the Senior Convertible Debentures is secured by all of our assets other than those used in our Arizona and Riverside operations. As of June 30, 2014, $7,304,122 in principal and accrued interest was outstanding under the Senior Convertible Debentures. Under the terms of the Exchange Offer, the Senior Convertible Debentures will be exchanged for shares of common stock and will be retired upon the closing of this offering.

On February 23, 2012, we sold and issued a 10% Senior Secured Promissory Note, due March 31, 2015, to Wattles Capital Management, or WCM, in the principal amount of $549,890, or WCM Note. We issued the WCM Note with an original issue discount of 10%. As a result, net proceeds to us equaled $499,000. On September 9, 2013, Setal 10 Trust purchased the WCM Note and all its rights and obligations under the WCM Note. The WCM Note in the hands of Setal 10 is referred to in this prospectus as the Setal 10 Note. The Setal 10 Note has an amended maturity date of July 31, 2015, with no cash coupon, and accrues interest 10% per annum, all due at maturity. All principal and accrued but unpaid interest under the Setal 10 Note is convertible, at the election of the holder, into the shares of our common stock at a conversion price equal to $32.00 per share, and the repayment of all obligations under the Setal 10 Note is secured by all of our assets, except for those used in our Arizona and Riverside operations. As of June 30, 2014, the principal and accrued but unpaid interest payable on the Setal 10 Note was $686,905. We expect that all amounts owed under the Setal 10 Note will be paid upon the closing of this offering.

On August 22, 2012, we sold and issued a 10% Senior Secured Promissory Note, due March 31, 2015, to Setal 9 Trust, or Setal 9, in the principal amount of $550,000, or Setal 9 Note. We issued the Setal 9 Note with an original issue discount of 9%. As a result, net proceeds to us equaled $500,000. The Setal 9 Note has no cash coupon, and interest accrues on all unconverted and outstanding principal at 10% per annum, all due on maturity. On March 20, 2014, the Setal 9 Note was amended to extend the maturity date to July 31, 2015. All principal and accrued but unpaid interest under the Setal 9 Note is convertible, at the election of the holder, into the shares of our common stock at a conversion price equal to $32.00 per share, and the repayment of all obligations under the Setal 9 Note is secured by all of our assets, except for those used in our Arizona and Riverside operations. As of June 30, 2014 an aggregate of $649,745 in principal and accrued interest was outstanding under the Setal 9 Note. Under the terms of the Exchange Offer, the Setal 9 Note will be exchanged for shares of common stock and will be retired upon the closing of this offering.

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On August 22, 2012, we sold and issued a Working Capital Secured Note to Lester E. Taylor Jr. & Diane M. Taylor as Trustees of the Taylor Family Trust and Clyde Wilson & Anita Wilson as Trustees of the Wilson Family Trust, or Working Capital Note, in the principal amount of $200,400. Interest on the Working Capital Note accrued at 14% per annum. This note was subsequently rolled into the Riverside Loan (as described below) and retired.

On November 6, 2012, we entered into a Loan and Security Agreement with Setal 8 Trust, or Setal 8, under which Setal 8 provided a term loan of $100,000 secured by the assets used in our Arizona operation, or Arizona Loan. We paid interest on the Arizona Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount (e.g., $1,000 per month on a $100,000 advance). The Arizona Loan was amended on January 17, 2014 to extend the maturity to January 17, 2019 and reduce the interest to 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% of the original amount. As of June 30, 2014 an aggregate of $118,298 in principal and accrued interest was outstanding under the Arizona Loan. Under the terms of the Exchange Offer, the Arizona Loan will be exchanged for shares of common stock and will be retired upon the closing of this offering.

On January 3, 2013, we entered into a Loan and Security Agreement with Setal 8 under which Setal 8 agreed to provide a term loan of up to $500,000 secured by the assets used in our Riverside operation, or Riverside Loan. We used $211,500 of the proceeds of the Riverside Loan to repay and retire the Working Capital Note. We paid interest on the Riverside Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount. The Riverside Loan was amended on January 17, 2014 to extend the maturity to January 17, 2019 and reduce the interest to 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% of the original amount. As of June 30, 2014 an aggregate of $347,026 in principal and accrued interest was outstanding under the Riverside Loan. Under the terms of the Exchange Offer, the Riverside Loan will be exchanged for shares of common stock and will be retired upon the closing of this offering.

On March 21, 2013, we entered into a Loan Agreement with Setal 10, under which Setal 10 agreed to provide an unsecured term loan of up to $500,000, or Setal 10 Unsecured Loan. We paid interest on the Setal 10 Unsecured Loan at 20% per annum, comprised of 10% interest compounded monthly and monthly cash payments of .8333% of the original amount. We paid off the principal and accrued but unpaid interest on the Setal 10 Trust Loan in the amount of $528,142 with proceeds from the Setal 11 Loan.

On August 16, 2013, we entered into a Loan and Security Agreement with Park Place Services, or Park Place, under which Park Place agreed to provide a term loan of up to $400,000 secured by a blanket lien on our assets, or Park Place Loan. We paid interest on the Park Place Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount. On January 17, 2014, we paid off the principal and accrued but unpaid interest on the Park Place Loan in the amount of $418,206 with proceeds from the Setal 11 Loan.

On January 17, 2014, we entered into a Loan and Security Agreement, or Setal 11 Loan, with Setal 11, LLC, a California limited liability company, or Setal 11, under which Setal 11 agreed to provide one or more term loans of newly-committed funds in an aggregate principal amount of not less than $2,395,496, or Initial Commitment Amount, and no more than $4,000,000. On January 20, 2014, at the closing, Setal 11 advanced us $1,395,496, or Initial Advance under the Setal 11 Loan. We used $995,496 of the proceeds of this advance to repay certain outstanding indebtedness and the remaining $400,000 to fund our working capital requirements. Interest accrues on advances at 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% on the original amount. The maturity date of the Setal 11 Loan is January 17, 2019. We also pay a “commitment fee” of 6% per annum on the difference between the Initial Commitment Amount and amounts advanced, including the Initial Advance. Repayment of all obligations under the Setal 11 Loan is secured by all of our assets. On February 24, 2014, we borrowed an additional $200,000 under this credit facility. As of June 30, 2014, an aggregate of $2,496,178 in principal and accrued interest was outstanding under the Setal 11 Loan. We currently have no additional availability under this credit facility unless Setal 11 elects to increase the Initial Commitment Amount. Under the terms of the Exchange Offer, the Setal 11 Loan will be exchanged for shares of common stock and will be retired upon the closing of this offering.

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On June 30, 2014, we entered into a loan agreement with the Taylor Family Trust and with Wilson Family Trust, or Taylor Family Trust Note, under which these lenders agreed to provide one or more term loans of newly-committed funds. There is no minimum commitment amount and any advances shall be at the sole discretion of the lenders. Mr. Taylor is the trustee of the Taylor Family Trust. We received an initial advance of $150,000, plus an additional $250,000 advanced in August 2014. Interest accrues on advances at 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% on the original amount. The maturity date of the Taylor Family Trust Note is July 31, 2015. Repayment of all obligations under the Taylor Family Trust Note is secured by all of our assets. We expect that $ owed under the Taylor Family Trust Note will be paid upon the closing of this offering.

Reorganization Agreement

Effective as of January 17, 2014 we entered into a reorganization agreement with several of our existing creditors, or Reorganization Agreement. Under the terms of the Reorganization Agreement, the parties agreed to, among other things, (i) enter into an intercreditor agreement to establish the priority of liens on our assets used to secure certain of our debt obligations and to establish the same priority with respect to any distribution of our assets in connection with any dissolution, winding up, liquidation or reorganization of our company and (ii) amend other existing debt instruments to make certain material terms, including the maturity date and interest payments, match those of the Setal 11 Loan. Under the terms of the Reorganization Agreement, holders of our 10% Subordinated Secured Convertible Debentures, or Subordinated Convertible Debentures, in the aggregate principal amount of $9,100,000, agreed to exchange all of the outstanding principal and accrued and unpaid interest under their Subordinated Convertible Debentures for (i) an aggregate of 5,620,514 shares of our Series A Preferred Stock, at an exchange price of $32.00 per share and (ii) an aggregate of 1,328,913 shares of our common stock. Further, under the Reorganization Agreement we agreed to issue an aggregate of 442,969 shares of our common stock to Setal 11 in connection with Setal 11’s commitment of capital under the Setal 11 Loan. We also confirmed our obligation to issue 354,391 shares of our common stock to our senior management pursuant to individual restricted stock purchase agreements at fair market value on the date in which we created the obligation to issues such shares. In addition, we agreed to purchase and fund a $5,000,000 ten-year term life insurance policy for Alex Bond, our Chief Executive Officer, with us named as the sole beneficiary. As of August 22, 2014, we were in the process of obtaining this policy.

Exchange Agreement

On July 23, 2014, we entered into the Exchange Agreement with certain holders of our debt instruments under which certain of our secured and unsecured notes and loan agreements will be exchanged for shares of our common stock and retired upon the closing of this offering. Under the terms of the Exchange Agreement, the number of shares of common stock to be issued in exchange for certain of our certain of our secured and unsecured notes and loan agreements is to be calculated by dividing (a) depending upon the instrument, the outstanding amount of principal or the outstanding amount of principal and interest under such debt instrument on April 30, 2014 by (b) the offering price of a share of common stock in this offering. The closing of the Exchange Agreement is conditioned upon and shall close concurrently with this offering.

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Under the terms of the Exchange Agreement, certain of our secured and unsecured notes and loan agreements, under which an aggregate amount of $11,184,164 in principal and in interest was outstanding as of August 22, 2014, will be exchanged for an aggregate of shares of our common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering. As a result of the Exchange Offer, upon the closing of this offering, we expect to have a total of approximately $ in debt outstanding, of which we expect to repay up to $1.0 million with the proceeds of this offering.

Cash Flow

The following table sets forth the significant sources and uses of cash for the periods set forth below:

	Nine Months Ended June 30,
	2014			2013
Net Cash Provided By (Used In)

Operating Activities	$	(1,279,608	)	$	(128,678	)
Investing Activities	$	(226,303	)	$	(178,737	)
Financing Activities	$	1,765,443		$	290,140
Net Increase (Decrease) In Cash	$	259,532		$	(17,275	)

Net cash used in operating activities:

Net cash used in operating activities for the nine months ended June 30, 2014 was $1,279,608, as compared to $128,678 for the nine months ended June 30, 2013, an increase of $1,150,930. This increase was due primarily to a decrease in accrued interest due to the exchange of the Subordinated Convertible Debentures for a combination of Series A preferred stock and common stock discussed above, decrease in accounts payable, accrued and other liabilities, an increase in prepaids and other current assets, and the increase in net loss, partially offset by an increase in amortization of discount on debt.

Net cash used in investing activities:

Net cash used in investing activities was $226,303 for the nine months ended June 30, 2014, as compared to $178,737 for the nine months ended June 30, 2013, an increase of $47,566. This increase was due to increased investment in machinery and equipment to operate our business.

Net cash provided by financing activities:

Net cash provided by financing activities was $1,765,443 for the nine months ended June 30, 2014, as compared to $290,140 for the nine months ended June 30, 2013, an increase of $1,475,303. This increase was due primarily to an increase in our long-term debt in connection with the Setal 11 Loan proceeds from the Reorganization Agreement discussed above, net of repayments of debt we made in the same nine month period.

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Non-GAAP Financial Measures

We use EBITDA as a supplemental measure to help management and our investors understand our operating performance. EBITDA should not be considered an alternative to, or more meaningful than, GAAP measures such as net income and net cash provided by operating activities. EBITDA excludes depreciation and amortization, income taxes, gain on extinguishment of debt, and other gain (loss) and does not reflect any cash requirements for the replacement of the assets being depreciated and amortized, which assets will often have to be replaced in the future. Further, EBITDA does not reflect the impact of cash dividends, capital expenditures and other cash commitments from time to time as described in more detail elsewhere in this prospectus, and it does not represent how much discretionary cash we have available for other purposes. Nonetheless, EBITDA is a key measure used by us, and we believe by investors. EBITDA, as calculated, may not be comparable to a similarly titled measure reported by other companies.

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A reconciliation of EBITDA to GAAP net income (loss) is calculated as follows (in thousands):

	Year Ended September 30, 2013										Nine Months Ended June 30, 2014 Unaudited
	U.S. Dry Cleaning Services Corp.			Advent Cleaners, LLC		Advent Cleaners, LLC Preliminary Acquisition Adjustments (1)		Unaudited Pro Forma			U.S. Dry Cleaning Services Corp.			Advent Cleaners, LLC			Advent Cleaners, LLC Preliminary Acquisition Adjustments (1)		Pro Forma

Net (loss) income	$	(2,603,619	)	$	72,819	$	253,469	$	(2,277,331	)	$	(2,325,960	)	$	(21,408	)	$	191,245	$	(2,156,123	)
Income tax expense	9,100			—				9,100			9,100			—					9,100
Interest expense	2,510,495			3,599				2,514,094			1,549,063			2,151					1,551,214
Gain on extinguishment of debt	(654,935		)	—				(654,935		)	(55,558		)	—					(55,558		)
(Gain) loss other	(895		)	31,547				30,652			(6,007		)	(3,500		)			(9,507		)
Depreciation and amortization	469,547			186,571				656,118			346,658			170,498					517,156
EBITDA (2)	$	(270,307	)	$	294,536	$	253,469	$	277,698		$	(482,704	)	$	147,741		$	191,245	$	(143,718	)

(1) Adjusts out the salary and related direct expenses incurred for the majority shareholder of Advent Cleaners. These expenses will neither continue nor be replaced at, and or subsequent to, the close of the acquisition of Advent Cleaners.

(2) EBITDA for the nine months ended June 30, 2014, EBITDA includes significant and necessary expenses incurred in connection with our preparation to file a registration statement for our IPO. These expenses include $152,941 for audit and review fees of our financial statements, $183,714 for accounting and tax consultants to provide various technical, accounting, and tax advisory services, $45,000 for third party valuation specialists to perform valuations of our company and various complex financial instruments, and $28,143 in other advisory services.

Future Capital Requirements

We believe that the net proceeds from this offering, together with our existing cash will enable us to fund our operating expenses and capital expenditure requirements through 2015. We intend to use $4.0 million of the net proceeds from this offering to acquire Advent Cleaners, $ of the net proceeds from this offering to pay all amounts owed under the Setal 10 Note described above and up to $ of the net proceeds of this offering to pay amounts due under the Taylor Family Trust Note described above. After applying the proceeds of this offering as intended, we will have $ in debt outstanding. We intend to devote the remaining net proceeds from this offering, together with our existing cash resources to fund additional acquisitions, open new stores and establish new delivery routes, fund capital expenditures at several of our stores and production plants, and for working capital and other general corporate purposes.

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Until such time, if ever, as we can generate positive operating cash flows, we may finance our cash needs through a combination of equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Critical Accounting Policies and Estimates

To prepare the financial statements in conformity with accounting principles generally accepted in the United States, management is required to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In particular, we provide estimates regarding the collectability of accounts receivable, useful lives and the recoverability of long-lived assets, the valuations of warrants, restricted stock grants, debt and preferred stock, as well as the deferred tax asset valuation allowance. On an ongoing basis, we evaluate our estimates based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which forms the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Accounts Receivable and Allowance for Doubtful Accounts

We perform ongoing credit evaluations of our customers and adjust credit limits based on payment history and the customers’ credit worthiness. We monitor collections and payments from our customers and maintain an allowance for doubtful accounts based on specific customer collection issues that have been identified. The allowance for doubtful accounts is maintained at a level that, in our opinion, is adequate to absorb potential losses related to account receivables and is based upon our continuous evaluation of the collectability of outstanding balances. Our evaluation takes into consideration such factors as past bad debt experience, economic conditions and information about specific receivables. We also consider the age and composition of the outstanding amounts in determining their net realizable value. The allowance is based on estimates, and ultimate losses may vary from current estimates. As adjustments to these estimates become necessary, they are reported in the statements of operations in the periods that they become known. The allowance is increased by bad debt provisions charged to bad debt expense in operating expense and reduced by direct write-offs, net of recoveries.

We experience claims for items damaged during processing, adjustments in resolution of customer disputes, and promotional discounts, all of which are recorded as incurred. Such charges average about one percent of gross revenue. Sales refunds or discounts apply to retail and commercial sales. Sales are reported net of all adjustments, refunds and discounts.

Revenue Recognition

We recognize revenue when four basic criteria are met: persuasive evidence of an arrangement exists; services have been rendered; the fees are fixed or determinable and collectability is reasonably assured. An arrangement exists when a customer work order is created. For walk-in and pickup-and-delivery-type retail customers, the service is completed typically within three business days or less. Therefore, we defer revenues for services that have not yet been completed as services in process, generally consisting of work orders created within the last three business days of the month. We record services in process, included in our prepaids and other current assets, and the corresponding deferred revenue liability on our balance sheet since we have an obligation to perform the service and are liable for the customer’s garment as the services are being performed. Once service is complete, we recognize the revenue and record the related account receivable. Collectability is reasonably assured as the customer cannot pick up their garments without paying for the amount due. For commercial customers, collectability is reasonably assured under the contractual and credit limits established by us with our customers. For commercial customers, revenue is not recorded until we deliver the cleaned garments to the customer. We also have certain prepaid cards for commercial customers. Cash pre-payments are deferred and recognized as revenue when the customers use those cards as payment for dry cleaning services rendered.

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Property, Machinery and Equipment

Property, machinery and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the assets’ estimated useful lives as follows:

Delivery equipment and other vehicles	3-5 years
Store furniture and equipment	7 years
Office furniture and equipment	5 years
Uniforms	3 years
Machinery and equipment	7 years
Leasehold improvements	Shorter of 3-10 years or life of underlying lease

The cost of normal maintenance and repairs is expensed as incurred. Significant capital expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of fixed assets sold, or otherwise disposed of, and the related accumulated depreciation or amortization are removed from the accounts, and any resulting gains or losses are reflected in current operations.

Long-lived Assets

We assess the impairment of long-lived assets, which consist primarily of property, machinery and equipment, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. Events or changes in circumstances that may indicate that an asset is impaired include significant decreases in the market value of an asset, significant underperformance relative to expected historical or projected future results of operations, a change in the extent or manner in which an asset is utilized, significant declines in the estimated fair value of the overall business enterprise for a sustained period, shifts in technology, changes in our operating model or strategy and competitive forces.

If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the assets. If we determine that an impairment charge is needed, the charge will be recorded as asset impairment in the statements of operations. We have not recorded any impairment of our long-lived assets for any of the periods presented in this prospectus.

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Indefinite Lived Intangible Asset

Trade name, our only indefinite-lived intangible asset, is not amortized but instead is tested for impairment on an annual basis or between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. We measure and record an impairment loss for the excess of the carrying value of the asset over its fair value. This asset has an indefinite useful life and is evaluated annually for impairment using qualitative factors or indicators to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. We performed our annual impairment tests and, while the recurring losses are an indicator, based on the mix of qualitative and quantitative factors considered, we determined it was more likely than not the intangible asset was not impaired as of any of the periods presented in the financial statements.

Classification of Series A Preferred Stock

Our Series A Preferred Stock is nonredeemable and it does not have a specific date on which it can be redeemed. However, as the holders of our Series A Preferred Stock include Setal 1, LLC, Setal 2, LLC, Setal 3, LLC, Setal 4, LLC, Setal 5, LLC and Setal 6, LLC, Setal 7, LLC, Setal 8, Trust, Setal 9 Trust, Setal 10 Trust, Setal 11, LLC, Park Place Services and Lester E. Taylor, Jr., all of whom we refer to as the Setal Entities, who control the company through their majority ownership interest in our company and control of our current board of directors with majority seats, the Series A Preferred Stock and related dividends, upon a voluntary conversion to common stock, may be redeemed in cash or other assets by events not solely within our control, which includes liquidation of the Series A Preferred Stock without liquidating other securities, such as our common stock, to pay holders of our Series A Preferred Stock. Therefore, we have presented our Series A Preferred Stock outside of stockholders’ deficit in the mezzanine section of the June 30, 2014 balance sheet.

Internal Control Over Financial Reporting

Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of the effectiveness of our internal control over financial reporting. However, in connection with the audit of our financial statements for the years ended September 30, 2012 and 2013, our independent registered public accounting firm identified several material weaknesses in our internal control over financial reporting. As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified by our independent registered public accounting firm include (i) inadequate segregation of duties consistent with control objectives; (ii) inadequate written documentation of internal control policies and procedures; (iii) inadequate controls over the identification, assessment and accounting for complex financial instruments and transactions, non recurring and unusual transactions; and (iv) ineffective controls over period end financial disclosure and reporting processes resulting in a significant number of post-closing adjustments.

Neither we nor our independent registered public accounting firm undertook a comprehensive assessment for purposes of expressing an opinion on our internal control over financial reporting. It is possible that, had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional deficiencies or weaknesses may have been identified.

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We are in the process of implementing a number of measures designed to improve our internal control over financial reporting to remediate these material weaknesses. To remediate these material weaknesses, we have hired a new Chief Financial Officer and intend to hire additional finance and accounting personnel, which significantly increases our finance and accounting team’s experience in United States GAAP and financial reporting for publicly traded companies. In addition, we expect to retain consultants to advise us on making further improvements to our internal controls related to these accounting areas. We believe that these additional resources will enable us to broaden the scope and quality of our controls relating to the oversight and review of financial statements and reconciliations and our application of relevant accounting policies. However, these remediation efforts are still in process and have not yet been completed. Because of these material weaknesses, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected. In addition, the remediation steps we have taken, are taking and expect to take may not effectively remediate these material weaknesses, in which case our internal control over financial reporting would continue to be ineffective. We cannot guarantee that we will be able to complete our remedial actions successfully. Even if we are able to complete these actions successfully, these measures may not adequately address our material weaknesses. In addition, it is possible that we will discover additional material weaknesses in our internal control over financial reporting. See “Risk Factors.”

Upon the completion of this offering, we will be required to disclose changes made in our internal control and procedures on a quarterly basis. In addition, our management will have to evaluate the effectiveness of our internal control over financial reporting beginning the year following our first annual report required to be filed with the Securities and Exchange Commission. At such time, our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is adverse in the event that such firm is not satisfied with the level at which our controls are documented, designed, operated or reviewed. As a result, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff. Our remediation efforts may not enable us to avoid material weaknesses in the future. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future.

Recent Accounting Pronouncements

In June 2014, the FASB issued Accounting Standard Update, or ASU, 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Shared Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force)”. ASU 2014-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. We are assessing the impact, if any, to our financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for fiscal years and interim periods beginning after December 15, 2016. Early adoption is not permitted. We expect to adopt this guidance when effective. We are currently evaluating the impact of the pending adoption of ASU 2014-09 on our financial statements.

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In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740)”, which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We plan to adopt this guidance during our quarter ending December 31, 2014 and are assessing the impact, if any, to our financial statements.

In July 2012, the FASB issued ASU 2012-02, “Goodwill and Other - Testing Indefinite-Lived Intangible Assets for Impairment”, which provides companies the option to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary. ASU 2012-02 prescribes an entity to perform a quantitative impairment test if qualitative factors indicate that it is more likely than not that its indefinite-lived intangible assets are impaired. The qualitative factors are similar to the guidance established for goodwill impairment testing and include identifying and assessing events and circumstances that would most significantly impact, individually or in the aggregate, the carrying value of the indefinite-lived intangible assets. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. We adopted this new standard on October 1, 2012, and the adoption did not have any impact on our financial position or results of operations.

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BUSINESS

Overview

We believe that we are the largest owner-operator of dry cleaning and laundry stores in the United States. We currently operate 70 retail dry cleaning and laundry stores and three production plants in the following locations: 11 stores and one production plant in Virginia, 25 stores in Indiana, five stores and one production plant in Southern California, 12 stores in Central California, 15 stores and one production plant in Hawaii, and two stores in Arizona.

Since our inception in 2005 as a Delaware corporation, our business has grown primarily through the acquisition of several dry cleaning chains. We have acquired the following operations:

· In 2005, we acquired Young Laundry & Dry Cleaning in Hawaii and Roadrunner Cleaners in California.

· In February 2007, we acquired Boston Cleaners in California.

· In 2008, we acquired the following companies:

· Martinizing Cleaners in California,

· Regency Cleaners, with stores in both California and Arizona,

· Zoots Cleaners in Virginia,

· Caesars $3.93 Cleaners in Hawaii, and

· Tuchman Cleaners in Indiana.

We financed each of these acquisitions using cash raised through the sale of debt instruments with relatively short maturities. Our intention was to repay these debt obligations by raising capital in the public markets. However, due to the financial crisis and the associated difficulties with raising capital in late 2008, we began to experience significant financial constraints and were unable to raise sufficient capital through the sale of our equity to repay our debt obligations.

As a result of our inability to meet these debt obligations, we filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California in an effort to restructure our indebtedness. We continued to operate our dry cleaning stores during the pendency of the bankruptcy proceedings. On September 23, 2011, the Bankruptcy Court approved our Bankruptcy Plan which provided for the elimination of a significant amount of our outstanding debt and allowed us to close or relocate 12 of our unprofitable dry cleaning stores. In addition, our Bankruptcy Plan provided for all of our stockholders to maintain a continuing equity interest in our company upon its effectiveness.

Since completing our reorganization, we believe that we have a compelling opportunity to continue to expand our position as the largest owner-operator of dry cleaning and laundry stores nationwide through growth in the large and fragmented dry cleaning industry.

In order to capitalize upon this opportunity, we have taken numerous steps to improve our balance sheet, obtain additional working capital, invest in our production equipment, vehicles and retail stores, modernize our marketing efforts, and enhance our operating focus. Specifically, we converted additional debt to equity, made changes in management and field personnel, upgraded stores and production plants, expanded the use of eco-friendly solvents and “green” dry cleaning processes, pursued new store locations and free door-to-door home and office delivery in order to leverage existing production capacity, and expanded our product offerings.

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Our Operating Plan

To ensure that our current operations provide a solid foundation upon which we can build a growing and successful national business, we have identified the following areas of operational focus:

· leveraging excess production capacity in our existing markets;

· promoting “green” dry cleaning processes, which are gentler on fabrics and healthier for our customers and the environment;

· expanding the number of locations that offer incremental services, such as shoe repair, handbag cleaning and repair, drapery cleaning, and carpet cleaning;

· expanding our service offerings to include services such as tuxedo and eveningwear rentals in certain locations;

· expanding our existing dry cleaning and laundry services related to fire and flood restoration; and

· further developing a customer-focused culture that strengthens our brands.

Leveraging Excess Production Capacity

We operate a hub-and-spoke model, utilizing a large centralized processing plant, or “hub,” to provide dry cleaning and laundry services to several smaller company-owned retail stores, or “spokes.” The existence of a central production plant allows us to operate much smaller stores that serve as drop off and pick up locations. Because these stores have no production equipment, they are not subject to the same environmental risks as the other stores or plants where laundry is processed. This makes them much more attractive to landlords. In addition, because there is no production, these stores are often able to operate with a single employee each shift, which allows these stores to be profitable even with relatively low revenue.

While the implementation varies from market to market, we believe this approach is the best way to (i) ensure consistent production quality, (ii) allow for more efficient equipment maintenance and repairs, and (iii) leverage labor, supplies, and utilities in order to lower production costs. Moreover, the cost to build a hub is quite high, whereas the cost to open new stores (assuming they will be serviced by an existing hub) is relatively low in comparison. Therefore, once a hub exists and there is excess capacity, we believe the opportunity to add additional stores becomes a compelling proposition.

We believe that the markets where we currently employ our hub-and-spoke model are well suited for this method of operation. These markets possess some or all of the following desirable requirements:

· ample high-income population within a small geographic area with a high demand for services and a low threshold of competition;

· a traffic infrastructure allowing for the ease of transportation between stores and our production facilities, and for our home delivery drivers; and

· numerous high-traffic retail shopping centers where we can lease smaller stores.

We currently operate central hubs in Southern California, Virginia and Hawaii. These central hubs occupy, in the aggregate, approximately 62,500 square feet and service 31 retail stores and several delivery routes. We believe that our central hubs have capacity to service, in the aggregate, an additional 60 retail stores plus additional delivery routes. We believe that adding additional stores and delivery routes will drive operating efficiencies, lower the production cost per unit, and increase profitability. We intend to open “dry” stores, for the drop-off and pick-up of garments that do not contain dry cleaning equipment, acquire existing stores and chains that consist primarily of dry stores, and establish new delivery routes in areas surrounding these central hubs in order to make use of this excess capacity.

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In larger and more geographically spread-out markets, such as Arizona, Central California and Indiana, we operate a modified version of the hub-and-spoke model, where smaller mini-hubs service a few neighboring stores rather than a single hub servicing the entire market. While this approach typically requires more equipment, it is superior in areas where the drive-times are long (i.e., more than 30-40 minutes between the hub and the spoke). We currently operate 16 mini-hubs in Arizona, Central California and Indiana which, in the aggregate, service 39 retail stores. We believe that these mini-hubs have capacity to service an additional 40 retail stores and additional delivery routes, which would drive operating efficiencies, lower the production cost per unit, and increase profitability. We also intend to utilize the excess capacity of mini-hubs by opening dry stores, acquiring existing stores and chains that consist primarily of dry stores, and establishing new delivery routes in areas surrounding these mini-hubs.

We believe the capital intensity of the hub-and-spoke model is one of our competitive advantages, as smaller operators generally do not have the capital and management expertise needed to develop and operate a central hub that is efficient and in compliance with all applicable regulations. We have already made substantial investments in our central hubs and our production equipment to improve their efficiency and compliance with regulations.

Eco-Friendly Focus

State and federal regulatory agencies have targeted the practices of the dry cleaning industry over the past two decades due to the use of certain solvents in the cleaning process, with perc being the most widely scrutinized. Of the 73 total locations we lease (70 retail stores and three productions plants), 33 are used for processing clothes and of those locations only four currently use perc (of which one is being converted this year to eliminate the use of perc), while the other locations use eco-friendly solvents and “green” dry cleaning processes. We are in the process of eliminating the use of perc at one of these four locations by the end of 2014. We use a number of eco-friendly solvents including those manufactured by GreenEarth Cleaning. We promote our “green” cleaning products in many of our marketing materials designed to appeal to customers seeking eco-friendly dry cleaning options.

Furthering A Customer-Focused Culture & Promoting Our Brands

We strive to promote a company-wide culture in which customer satisfaction is the paramount objective. While certain aspects of our operations vary from region to region, we nonetheless require that every store or route manager deliver on the basic consumer proposition of providing consistently clean clothes, ready on time, at a great value, delivered with genuinely warm and friendly customer service. As part of our value proposition, we believe we provide quality and services that surpasses many our competitors, such as expert stain identification and removal, hand pressing of all garments (as opposed to simply sending them through a steam tunnel), detailed garment inspection with free minor repairs and button replacement, same-day service, e-mail notifications when an order is ready, and free delivery to home or office. We believe that the incremental cost of labor required to provide these additional customer benefits is outweighed by the opportunity to engender customer loyalty and increase referrals.

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Our Growth Strategy

While we believe that we are currently the largest single owner-operator of retail dry cleaning and laundry stores in the United States. The IBISWorld Industry Report projected that revenues in the United States dry cleaning market would reach approximately $9.0 billion in 2013. Our market share in this market is less than 0.3%, which leaves significant room for future growth. We intend to increase our market share through a combination of organic and strategic growth.

Organic Growth. We seek to achieve organic growth by increasing sales in our existing stores and also by opening select new stores in order to leverage excess production capacity from existing central hubs or mini-hubs. We believe we can increase sales in our existing stores by expanding our service offerings, and by promoting our brands more effectively. Since many of our costs, including rent, salaried-labor and delivery are relatively fixed, we believe that incremental sales will improve our profitability.

In addition to increasing revenue in existing stores and routes, we plan to open new stores and establish new routes, especially dry stores and delivery routes in areas that can be serviced by one of our existing central hubs or mini-hubs. In certain new markets or trade areas where new housing and retail shopping centers are being developed outside existing service areas, we will also consider establishing new mini-hub type stores, especially if we anticipate being able to leverage that investment by opening several additional stores in the same trade area or geographic region. Because of their significantly smaller initial investment compared to larger central hubs, we believe that mini-hubs provide excellent flexibility for scaled growth.

Strategic Growth. We also intend to grow through strategic acquisitions, especially in more mature markets and trade areas, where there are fewer new retail centers being developed and where existing competition is already entrenched.

We also plan to be opportunistic as it relates to underperforming operations that we believe have significant potential for improvement. We believe we can offer an intriguing exit alternative to targets that do not otherwise have an attractive exit option, especially upon completing this offering, which will provide cash for acquisitions and improve our access to capital going forward. Since there are currently no other publicly-traded dry cleaning companies, we would be the only company in our industry able to offer equity securities that would allow targets to participate in the appreciation of such securities. In addition, we believe that having publicly-traded securities will enable us to incentivize key employees with equity securities, including stock options, which would be a competitive advantage.

Our market planning and site selection process is integral to the successful execution of our growth strategy. We have processes for identifying, analyzing, and assigning markets for development. Once a market is selected, we carefully screen specific areas based on demographic and company-specific variables to assess the opportunities presented by the stores we identify as acquisition targets. We analyze markets to ensure that they meet our guidelines and begin the site selection process. Once a market is approved, we carefully screen prospective locations for visibility, traffic patterns, ease-of-use and other factors as we assess the feasibility of potential acquisitions. Our expansion strategy involves using this market planning and site selection process to focus on areas of demand within each market. We intend to use this approach to cluster stores in specific geographic areas of demand, which we believe will drive brand awareness and improve our operating and marketing efficiencies, especially where we are able to leverage delivery and other operating costs associated with our existing central hubs, mini-hubs and regional management structure.

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Our Proposed Strategic Acquisition

On August 25, 2014, we entered into an asset purchase agreement with Advent Cleaners LLC to purchase substantially all of the assets and to assume certain liabilities not to exceed $200,000 for a purchase price equal to $4.0 million in cash, subject to adjustment. The acquisition is subject to customary closing conditions, including payment of purchase consideration conditioned upon the closing of this offering by November 30, 2014. If this offering is not completed by November 30, 2014, then we may extend this deadline to February 28, 2015 by paying up to $50,000 of Advent Cleaners’ accounting and legal fees, of which up to $37,500 will be credited towards the purchase consideration. In addition, we agreed to pay certain of Advent Cleaners’ expenses, not to exceed $100,000. Other than obligations arising after the closing of the Advent Cleaners Acquisition related to certain leases and agreements and other specific enumerated obligations, we will not assume any liabilities of Advent Cleaners.

The Advent Cleaners operations are located in Las Vegas, Nevada and consist of two retail brands and a large production hub. The Al Phillips brand consists of three mini-hubs with retail operations and nine dry stores. The Thrift DLux brand provides more cost-focused, affordable dry cleaning and laundry services and consists of five dry stores. The central hub processes commercial laundry for some of the largest resorts and hotels in Las Vegas and also processes garments for several of the Al Phillips and Thrift DLux dry stores. As of August 1, 2014, Advent Cleaners operations employed 235 workers, of whom 130 are members of the Local 226 Union. Advent Cleaners is a party to the Advent CBA, a collective bargaining agreement with the Local 226 Union. We do not have plans to terminate any of Advent Cleaners’ unionized employees upon the closing of the Advent Cleaners Acquisition. Although the Advent CBA is not automatically assignable, we intend to enter into a new collective bargaining agreement with the Local 226 Union. There is no guaranty that we will be able to enter into a new collective bargaining agreement with the Local 226 Union on the same or similar terms as the current CBA. See “Risk Factors.”

Dry Cleaning Industry

The dry cleaning industry is primarily comprised of dry cleaning and commercial laundry services. Dry cleaning is a process for cleaning garments using solvent rather than water. While the solvents are liquids, the process is called “dry cleaning” because no water is used in the process. Commercial laundry, or “wet cleaning” is a process, very similar to home laundry, where water and detergents are used to clean textiles. In both cases, the garments are typically steam-pressed before being returned to the customer.

A Fragmented Industry

Originally, the dry cleaning industry operated as a hub-and-spoke system, with a central plant providing the cleaning while storefronts collected and delivered the clothing. When machines small enough to be located inside a store were developed, the in-store dry cleaning model emerged. Although in-store cleaning was convenient and quick, moving from the central plant to in-store cleaning deprived the dry cleaning industry of the benefits of scale. Now that many operators are providing home pick-up and delivery, we believe the dry cleaning industry has the opportunity to return to operating central plants and recapturing some of the profit margins that were lost when the industry first moved to in-store service.

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According to the IBISWorld Industry Report, total dry cleaning industry revenues were expected to rise 1.2% in 2013 and reach $9.0 billion in the United States, generated by an estimated 38,755 establishments, mostly small, private, geographically diverse operators. The IBISWorld Industry Report projected that during 2013 the top four companies in the dry cleaning industry would generate just 2.0% of the industry’s revenue. Further, according to the IBISWorld Industry Report, a majority of dry cleaning companies are family-run and employ less than five people and over 90% of all dry cleaning companies have just one facility. We believe these figures are indicative of consolidation opportunities and that the dry cleaning industry is entering a consolidation phase driven by:

· generational transition difficulties where the children of traditional “mom and pop” operators are pursuing other career paths;

· regulatory and tax changes, including the Patient Protection and Affordable Care Act;

· increased capital requirements, including expenses related to the introduction of eco-friendly solvents and “green” dry cleaning processes; and

· limited access to capital to fund working capital and expansion.

Market Challenges

Currently, the dry cleaning industry is faced with several challenges including, among others, the following:

· The financial crisis of 2008 and the following recession reduced overall consumer spending which, in turn, negatively impacted the dry cleaning industry. Since much of the dry cleaning industry’s revenue comes from cleaning work and professional attire, higher unemployment rates have reduced the need and frequency of dry cleaning services. In addition, as more consumers forego restaurants and hotels to save money, the demand for cleaned linens from commercial accounts also declines. According to the IBISWorld Industry Report, the result has been that between 2008 and the end of 2013, industry-wide revenue fell at an average annual rate of 2.6%.

· Perc, the main cleaning agent used in dry cleaning, is classified as a hazardous air pollutant by the Environmental Protection Agency, or EPA. Currently, dry cleaners are required to dispose of used perc solvent as hazardous waste and conform to EPA requirements. In some states such as California, perc use will become illegal by 2023. The toxic nature of Perc makes the threat of additional government environmental regulation a possibility in the future. If any of this legislation were passed, the dry cleaning industry would be forced to invest considerable sums in upgrading existing facilities to use advanced, non-Perc, cleaning systems.

· New fabrics continue to be developed that do not require dry cleaning or pressing. Many of these fabrics are currently being adopted by clothing manufacturers for professional attire as well as uniforms. These new products threaten to reduce the demand for dry cleaning services.

· The continued trend toward business-casual clothing also reduces traditional demand.

· Home dry cleaning kits have been available for some time. It is generally understood that these products do not perform as well as traditional dry cleaning services. However, there is always the possibility that these home dry cleaning options will become more competitive in the future.

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Market Strengths

We believe a number of positive trends are affecting the dry cleaning industry including, among others, the following:

· Outsourcing of dry cleaning and laundry by commercial customers, particularly within the tourism, hospitality and retail sectors is accelerating. In certain markets, like Hawaii, we employ sales representatives to service and expand our commercial accounts.

· We believe that dry cleaning is more convenient because many operators provide free pickup and delivery. We offer free pickup and delivery service in each of our operating regions and promote this service in our marketing materials.

· Many dry cleaners provide customers with “one-stop shopping” by integrating ancillary services, such as tailoring and alterations, footwear and handbag repair, and cleaning. We offer these services in certain of our stores and look to expand these services on a company-wide basis.

Industry Outlook

According to the IBISWorld Industry Report, revenue in the dry cleaning and laundry industry is projected to increase at an annualized rate of 3.4% to an estimated $10.6 billion in 2018. While growth may be partially offset by the continued trend toward business-casual clothing, we believe that the dry cleaning and laundry industry should benefit overall from a post-recession increase in spending and employment.

Competition

We operate in an industry that is subject to intense competition. A handful of markets are dominated by large, well-capitalized operators, including those with franchised operations, who have implemented a model similar to ours: serving multiple locations with centralized production facilities. Many of these large competitors have significant budgets for advertising and promotion, and often aggressively promote their services. In addition, we almost always compete with smaller “mom and pop” dry cleaners that offer “one price” (i.e., $0.99 laundered shirts) and other types of deeply discounted cleaning services. While we believe our production quality is significantly better and represents a better value for most consumers, these competitors command their share of the market and often restrain our pricing power.

Our competitors include Jones Cleaners and Carr’s Cleaners in Central California, Hakuyosha Clean Living, Al Phillips — The Cleaner, United Cleaners, and Alsco, Inc. in Hawaii, Classic Cleaners, Morellis Cleaners, Milto Cleaners and Deering Cleaners in Indiana, and Albano Cleaners in Virginia. In addition, in each of our current operating regions, we compete with numerous “mom and pop” dry cleaning and laundry operators.

Seasonality

Although our retail operations are open throughout the year, the demand of our services, and therefore our sales, is lower during the summer months. Our business is also affected by weather, especially severe weather conditions such as hurricanes and tropical storms in Virginia and Hawaii, snow storms in Indiana and high temperatures in California and Arizona.

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Large Customers

While the majority of our business is comprised of a large number of individual retail customers, we do have several commercial contracts that individually generate revenue of over $50,000 a year. These large customers include several large hotel chains, primarily located in Hawaii, and the United States Navy in Virginia. These contracts, in the aggregate, do not account for more than 5% of our gross revenues.

Governmental Regulations

We are subject to extensive and varied federal, state and local government regulation, including regulations relating to occupational health and safety, hazardous waste disposal and fire prevention. We operate each of our stores and plants in accordance with standards and procedures designed to comply with applicable codes and regulations.

As with any company involved in the dry cleaning business, we are subject to environmental laws. We may, from time to time, be subject to any or all of the following environmental laws:

· Clean Water Act;

· Clean Air Act;

· Resource Conservation & Recovery Act;

· Comprehensive Environmental Response, Compensation & Recovery Act; and

· state and local laws and regulations, including those regulating solid waste.

We are also subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act and various other federal and state laws governing similar matters including minimum wages, overtime, workplace safety and other working conditions. We may also be subject to lawsuits or others allegations of violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters initiated by our employees, the U.S. Equal Employment Opportunity Commission or other regulatory bodies. We are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition.

Environmental Regulations

We are subject to federal, state and local environmental laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling, release and disposal of, or exposure to, hazardous or toxic substances. These environmental laws can provide for significant fines and penalties for non-compliance and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances. Third-parties may also make claims against owners or tenants of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances.

The dry cleaning industry has been subject to environmental regulations during the past two decades, mainly due to the use of certain solvents in the cleaning process. The main solvent used by the dry cleaning industry that has been subject to environmental regulations is perc, a chlorinated hydrocarbon. For example, in 2002, air quality officials in California approved a gradual phase out of perc by 2023. Effective January 1, 2003, this regulation requires any new dry cleaning business or facility that adds a machine to also add a non-perc machine. While existing dry cleaners can continue to operate one perc machine until 2023, all dry cleaners using perc must utilize mandated pollution controls to reduce perc emissions. In addition to air regulations, perc may also be subject to hazardous waste regulations and disposal requirements in various states. If released into the environment, perc may be subject to assessment and remediation regulations.

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We do not use perc in any of our California operations. Of the 70 stores and three central hubs we own and operate, we use perc only in three stores in Indiana (one of which is being converted this year to use GreenEarth® Cleaning solvents) and in one production plant in Hawaii. The Hawaii production plant uses perc for approximately 90% of its dry cleaning and uses GreenEarth® Cleaning products for the remainder of its dry cleaning operations. The Hawaii production plant is subject to less stringent environmental regulation because the aquifer underlying the plant is not considered a drinking water source because it is below the Underground Injection Control Line. In the facilities where we use perc, appropriate safeguards are in place to prevent releases of perc into the environment. These safeguards may include, among other things, containment pans under the machines and waste barrels.

The majority of our operations use eco-friendly solvents, such as those offered by GreenEarth® Cleaning, or synthetic hydrocarbon technologies, for our dry cleaning services. GreenEarth® Cleaning uses a liquid silicone, a clear, odorless, and non-toxic solvent solution, in a closed loop system. Synthetic hydrocarbon technologies use hydrocarbons for cleaning the garments, and are manufactured to meet high standards of consistency and purity for a quality result every time by remaining stable through multiple distillation and reclamation cycles. These technologies do not require air permits and do not produce hazardous waste.

We believe that we are in compliance in all material respects with all known federal, state, and local environmental laws and regulations pertaining to our current operations and have all of the environmental permits required to operate our current business and are in material compliance with those permits.

We employ a top down management approach to environmental compliance using what we believe to be “best practices” rather than simply complying with regulatory requirements. On a corporate level, we review our environmental management and compliance practices program on at least an annual basis in connection with the renewal of our insurance policies and periodically if processes, procedures or exposures change. In addition, our facilities are subject to inspection by representatives of our workers’ compensation providers. We are constantly looking for environmentally friendly alternatives within the context of providing a correctly cleaned garment at the proper consumer value level and feel we are substantially ahead of the curve in this area.

At a store level, we provide operational and safety training for all spotting materials, detergents and cleaning solvents used in each location. We train all employees using these materials in the safe handling, use, storage and disposal of these materials. When warranted, we also provide training for emergency situations, both from a safety and environmental action standpoint. All spotting or cleaning waste materials or contact water, whether considered hazardous or not, from each production facility are properly manifested, packaged appropriately and properly treated or hauled by a licensed hauler in good standing and in compliance with Federal, state and local regulations.

We continue to integrate “green” technology with a goal of achieving a zero emission operating platform regardless of the cleaning methodology used. To implement this aspect of our operation we have a trained Maintenance Manager for each of our main operating regions (Southern California, Northern California, Hawaii, Indiana and Virginia) responsible for all machine and equipment preventative maintenance and repairs. Both physical machine and administrative controls are employed to reduce the likelihood of emergency spills or releases and include: regularly monitored and maintained machine solvent containment pans, latest filtration and closed loop cleaning technologies, solvent and spotting material usage logs as well as housekeeping and machine compliance checklists.

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Employees

As of August 22, 2014, we employed 443 individuals, of which 350 are full-time. We employ four individuals in our corporate office who provide certain company-wide accounting, insurance, human resource, legal and other support services, approximately 15 individuals in our various operating regions who serve in administrative or marketing positions, and approximately 133 employees who staff our hub operations. None of our current employees is represented by a labor union or covered by a collective bargaining agreement. We believe we have good relations with our employees.

As of August 1, 2014, Advent Cleaners’ operations employed 235 individuals, of whom 130 are members of the Local 226 Union. Advent Cleaners is a party to the Advent CBA, a collective bargaining agreement with the Local 226 Union. We do not have plans to terminate any of Advent Cleaners’ unionized employees upon the closing of the Advent Cleaners Acquisition. While the Advent CBA is not automatically assignable, we intend to enter into a new agreement with the Local 226 Union. No assurances may be made that we will be able to enter into a new collective bargaining agreement with the Local 226 Union on the same or similar terms as the current CBA. See “Risk Factors.”

Our Properties

We currently lease our corporate office, located at 20250 Acacia Street, Suite 230, Newport Beach, California. We operate 70 stores and three production plants in four principal regions, California, Hawaii, Indiana and Virginia.

The following is a list of our current leased production and retail facilities:

· main production plant, Honolulu, Hawaii, approximately 23,000 square feet;

· main production plant, Riverside, California, approximately 9,524 square feet;

· main production plant, Portsmouth, Virginia, approximately 30,000 square feet; and

· our 70 retail establishments which are located in Arizona, Southern California, Central California, Hawaii, Indiana and Virginia range in size from approximately 300 square feet to 3,800 square feet and consist of approximately 185,000 square feet in the aggregate.

We believe that all of our facilities are in good operating condition and have capacities adequate for our current operations. We intend to extend our leases as we deem necessary or as appropriate.

Upon the closing of the Advent Cleaners Acquisition, our leased production and retail facilities will also include the following:

· the Advent main production plant, Las Vegas, Nevada, approximately 20,230 square feet; and

· the 17 Advent retail establishments located in Las Vegas, Nevada, ranging in size from approximately 1,200 square feet to 2,968 square feet and consisting of approximately 28,339 square feet in the aggregate.

Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We currently have no material legal proceedings pending.

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Corporate Information

We were incorporated in Delaware as U.S. Dry Cleaning Corporation on July 19, 2005. On December 30, 2005, we entered into a reverse merger transaction with First Virtual Communications, Inc., a public shell Delaware corporation with shares of common stock quoted on the OTC Bulletin Board. We filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. On September 23, 2011, the Bankruptcy Court approved our Bankruptcy Plan. On March 20, 2012, the Securities and Exchange Commission issued an order revoking the registration of our securities under the Exchange Act pursuant to Section 12(j) of the Exchange Act as a result of our failure to file annual and quarterly reports with the Securities and Exchange Commission.

Our fiscal year end is September 30. Our principal executive offices are located at 20250 Acacia Street, Suite 230, Newport Beach, CA. Our telephone number is (949) 734-7310. Our website address is www.usdrycleaning.com. The information contained on, or that can be accessed through, our website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.

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MANAGEMENT

Executive Officers and Directors

Our directors and executive officers, and their ages and positions as of August 22, 2014 are as follows:

Name	Age	Position
Alexander M. Bond (1)(3)	44	Chief Executive Officer and Chairman
Kari Minton	53	Chief Financial Officer
Timothy N. Stickler	43	Chief Legal and Administrative Officer
Gary Johnston(1)(2)(3)	47	Director
Timothy Rand(1)(2)(3)	59	Director

(1) Member of the audit committee effective as of the time of this offering.

(2) Member of the compensation committee effective as of the time of this offering.

(3) Member of the nominating and corporate governance committee effective as of time of this offering.

Alex M. Bond, Chief Executive Officer and Chairman. Upon completing our Chapter 11 reorganization in September 2011, Mr. Bond joined us as our Chief Executive Officer and Chairman of our board of directors. From June 2011 to September 2011, Mr. Bond served as our consultant in connection with the bankruptcy. Mr. Bond has significant experience managing the growth of enterprises and the consolidation of assets and operating entities. From December 2007 to June 2011, Mr. Bond was Managing Director of Wattles Capital Management, LLC where he participated in a wide range of investment management activities. From March 2003 to August 2005, Mr. Bond was the Senior Vice President, Finance at Hollywood Entertainment Corporation, where he led the successful sale of the company and its approximately 2,000 Hollywood Video and 700 Game Crazy stores for $1.25 billion. Prior to 2003, Mr. Bond held other executive management positions at Hollywood Entertainment, including Senior Vice President, Strategic Development, where he acquired and oversaw all aspects of the operations of more than 120 stores. Mr. Bond began his career in investment banking as an Analyst at Montgomery Securities and left as Principal and Head of the Semiconductor Group at Thomas Weisel Partners, LLC.

Kari Minton, Chief Financial Officer. Ms. Minton joined us as our Chief Financial Officer in August 2014. Over the past 20 years, Ms. Minton has held senior positions providing accounting, financial and operational support services to various venture-backed and publicly traded companies. From February 2008 to May 2014, Ms. Minton was the Chief Financial Officer at Clinicient, Inc., a provider of SaaS practice management software and revenue cycle services, where she was responsible for all finance, accounting, human resources, legal, compliance, facilities, revenue cycle management services and other operating functions. From January 2004 to January 2008, Ms. Minton was the Vice President of Finance at enseQuence, a multi-media software and services provider, where she managed all accounting, finance, human resources, IT and facilities, and also led due diligence in connection with acquisitions and other business opportunities. From April 2001 to March 2003, Ms. Minton was Vice President, Finance and Administration/Corporate Controller at BeamReach, a developer of broadband access systems for telecommunications service providers. Prior to this, she held other senior finance positions with several emerging growth technology companies in Silicon Valley, including Terayon, Inc. (NASDAQ: TERN), Vishay Siliconix, and Inmac Corporation. She began her accounting career at KPMG in 1984. Ms. Minton earned a B.S. degree, summa cum laude, from Central Washington University. Ms. Minton is also a licensed CPA.

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Timothy N. Stickler, Chief Legal and Administrative Officer. Mr. Stickler joined us as a consultant in February 2011 and was appointed as our Chief Legal and Administrative Officer in September 2011. Mr. Stickler has practiced corporate and securities law for over 15 years in private practice and various in-house capacities. From June 2010 to November 2010, Mr. Stickler was Senior Corporate Counsel at Autobytel, Inc. (NASDAQ: ABTL) where he was a member of the business development team and lead in-house attorney for the company’s acquisition activities. From November 2008 to June 2010, Mr. Stickler was employed at The Warmington Group of Companies, one of California’s largest multi-use and commercial real estate developers where he structured, formed and managed investment vehicles for the acquisition of land and portfolio properties. Mr. Stickler began his legal career in September 1998 as an associate at Stradling Yocca Carlson & Rauth representing emerging growth companies in public offerings, venture capital financings, mergers and acquisitions, and various forms of technology and business concept licensing. Mr. Stickler earned a J.D. degree from the University of California, Hastings College of the Law and a B.A. from the University of California, Berkeley, with Distinction in General Scholarship.

Gary Johnston, Director. Mr. Johnston has served on our board of directors since January 25, 2012. Mr. Johnston is an active investor in real estate, fixed income securities and small companies. Mr. Johnston worked at Hewlett-Packard for 16 years, where he rose through the management ranks to Director of Research & Development, LaserJet Business Unit. Mr. Johnston retired from Hewlett-Packard in October 2005 and is now a frequent lecturer on fixed income securities. Mr. Johnston has a M.S. in Management from Purdue University and a B.S. in Software Engineering Technology from Oregon Institute of Technology.

Timothy Rand, Director. Dr. Rand has served on our board of directors since 2009. Dr. Rand specializes in Gynecological Surgery and owns and operates Alamitos Associates OBGYN, Inc. in Los Alamitos, California. He has been in medical practice since 1988. Dr. Rand is also on the Board of Directors of the Memorial HealthCare IPA from 1990 to 2012. Dr. Rand graduated from the University of California, San Diego and completed his residency in Obstetrics & Gynecology at Harbor/UCLA Medical Center. Dr. Rand oversees all aspects of finance, accounting, billing and collections for Alamitos Associates OBGYN. Dr. Rand is also a private investor in real estate, fixed income securities and other enterprises.

There are no family relationships among any of our directors or executive officers.

Board Composition

Our board of directors currently consists of three members. Messrs. Johnston and Rand were elected as directors pursuant to a voting agreement that we entered into with a group of our creditors. The voting agreement will terminate upon the closing of this offering and there will be no further contractual obligations regarding the election of our directors after the closing of this offering. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.

Our amended and restated certificate of incorporation and our amended and restated bylaws provide that the authorized number of directors may be changed only by resolution of the board of directors. Our amended and restated certificate of incorporation and our amended and restated bylaws also provide that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office, although less than a quorum or by a sole remaining director.

We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape.

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Board Independence

Rule 5605 of the NASDAQ Listing Rules requires a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the NASDAQ Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under NASDAQ Listing Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. We are relying on the phase-in rules of the Exchange Act and NASDAQ with respect to the independence requirements regarding the composition of our board of directors and certain committees of our board of directors. Our board of directors will take all action necessary to comply with the applicable rule of the Exchange Act and NASDAQ, including appointing a majority of independent directors to our board of directors and establishing certain committees composed of independent directors, subject to the permitted phase-in period.

In August 2014, our board of directors undertook a review of the composition of our board of directors and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that each of our directors, with the exception of Alexander Bond, is an “independent director” as defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. Our board of directors also determined that Mr. Johnston and Dr. Rand, who will be members of our audit committee, our compensation committee and our nominating and corporate governance committees following this offering, satisfy the independence standards for such committees established by the Securities and Exchange Commission and the NASDAQ Listing Rules, as applicable. In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

Audit Committee

Effective at the time of this offering, the members of our audit committee will be Messrs. Johnston, Bond and Dr. Rand. Mr. Johnston will be the chair of the audit committee. Our board of directors has determined that Mr. Johnston and Dr. Rand are independent within the meaning of Rule 10A-3 under the Exchange Act. In order to comply with the NASDAQ Listing Rules, we intend to replace Mr. Bond with an independent director elected to the board of directors as soon as possible but in no event later than one year after our initial listing on NASDAQ. In addition, our board of directors has determined that Mr. Johnston qualifies as an audit committee financial expert within the meaning of applicable Securities and Exchange Commission regulations and the NASDAQ Listing Rules. In making this determination, our board of directors has considered the formal education and nature and scope of his previous experience, coupled with past and present service on various audit committees. Our audit committee will assist our board of directors in its oversight of our accounting and financial reporting process and the audits of our financial statements. Following this offering, our audit committee will generally be responsible for assisting our board of directors in fulfilling its responsibilities for oversight and evaluation of:

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· the quality and integrity of our financial statements,

· the effectiveness of our internal controls over financial reporting,

· our compliance with legal and regulatory requirements and

· our independent auditor’s qualifications and independence.

Compensation Committee

Effective at the time of this offering, the members of our compensation committee will be Mr. Johnston and Dr. Rand. Dr. Rand will be the chair of the compensation committee. Each member of our compensation committee is independent under NASDAQ’s independence standards for compensation committee members. Our compensation committee will assist our board of directors in the discharge of its responsibilities relating to the compensation of our executive officers. Following this offering, the compensation committee’s responsibilities will include, among other things:

· developing and maintaining an executive compensation policy and monitor the results of that policy;

· recommending to our board of directors for approval compensation and benefit plans;

· reviewing and approving annually corporate and personal goals and objectives to serve as the basis for the CEO’s compensation, evaluating the CEO’s performance in light of those goals and objectives and determining the CEO’s compensation based on that evaluation;

· determining and approving the annual compensation for other executive officers;

· retaining or obtaining the advice of a compensation consultant, outside legal counsel or other advisor;

· approving any grants of stock options, restricted stock, performance shares, stock appreciation rights, and other equity-based incentives to the extent provided under the our equity compensation plans;

· reviewing and making recommendations to our board of directors regarding the compensation of non-employee directors; and

· reviewing and recommending to our board of directors for approval our approach with respect to the advisory vote on executive compensation, or say-on-pay, and the frequency of the say-on-pay advisory vote.

Nominating and Corporate Governance Committee

Effective at the time of this offering, the members of our nominating and corporate governance committee will be Messrs. Bond and Johnston and Dr. Rand. Mr. Johnston will be the chair of the nominating and corporate governance committee. Each of Mr. Johnston and Dr. Rand is independent under NASDAQ’s independence standards. Upon the completion of this offering, the nominating and corporate governance committee’s responsibilities will include, among other things:

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· considering and reviewing periodically the desired composition of our board of directors;

· establishing any qualifications and standards for individual directors;

· identifying, nominating and evaluating candidates for election to our board of directors;

· ensuring that our board of directors is composed of a sufficient number of independent directors to satisfy Securities and Exchange Commission and NASDAQ requirements and that at least three directors satisfy the NASDAQ financial and accounting experience requirements and the heightened independence standards of the Securities and Exchange Commission and that at least one of such three members qualifies as an “audit committee financial expert”;

· making recommendations to our board of directors regarding the size of the board of directors, the tenure and classifications of directors, and the composition of the committees of the board of directors;

· monitoring compliance with federal law limitations on direct competition between companies with overlapping officers or directors; and

· considering other corporate governance and related matters as requested by our board of directors.

Executive Compensation

Compensation Philosophy

Upon completion of this offering, our compensation committee will be charged with the responsibility of evaluating the compensation of our executive officers and assuring that they are compensated effectively in a manner consistent with our compensation strategy and resources, competitive practice, and the requirements of the appropriate regulatory bodies. Prior to the completion of this offering, these functions have been and will continue to be performed by our board of directors.

Our compensation philosophy has the following basic components: (i) establish competitive base salaries to attract qualified talent, and (ii) evaluate performance and grant performance-based bonuses that may include equity and cash components. We try to establish our executives’ base salaries to allow us to remain competitive in our industry and to attract and retain executives of a high caliber. Similarly, we try to align a component of annual compensation to performance and achievement of our objectives in an effort to retain highly motivated executives who are focused on performance. When determining and evaluating our compensation philosophy and compensation levels, we review other public reports and take into account the compensation paid to executives at similarly situated companies, both within and outside of our industry,. Our performance, including, but not limited to, earnings, revenue growth, cash flow, and continuous improvement initiatives, is a significant part of our evaluation and our executives’ compensation levels.

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Summary Compensation Table

The following table sets forth information regarding compensation earned in or with respect to our years ended September 30, 2013 and 2012 by:

· each person who served as our chief executive officer during the year ended September 30, 2013; and

· the only other person that served as an executive officer during the year ended September 30, 2013.

We refer to these officers collectively as our named executive officers.

Name and Principal Position	Year	Salary ($)			Stock Awards ($)(1)			All Other Compensation ($)(2)		Total ($)
Alexander Bond, Chief Executive Officer	2013	$	300,000	(3)	—			—	(4)	$	300,000
	2012	$	300,000	(3)	$	273	(5)	—	(4)	$	300,273
Timothy N. Stickler, Chief Legal and	2013	$	200,000	(6)	—			—		$	200,000
Administrative Officer	2012	$	200,000	(6)	$	81	(7)	—		$	200,081

(1) The amounts shown are the fair value of stock awards on the date of grant. Fair value of stock awards is calculated by multiplying the number of shares of stock granted by the fair value of a share our common stock on the date of grant. The fair value of the common stock on the date of grant was determined to be de minimis. The amounts shown are based on the par value of our common stock.

(2) Except as specifically noted, the value of perquisites and other personal benefits was less than $10,000 in aggregate for each of the named executive officers.

(3) Mr. Bond’s employment agreement provided for a base salary of $300,000. Mr. Bond voluntarily deferred $100,000 of the salary he earned in each of 2013 and 2012, and then subsequently agreed to write off all but $150,000 of all deferred amounts.

(4) Mr. Bond’s employment agreement provided for an automobile allowance of $24,000, but Mr. Bond voluntarily deferred acceptance of the automobile allowance of $24,000 in each of 2013 and 2012, and then subsequently agreed to write off these amounts in their entirety.

(5) Mr. Bond was granted 273,141 shares of common stock on February 21, 2012.

(6) Mr. Stickler was hired with a base salary of $200,000. Mr. Stickler voluntarily deferred $80,000 of the salary he earned in each of 2013 and 2012, and then subsequently agreed to write off all but $100,000 of all deferred amounts.

(7) Mr. Stickler was granted 81,250 shares of common stock on February 21, 2012.

Employment Agreement — Alex Bond

In July 2014, we entered into an employment agreement with our Chief Executive Officer, Alexander Bond. The term of Mr. Bond’s employment agreement is three years ending July 23, 2017. This term may be extended for an additional three years upon mutual written agreement between us and Mr. Bond. The employment agreement provides for a base salary of $300,000 and cash bonuses based upon meeting certain performance criteria.

Under his employment agreement, Mr. Bond is also entitled to discretionary bonuses as awarded by our board of directors for significant accomplishments that produce material benefits for us. We are also obligated to reimburse Mr. Bond for reasonable expenses for one automobile owned or leased by Mr. Bond and reasonable housing-related expenses for a leased residence in Orange County, California. We also agreed that Mr. Bond would be eligible to receive grants under our 2014 Plan.

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Under the terms of Mr. Bond’s employment agreement, we are required to compensate Mr. Bond upon termination of his employment with us or upon a “change in control”. Regardless of the manner in which his employment terminates, Mr. Bond will be entitled to receive amounts earned during the term of his employment. Such amounts include:

· the portion of his current annual base salary and bonuses which have accrued through the date of termination;

· vested stock options; and

· payment for accrued but unused vacation.

In addition to the consideration described above, the amount of compensation payable to Mr. Bond following termination or a change of control is discussed below.

Termination for Death. In the event that Mr. Bond dies during the term of his employment agreement, we must pay to Mr. Bond’s estate an amount equal to the lesser of six months of base salary or the base salary he would have received through the remaining term of his employment agreement.

Termination for Disability. In the event we terminate Mr. Bond’s employment because he is physically or mentally incapacitated so as to be incapable of performing his duties as our Chief Executive Officer and the incapacity shall have continued for a period of at least three consecutive months, Mr. Bond is entitled to an amount equal to his base salary, bonuses and any other compensation for the six months following his termination or until the expiration of the term of his employment agreement, whichever is earlier.

Termination Without Cause or for Good Reason. In the event Mr. Bond’s employment is terminated by us other than for “cause” or by Mr. Bond for “good reason,” Mr. Bond will be entitled to an amount equal to his base salary (as in effect at the time of the employment termination) for the remaining term of his employment agreement plus an amount equal to bonus and other compensation that Mr. Bond would have reasonably earned during the remaining term of his employment agreement (but in no event less than 50% of his annual base salary for each year, or portion thereof, remaining on the term of his employment agreement).

The term “cause” is defined as (i) after repeated written notices and a reasonable opportunity for cure, Mr. Bond fails to perform his reasonably assigned duties, (ii) Mr. Bond is convicted of a felony involving moral turpitude, or (iii) Mr. Bond commits any intentionally dishonest or fraudulent act which materially damages or may damage our business or reputation.

The term “good reason” is defined as (i) us having materially breached any of the provisions of Mr. Bond’s employment agreement and failed to cure the breach within 15 calendar days after our board of directors receives written notice from Mr. Bond of the breach, (ii) Mr. Bond no longer holds the position as our Chief Executive Officer or there is a material reduction in Mr. Bond’s responsibilities, (iii) Mr. Bond is not re-elected as a director or is removed as a director of our company, (iv) Mr. bond is required to relocate more than 50 miles from Portland, Oregon, or (v) there is a material reduction in any of Mr. Bond’s compensation arrangements or benefits, even if such benefits and arrangements are not required by his employment agreement.

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Termination in Connection With a Change of Control. Prior to a “change of control,” all of Mr. Bond’s equity awards shall become fully-vested and Mr. Bond shall be given a reasonable amount of time to exercise such equity awards prior to the change of control. Upon termination of Mr. Bond’s employment within 24 months following a change of control by us without cause or by Mr. Bond for good reason, we must pay to Mr. Bond (i) an amount equal to two times his base salary, plus (ii) an amount equal to two times the greater of (a) the amount of his expected bonus during the year in which the termination of his employment occurs or (b) the amount of his highest bonus for any year under his employment agreement. The term “change of control” is defined as the occurrence of any of the following events: (i) the consummation of a merger or consolidation of our company with any other entity which results in our voting securities outstanding immediately prior thereto failing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by our voting securities of or such surviving entity outstanding immediately after such merger or consolidation, (ii) the sale, lease, exchange or other transfer in one or more transactions of all, or substantially all, of our assets, (iii) the adoption of any plan or proposal for the liquidation or dissolution of our company, (iv) individuals who constituted the board of directors when Mr. Bond was hired cease for any reason to constitute at least a majority of the board of directors, (v) any “person” (as such term is used in Section 14(d) of the Exchange Act), shall have become the beneficial owner, directly or indirectly, of our voting securities representing 50% or more of the combined voting power of the then-outstanding voting securities.

Employment Agreements — Kari Minton and Timothy Stickler

In July 2014, we entered into an employment agreement with our Chief Financial Officer, Kari Minton, under which Ms. Minton agreed to serve as our Chief Financial Officer beginning on August 1, 2014. In August 2014, we entered into an employment agreement with our Chief Legal and Administrative Officer, Timothy Stickler. The term of each employment agreement is three years, ending in August 2017. The term of each employment agreement may be extended for additional one-year periods upon mutual written agreement between us and the executive. Each employment agreement provides for a base salary of $200,000 and cash bonuses based upon meeting certain performance criteria.

Under the employment agreements, each executive is also entitled to discretionary bonuses as awarded by our board of directors for significant accomplishments that produce material benefits for us. In addition, we also agreed that each executive would be eligible to receive grants under our 2014 Plan.

Under the terms of the employment agreements, we are required to compensate each executive upon termination of his or her employment with us or upon a change in control. Regardless of the manner in which his or her employment terminates, each executive will be entitled to receive amounts earned during the term of his or her employment. Such amounts include:

· the portion of current annual base salary and bonuses which have accrued through the date of termination;

· vested stock options; and

· payment for accrued but unused vacation.

In addition to the consideration described above, the amount of compensation payable to each executive following termination or a change of control is discussed below.

Termination for Death, Disability; Without Cause or for Good Reason In the event that the executive dies during the term of his or her employment agreement or is physically or mentally incapacitated so as to be incapable of performing his or her duties and the incapacity shall have continued for a period of at least three consecutive months, or the executive’s employment is terminated by us other than for “cause” or by the executive for “good reason,” we must pay executive’s estate an amount equal six months of base salary.

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The term “cause” is defined in these employment agreements as (i) after repeated written notices and a reasonable opportunity for cure, the executive fails to perform his reasonably assigned duties, (ii) the executive is convicted of a felony involving moral turpitude, or (iii) the executive commits any intentionally dishonest or fraudulent act which materially damages or may damage our business or reputation.

The term “good reason” is defined as (i) us having materially breached any of the provisions of the employment agreement and failed to cure the breach within 30 calendar days after our board of directors receives written notice of the breach, (ii) there is a material reduction in the executive’s authority, duties, responsibilities or a material diminution in the executive’s title or office, or (iii) there is a material reduction in any compensation arrangements or benefits, even if such benefits and arrangements are not required by his employment agreement.

Termination in Connection With a Change of Control. Prior to a “change of control,” all of the executive’s equity awards shall become fully-vested and the executive shall be given a reasonable amount of time to exercise such equity awards prior to the change of control. Upon termination of the executive’s employment within 24 months following a change of control by us without cause or by the executive for good reason, we must pay to the executive (i) an amount equal to one times his or her base salary, plus (ii) an amount equal to one times the greater of (a) the amount of his or her expected bonus during the year in which the termination of his or her employment occurs or (b) the amount of his or her highest bonus for any year under his or her employment agreement. The term “change of control” is defined as the occurrence of any of the following events: (i) the consummation of a merger or consolidation of our company with any other entity which results in our voting securities outstanding immediately prior thereto failing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by our voting securities of or such surviving entity outstanding immediately after such merger or consolidation, (ii) the sale, lease, exchange or other transfer in one or more transactions of all, or substantially all, of our assets, and (iii) the adoption of any plan or proposal for the liquidation or dissolution of our company, (iv) individuals who constituted the board of directors when the executive was hired cease for any reason to constitute at least a majority of the board of directors, (v) any “person” (as such term is used in Section 14(d) of the Exchange Act), shall have become the beneficial owner, directly or indirectly, of our voting securities representing 50% or more of the combined voting power of the then outstanding voting securities.

2014 Omnibus Incentive Plan

Our 2014 Plan, was adopted by our board of directors and approved by our stockholders on July 23, 2014. The material terms of the 2014 Plan are summarized below.

Summary of the Material Terms of the 2014 Plan

Purpose. We established the 2014 Plan to attract, retain and motivate our employees, officers and directors, to promote the success of our business by linking the personal interests of our employees, officers, consultants, advisors and directors to those of our stockholders and to encourage stock ownership on the part of management. The 2014 Plan is intended to permit the grant of stock options (both incentive stock options, or ISOs and non-qualified stock options, or NQSOs or, collectively Options), stock appreciation rights, or SARS, restricted stock awards, or Restricted Stock Awards, restricted stock units, or RSUs, incentive awards, or Incentive Awards, other stock-based awards, or Stock Based Awards, and dividend equivalents, or Dividend Equivalents.

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Administration. The 2014 Plan is currently administered by our board of directors, which has the authority to grant awards to such persons and upon such terms and conditions (not inconsistent with the provisions of the 2014 Plan) as it may consider appropriate. Upon completion of this offering, the 2014 Plan will be administered by our Compensation Committee. Our Compensation Committee may act through subcommittees or, with respect to awards granted to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and who are not members of our board of directors or the board of directors of our Affiliates (as defined by the 2014 Plan), delegate to one or more officers all or part of its duties with respect to such awards. Our Compensation Committee may, at its discretion, accelerate the time at which any award may be exercised, become transferable or nonforfeitable or become earned and settled including without limitation (i) in the event of the participant’s death, disability, retirement or involuntary termination of employment or service (including a voluntary termination of employment or service for good reason) or (ii) in connection with a Change in Control (as defined in the 2014 Plan).

Authorized Shares. Under the 2014 Plan, we may issue a maximum aggregate of 1,250,000 shares of common stock, all of which may be issued pursuant to Options, SARs, Restricted Stock Awards, RSUs, Incentive Awards, Stock-Based Awards or Dividend Equivalents. Each share issued in connection with an award will reduce the number of shares available under the 2014 Plan by one, and each share covered under a SAR will reduce the number of shares available under the 2014 Plan by one, even though the share is not actually issued upon settlement of the SAR. Shares relating to awards that are terminated by expiration, forfeiture, cancellation or otherwise without issuance of shares of common stock, settled in cash in lieu of shares, or exchanged prior to the issuance of shares for awards not involving shares, will again be available for issuance under the 2014 Plan. Shares not issued as a result of net settlement of an award, tendered or withheld to pay the exercise price, purchase price or withholding taxes of an award or shares purchased on the open market with the proceeds of the exercise price of an award will not again be available for issuance under the 2014 Plan.

Written Agreements. All awards granted under the 2014 Plan will be governed by separate written agreements between the participants and us. The written agreements will specify the terms of the particular awards.

Transferability. Generally, an award is non-transferable except by will or the laws of descent and distribution, and during the lifetime of the participant to whom the award is granted, the award may only be exercised by, or payable to, the participant. However, the Compensation Committee may provide that awards, other than ISOs or a Corresponding SAR that is related to an ISO, may be transferred by a participant to immediate family members or trust or other entities on behalf of the Participant and/or family members for charitable donations. Any such transfer will be permitted only if (i) the participant does not receive any consideration for the transfer and (ii) the Compensation Committee expressly approves the transfer. The holder of the transferred award will be bound by the same terms and conditions that governed the award during the period that it was held by the participant, except that such transferee may only transfer the award by will or the laws of descent and distribution.

Maximum Award Period. No award shall be exercisable or become vested or payable more than ten years after the date of grant. An ISO granted to a Ten Percent Stockholder (as defined in the 2014 Plan) or a corresponding SAR that relates to such an ISO may not be exercisable more than five years after the date of grant.

Compliance With Applicable Law. No award shall be exercisable, vested or payable except in compliance with all applicable federal and state laws and regulations (including, without limitation, tax and securities laws), any listing agreement with any stock exchange to which we are a party, and the rules of all domestic stock exchanges on which our shares may be listed.

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Payment. The exercise or purchase price of an award, and any taxes required to be withheld with respect to an award, may be paid in cash or, if the written agreement so provides, the Compensation Committee may allow a participant to pay all or part of the exercise or purchase price, and any required withholding taxes, by tendering shares of common stock, through a broker-assisted cashless exercise, by means of “net exercise” procedure, or any other specified medium of payment.

Stockholder Rights. No participant shall have any rights as our stockholder as a result of issuance of an award until the award is settled by the issuance of common stock (other than a Restricted Stock Award or RSUs for which certain stockholder rights may be granted).

Forfeiture Provisions. Awards do not confer upon any individual any right to continue in our employ or service or in the employ or service of our Affiliates. All rights to any award that a participant has will be immediately forfeited if the participant is discharged from employment or service for “Cause” (as defined in the 2014 Plan).

Types of awards

Options. Both ISOs and NQSOs may be granted under the 2014 Plan. Our Compensation Committee determines the eligible individuals to whom grants of Options will be made, the number of shares subject to each option, the exercise price per share, the time or times at which the option may be exercised, whether any performance or other conditions must be satisfied before a participant may exercise an option, the method of payment by the participant, the method of delivery of shares to a participant, whether the Option is an ISO or a NQSO, and all other terms and conditions of the award. However, the exercise price of an Option may not be less than the fair market value of a share of common stock on the date the Option is granted. No participant may be granted ISOs that are first exercisable in any calendar year for shares of common stock having an aggregate fair value (determined on the date of grant) that exceeds $100,000. With respect to an ISO granted to a participant who is a Ten Percent Stockholder (as defined in the 2014 Plan), the exercise price per share may not be less than 110% of the fair market value of the common stock on the date the Option is granted. At the Compensation Committee’s discretion, an Option may be granted with or without a Corresponding SAR (as defined below).

SARs. A SAR entitles the participant to receive, upon exercise, the excess of the fair market value on that date of each share of common stock subject to the exercised portion of the SAR over the fair market value of each such share on the date of the grant of the SAR. A SAR can be granted alone or in tandem with an Option. A SAR granted in tandem with an Option is called a Corresponding SAR and entitles the participant to exercise the Option or the SAR, at which time the other tandem award expires with respect to the number of shares being exercised. The Compensation Committee is authorized to determine the eligible individuals to whom grants of SARs will be made, the number of shares of common stock covered by the grant, the time or times at which a SAR may be exercised and all other terms and conditions of the SAR. However, no participant may be granted Corresponding SARs that are related to ISOs which are first exercisable in any calendar year for shares of common stock having an aggregate fair market value (determined on the date of grant) that exceeds $100,000.

Restricted Stock Awards and RSUs. A Restricted Stock Award is the grant or sale of shares of common stock, which may be subject to forfeiture for a period of time or subject to certain conditions. An RSU entitles the participant to receive, upon vesting, shares of our common stock. We will deliver to the participant one share of common stock for each RSU that becomes earned and payable. With regard to Restricted Stock Awards, the Compensation Committee is authorized to determine the eligible individuals to whom grants will be made, the number of shares subject to such grants, the purchase price, if any, to be paid for each share subject to the award of restricted stock, the time or times at which the restrictions will terminate, and all other terms and conditions of the restricted stock. With regards to RSUs, the Compensation Committee is authorized to determine the eligible individuals to whom grants will be made, the number of shares subject to such grants and the vesting conditions entitling a participant to settlement of the RSUs.

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Incentive Awards. An Incentive Award entitles the participant to receive cash or common stock when certain conditions are met. The Compensation Committee has the authority to determine the eligible individuals to whom grants will be made and all other terms and conditions of the Incentive Award.

Stock-Based Awards. Stock-Based Awards may be denominated or payable in, valued by reference to or otherwise based on shares of common stock, including awards convertible or exchangeable into shares of common stock (or the cash value thereof) and common stock purchase rights and awards valued by reference to the fair market value of the common stock. The Compensation Committee has the authority to determine the eligible individuals to whom grants will be made and all other terms and conditions of Stock-Based Awards. However, the purchase price for the common stock under any Stock-Based Award in the nature of a purchase right may not be less than the fair market value of a share of common stock as of the date the award is granted. Cash awards, as an element of or supplement to any other award under the 2014 Plan, may also be granted.

Our Compensation Committee is also authorized under the 2014 Plan to grant shares of common stock as a bonus, or to grant shares of common stock or other awards in lieu of any of our obligations or of our affiliates to pay cash or to deliver other property under the 2014 Plan or under any other of our plans or compensatory arrangements or any of our affiliates.

Dividend Equivalents. Our Compensation Committee may also grant Dividend Equivalents under the 2014 Plan. A Dividend Equivalent is an award that entitles the participant to receive cash, shares of common stock, other awards or other property equal in value to all or a specified portion of dividends paid with respect to shares of our common stock. The Compensation Committee is authorized to determine the eligible individuals to whom grants will be made and all other terms and conditions of the Dividend Equivalents. However, no Dividend Equivalents may be awarded with an Option, SAR or Stock-Based Award in the nature of purchase rights.

Material terms of the performance-based compensation

Awards that are paid to Named Executive Officers (as defined in the 2014 Plan) are potentially subject to the tax deduction limitations of Section 162(m) of the Code. The limitations of Section 162(m) of the Code do not apply, however, to performance-based compensation that meets certain requirements, including stockholder approval of the eligibility requirements, business criteria for performance goals and individual award limits of the 2014 Plan pursuant to which such awards are made.

Eligibility. Any of our employees or service providers, employees or service providers of our Affiliates (as defined in the 2014 Plan), and nonemployee members of our board of directors or of any board of directors of our Affiliates is eligible to receive an award under the 2014 Plan.

Award Limits. In any calendar year, no participant may be granted awards that relate to more than 1,000,000 shares of common stock. For these purposes, an Option and its corresponding SAR will be counted as a single award. For any award stated with reference to a specific dollar limit, the maximum amount payable with respect to any 12-month performance period to any one participant is $5,000,000 (pro-rated up or down for performance periods greater or less than 12 months). Award limits that are expressed as a number of shares are subject to the adjustment provisions of the 2014 Plan as described below.

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Performance Criteria. Our Compensation Committee has the discretion to establish objectively determinable performance conditions for when awards will become vested, exercisable and payable. Objectively determinable performance conditions generally are performance conditions (a) that are established in writing (i) at the time of the grant or (ii) no later than the earlier of (x) 90 days after the beginning of the period of service to which they relate and (y) before the lapse of 25 percent of the period of service to which they relate; (b) that are uncertain of achievement at the time they are established and (c) the achievement of which is determinable by a third party with knowledge of the relevant facts. These performance conditions may be based on one or any combination of metrics related to our financial, market or business performance. The form of the performance conditions also may be measured on a company, affiliate, division, business unit or geographic basis, individually, alternatively or in any combination, subset or component thereof. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance conditions. Profits, earnings and revenues used for any performance condition measurement may exclude any extraordinary or nonrecurring items. The performance conditions may, but need not, be based upon an increase or positive result under the aforementioned business criteria and could include, for example and not by way of limitation, maintaining the status quo or limiting the economic losses (measured, in each case, by reference to the specific business criteria). An award that is intended to become exercisable, vested or payable on the achievement of performance conditions means that the award will not become exercisable, vested or payable solely on mere continued employment or service. However, such an award, in addition to performance conditions, may be subject to continued employment or service by the participant. The performance conditions may include any or any combination of the following: (a) revenue, (b) earnings before interest, taxes, depreciation and amortization, or EBITDA, (c) cash earnings (earnings before amortization of intangibles), (d) operating income, (e) pre-or after-tax income, (f) earnings per share, (g) net cash flow, (h) net cash flow per share, (i) net earnings, (j) return on equity, (k) return on total capital, (l) return on sales, (m) return on net assets employed, (n) return on assets or net assets, (o) share price performance, (p) total stockholder return, (q) improvement in or attainment of expense levels, (r) improvement in or attainment of working capital levels, (s) net sales, (t) revenue growth or product revenue growth, (u) operating income (before or after taxes), (v) pre-or after-tax income (before or after allocation of corporate overhead and bonus), (w) earnings per share; (x) return on equity, (y) appreciation in and/or maintenance of the price of the shares of common stock, (z) market share, (aa) gross profits, (bb) comparisons with various stock market indices; (cc) reductions in cost, (dd) cash flow or cash flow per share (before or after dividends), (ee) return on capital (including return on total capital or return on invested capital), (ff) cash flow return on investments; (gg) improvement in or attainment of expense levels or working capital levels, and/or (hh) stockholder equity.

The foregoing performance conditions represent the criteria on which performance goals may be based under the 2014 Plan for awards that are intended to qualify for the “qualified performance-based compensation” exception to Section 162(m) of the Code. At its sole discretion, our Compensation Committee may grant an award that is subject to the achievement or satisfaction of performance conditions that are not set forth in the 2014 Plan to the extent our Compensation Committee does not intend for such award to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

Our Compensation Committee has the discretion to select one or more periods of time over which the attainment of one or more of the foregoing performance conditions will be measured for the purpose of determining when an award will become vested, exercisable or payable. The Compensation Committee has the authority to adjust goals and awards in the manner set forth in the 2014 Plan.

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Change in Control. In the event of a “Change in Control” (as defined in the 2014 Plan) and, with respect to awards that are subject to Section 409A of the Internal Revenue Code of 1986, as amended, or the Code, and such awards, 409A Awards, only to the extent permitted by Section 409A of the Code, our Compensation Committee in its discretion may, on a participant-by-participant basis (a) accelerate the vesting of all unvested and unexercised Options, SARs or Stock-Based Awards in the nature of purchase rights and/or terminate such awards, without any payment therefore, immediately prior to the date of any such transaction after giving the participant at least seven days written notice of such actions; (b) fully vest and/or accelerate settlement of any awards; (c) terminate any outstanding Options, SARs or Stock-Based Awards in the nature of purchase rights after giving the participant notice and a chance to exercise such awards (to the extent then exercisable or exercisable upon the change in control); (d) cancel any portion of an outstanding award that remains unexercised or is subject to restriction or forfeiture in exchange for a cash payment to the participant of the value of the award; or (e) require that the award be assumed by the successor corporation or replaced with interests of an equal value in the successor corporation.

Amendment and Termination. The 2014 Plan expires 10 years after its effective date, unless terminated earlier by our board of directors. Any award that is outstanding as of the date the 2014 Plan expires will continue in force according to the terms set out in the award agreement. Our board of directors may terminate, amend or modify the 2014 Plan at any time. However, stockholder approval may be required for certain types of amendments under applicable law or regulatory authority. Except as may be provided in an award agreement or the 2014 Plan, no amendment to the 2014 Plan may adversely affect the terms and conditions of any existing award in any material way without the participant’s consent.

An amendment will be contingent on approval of our stockholders, to the extent required by law, by the rules of any stock exchange on which our securities are then traded or if the amendment would (i) increase the benefits accruing to participants under the 2014 Plan, including without limitation, any amendment to the 2014 Plan or any agreement to permit a re-pricing or decrease in the exercise price of any outstanding awards, (ii) increase the aggregate number of shares of common stock that may be issued under the 2014 Plan, (iii) modify the requirements as to eligibility for participation in the 2014 Plan or (iv) change the stated performance conditions for performance-based compensation within the meaning of Section 162(m) of the Code. Additionally, to the extent the Compensation Committee deems necessary for the 2014 Plan to continue to grant awards that are intended to comply with the performance-based exception to the deduction limits of Section 162(m) of the Code, the Compensation Committee will submit the material terms of the stated performance conditions to our stockholders for approval no later than the first stockholder meeting that occurs in the fifth year following the year in which our stockholders previously approved the performance goals.

Material U.S. federal income tax consequences of awards under the 2014 Plan

The following discussion summarizes the principal federal income tax consequences associated with awards under the 2014 Plan. The discussion is based on laws, regulations, rulings and court decisions currently in effect, all of which are subject to change.

ISOs. A participant will not recognize taxable income on the grant or exercise of an ISO (although the excess of the fair market value of the common stock over the exercise price will be included for alternative minimum tax purposes). A participant will recognize taxable income when he or she disposes of the shares of common stock acquired under the ISO. If the disposition occurs more than two years after the grant of the ISO and more than one year after its exercise, the participant will recognize long-term capital gain (or loss) to the extent the amount realized from the disposition exceeds (or is less than) the participant’s tax basis in the shares of common stock. A participant’s tax basis in the common stock generally will be the amount the participant paid for the stock. If common stock acquired under an ISO is disposed of before the expiration of the ISO holding period described above, the participant will recognize as ordinary income in the year of the disposition the excess of the fair market value of the common stock on the date of exercise of the ISO over the exercise price. Any additional gain will be treated as long-term or short-term capital gain, depending on the length of time the participant held the shares. Special rules apply if a participant pays the exercise price by delivery of common stock. We will not be entitled to a federal income tax deduction with respect to the grant or exercise of an ISO. However, in the event a participant disposes of common stock acquired under an ISO before the expiration of the ISO holding period described above, we generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

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NQSOs. A participant will not recognize any taxable income on the grant of a NQSO. On the exercise of a NQSO, the participant will recognize as ordinary income the excess of the fair market value of the common stock acquired over the exercise price. A participant’s tax basis in the common stock is the amount paid plus any amounts included in income on exercise. Special rules apply if a participant pays the exercise price by delivery of common stock. The exercise of a NQSO generally will entitle us to claim a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

SARs. A participant will not recognize any taxable income at the time SARs are granted. The participant at the time of receipt will recognize as ordinary income the amount of cash and the fair market value of the common stock that he or she receives. We generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes.

Restricted Stock Awards and RSUs. With regard to Restricted Stock Awards, a participant will recognize ordinary income on account of a Restricted Stock Award on the first day that the shares are either transferable or not subject to a substantial risk of forfeiture. The ordinary income recognized will equal the excess of the fair market value of the common stock on such date over the price, if any, paid for the stock. However, even if the shares under a Restricted Stock Award are both nontransferable and subject to a substantial risk of forfeiture, the participant may make a special “83(b) election” to recognize income, and have his or her tax consequences determined, as of the date the Restricted Stock Award is made. The participant’s tax basis in the shares received will equal the income recognized plus the price, if any, paid for the Restricted Stock Award. We generally will be entitled to a federal income tax deduction equal to the ordinary income the participant recognizes. With regard to RSUs, the participant will not recognize any taxable income at the time RSUs are granted. When the terms and conditions to which the RSUs are subject have been satisfied and the RSUs are paid, the participant will recognize as ordinary income the fair market value of the common stock he or she receives. We generally will be entitled to a federal income tax deduction equal to the ordinary income the participant recognizes.

Incentive Awards. A participant will not recognize any taxable income at the time an Incentive Award is granted. When the terms and conditions to which an Incentive Award is subject have been satisfied and the award is paid, the participant will recognize as ordinary income the amount of cash and the fair market value of the common stock he or she receives. We generally will be entitled to a federal income tax deduction equal to the amount of ordinary income the participant recognizes, subject to the deduction conditions and limits applicable under Section 162(m) of the Code.

Stock-Based Awards. A participant will recognize ordinary income on receipt of cash or shares of common stock paid with respect to a Stock-Based Award. We generally will be entitled to a federal tax deduction equal to the amount of ordinary income the participant recognizes.

Dividend Equivalents. A participant will recognize as ordinary income the amount of cash and the fair market value of any common stock he or she receives on payment of the Dividend Equivalents. To the extent the Dividend Equivalents are paid in the form of other awards, the participant will recognize income as otherwise described herein.

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Limitation on Deductions. The deduction for a publicly-held corporation for otherwise deductible compensation to a “covered employee” generally is limited to $1,000,000 per year. An individual is a covered employee if he or she is the chief executive officer or one of the three highest compensated officers for the year (other than the chief executive officer or chief financial officer). The $1,000,000 limit does not apply to compensation payable solely because of the attainment of performance conditions that meet the requirements set forth in Section 162(m) of the Code and the underlying regulations. Compensation is considered performance-based only if (a) it is paid solely on the achievement of one or more performance conditions; (b) two or more “outside directors” set the performance conditions; (c) before payment, the material terms under which the compensation is to be paid, including the performance conditions, are disclosed to, and approved by, the stockholders and (d) before payment, two or more “outside directors” certify in writing that the performance conditions have been met. The 2014 Plan has been designed to enable the Compensation Committee to structure awards that are intended to meet the requirements for performance-based compensation that would not be subject to the $1,000,000 per year deduction limit.

Other Tax Rules. The 2014 Plan is designed to enable our Compensation Committee to structure awards that will not be subject to Section 409A of the Code, which imposes certain restrictions and requirements on deferred compensation. However, our Compensation Committee may grant awards that are subject to Section 409A of the Code. In that case, the terms of such 409A Award will be (a) subject to the deferral election requirements of Section 409A of the Code; and (b) may only be paid upon a separation from service, a set time, death, disability, a change in control or an unforeseeable emergency, each within the meanings of Section 409A of the Code. Our Compensation Committee shall not have the authority to accelerate or defer a 409A Award other than as permitted by Section 409A of the Code. Moreover, any payment on a separation from service of a “Specified Employee” (as defined in the 2014 Plan) will not be made until six months following the participant’s separation from service (or upon the participant’s death, if earlier) as required by Section 409A of the Code.

Non-Employee Director Compensation

During 2013, our non-employee directors did not receive any compensation.

Prior to this offering during 2014, our non-employee directors received no compensation for serving on the board of directors. Following the completion of this offering, our non-employee directors will receive aggregate annual compensation in the amount of $40,000 for serving as members of our board of directors comprised of the following: quarterly grants of shares of our common stock in an amount equal to $7,000 based upon the closing price of our common stock on the date of grant (i.e., the last trading day of each calendar quarter) and quarterly payments of $3,000 in cash. Our directors will not receive additional compensation for serving as members of the committees of our board of directors. All of the equity grants to the directors will be made under our 2014 Plan.

We will reimburse all of our directors for travel and other necessary business expenses incurred in the performance of director services and extend coverage to them under our directors’ and officers’ indemnity insurance policies.

Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law, or DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Sections 6.1 and 6.2 of Article VI of our amended and restated bylaws provide for indemnification by us of our directors, officers, employees and agents to the fullest extent permitted by the DGCL.

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Article Nine of our Amended and Restated Certification of Incorporation eliminates the liability of a director or stockholder for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under Delaware law. Under Section 102(b)(7) of the DGCL, a director shall not be exempt from liability for monetary damages for any liabilities arising (i) from any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit.

We have entered and expect to continue to enter into agreements to indemnify our directors and officers as determined by our board of directors. These agreements provide for indemnification of related expenses including attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons under the foregoing provisions of our amended and restated certificate of incorporation or our amended and restated bylaws, or otherwise, we have been informed that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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RELATED PARTY TRANSACTIONS

Our board of directors reviews and approves any transaction or series of similar transactions to which we were or are to be a party in which the amount involved exceeds $34,968, the average of our total assets at September 30, 2012 and September 30, 2013, and in which any director, director nominee, executive officer or holder of more than 5% of any class of our capital stock, or members of any such person’s immediate family, had or will have a direct or indirect material interest. We refer to each such transaction as a Related Party Transaction.

In addition to the compensation transactions described above in “Management—Executive Compensation”, the following describes all Related Party Transactions since October 1, 2011.

Bankruptcy Related Financings

On September 23, 2011, under the terms of our Bankruptcy Plan, we settled the claims of our largest creditors, Setal 1, LLC, Setal 2, LLC, Setal 3, LLC, Setal 4, LLC, Setal 5, LLC and Setal 6, LLC (collectively, “Setals 1-6”), and the Taylor Family Trust (together with Setals 1-6, the “Setal Bankruptcy Entities”), certain entities controlled by Timothy Rand, a member of our board of directors (the “Rand Entities”) and certain of our other creditors (collectively with the Setal Bankruptcy Entities and the Rand Entities, the “Bankruptcy Entities”), by issuing to the Bankruptcy Entities a series of 10% Subordinated Secured Convertible Debentures, or Subordinated Convertible Debentures, due September 23, 2013 in an aggregate principal amount of $9,100,000, and an aggregate of 88,502 shares of our common stock. All amounts owed under the Subordinated Convertible Debentures are secured by substantially all our assets. Of the $9,100,000 in principal of the Subordinated Convertible Debentures, we issued $8,461,478 and $206,177 in principal to the Setal Bankruptcy Entities and the Rand Entities, respectively. Of the 88,502 shares of our common stock, we issued 84,408 and 1,949 shares of common stock to the Setal Bankruptcy Entities and the Rand Entities, respectively. Lester E. Taylor, Jr. is the managing member of Setals 1-6 and the trustee of the Taylor Family Trust. On September 27, 2012, the Subordinated Convertible Debentures were amended to extend the maturity date from September 23, 2013 to March 31, 2015 and to provide for all accrued interest to be paid at the new maturity date (March 31, 2015) together with principal in cash, eliminating periodic interest payments under the Subordinated Convertible Debentures. The Subordinated Convertible Debentures were retired upon consummation of the Reorganization Agreement.

On September 23, 2011 and September 27, 2011, as part of our exit financing under the Bankruptcy Plan, we issued and sold our Senior Convertible Debentures, originally due September 23, 2013, to seven accredited investors in the aggregate principal amount of $5,720,000. We issued the Senior Convertible Debentures with a discount of 9%. In connection with the issuance of the Senior Convertible Debentures, we also issued warrants to purchase an aggregate of up to 178,754 shares of our common stock at an exercise price of $32.00 per share (the “Senior Debenture Warrants”). If we issue rights, options or warrants in another transaction to the holders of common stock entitling those other investors rights to subscribe for or purchase shares of common stock at a price per share that is lower than the exercise price for the Senior Debenture Warrants, the exercise price then will be adjusted in a pro-rata manner. Of the $5,720,000 in principal amount of the Senior Convertible Debentures that we sold, (i) Setal 7, of which Lester E. Taylor, Jr. is the managing member, purchased $4,752,000, (ii) the Taylor Family Trust, of which Lester E. Taylor, Jr. is the managing member, purchased $550,000 and (iii) Alexander M. Bond purchased $110,000. Of the Senior Debenture Warrants we issued, (i) Setal 7 was issued Senior Debenture Warrants to purchase 148,501 shares of common stock, (ii) the Taylor Family Trust was issued Senior Debenture Warrants to purchase 17,188 shares of common stock and (iii) Alexander M. Bond was issued Senior Debenture Warrants to purchase 3,438 shares of common stock. On September 27, 2012, the Senior Convertible Debentures were amended to extend the maturity date from September 23, 2013 to March 31, 2015 and to provide for all accrued interest on the Senior Convertible Debentures to be paid at the new maturity date (March 31, 2015) together with principal in cash, eliminating periodic interest payments under the Senior Convertible Debentures. On March 20, 2014, the Senior Convertible Debentures were amended to extend the maturity date from March 31, 2015 to July 31, 2015. As of June 30, 2014 and August 22, 2014, the initial principal amount of $5,720,000 in principal was outstanding under the Senior Convertible Debentures. Under the terms of the Exchange Agreement, the Senior Convertible Debentures will be exchanged for an aggregate of shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering. Under the terms of the Exchange Agreement, the Senior Debenture Warrants will be exchanged for an aggregate of 89,738 shares of common stock upon the closing of this offering. The exchange of the Senior Convertible Debentures and Senior Debenture Warrants include the following exchanges:

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· Setal 7 will exchange (i) Senior Convertible Debentures under $4,752,000 in principal was outstanding as of June 30, 2014 and August 22, 2014 for an aggregate of shares of our common stock and (ii) Senior Debenture Warrants to purchase 148,501 shares for 74,251 shares of common stock;

· The Taylor Family Trust will exchange (i) Senior Convertible Debentures under $550,000 in principal was outstanding as of June 30, 2014 and August 22, 2014 for an aggregate of shares of our common stock and (ii) Senior Debenture Warrants to purchase 17,188 shares for 8,594 shares of common stock; and

· Alexander Bond will exchange (i) Senior Convertible Debentures under $110,000 in principal was outstanding as of June 30, 2014 and August 22, 2014 for an aggregate of shares of our common stock and (ii) Senior Debenture Warrants to purchase 3,438 shares for 1,719 shares of common stock.

In connection with the issuance of the Senior Convertible Debentures, we entered into a Security Agreement and a Registration Rights Agreement with each initial holder of the Senior Convertible Debentures. The Security Agreement provided the holders with a security interest collateralized by all of our assets, except for those used in connection with our Arizona and Riverside operations. The liquidation preference granted to these holders was senior to all other secured creditors, except for up to $750,000 in existing or new operating leases or loans.

Michael Smith — Former Member of our Board of Directors

By letter agreement dated July 12, 2012, we issued Michael Smith, a former member of our board of directors, in exchange for services rendered, 1,250 shares of our common stock at the fair market value on the date of grant. We also granted Mr. Smith the right to purchase an additional 1,875 shares of common stock at a purchase price equal to the lesser of $80.00 or the purchase price of common stock sold in a subsequent public offering. Under the terms of the Exchange Agreement, the right held by Mr. Smith to purchase an additional 1,875 shares of common stock will be exchanged for 938 shares of common stock upon the closing of this offering.

Transactions with Maxim Group LLC

On August 2, 2012, we entered into a Note Exchange Agreement with Maxim Group LLC, under which we cancelled a 10% Senior Secured Convertible Debenture in the principal amount of $200,000, in exchange for, among other consideration, a new 10% Senior Secured Promissory Note, due March 31, 2015, in the principal amount of $50,000, which we refer to as the Maxim Note. In connection with this Note Exchange Agreement, we also agreed to issue Maxim Group LLC, if and when we consummate an underwritten public offering of our securities or such earlier time as requested by Maxim Group LLC, a number of shares of our common stock equal to $100,000 divided by the lesser of (i) 80% of the per share price of our common stock sold in our next underwritten public offering and (ii) $80.00 (the “Maxim Stock Obligation”). On January 21, 2014, we entered into an Amendment to Note Exchange Agreement under which we issued 1,250 shares of our common stock in exchange for cancelling the Maxim Stock Obligation. We also agreed to issue additional shares of common stock equal to the difference between 1,250 shares and the number of shares determined by dividing $100,000 by the lesser of (a) eighty percent (80%) of the per share price of the our common stock sold in an underwritten public offering of our securities and (b) the valuation ascribed to our common stock in a future valuation event, including a private financing, a merger and acquisition transaction, strategic transaction or independent appraisal. We expect to issue these shares (i.e., shares of common stock, based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) to Maxim Group LLC upon the closing of this offering.

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On August 8, 2012, we entered into a Note Purchase Agreement with Maxim Group LLC, under which we canceled the Maxim Note, in exchange for, among other consideration, a number of shares of our common stock equal to $34,000 divided by the lesser of (i) 80% of the per share price of our common stock sold in our next underwritten public offering or (ii) $80.00. We are obligated to issue these shares if and when we consummate an underwritten public offering of our securities or such earlier time as requested by Maxim Group LLC. We expect to issue these shares ( shares of common stock, based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) to Maxim Group LLC upon the closing of this offering.

On September 23, 2011 as consideration for certain advisory services provided prior to our exit from bankruptcy, we issued to Maxim Group LLC a five year warrant for the purchase of up to 9,057 shares of our common stock at an exercise price of $32.00 per share. Under the terms of the Exchange Agreement, the warrant will be exchanged for 4,529 shares of common stock upon the closing of this offering.

Related Party Working Capital Loans

WCM Note (Setal 10 Note). On February 23, 2012, we sold and issued to WCM the WCM Note. We issued the WCM Note with an original discount of 9%. As a result, net proceeds to us equaled $499,000. In connection with the WCM investment, we entered into a letter agreement with WCM, Mr. Wattles, Setals 1-6 and Setal 7, Taylor Family Trust, and Lester E. Taylor, Jr. dated February 21, 2012, or WCM Letter Agreement, under which we agreed to (i) issue WCM a number of shares of our common stock equal to 35% of the issued and outstanding shares of our common stock on a fully diluted basis, or 618,750 shares of our common stock, subject to certain restrictions, at the fair market value on the date of this grant, or WCM Restricted Stock, (ii) issue our management a number of shares of our common stock equal to 20% of the issued and outstanding shares of our common stock on a fully diluted basis, subject to certain restrictions, at the fair market value on the date of this grant, (iii) grant WCM the right to appoint two directors to our board of directors, and (iv) appoint Mr. Wattles as our non-executive Chairman of our board of directors. In connection with the sale and issuance of the WCM Note, we issued WCM a seven year warrant to purchase 17,185 shares of our common stock at an exercise price of $32.00 per share, or WCM Warrant. Under a subsequent Securities Purchase Agreement, dated September 9, 2013, Setal 10, purchased the WCM Note, the rights to the “vested shares” of WCM Restricted Stock consisting of 326,563 shares of our common stock, the WCM Warrant and all other rights afforded WCM and Mr. Wattles under the WCM Letter Agreement. Under the terms of that Securities Purchase Agreement, the rights to the “unvested shares” were forfeited by WCM and Mr. Wattles. We refer to the WCM Note in the hands of Setal 10 as the Setal 10 Note. Lester E. Taylor, Jr. is the Trustee of Setal 10. The Setal 10 Note has an amended maturity date of July 31, 2015, with no cash coupon, and accrues interest 10% per annum, all due at maturity. All principal and accrued but unpaid interest under the Setal 10 Note is convertible, at the election of the holder, into the shares of our common stock at a conversion price equal to $32.00 per share, and the repayment of all obligations under the Setal 10 Note is secured by all of our assets, except for those used in our Arizona and Riverside operations. As of June 30, 2014 and August 22, 2014, $635,428 in principal was outstanding under the Setal 10 Note. We expect that $ owed under the Setal 10 Note will be paid upon the closing of this offering. Under the terms of the Exchange Agreement the WCM Warrant will be exchanged for 8,593 shares of common stock upon the closing of this offering.

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New Debentures. On October 21, 2011, as partial settlement for Class 7, 8, 9 and 13 secured claims under our Bankruptcy Plan, we issued a series of 6% Senior Secured Convertible Debentures, or 6% New Debentures, in the aggregate principal amount of $166,949. On November 16, 2012, we repaid $15,734 in principal, together with accrued and unpaid interest on the principal being repaid, to a holder of the New Debentures. On November 16, 2012, the remaining $151,215 in principal and $9,864 in accrued and unpaid interest on the remaining principal under the New Debentures were acquired by Setal 8, and the New Debentures were amended to increase the interest rate on the New Debentures to 12% per annum. Mr. Lester E. Taylor, Jr. is the Trustee of Setal 8. As of June 30, 2014 and August 22, 2014, $127,666 in principal was outstanding under the New Debentures. Under the terms of the Exchange Agreement, the New Debentures will be exchanged for shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering.

Setal 9 Note. On August 22, 2012, we sold and issued to Setal 9 the Setal 9 Note. We issued the Setal 9 Note with an original issue discount of 9%. As a result, net proceeds to us equaled $500,000. All principal and accrued but unpaid interest under the Setal 9 Note is convertible, at the election of the holder, into the shares of our common stock at a conversion price of $32.00 per share. Mr. Taylor is the trustee of Setal 9. On March 20, 2014, the Setal 9 Note was amended to extend the maturity date to July 31, 2015. In connection with the sale and issuance of the Setal 9 Note, we also issued Setal 9 a seven-year warrant to purchase 17,188 shares of common stock at an exercise price of $32.00 per share. As of June 30, 2014 and August 22, 2014, $550,000 in principal was outstanding under the Setal 9 Note. Under the terms of the Exchange Agreement, the Setal 9 Note will be exchanged for shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering.

Working Capital Note. On August 22, 2012, we sold and issued the Working Capital Secured Note to Lester E. Taylor Jr. & Diane M. Taylor as Trustees of the Taylor Family Trust and Clyde Wilson & Anita Wilson as Trustees of the Wilson Family Trust, in the principal amount of $200,400. Mr. Taylor is the trustee of the Taylor Family Trust. Interest on the Working Capital Note accrued at 14% per annum. This note was subsequently rolled into the Riverside Loan (as described below) and retired.

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Arizona Loan. On November 6, 2012, we entered into the Arizona Loan with Setal 8, under which Setal 8 provided a term loan of $100,000 secured by the assets used in our Arizona operation. Mr. Taylor is the trustee of Setal 8. We paid interest on the Arizona Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount (e.g., $1,000 per month on a $100,000 advance). The Arizona Loan was amended in connection with the Reorganization Agreement (as described below) extending the maturity to January 17, 2019 and reducing the interest to 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% of the original amount. As of June 30, 2014 and August 22, 2014, $100,000 in principal was outstanding under the Arizona Loan. Under the terms of the Exchange Agreement, the Arizona Loan will be exchanged for shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering.

Riverside Loan. On January 3, 2013, we entered into the Riverside Loan with Setal 8 under which Setal 8 agreed to provide a term loan of up to $500,000 secured by the assets used in our Riverside operation. We paid interest on the Riverside Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount. The Riverside Loan was also amended in connection with the Reorganization Agreement extending the maturity to January 17, 2019 and reducing the interest to 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% of the original amount. As of June 30, 2014 and August 22, 2014, $311,500 in principal was outstanding under the Riverside Loan. Under the terms of the Exchange Agreement, the Riverside Loan will be exchanged for shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering.

Setal 10 Unsecured Loan. On March 21, 2013, we entered into the Setal 10 Unsecured Loan with Setal 10, under which Setal 10 agreed to provide an unsecured term loan of up to $500,000. Mr. Taylor is the trustee of Setal 10. We paid interest on the Setal 10 Trust Loan at 20% per annum, comprised of 10% interest compounded monthly and monthly cash payments of .8333% of the original amount. We paid off the principal and accrued but unpaid interest on the Setal 10 Trust Loan in the amount of $528,142 with proceeds of our Setal 11 Loan. See “Setal 11 Loan” below.

Park Place Loan. On August 16, 2013, we entered into the Park Place Loan with Park Place, under which Park Place agreed to provide a term loan of up to $400,000 secured by a blanket lien on our assets. Mr. Taylor is a general partner in Park Place. We paid interest on the Park Place Loan at 22% per annum, comprised of 10% interest compounded monthly and monthly cash payments of 1% of the original amount. We paid off the principal and accrued but unpaid interest on the Park Place Loan in the amount of $418,206 with proceeds of our Setal 11 Loan. See “Setal 11 Loan” below.

Setal 11 Loan. On January 17, 2014, we entered into the Setal 11 Loan with Setal 11, under which Setal 11 agreed to provide one or more term loans of newly-committed funds in an aggregate principal amount of not less than the Initial Commitment Amount, and not more than $4,000,000. Mr. Taylor is the managing member of Setal 11. At the closing, Setal 11 advanced us the Initial Advance. Interest accrues on advances at 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% on the original amount. The maturity date of the Setal 11 Loan is January 17, 2019. We also pay a “commitment fee” of 6% per annum on the difference between the Initial Commitment Amount and amounts advanced, including the Initial Advance. Repayment of all obligations under the Setal 11 Loan is secured by all of our assets. On February 24, 2014, we took down an additional advance under the Setal 11 Loan in the amount of $200,000. As of June 30, 2014 and August 22, 2014, $2,487,108 in principal was outstanding under the Setal 11 Loan. Under the terms of the Exchange Agreement, the Setal 11 Loan will be exchanged for shares of common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) and retired upon the closing of this offering.

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Taylor Family Trust Note. On June 30, 2014, we entered into the Taylor Family Trust Note with the Taylor Family Trust and with Wilson Family Trust, under which these lenders agreed to provide one or more term loans of newly-committed funds. There is no minimum commitment amount and any advances shall be at the sole discretion of the lenders. Mr. Taylor is the trustee of the Taylor Family Trust. At the closing, we received an initial advance of $150,000 and another $150,000 advance on August 11, 2014. Interest accrues on advances at 18% per annum, with 9% compounded monthly and monthly cash payments of 0.75% on the original amount. The maturity date of the Taylor Family Trust Note is July 31, 2015. Repayment of all obligations under the Taylor Family Trust Note is secured by all of our assets. As of June 30, 2014 and August 22, 2014, $150,000 and $300,000 in principal, respectively, was outstanding under the Taylor Family Trust Note. We expect that $ of the amounts owed under the Setal 10 Note will be paid upon the closing of this offering.

Management Restricted Stock Grants

Management Restricted Stock Grants. Concurrently with and as a condition to the execution of the WCM Letter Agreement, we agreed to issue 354,391 shares of our common stock (the “Management Shares”) to members of our senior management, of which 273,141 shares were granted to Mr. Bond and 81,250 shares were granted to Mr. Stickler. The Management Shares were issued pursuant to Restricted Stock Purchase Agreements which allow us to repurchase “unvested shares” at their original issue price of $0.001 upon certain events, including the termination of employee’s continued services. Approximately 35% of the Management Shares were deemed “vested,” and therefore not subject to forfeiture, on the grant date with the remainder vesting monthly through September 2014.

Debt Restructuring and Recapitalization

Reorganization Agreement

Effective as of January 17, 2014, we entered into the Reorganization Agreement with the holders of our Subordinated Convertible Debentures (including the Setal Bankruptcy Entities and the Rand Entities), Setal 7, Setal 8 Trust, Setal 9 Trust, Setal 10 Trust, Setal 11, LLC, Park Place Services and Lester E. Taylor, Jr. We entered into the Reorganization Agreement to confirm the priorities of our outstanding debt instruments and document certain other continuing covenants and obligations between us and the lenders.

The material transactions contemplated by the Reorganization Agreement are as follows:

· Restructuring of Debt Obligation. The parties agreed to restructure security interests and liquidation preferences in connection certain debt instruments as set forth in an Intercreditor Agreement, dated January 17, 2014.

· Amendments to Existing Debt. We and Setal 8 (with respect to the Arizona Loan and Riverside Loan), agreed to enter into amendments to the Arizona Loan and Riverside Loan to (a) conform the maturity date of those obligations to that of the Setal 11 Loan, (b) revise the interest rates and cash coupons of those obligations to match those of the Setal 11 Loan, (c) amend the definition of the “collateral” applicable to the security interests of the obligations to conform to the definition of “collateral” used in the Setal 11 Loan, and (d) add the payment of a claim on the Key Man Life Insurance as an Event of Default (as defined in the Arizona Loan and Riverside Loan). In addition, we and Setal 7 (with respect to the Senior Convertible Debentures), Setal 9 (with respect to the Setal 9 Note), and Setal 10 (with respect to the Setal 10 Note), agreed to enter into amendments to the Senior Convertible Debentures, Setal 9 Note and Setal 10 Note to add the payment of a claim on the Key Man Life Insurance as an Event of Default under these credit facilities.

· Exchange of Subordinated Convertible Debentures. The holders of the Subordinated Convertible Debentures (including the Setal Bankruptcy Entities and Rand Entities) agreed to exchange their Subordinated Convertible Debentures for (i) an aggregate of 5,620,514 shares of our Series A Preferred Stock, at an exchange price of $32.00 per share and (ii) an aggregate of 1,328,913 shares of our common stock. Under the terms of the Reorganization Agreement, we issued 5,226,138 and 127,342 shares of Series A Preferred Stock and 1,235,665 and 30,110 shares of common stock to the Setal Bankruptcy Entities and the Rand Entities, respectively, in exchange of the Subordinated Convertible Debentures held by such entities.

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· Issuance of Stock. We issued 442,969 shares of our common stock at the fair market value on the effective date of the Reorganization Agreement to Setal 11 in connection with and as a condition Setal 11’s commitment of capital under the Setal 11 Loan.

· Board Designees. We entered into a voting agreement with the Setal Entities which provides that the Setal Entities shall have the right to appoint four of five members to our board of directors. This voting agreement will terminate upon the closing of this offering.

· Key Man Life Insurance. We agreed to purchase and fund a $5 million ten-year term life insurance policy for our Chief Executive Officer with us named as the sole beneficiary of such policy. We are in the process of obtaining this insurance policy.

· Indemnification. We agreed to indemnify and hold each of the Bankruptcy Entities and the holders of the Subordinated Convertible Debentures and each of their respective affiliates, against claims brought as a result of any breach of any of the transaction documents identified in the Reorganization Agreement.

Exchange Agreement

On July 23, 2014, we entered into the Exchange Agreement with certain holders of our debt instruments, warrants and right to purchase common stock to (i) exchange certain of our secured and unsecured notes and loan agreements, under which an aggregate amount of $11,184,164 in principal and interest was outstanding as of August 22, 2014, for an aggregate of shares of our common stock upon the closing of this offering, based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus; and (ii) exchange warrants and rights to purchase an aggregate of 224,059 shares of our common stock at exercise prices ranging from $ (which is the midpoint of the range set forth on the cover page of this prospectus) to $32.00 per share for an aggregate of 112,032 shares of our common stock upon the closing of this offering (i.e., one share of common stock for each warrant representing the right to purchase two shares of common stock). The effect of the Exchange Offer on the secured and unsecured notes and loan agreements and warrants held by our related parties are described above.

Under the terms of the Exchange Agreement certain holders of our common stock have agreed to cancel 1,098,445 shares of our common stock, including 871,882 shares of common stock initially issued under the terms of the Reorganization Agreement described above, of which 342,969, 491,800 and 11,984 shares of common stock are held by Setal 11, the Setal Bankruptcy Entities and the Rand Entities, respectively.

The closing of the Exchange Agreement is conditioned upon and shall close concurrently with this offering.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of our common stock by (i) each person or entity who is known by us to own beneficially more than 5% of the outstanding shares of our common stock, (ii) each of our directors, (iii) each of the named executive officers, and (iv) all directors, and executive officers as a group.

The table is based on information provided to us by our directors, executive officers and principal stockholders. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting and investment power with respect to shares. To our knowledge, except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Shares of common stock underlying derivative securities, if any, that currently are exercisable or convertible or are scheduled to become exercisable or convertible for or into shares of common stock within 60 days after August 22, 2014 are deemed to be outstanding in calculating the percentage ownership of each listed person or group but are not deemed to be outstanding as to any other person or group.

All figures in the table below assume (i) the conversion of all of the shares of our outstanding Series A Preferred Stock into shares of common stock immediately prior to the closing of this offering, (ii) the consummation of the transactions contemplated by the Exchange Agreement immediately prior to the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus), (iii) the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus).

For purposes of computing percentage ownership after our initial public offering, we have assumed that shares of our common stock will be issued by us in our initial public offering. The table below assumes that the initial public offering price for shares of our common stock to be sold in this offering is $ per share, which is the midpoint of the range on the front cover of this prospectus. The precise holdings of shares of our common stock by particular existing owners after the offering would differ from that presented in the table above if the actual initial public offering price per share differs from the assumed price.

	Stock Beneficially Owned Prior to the Offering				Stock Beneficially Owned After the Offering
Name and Address of Beneficial Owner(1)	Number		Percentage (2)		Number		Percentage (3)
Alexander Bond	273,141			%				%
Timothy N. Stickler	81,250			%
Kari Minton	—		—		—		—
Gary Johnston	—		—		—		—
Timothy Rand		(4)		%		(4)		%
Setal 1, LLC (5)(6)	238,035			%				%
Setal 3, LLC (5) (6)	248,539			%				%
Setal 4, LLC(5) (6)	197,650			%				%
Setal 6, LLC (5) (6)	217,753			%				%
Setal 7, LLC (5) (6)				%				%
Setal 11, LLC (5) (6)				%				%
Lester E. Taylor, Jr. (6)		(7)		%		(8)		%
All directors and executive officers as a group (5 persons)				%				%

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* Less than 1%.

(1) Messrs. Bond, Johnston and Rand are directors of U.S. Dry Cleaning Services Corporation. Messrs. Bond and Stickler and Ms. Minton are executive officers of U.S. Dry Cleaning Services Corporation. The address for each of these persons is c/o U.S. Dry Cleaning Services Corporation, 20250 Acacia Street, Suite 230, Newport Beach, CA 92660.

(2) Percentage of beneficial ownership prior to the offering is based on shares of common stock, consisting of 2,685,924 shares of common stock outstanding as of August 22, 2014, the issuance of 351,290 shares of common stock upon the automatic conversion of all of the shares of our Series A Preferred Stock outstanding as of August 22, 2014 upon the closing of this offering, the issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus), the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings less the cancellation of 1,098,445 shares of common stock in connection with the Exchange Offer upon the closing of this offering.

(3) Percentage of beneficial ownership after the offering is based on shares of common stock, consisting of shares of common stock outstanding as of August 22, 2014, an assumed shares of our common stock will be issued by us in this offering, the issuance of 351,290 shares of common stock upon the automatic conversion of all of the shares of our Series A Preferred Stock outstanding as of August 22, 2014 upon the closing of this offering, the issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the mid-point of the range indicated on the front cover of this prospectus), the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings less the cancellation of 1,098,445 shares of common stock in connection with the Exchange Offer upon the closing of this offering.

(4) Represents shares held by the Timothy & Christine Rand 1991 Trust, shares held by the Alamitos Associates In OBGYN INC PSB FBO Timothy Rand, shares held by the 15609 Trust and shares held by the 9961 Trust. Timothy Rand has the sole power to vote and dispose of the shares of common stock represented as beneficially owned.

(5) Lester E. Taylor, Jr., as managing member of the stockholder, has the power to vote and dispose of the shares of common stock held by the stockholder.

(6) The address for the stockholder is c/o Lester E. Taylor, Jr., P.O. Box 1687, Bellflower, California 90707.

(7) Represents 238,035 shares held by Setal 1, LLC, 114,303 shares held by Setal 2, LLC, 248,539 shares held by Setal 3, LLC, 197,650 shares held by Setal 4, LLC, 119,110 shares held by Setal 5, LLC, 217,753 shares held by Setal 6, LLC, shares held by Setal 7, LLC, shares held by Setal 8 Trust, shares held by Setal 9 Trust, 130,346 shares held by Setal 10 Trust including 21,753 shares underling the Setal 10 Note held by Setal 10 Trust, shares held by Setal 11, LLC, shares held by The Taylor Family Trust dated 3/3/1994 and 564 shares held by Park Place Services. Lester E. Taylor, Jr. has the sole power to vote and dispose of the shares of common stock represented as beneficially owned.

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(8) Represents 238,035 shares held by Setal 1, LLC, 114,303 shares held by Setal 2, LLC, 248,539 shares held by Setal 3, LLC, 197,650 shares held by Setal 4, LLC, 119,110 shares held by Setal 5, LLC, 217,753 shares held by Setal 6, LLC, shares held by Setal 7, LLC, shares held by Setal 8 Trust, shares held by Setal 9 Trust, 108,593 shares held by Setal 10 Trust, shares held by Setal 11, LLC, shares held by The Taylor Family Trust dated 3/3/1994 and 564 shares held by Park Place Services. Lester E. Taylor, Jr. has the sole power to vote and dispose of the shares of common stock represented as beneficially owned. Lester E. Taylor, Jr. has the sole power to vote and dispose of the shares of common stock represented as beneficially owned. We have assumed that the net proceeds from this offering will be used to pay all amounts owed under the Setal 10 Note and therefore that the Setal 10 Note will not survive the closing of this offering.

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DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 30,000,000 shares of common stock, par value $0.001 per share, and 6,000,000 shares of preferred stock, par value $0.001 per share, of which 200,000 shares of preferred stock are undesignated and 5,800,000 shares are currently designated Series A Preferred Stock. Upon the completion of this offering, all 5,620,514 outstanding shares of Series A Preferred Stock will automatically convert into an aggregate of 351,290 shares of common stock. Thereafter, all 6,000,000 shares of authorized shares of preferred stock will be undesignated. The following description of our capital stock and provisions of our restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference to the certificate of incorporation and the bylaws that will be in effect upon closing of this offering. Copies of these documents are filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering.

Common Stock

We had 2,685,924 shares of common stock outstanding as of August 22, 2014.

Holders of our common stock are entitled to receive ratably dividends when, as, and if declared by our board of directors out of funds legally available therefor. Upon our liquidation, dissolution, or winding up, the holders of our common stock are entitled to receive ratably the net assets available after the payment of all debts and other liabilities and subject to the prior rights of our outstanding preferred shares, if any. However, there are no assurances that upon any such liquidation or dissolution, there will be any net assets to distribute to the holders of our common stock.

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Under certain circumstances, California law permits the holders of our common stock to cumulate their votes for the election of directors, in which case holders of less than a majority of the outstanding shares of our common stock could elect one or more of our directors. Holders of our common stock have no preemptive, subscription, or redemption rights. The outstanding shares of our common stock are fully paid and non-assessable. The rights and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of preferred stock that we may designate and issue in the future.

Preferred Stock

Our board of directors is authorized to issue preferred stock in one or more series and to fix the rights, preferences, privileges, qualifications, limitations and restrictions thereof, including dividend rights and rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without any vote or action by our stockholders. Any preferred stock to be issued could rank prior to our common stock with respect to dividend rights and rights on liquidation. Our board of directors, without stockholder approval, may issue preferred stock with voting and conversion rights which could adversely affect the voting power of holders of our common stock and discourage, delay or prevent a change in control of our company.

Series A Preferred Stock

Upon the closing of this offering, there will be no shares of our Series A Preferred Stock issued or outstanding. Under the terms of our Series A Preferred Stock, we cannot issue any shares of our Series A Preferred Stock after the completion of this offering and all 5,620,514 shares of Series A Preferred Stock currently outstanding will be converted into an aggregate of 351,290 shares of common stock and reclassified as authorized and unissued shares of preferred stock.

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Existing Warrants

As consideration for certain advisory services provided prior to our exit from bankruptcy, we issued to Maxim Group LLC a five year warrant for the purchase of up to 9,057 shares of our common stock at $32.00 per share.

In connection with the sale and issuance of our Senior Convertible Debentures, we issued to the holders of the Senior Convertible Debentures five-year warrants for the purchase of up to an aggregate of 178,754 shares of our common stock at $32.00 per share, or the Senior Debenture Warrants.

Pursuant to a letter agreement, dated August 12, 2012, we granted Michael Smith, a former member of our board of directors, the right to purchase 1,875 shares of common stock at a purchase price equal to the lesser of $80.00 or the purchase price of common stock sold in a subsequent public offering.

In connection with the sale and issuance of the WCM Note, we issued to WCM a seven-year warrant for the purchase of up to 17,185 shares of our common stock at an exercise price of $32.00 per share, or the WCM Warrant. Setal 10 Trust subsequently purchased the rights to all of WCM’s holdings of our securities, including the WCM Warrant.

In connection with the sale and issuance of the Setal 9 Note, we issued to Setal 9 a seven year warrant for the purchase of up to 17,188 shares of our common stock at an exercise price of $32.00 per share, or the Setal 9 Warrant.

We expect that all of the above warrants and rights will be exchanged for an aggregate of 112,032 shares of common stock upon the closing of this offering pursuant to the terms of the Exchange Offer.

Existing Options

In August 2014, we issued stock options to purchase an aggregate of 636,000 shares of our common stock to certain of our employees at an exercise price of $4.80 per share. These options will vest in three equal annual installments on the first, second and third anniversaries of the grant date. On the date of this grant, our board of directors determined that the exercise price per share of the options exceeded the fair market value of the shares of common stock underlying the options.

Registration Rights

We have entered into registration rights agreements with certain of our stockholders. Under these registration rights agreements, subject to specified limitations set forth in each registration rights agreement, upon the closing of this offering, we are required to file a registration statement to register shares of our common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) under the Securities Act within six months after the effective date of the registration statement of which this prospectus forms a part. After registration pursuant to these rights, subject to the lock-up agreements described below, these shares will become freely tradable without restriction under the Securities Act.

Pursuant to the various registration rights agreements, we are required to pay all registration expenses, including all registration, filing and qualification fees, printers’ and accounting fees, fees and expenses incurred in connection with complying with state securities or “blue sky” laws, fees and expenses of listing registrable securities on any securities exchange on which shares of our common stock are then listed, fees and disbursements of our counsel, other than any underwriting discounts and commissions, related to any demand or incidental registration. Each registration rights agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions in the registration statement attributable to them.

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Anti-Takeover Provisions of Delaware Law, our Restated Certificate of Incorporation and our Amended and Restated Bylaws

The provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws discussed below could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or in our best interests. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by our board of directors and to discourage certain types of transactions that may involve an actual or threatened change of our control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. Such provisions also may have the effect of preventing changes in our management.

Our amended and restated bylaws provide that, for nominations to our board of directors or for other business to be properly brought by a stockholder before a meeting of stockholders, the stockholder must first have given timely notice of the proposal in writing to our Chief Legal and Administrative Officer. For an annual meeting, a stockholder’s notice generally must be delivered not less than 90 days nor more than 120 days prior to the anniversary of the mailing date of the proxy statement for the previous year’s annual meeting. For a special meeting, the notice must generally be delivered not earlier than the 90th day prior to the meeting and not later than the later of (i) the 60th day prior to the meeting or (ii) the 10th day following the day on which public announcement of the meeting is first made. Detailed requirements as to the form of the notice and information required in the notice are specified in the restated bylaws. If it is determined that business was not properly brought before a meeting in accordance with our bylaw provisions, such business will not be conducted at the meeting.

Listing

There is currently no established public trading market for our common stock or warrants, and a liquid public trading market for our common stock and warrants may not develop or be sustained after this offering. We have applied to have our shares of common stock and warrants issued in this offering listed for trading on The NASDAQ Capital Market under the symbols “DCLN” and “DCLNW”, respectively. No assurance can be given that such listings will be approved.

Transfer Agent and Warrant Agent

Interwest Transfer Co., Inc., Salt Lake City, Utah, serves as transfer agent for our common stock. Interwest will also act as the warrant agent for the warrants issued under this offering.

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DESCRIPTION OF SECURITIES WE ARE OFFERING

We are offering shares of common stock and warrants, which will be sold in combinations consisting of one share of common stock and one warrant. Although issued together, the shares of common stock and warrants may be transferred separately immediately upon issuance. Each warrant is exercisable for one share of common stock. The shares of common stock issuable from time to time upon the exercise of the warrants are also being offered pursuant to this prospectus.

Common Stock

The material terms and provisions of our common stock and each other class of our securities which qualifies or limits our common stock are described under the caption “Description of Capital Stock” in this prospectus.

Warrants

The material terms and provisions of the warrants being offered pursuant to this prospectus are summarized below. The summary is subject to, and qualified in its entirety by, the form of the warrant and the Warrant Agent Agreement which have been filed as exhibits to the registration statement of which this prospectus is a part.

The warrants issued in this offering entitle the registered holder to purchase one share of our common stock at a price equal to 100% of the price per combination of one share of common stock and one warrant sold in this offering, subject to adjustment as discussed below, at any time commencing upon consummation of this offering and terminating at 5:00 p.m., New York City time, on the fifth anniversary of the date of this prospectus.

Upon the holder’s exercise of a warrant, we will issue the shares of common stock issuable upon exercise of the warrant within three trading days of our receipt of notice of exercise, subject to timely payment of the aggregate exercise price therefor.

The shares of common stock issuable on exercise of the warrants will be, when issued in accordance with the warrants, duly and validly authorized, issued and fully paid and non-assessable. We will authorize and reserve at least that number of shares of common stock equal to the number of shares of common stock issuable upon exercise of all outstanding warrants.

The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary dividend on or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices.

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the public warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. Under the terms of the warrant agreement, we have agreed to use our best efforts to maintain the effectiveness of the registration statement and current prospectus relating to common stock issuable upon exercise of the warrants until the expiration of the warrants. During any period if we fail to have maintained an effective registration statement covering the shares underlying the warrants, the warrant holder may exercise the warrants on a cashless basis. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by our stockholders.

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We may redeem the outstanding warrants without the consent of any third party or the representative of the underwriters:

· in whole and not in part;

· at a price of $0.01 per warrant at any time after the warrants become exercisable;

· upon not less than 30 days prior written notice of redemption; and

· if, and only if, the last sales price of our common stock equals or exceeds $ per share (subject to adjustment for splits, dividends, recapitalization and other similar events) for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption;

provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement covering shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock.

No fractional shares of common stock will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number of shares of common stock to be issued to the warrant holder. If multiple warrants are exercised by the holder at the same time, we will aggregate the number of whole shares issuable upon exercise of all the warrants.

You should review a copy of the warrant agent agreement and the form of warrant, each of which are included as exhibits to the registration statement of which this prospectus forms a part.

Representative’s Warrants

We have agreed to grant to Maxim Group LLC, the representative of the underwriters, warrants to purchase a number of shares of common stock equal to 8% of the total number of shares of common stock sold in this offering at a price equal to 110% of the price per combination of one share of common stock and one warrant sold in this offering. The warrants contain a cashless exercise feature.

THE HOLDER OF A WARRANT WILL NOT POSSESS ANY RIGHTS AS A STOCKHOLDER UNDER THAT WARRANT UNTIL THE HOLDER EXERCISES THE WARRANT. THE WARRANTS MAY BE TRANSFERRED INDEPENDENT OF THE COMMON STOCK WITH WHICH THEY WERE ISSUED, SUBJECT TO APPLICABLE LAWS.

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SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there has been no established public trading market for our common stock or warrants, and a liquid public trading market for our common stock and warrants may not develop or be sustained after this offering. Future sales of significant amounts of our common stock and warrants, including shares issued upon exercise of outstanding options, warrants and other convertible securities or in the public market after this offering, or the anticipation of those sales, could adversely affect the public market prices prevailing from time to time and could impair our ability to raise capital through sales of our equity securities. We intend to apply to have our common stock and warrants listed on The NASDAQ Capital Market under the symbols “DCLN” and “DCLNW”, respectively.

Based on 2,685,924 shares of common stock outstanding as of August 22, 2014, upon the closing of this offering, and after giving effect to the issuance of shares of our common stock offered in this offering, the conversion of our 5,620,514 outstanding shares of Series A Preferred Stock into 351,290 shares of common stock upon the closing of this offering, the issuance of shares of common stock in connection with the Exchange Offer upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus), the cancellation of 1,098,445 shares of common stock pursuant to the terms of the Exchange Agreement upon the closing of this offering and the issuance of an aggregate of shares of common stock to certain professionals and advisors in connection with our bankruptcy proceedings upon the closing of this offering (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus), we will have outstanding an aggregate of shares of common stock, assuming no exercise of outstanding options, warrants or other convertible securities that will be outstanding after this offering. Of these shares of outstanding common stock, the shares sold by us (assuming that the underwriters do not exercise their over-allotment option) in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, or Rule 144, whose sales would be subject to the Rule 144 resale restrictions, other than the holding period requirement.

Of the remaining shares of common stock, shares of common stock will not be “restricted securities” that term is defined in Rule 144 under the Securities Act and shares of common stock will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. All of the shares of common stock that are not “restricted securities” will be eligible for public sale upon the closing of this offering except for shares of common stock that will be subject to restrictions on transfer under the lock-up agreements described below. The shares of common stock that are “restricted securities” will either be subject restrictions on transfer under the lock-up agreements described below. Following the expiration of these restrictions, these “restricted securities” will become eligible for public sale if they are registered under the Securities Act or if they qualify for an exemption from the registration requirements of the Securities Act, including the exemptions available under Rules 144 or 701 under the Securities Act.

Rule 144

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Because Rule 144 is not available for resale of “restricted securities” issued by any company that was at the time of issuance, or at any time prior to the time of issuance of the “restricted securities”, a shell company (other than business combination-related shell companies), Rule 144 is not available for any of our outstanding “restricted securities” until we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act (the “Rule 144 Eligibility Requirement”). After we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, subject to the general restrictions under Rule 144 described below, our “restricted securities can be sold if, at the time of the sale of our “restricted securities,” we have filed all reports and materials we required are required to file under the Exchange Act during the 12 months preceding the sale (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports.

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Until we meet the Rule 144 Eligibility Requirement, our stockholders may sell our “restricted securities” only pursuant to a registration statement that has been declared effective under the Securities Act or pursuant to another exemption from registration.

General Restrictions Under Rule 144 - Affiliate Resale of Restricted Securities

In general, beginning 90 days after the effective date of the registration statement of which this prospectus forms a part, a person who is an affiliate of ours, or who was an affiliate at any time during the 90 days before a sale, who has beneficially owned shares of our common stock for at least six months would be entitled to sell in “broker’s transactions” or certain “riskless principal transactions” or to market makers, a number of shares within any three-month period that does not exceed the greater of:

· one percent of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; or

· the average weekly trading volume in our common stock on The NASDAQ Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Affiliate resales under Rule 144 are also subject to the availability of current public information about us. In addition, if the number of shares being sold under Rule 144 by an affiliate during any three-month period exceeds 5,000 shares or has an aggregate sale price in excess of $50,000, the seller must file a notice on Form 144 with the Securities and Exchange Commission and The NASDAQ Capital Market concurrently with either the placing of a sale order with the broker or the execution directly with a market maker.

General Restrictions Under Rule 144 - Non-Affiliate Resales of Restricted Securities

In general, beginning 90 days after the effective date of the registration statement of which this prospectus forms a part, a person who is not an affiliate of ours at the time of sale, and has not been an affiliate at any time during the three months preceding a sale, and who has beneficially owned shares of our common stock for at least six months but less than a year, is entitled to sell such shares subject only to the availability of current public information about us. If such person has held our shares for at least one year, such person can resell under Rule 144(b)(1) without regard to any Rule 144 restrictions, including the 90-day public company requirement and the current public information requirement.

Non-affiliate resales are not subject to the manner of sale, volume limitation or notice filing provisions of Rule 144.

Rule 701

In general, under Rule 701, any of an issuer’s employees, directors, officers, consultants or advisors who purchases shares from the issuer in connection with a compensatory stock or option plan or other written agreement before the effective date of a registration statement under the Securities Act is entitled to sell such shares 90 days after such effective date in reliance on Rule 144. An affiliate of the issuer can resell shares in reliance on Rule 144 without having to comply with the holding period requirement, and non-affiliates of the issuer can resell shares in reliance on Rule 144 without having to comply with the current public information and holding period requirements.

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Lock-up Agreements

Our executive officers and directors and the holders of substantially all of our outstanding stock have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock for a period through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters.

The representatives of the underwriters currently do not anticipate shortening or waiving any of the lock-up agreements and do not have any pre-established conditions for such modifications or waivers. The representatives of the underwriters may, however, with the approval of our board of directors, release for sale in the public market all or any portion of the shares subject to the lock-up agreements.

Registration Rights

Upon the closing of this offering, subject to certain limitations, we are required to file a registration statement to register shares of our common stock (based upon an assumed public offering price for our common stock of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus) under the Securities Act. After registration pursuant to these rights, subject to the lock-up agreements described above, these shares will become freely tradable without restriction under the Securities Act. See “Description of Capital Stock— Registration Rights” for additional information regarding these registration rights.

Stock Options and Warrants

As of August 22, 2014, we had outstanding options to purchase 636,000 shares of common stock. We granted the options to purchase 636,000 shares in August 2014, and all of the options will vest in three equal installments on the first, second and third anniversaries of the grant date. Following this offering, we intend to file registration statements on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options and options and other awards issuable pursuant to the 2014 Plan.

After the closing of this offering, assuming the consummation of the Exchange Offer, we will have no outstanding warrants to purchase shares of our common stock.

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UNDERWRITING

We have entered into an underwriting agreement with Maxim Group LLC acting as the sole book-running manager and sole representative for the underwriters named below. Subject to the terms and conditions of the underwriting agreement, the underwriters named below have agreed to purchase, and we have agreed to sell to them, the number of shares of common stock and warrants to purchase common stock at the public offering price, less the underwriting discounts and commissions, as set forth on the cover page of this prospectus and as indicated below:

Underwriter		Number of Shares
Maxim Group LLC

Total

The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares and warrants offered by this prospectus are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all of the shares and warrants offered by this prospectus if any such shares and warrants are taken, other than those shares and warrants covered by the over-allotment option described below.

Over-Allotment Option

We have granted to the underwriters an option, exercisable no later than 45 calendar days after the date of the underwriting agreement to purchase up to an additional shares of common stock and/or up to additional warrants to purchase up to additional shares of common stock at a price per combination of one share of common stock and one warrant, after the underwriting discount, of $ per combination. The underwriters may exercise this option only to cover over-allotments, if any, made in connection with this offering. To the extent the option is exercised and the conditions of the underwriting agreement are satisfied, we will be obligated to sell to the underwriters, and the underwriters will be obligated to purchase, these additional shares of common stock and warrants to purchase common stock.

Commissions

We have agreed to pay the underwriters (i) a cash fee equal to eight percent of the aggregate gross proceeds raised in this offering and (ii) warrants to purchase that number of shares of our common stock equal to an aggregate of eight percent of the shares of common stock sold in the offering (or shares, assuming the over-allotment option is fully exercised). Such underwriters’ warrants shall have an exercise price equal to $ per share, which is 110% of the public offering price, terminate five years after the effectiveness of the registration statement of which this prospectus forms a part, and otherwise have the same terms as the warrants sold in this offering except that (1) they will not be subject to redemption by us and (2) they will provide for one demand registration of the sale of the shares of common stock at the Company’s expense, an additional demand registration at the warrant holders’ expense for a period of five years from the effective date of the registration statement of which this prospectus forms a part and unlimited “piggyback” registration rights with respect to the underlying shares during the seven year period commencing on the effective date of the registration statement of which this prospectus forms a part. The underwriters’ warrants will be subject to FINRA Rule 5110(g)(1) in that, except as otherwise permitted by FINRA rules, for a period of 180 days following the effective date of the registration statement of which this prospectus forms a part, the underwriters’ warrants shall not be (A) sold, transferred, assigned, pledged, or hypothecated, or (B) the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person.

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The representative has advised us that the underwriters propose to offer the shares and warrants directly to the public at the public offering price set forth on the cover of this prospectus. In addition, the representative may offer some of the shares and warrants to other securities dealers at such price less a concession of up to $ per share. After the offering to the public, the offering price and other selling terms may be changed by the representative without changing our proceeds from the underwriters’ purchase of the shares and warrants.

The following table summarizes the public offering price, underwriting commissions and proceeds before expenses to us assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares and warrants. The underwriting commissions are equal to the public offering price per share less the amount per share the underwriters pay us for the shares and warrants.

	Per Share(1)	Total Without Over- Allotment	Total With Over- Allotment
Public Offering price
Underwriting discounts and commissions
Proceeds, before expenses, to us

(1) The fees shown do not include the warrant to purchase shares of common stock issuable to the underwriters at closing.

We estimate that the total expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding underwriting discounts and commissions, will be approximately $ , all of which are payable by us. We provided Maxim Group LLC an advance of $35,000 for its anticipated out-of-pocket accountable expenses. Maxim Group LLC will reimburse us for any remaining portion of the advance to the extent such monies were not used for out-of-pocket accountable expenses actually incurred if this offering is not completed. If this offering is completed, we will reimburse Maxim Group LLC for certain out-of-pocket actual expenses related to the offering, including legal fees and expenses incurred to clear the offering with FINRA, background searches of our officers and directors, net road show expenses, and lucite cube mementos, up to a maximum aggregate reimbursable amount of $150,000 (of which $100,000 can be allocated to legal expenses and $50,000 for non-legal expenses).

Representative’s Warrants

We have agreed to issue to the representative of the underwriters warrants to purchase up to 8% of the shares of common stock sold in this offering, including the shares of common stock sold pursuant to the exercise of the over-allotment option, if any. The shares of common stock issuable upon exercise of these warrants are identical to those offered by this prospectus. We are registering hereby the issuance of the representative’s warrants and the shares of common stock issuable upon exercise of the warrants. The representative’s warrants are exercisable for cash or on a cashless basis at per share exercise price equal to 110% of the public offering price of one combination in this offering commencing on the effective date of the registration statement of which this prospectus forms a part and expiring on a date which is no more than five years from such effective date in compliance with FINRA Rule 5110(f)(2)(H)(i). The representative’s warrants and the shares of common stock underlying the warrants have been deemed compensation by FINRA and are, therefore, subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. The representative (or permitted assignees under the Rule) will not sell, transfer, assign, pledge or hypothecate these warrants or the securities underlying these warrants, nor will it engage in any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of these warrants or the underlying securities for a period of 180 days after the effective date. In addition, the representative’s warrants provide for registration rights upon request, in certain cases. The demand registration right provided will not be greater than five years from the date of effectiveness in compliance with FINRA Rule 5110(f)(2)(H)(iv). The piggyback registration right provided will not be greater than seven years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(v). We will bear all fees and expenses attendant to registering the securities issuable on exercise of the representative’s warrants, other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of common stock at a price below the warrant exercise price.

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Determination of Offering Price

Immediately prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between us and the representative of the underwriters. Among the factors to be considered in these negotiations are:

· the prospects for our company and the industry in which we operate;

· our past and present financial and operating performance;

· financial and operating information and market valuations of publicly traded companies engaged in activities similar to ours;

· the prevailing conditions of U.S. securities markets at the time of this offering; and

· other factors deemed relevant.

Lock-Up Agreements

We and each of our officers, directors, and certain existing stockholders aggregating at least % of our outstanding shares, assuming the issuance of shares to warrant holders in exchange for warrants, have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our common stock for a period of six months after the effective date of the registration statement of which this prospectus is a part without the prior written consent of Maxim Group LLC.

Maxim Group LLC may in its sole discretion and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration of the lock-up period. When determining whether or not to release shares from the lock-up agreements, the representative will consider, among other factors, the security holder’s reasons for requesting the release, the number of shares for which the release is being requested and market conditions at the time.

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Price Stabilization, Short Positions and Penalty Bids

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares and warrants than are set forth on the cover page of this prospectus. This creates a short position in our common stock for its own account. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares common stock or warrants over-allotted by the underwriters is not greater than the number of shares of common stock or warrants that they may purchase in the over-allotment option. In a naked short position, the number of shares of common stock or warrants involved is greater than the number of shares common stock or warrants in the over-allotment option. To close out a short position, the underwriters may elect to exercise all or part of the over-allotment option. The underwriters may also elect to stabilize the price of our common stock or reduce any short position by bidding for, and purchasing, common stock in the open market.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing a security in this offering because the underwriter repurchases that security in stabilizing or short covering transactions.

Finally, the underwriters may bid for, and purchase, shares of our common stock in market making transactions, including “passive” market making transactions as described below.

These activities may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on The NASDAQ Capital Market, in the over-the-counter market, or otherwise.

In connection with this offering, the underwriters and selling group members, if any, or their affiliates may engage in passive market making transactions in our common stock immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103 generally provides that:

· a passive market maker may not effect transactions or display bids for our common stock in excess of the highest independent bid price by persons who are not passive market makers;

· net purchases by a passive market maker on each day are generally limited to 30% of the passive market maker’s average daily trading volume in our common stock during a specified two-month prior period or 200 shares, whichever is greater, and must be discontinued when that limit is reached; and

· passive market making bids must be identified as such.

Other Terms

We granted Maxim Group LLC a right of first refusal for future public and private financings for a period of fifteen months from the closing of this offering.

The underwriters and their affiliates may in the future provide various investment banking and other financial services for us, for which they may receive, in the future, customary fees. On February 21, 2014, we entered into an engagement agreement with Maxim Group LLC to provide advisory services related to potential mergers and acquisitions of our company.

Indemnification

We have agreed to indemnify the underwriters against liabilities relating to the offering arising under the Securities Act and the Exchange Act, liabilities arising from breaches of some or all of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these liabilities.

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Electronic Distribution

A prospectus in electronic format may be made available on a website maintained by the representatives of the underwriters and may also be made available on a website maintained by other underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives of the underwriters to underwriters that may make Internet distributions on the same basis as other allocations. In connection with the offering, the underwriters or syndicate members may distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe® PDF will be used in connection with this offering.

The underwriters have informed us that they do not expect to confirm sales of shares and warrants offered by this prospectus to accounts over which they exercise discretionary authority.

Other than the prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by Troutman Sanders LLP, Irvine, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Ellenoff Grossman & Schole LLP, New York, New York.

EXPERTS

The financial statements of U.S. Dry Cleaning Services Corporation as of September 30, 2013 and 2012 and for each of the two years in the period ended September 30, 2013 included in this Prospectus and in the Registration Statement have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, (the report on the financial statements contains an explanatory paragraph regarding the U.S. Dry Cleaning Service Corporation’s ability to continue as a going concern) appearing elsewhere herein and in the Registration Statement, given on the authority of said firm as experts in auditing and accounting.

The financial statements of Advent Cleaners, LLC as of December 31, 2013 and 2012 and for each of the two years in the period ended December 31, 2013 included in this Prospectus and in the Regisration Statement have been so included in reliance on the report of Cho & Woo, independent auditors appearing elsewhere herein and in the Registration Statement, given on the authority of said firm as experts in auditing and accounting.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the shares and warrants and its underlying securities was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, Washington, D.C., 20549, under the Securities Act of 1933, a registration statement on Form S-1 relating to the securities offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to our company and the securities we are offering by this prospectus you should refer to the registration statement, including the exhibits and schedules thereto. You may inspect a copy of the registration statement without charge at the Public Reference Section of the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains an Internet site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. The Securities and Exchange Commission’s World Wide Web address is http://www.sec.gov.

We will file periodic reports, proxy statements and other information with the Securities and Exchange Commission in accordance with requirements of the Exchange Act. These periodic reports, proxy statements and other information will be available for inspection and copying at the regional offices, public reference facilities and Internet site of the Securities and Exchange Commission referred to above. In addition, you will be able to request a copy of any of our periodic reports filed with the Securities and Exchange Commission at no cost, by writing or telephoning us at the following address:

Investor Relations

U.S. Dry Cleaning Services Corporation

20250 Acacia Street, Suite 230

Newport Beach, California 92660

(949) 734-7300

Information contained on our website is not a prospectus and does not constitute a part of this prospectus.

You should rely only on the information contained in or incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume the information in this prospectus is accurate as of any date other than the date on the front of this prospectus.

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INDEX TO FINANCIAL STATEMENTS

U.S. Dry Cleaning Services Corporation
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as at September 30, 2012 and 2013, and June 30, 2014 (unaudited)	F-3
Statements of Operations for the Years Ended September 30, 2012 and 2013 and for Nine Months Ended June 30, 2013 and 2014 (unaudited)	F-4
Statements of Series A Cumulative Convertible Preferred Stock and Stockholders’ Deficit for the Years Ended September 30, 2012 and 2013, and the Nine Months Ended June 30, 2014 (unaudited)	F-5
Statements of Cash Flows for the Years Ended September 30, 2012 and 2013 and for Nine Months Ended June 30, 2013 and 2014 (unaudited)	F-6
Notes to Financial Statements	F-7
Advent Cleaners, LLC
Independent Auditor’s Report	F-42
Balance Sheets at December 31, 2013 and 2012	F-43
Statements of Income and Member’s Equity for the Years Ended December 31, 2013 and 2012	F-44
Statements of Cash Flows for the years ended December 31, 2013 and 2012	F-46
Notes to Financial Statements	F-47
Balance Sheets as of December 31, 2013 and June 30, 2014 (unaudited)	F-54
Statements of Income and Member’s Equity for the Six Months Ended June 30, 2014 and 2013 (unaudited)	F-56
Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 (unaudited)	F-57
Notes to Financial Statements	F-58

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REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors and Stockholders
U.S. Dry Cleaning Services Corporation
Newport Beach, California

We have audited the accompanying balance sheets of U.S. Dry Cleaning Services Corporation as of September 30, 2013 and 2012 and the related statements of operations, Series A cumulative convertible preferred stock and stockholders’ deficit, and cash flows for each of the two years in the period ended September 30, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of U.S. Dry Cleaning Services Corporation at September 30, 2013 and 2012, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

/s/ BDO USA, LLP
Los Angeles, California
September 2, 2014

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U.S. DRY CLEANING SERVICES CORPORATION

US Dry Cleaning Services Corp S-1