As filed with the Securities and Exchange Commission on November 16, 2018

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Virgin Trains USA LLC*

(Exact Name of Registrant as Specified in Its Charter)

Delaware	4011	36-4893027
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

161 NW 6^th Street, Suite 900
Miami, FL 33136
(305) 521-4800

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

Cameron MacDougall, Esq.
Ivy Hernandez, Esq.
c/o Fortress Investment Group LLC
1345 Avenue of the Americas, 45^th floor
New York, NY 10105
(212) 798-6100

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

Copies to:

Michael J. Zeidel, Esq.
Michael J. Schwartz, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000

Richard D. Truesdell, Jr., Esq.
Marcel Fausten, Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000

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

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 under the Securities Exchange Act of 1934.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer ☒	Smaller reporting company o
	Emerging Growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. o

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, $0.01 par value per share	$100,000,000	$12,120

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes the aggregate offering price of additional shares that the underwriters have the option to purchase.

(2)

As paid in connection with the initial filing of the registration statement.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

* The registrant is currently a Delaware limited liability company named Virgin Trains USA LLC. Prior to the closing of this offering, the registrant will be converted to a Delaware corporation and change its name to Virgin Trains USA Inc.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated November 16, 2018

Preliminary Prospectus

Shares

Virgin Trains USA Inc.
Common Stock

This is an initial public offering of common stock of Virgin Trains USA Inc. We are selling shares of our common stock. After this offering, AAF Holdings LLC (the “Virgin Trains Stockholder”), an entity owned primarily by private equity funds managed by an affiliate of Fortress Investment Group LLC (“Fortress”), will own approximately % of our common stock, or % if the underwriters’ over-allotment option is fully exercised.

We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares. We intend to apply to list our shares of common stock on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “VTUS.”

We are an “emerging growth company” as that term is defined in the Jumpstart Our Business Startups Act of 2012 and, as such, will be subject to certain reduced public company reporting requirements. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 19 to read about certain factors you should consider before buying our common stock.

	Per Common Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to us	$	$

(1)

See “Underwriting” for additional information regarding underwriting compensation.

Corvina Holdings Limited (“Corvina”), an affiliate of Virgin Enterprises Limited (“VEL”), each a part of the Virgin Group, has entered into an agreement pursuant to which it has agreed to purchase from us, at a price per share equal to the initial public offering price, shares of newly issued common stock in an amount less than % of the number of shares outstanding immediately following this offering. None of the shares of our common stock to be sold in this private placement transaction will be registered and sold in this offering.

To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from us at the initial public offering price, less underwriting discounts and commissions, for 30 days after the date of this prospectus.

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

The underwriters expect to deliver the shares of common stock against payment on or about , 2018.

Joint Book-Runners

Barclays

J.P. Morgan

Morgan Stanley

Prospectus dated , 2018

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For investors outside the United States: neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside of the United States.

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Market and Industry Data and Forecasts		ii
Special Note Regarding Forward-Looking Statements and Industry Data		iv
Prospectus Summary		1
Risk Factors		19
Use of Proceeds		46
Dividend Policy		47
Capitalization		48
Dilution		49
Selected Combined Financial Data		50
Management’s Discussion and Analysis of Financial Condition and Results of Operations		51
Intercity Passenger Rail — Industry Overview		62
Business		70
Independent Advisor Reports		89
Management		91
Certain Relationships and Related Party Transactions		105
Principal Stockholder		113
Description of Capital Stock		114
Shares Eligible for Future Sale		119
Description of Certain Indebtedness		120
U.S. Federal Income and Estate Tax Considerations for Non-U.S. Holders of Common Stock		122
Underwriting		125
Legal Matters		130
Experts		130
Additional Information		130
Index to Combined Financial Statements		F-1

We have not, and the underwriters have not, authorized anyone to provide you with different or additional information or to make any representations other than those contained or in any free writing prospectuses we have authorized for use with respect to this offering. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you or any representation that others may make to you. We are not making an offer of these securities in any state, country or other jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our common stock. Our business, financial condition, results of operations or cash flows may have changed since the date of the applicable document.

Presentation of Information

Except as otherwise noted, all information in this prospectus is based on the following assumptions:

•

an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus;

•

the underwriters do not exercise their option to purchase additional shares;

•

the conversion of Virgin Trains USA LLC into a Delaware corporation occurs prior to the closing of this offering;

•

that our certificate of incorporation and bylaws are in effect, pursuant to which the provisions under “Description of Capital Stock” are in effect; and

•

excludes shares of common stock available for issuance as equity incentive awards to our management.

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In this prospectus, we refer to the portion of our Florida passenger rail system running between Miami, Florida and West Palm Beach, Florida as the “South Segment.” We refer to the portion of our Florida passenger rail system that is expected to run between West Palm Beach, Florida and Orlando, Florida as the “North Segment.” We refer to the portion of our Florida passenger rail system that is expected to run between Orlando, Florida and Tampa, Florida as the “Tampa Expansion” and to our passenger rail system that is expected to run between Las Vegas, Nevada and Southern California as the “Vegas Expansion.” We anticipate our Florida passenger rail service (including the South Segment from Miami to West Palm Beach, the North Segment from West Palm Beach to Orlando and the Tampa Expansion from Orlando to Tampa) will stabilize by the fourth quarter of 2023 or the first quarter of 2024 following an approximately two-year ramp up period during which ridership is expected to increase as travelers become acquainted with the new rail service and adjust their trip-making habits. We anticipate stablilization of operations for our Vegas Expansion will also occur by the fourth quarter of 2023 or the first quarter of 2024. However, our expectations for stabilized operations are subject to risks and uncertainties and are subject to change based on various factors. See “Special Note Regarding Forward-Looking Statements and Industry Data” and “Risk Factors” in this prospectus for more information on how we might not achieve our expectations.

Trademarks and Trade Names

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

Market and Industry Data and Forecasts

Certain market and industry data included in this prospectus has been obtained from third party sources that we believe to be reliable. In addition, this prospectus contains discussion of certain conclusions and analyses contained in the Ridership and Revenue Study (the “Florida Ridership and Revenue Study”) and the Operations and Maintenance and Ancillary Revenue Report (the “Florida Operations and Maintenance And Ancillary Revenue Report”), each of which was commissioned by us and conducted by Louis Berger U.S., Inc. (“Louis Berger”). We utilize estimates of ridership, average fares and other conclusions and analyses from the Florida Ridership and Revenue Study and Florida Operations and Maintenance and Ancillary Revenue Report, but in light of our updated business and management’s estimates, we have made additional adjustments to items, such as ancillary revenue, to account for changing market conditions as described below. Louis Berger has not verified any such adjustments.

This prospectus also contains discussion of certain conclusions, analyses and estimates of our management that are derived in part from the Investment Grade Ridership and Revenue Forecasts (the “High Desert Corridor Study”) conducted by Steer Davies & Gleave Ltd. (“Steer Davies Gleave”), after giving effect to certain adjustments to take into account differences between the Victorville Phase (as defined below) and the Vegas Expansion. The High Desert Corridor Study was commissioned by the High Desert Corridor Joint Powers Authority, a joint powers authority formed by the counties of San Bernadino and Los Angeles and the cities of Adelanto, Victorville, Apple Valley, Lancaster and Palmdale, to study a proposed high-speed rail line linking Las Vegas to Burbank, Los Angeles and Anaheim. Among other phases, the High Desert Corridor Study contemplates a high-speed rail connection between Las Vegas and Victorville (the “Victorville Phase”), which would represent substantially the same route as the Vegas Expansion. Our management's estimates with respect to the Vegas Expansion are derived in part from estimates of ridership, average fares and other conclusions and analyses about the Victorville Phase and the Southern California and Las Vegas markets contained in the High Desert Corridor Study, including giving effect to the sensitivity tests contained in the High Desert Corridor Study as described below. However, the High Desert Corridor Study was not commissioned in connection with or in contemplation of the Vegas Expansion or this registration statement, and no third party, including Steer Davies Gleave, was involved in making our conclusions, analyses, adjustments or estimates. No third party, including Steer Davies Gleave, has independently verified our conclusions, analyses and estimates with respect to the Vegas Expansion. Accordingly, the conclusions, analyses and estimates with respect to the Victorville Phase contained in the High Desert Corridor Study are not directly applicable and may differ from those for the Vegas Expansion, and these differences may be material. In addition, the High Desert Corridor Study was dated March 2017 and, except as set forth therein, all information in the study speaks only as of such date.

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Our market estimates are calculated by using independent industry publications, government publications, and third party forecasts in conjunction with our assumptions about our markets. We have not independently verified such third party information. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings “Special Note Regarding Forward-Looking Statements and Industry Data” and “Risk Factors” in this prospectus.

We have made certain adjustments to the conclusions, analyses and estimates in the Florida Ridership and Revenue Study, the Florida Operations and Maintenance and Ancillary Revenue Report and the High Desert Corridor Study.

To derive expected ridership for the Vegas Expansion, we utilized the base case ridership projection provided in the High Desert Corridor Study and adjusted it using certain of the sensitivities provided in the study, applying a 12% reduction of ridership from the base case to give effect to potential increased journey time and decreased frequency of our service in comparison to the service assumed in the study’s base case:

•

an 8.4% reduction of ridership to give effect to potential increases in travel time;

•

a 3.6% reduction of ridership to give effect to potential reduced frequency in our expected schedule compared to the base case assumption of train service frequency of every 20-30 minutes, based on the High Desert Corridor Study’s projection of a 3.5% reduction in ridership if train service frequency were reduced by half.

The sensitivities provided in the High Desert Corridor Study are not provided in the study in contemplation of solely the Victorville Phase in isolation, nor do such sensitivities contemplate the cumulative effect of increases in travel time and reduced frequency of schedule. As a result, our management’s estimates of expected ridership may differ from actual results and such difference may be material.

To project expected ancillary revenue for the Vegas Expansion, we utilized the projections provided in the Florida Operations and Maintenance and Ancillary Revenue Report and increased the expected ancillary revenue by $5 per passenger to reflect, in management's judgment, the characteristics of the Vegas Expansion market, primarily due to the expected higher demand for onboard and in-station food and beverage.

We based our ridership and ancillary revenue expectations for the Florida system on the Florida Ridership and Revenue Study prepared by Louis Berger, with no changes to the base case projections for 2023.

For both the Florida system and Vegas Expansion fare projections, we assumed a 2.8% annual increase in fares, based on expected inflation and fare growth, from 2016 for the Florida Ridership and Revenue Study with respect to the South Segment and the North Segment, from 2017 for the Florida Ridership and Revenue Study with respect to the Tampa Expansion and from 2015 for the High Desert Corridor Study with respect to the Vegas Expansion.

The foregoing adjustments and all conclusions, analyses and estimates based upon them, are management’s estimates only and speak only as of the date of this prospectus. All such adjustments, conclusions, analyses and estimates are inherently imprecise and subject to risks and uncertainties that could cause actual results to differ materially from management’s expectations. See “Special Note Regarding Forward-Looking Statements and Industry Data” and “Risk Factors.”

iii

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

Some of the information contained in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this prospectus are based upon our limited historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, Fortress, the Virgin Trains Stockholder, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are, or will be, important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:

•

we may not be able to complete the XpressWest Acquisition, which is subject to customary closing conditions;

•

cost overruns and delays in the completion of our Florida passenger rail system, the Vegas Expansion and any other future rail system, changes to plans and specifications, as well as difficulties in obtaining requisite approval or sufficient financing to pay for such costs and delays;

•

reduced revenues as a result of delays in completion of our Florida passenger rail system or any future rail system;

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our dependence on third-party contractors for the successful, timely and cost-effective completion and operation of our express passenger rail system or any future rail system;

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our dependence on third-party suppliers for the successful, timely and cost-effective completion and operation of our express passenger rail system or any future rail system;

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our current limited revenue and cash flow history, and the significant uncertainty regarding our ability to achieve profitability and generate positive cash flows in the future;

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our ability to obtain additional funding in order to complete our express passenger rail system or any future rail system;

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adverse macroeconomic and business conditions in Florida, Southern California, Las Vegas or any other areas into which we may expand;

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the potential inaccuracy, incorrectness and inherent uncertainty of the estimates in this prospectus of future ridership and average fare prices for our Florida passenger rail system and the Vegas Expansion;

•

our ability to achieve the target stabilized operating income margin set forth in this prospectus;

•

our ability to successfully implement our proposed business strategy, particularly our ability build passenger rail systems in Florida, Southern California to Las Vegas and beyond;

•

our ability to achieve stabilized operations for our Florida passenger rail system or any future rail system in our anticipated timeframes;

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our ability to maintain or renew any permits necessary to successfully operate our passenger rail systems in Florida, Southern California, Las Vegas and beyond;

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our ability to continue to use, maintain, enforce, protect and defend our owned and licensed intellectual property, including the Virgin brand and other intellectual property licensed to us under the Virgin License Agreement;

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our ability to successfully rebrand under “Virgin Trains USA”;

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our limited operating history;

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•

rising fuel costs;

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failure to obtain and maintain required approvals and permits from governmental, regulatory and non-governmental agencies;

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risks, costs and liabilities associated with environmental and other government regulations, including any future changes in such regulations;

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our ability to successfully develop real estate adjacent to existing or future stations in our anticipated timeframes;

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severe weather and natural disasters;

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losses and liability that may not be covered by our insurance;

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risks related to the shared use of our corridor with freight operations and potentially commuter rail;

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our ability to satisfy the conditions precedent to effectuate agreements with certain government authorities and to enforce our rights under such agreements;

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increased labor costs and the unavailability of skilled workers, labor disputes and work stoppages;

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our ability to retain key members of management;

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losses and adverse publicity stemming from accidents or service disruptions;

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acts of terrorism or war;

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potential cybersecurity attacks; and

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reliance on technology and technology improvements.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this prospectus that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

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Prospectus Summary

This summary highlights information contained elsewhere in this prospectus and does not contain all the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the sections entitled “Risk Factors,” “Special Note Regarding Forward-Looking Statements and Industry Data,” “Selected Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and the accompanying notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “we,” “us,” “our,” the “Company,” “Virgin Trains” and similar terms refer to Virgin Trains USA LLC or to Virgin Trains USA Inc. (depending on whether the statement relates to the period before or after our conversion into a corporation in connection with this offering), and in each case, its subsidiaries, including certain other wholly-owned subsidiaries of the Virgin Trains Stockholder that will be contributed to the Company prior to the closing of this offering.

In addition, this prospectus contains discussion of certain conclusions and analyses contained in the Florida Ridership and Revenue Study and the Florida Operations and Maintenance and Ancillary Revenue Report, each conducted by Louis Berger. Any discussion herein of the Florida Ridership and Revenue Study, the Florida Operations and Maintenance and Ancillary Revenue Report or such report’s conclusions or analyses are expressly qualified by reference to the full text of such report. You should read carefully the Florida Ridership and Revenue Study, the Florida Operations and Maintenance and Ancillary Revenue Report and copies of which have been filed as an exhibit to the registration statement of which this prospectus is a part and are publicly available at www.sec.gov. See “Independent Advisor Reports.”

Our Company

We own and operate an express passenger rail system connecting major population centers in Florida, with plans to expand operations further in Florida, Las Vegas and elsewhere in North America. We are the first new major private passenger intercity railroad in the United States in over a century, and we believe our business represents a scalable model for twenty-first century passenger travel in North America.

We currently operate between Miami and West Palm Beach, one of the most heavily traveled and congested regions in the U.S. We have commenced construction of the expansion of our Florida passenger rail system to Orlando, Florida, and we intend to further expand our rail service to Tampa, Florida. Louis Berger estimates the total potential addressable market of travelers across our Miami to Tampa corridor to be approximately 413 million trips annually. We can operate up to 32 trains daily that are capable of speeds of up to 125 miles per hour, and we own stations located in the heart of downtown cities and major transit hubs in Florida. We believe our passenger rail system offers travel that is faster, safer, more eco-friendly, more reliable, less expensive, more productive and more enjoyable than travel by car or air.

On September 18, 2018, we announced our expansion to the west coast through our proposed acquisition of DesertXpress Enterprises, LLC and certain related assets (the “XpressWest Acquisition”). Pursuant to the XpressWest Acquisition, we have agreed to acquire the rights to develop a high-speed rail project within a corridor between Victorville, California and Las Vegas, Nevada that is expected to be federally approved. The XpressWest Acquisition provides us with the opportunity to develop, operate and connect Las Vegas with Southern California by means of a new passenger rail system. The Vegas Expansion will link one of the most traveled routes in the United States, connecting approximately 13.4 million people living in the Los Angeles metro area with the approximately 2.2 million people living in the Las Vegas metro area, which is one of the most visited cities in the United States. The XpressWest Acquisition is anticipated to close in the second quarter of 2019, subject to customary closing conditions. The closing of the XpressWest Acquisition is not a condition to the closing of this offering, and we cannot assure you that the XpressWest Acquisition will be consummated on our expected timeline or at all.

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population and international traveler base of our Florida market as well as the California and Las Vegas markets we intend to serve. We also expect to benefit from cross-marketing, distribution and customer loyalty programs with other VEL passenger travel businesses, many of which conduct operations within our markets. Under the terms of the agreement with respect to the concurrent private placement, Corvina has agreed to purchase from us, at a price per share equal to the initial public offering price, shares of newly issued common stock in an amount less than % of the number of shares outstanding immediately following the offering.

We intend for our Florida passenger rail service and the Vegas Expansion to generate meaningful profits and serve as a scalable model to expand our operations to a number of other large and congested intercity travel corridors in North America where large and growing travel populations seek a similar solution for medium-distance, “too long to drive, too short to fly” travel.

We aim to execute on our growth strategy by offering three compelling benefits to intercity travelers: speed of travel, customer experience and cost savings:

Speed of Travel – Our express transit service is significantly faster than car travel. For example, our Miami to Orlando service will take approximately 3 hours 15 minutes compared to an estimate of approximately 4 hours 15 minutes by car along I-95 or 3 hours 50 minutes along the Florida Turnpike, which is a toll road. We believe the Vegas Expansion will result in trips between Victorville and Las Vegas taking approximately 1 hour 30 minutes compared to an estimate of approximately 2 hours 50 minutes by car.

Customer Experience – Whether traveling for business or leisure, passengers can maximize productivity, using mobile devices freely, and enjoy a variety of amenities, while traveling from one downtown location to another on a reliable schedule and in an environmentally friendly way. Our trains depart and arrive at our bright, new state-of-the-art stations, and all of our trains are equipped with free high-speed WiFi connections. Additionally, passengers are able to avoid travel time to the airport, airport security and sitting in commuter traffic.

Cost Savings – We expect to offer service between Miami and Orlando for fares that are lower than the cost of driving or flying for individual travelers. Based on our expected fares for an individual traveler, we expect that a trip on our trains between Miami and Orlando will be approximately 25% less expensive than driving and approximately 30% less expensive than flying. We expect the fares between Victorville and Las Vegas will average approximately $60, which is less expensive than the cost of driving (when including parking costs) and the typical cost of flying. For example, the cost of a next day, Friday flight from Los Angeles to Las Vegas can often exceed $150.

These benefits are consistent with factors that have made other express passenger rail systems successful throughout the world.

Our Growth Potential in Florida

When our Florida passenger rail system is fully built-out and operational between Miami and Orlando, we expect to carry approximately 6.6 million passengers annually, as estimated by Louis Berger. Louis Berger estimates that a fully built-out and operational service between Orlando and Tampa would carry an additional 2.9 million passengers annually, which would result in fully operational annual stabilized ridership of approximately 9.5 million passengers for our Florida passenger rail system. The Tampa Expansion is contingent on our ability to obtain certain land rights, which requires that we demonstrate the financial wherewithal to complete our Florida passenger rail system. Based upon certain estimates and assumptions prepared for us by Louis Berger regarding our service between Miami, Orlando and Tampa to generate approximately $810 million of total revenue in our first stabilized year (including the South Segment from Miami to West Palm Beach, the North Segment from West Palm Beach to Orlando and the Tampa Expansion from Orlando to Tampa) after an initial ramp up period of our operations. To arrive at this estimate, our management applied a combined annual fare growth and inflation rate of approximately 2.8% to Louis Berger’s estimates, thereby projecting annualized ticket revenue of approximately $700 million by the fourth quarter of 2023 or the first quarter of 2024. Louis Berger has not verified our management's adjustments. The determination of the year of stabilization is based on information the Company provided to Louis Berger, which information has not been validated by Louis Berger. In addition, our management projects additional revenue of approximately $110 million based on the Florida Operations and Maintenance and Ancillary Revenue Report, which (based on management estimates Louis Berger determined were reasonable) expects revenue from food and beverage, parking, naming rights, sponsorships and partnerships, merchandise, advertisement and other fees to equal approximately 14% of total revenue (or approximately $12 per passenger). Our ancillary revenue is expected to consist of food and beverage sales, merchandise sales, parking fees, advertising, sponsorships and marketing

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affiliations (including naming rights), commissions from our travel partners and ground transportation extensions and other services. Our projections and forecasts are subject to risks and uncertainties and could change based on various factors. See “Special Note Regarding Forward-Looking Statements and Industry Data” and “Risk Factors.” We believe our service will generate compelling returns on investment given our efficient cost structure and predictable operating expenses, and we target a stabilized operating income margin, before depreciation and amortization, of approximately 70% of total revenue. This estimate is based on the Florida Operations and Maintenance and Ancillary Revenue Report, which estimated operating and maintenance expenses in 2023 to be approximately 30% for the South Segment and the North Segment. We expect that this margin will remain static or improve as a result of the Tampa Expansion, as a significant portion of our projected administrative and other costs are calculable or fixed and can support increased revenue without a corresponding increase in cost. In addition, we intend to pursue new real estate development opportunities at or around existing or future stations using land in Miami and Fort Lauderdale that we will own at or prior to the completion of this offering and other land we may acquire in Florida. We expect to work with or hire some or all of the same real estate development team of Florida East Coast Industries, LLC (our “Parent”) that has successfully developed commercial real estate in Southern Florida to develop new office, commercial, retail, entertainment, hotel and/or multi-family residential facilities, which we believe will enhance the appeal of our Florida passenger rail system. See “Risk Factors—Risks Related to Our Business—Our pursuit of new real estate development opportunities entails a number of significant risks that may prevent us from fully realizing some or all of the benefits of developing real estate.”

Our Florida Passenger Rail Network

Our Recently Announced Las Vegas Expansion

We estimate a fully operational annual stabilized ridership of 11.3 million passengers for the Vegas Expansion by the fourth quarter of 2023 or the first quarter of 2024. We expect the ramp up of ridership for the Vegas Expansion

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will proceed at a faster rate than our Florida passenger rail system due in part to the more concentrated travel pattern in the corridor between Las Vegas and Southern California. We also expect to stabilize by the fourth quarter of 2023 or the first quarter of 2024. We expect to generate approximately $863 million in total revenue from the Vegas Expansion in its first year of stabilized operations, which includes approximately $674 million in ticket revenue and approximately $189 million in ancillary revenue (which reflects an expected $5 in additional ancillary revenue per passenger as compared to our Florida passenger rail system, based on management’s expectation that the average trip length and nature of the market served by the Vegas Expansion will result in increased demand for food and beverage and potential sponsorship opportunities). Similar to our Florida passenger rail system, we believe that the Vegas Expansion could generate compelling returns, and our goal is to generate a stabilized operating income margin, before depreciation, amortization and interest, of approximately 70% of total revenue.

We intend for the Las Vegas station to be located adjacent to the Las Vegas strip and to serve as a major intermodal hub with access to taxis, buses, ride shares, shuttles and limousines. We expect the initial Southern California station to be located in Victorville, and we also intend to add additional stations and provide connections to California Metrolink.

In connection with the XpressWest Acquisition, we have also entered into an agreement to acquire, subject to customary closing conditions, approximately 38 acres of land adjacent to the Las Vegas strip for construction of the Las Vegas station and mixed-use development for a purchase price of approximately $150 million, of which approximately $140 million will be paid in cash and the balance in shares of our common stock. The XpressWest Acquisition is anticipated to close in the second quarter of 2019, subject to customary closing conditions. The closing of the XpressWest Acquisition is not a condition to the closing of this offering, and we cannot assure you that the XpressWest Acquisition will be consummated on our expected timeline or at all.

The first phase of the Vegas Expansion is expected to be built on a right of way within and adjacent to Interstate 15, traversing 185 miles with no at-grade or pedestrian crossings. Construction is expected to begin in 2019 and initial service is expected to begin by the fourth quarter of 2021 or the first quarter of 2022. We expect to fund the development costs with the net proceeds from this offering and/or future debt or equity financings.

Our Vegas Expansion Rail Network

Expansion Opportunities Beyond Florida and Las Vegas

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Expansion – connecting highly populated cities with substantial intercity travel and separated by distances of 200 to 300 miles that are “too long to drive, too short to fly.” As we have done in Florida and Las Vegas, we intend to target markets where we believe we can utilize existing transportation corridors – either rail, highway or a combination of both – to cost effectively build our systems, as opposed to developing entirely new corridors at potentially significantly higher costs.

The map below identifies several major U.S. cities that possess what we believe are key attributes for a successful intercity rail network using existing infrastructure:

By using existing infrastructure, we believe we can plan, permit and build new rail service significantly faster and cheaper than alternative express passenger rail projects in these areas. As the only successful private developer of express passenger rail currently operating in the United States, we believe we are uniquely positioned to leverage our expertise, brand and scalable platform to implement similar intercity passenger rail systems in a number of these markets.

Our Market

Overview

We provide “intercity” passenger rail transportation, which is characterized as service operating within medium-distance travel corridors, generally between 200 to 300 miles, that connect large population centers and experience high and increasing volumes of travelers. Intercity passenger rail services in the U.S. and globally are typically highly profitable. Such services have the ability to offer faster travel times with greater convenience at a lower cost when compared to other available modes of travel in their markets (such as car and air). Our business is differentiated from a “commuter” railroad, which is commonly government-owned and subsidized to maintain artificially low fares and provide high frequency service between large numbers of local stations within a single metro area resulting in high operating costs.

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Examples of these intercity rail services comparable to our business include Amtrak's Acela service in the northeastern U.S. and several privately owned European services, such as the Eurostar service operating between London and Paris, and Italo, which operates between several major cities in Italy and Virgin Trains (U.K.), which operates between London and Manchester. The table and summaries below contain publicly available information for select intercity rail services, including regions served, annual passengers, market share and financial information.

Examples of Intercity Passenger Rail Systems

	Amtrak
	Northeast Corridor (Including Acela)	Acela	Eurostar	Italo	Virgin Trains (U.K.)
Major Cities Served:	Boston - New York - Philadelphia - D.C.		London - Paris	Rome - Milan	London - Manchester

Distance (Miles)*:	215 (Boston - NY) 100 (NY - Phila.) 240 (NY - D.C.)		290	360	160
Annual Passengers (Total System):	12.0mm	3.4mm	10.3mm	12.8mm	38.3mm

Market Share**:	15% (Boston - NY) 29% (NY - Phila.) 27% (NY - D.C)		80%	23%	N/A

Annual Revenue:	$1.3bn	$615mm	$1.2bn	$0.5bn	$1.5bn

EBITDA margin***:	37%	47%	61%	57%	55%

Represents approximate distances between selected major city pairs only; does not include distance of entire network.

Sources: Company and industry reports, press releases and news articles.

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Amtrak: Amtrak Monthly Performance Report September 2017 - $471.7mm EBITDA / $1.3bn revenue; Eurostar: Eurostar Strategic Report, Directors’ Report and Financial Statements 2017 - $185.7mm EBITDA + $519.0mm access payments + $14.8mm equipment lease payments / $1.2bn revenue; Italo: Italo 2017 Annual Report - $175.9mm EBITDA + $107.8mm access payments + $8.9mm equipment lease payments / $513.9mm revenue. Virgin: Virgin FY2018 financials based on FY2018 Annual Report - $81.8mm EBIT + $173.6mm rolling stock / lease installments + $241.0mm track access, station and depot access + $322.3mm franchise fees / $1.5bn revenue.

For descriptions of these comparable intercity rail services, see “Intercity Passenger Rail—Industry Overview—Overview—Comparable Intercity Passenger Rail Services.”

Market Capture Rates

Due to their ability to offer travel that is faster, more productive, more convenient and more comfortable along densely traveled corridors, intercity railroads commonly capture a significant share of their relevant travel market, even at fare levels that are often higher than the cost of driving or flying. These markets represent travel destinations that are “too long to drive, too short to fly” for many travelers, making travel by rail the most effective, efficient and viable mode of transportation. Rail travel in the U.S. and throughout the world has reached an all-time high and has continued to grow at a rate faster than any other major mode of travel. According to a recent Brookings Institute report, total U.S. intercity rail passengers grew at a rate of almost double the rate of U.S. gross domestic product and approximately triple the rate of travel by air and car over the same period. Capture rates experienced by peer express passenger rail systems, which operate along some of the most traveled corridors served by intercity railroads, have ranged from 15% to 80%. For more information, see “Intercity Passenger Rail—Industry Overview—Overview—Intercity Passenger Rail—Market Capture Rates.”

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Demonstrated Ramp Up of New Intercity Rail Systems

For more information, see “Intercity Passenger Rail— Industry Overview—Overview—Demonstrated Ramp Up of New Intercity Rail Systems.”

Trends

Intercity travel in the United States has reached all-time highs and we expect several powerful trends to continue to drive ridership and demand for high-speed rail service.

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Growing roadway congestion. Growing travel demand, aging infrastructure and significant restrictions on the ability to expand roadways all contribute to increased roadway congestion in many areas of the United States, which includes 10 of the top 25 cities in the world with the worst traffic congestion. U.S. drivers incurred more than $305 billion in direct and indirect costs attributable to congestion in 2017.

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Dependence on mobile devices and productivity. Americans are spending an increasing portion of their days using mobile devices both for work and personal activities.

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New first/last-mile travel solutions. The recent emergence of rideshare services, such as Uber and Lyft, facilitate the use of passenger rail service by providing transport to and from rail stations.

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Travel preferences are changing. Many Americans, particularly younger Americans, seek a new means of travel in lieu of driving their own cars. Millennials represent approximately 70% of Uber users in the U.S., are three times more likely than certain other age groups to use public transit and are less likely to obtain driver’s licenses (only 45% of 17 year olds held a driver’s license in 2014, compared to 75% in 1978).

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Growing focus on safety and the environment. We believe that many U.S. roadways are becoming increasingly dangerous. U.S. motor-vehicle deaths in recent years have hit record numbers and are increasing at an alarming rate, including the I-95 corridor in Miami-Dade which is the deadliest interstate road in America as measured by fatalities per roadway mile. In addition, compared to other modes of travel, rail is substantially more fuel efficient per trip than driving or flying.

Strategy

We are the first new major private passenger intercity railroad in the United States in over a century, and we believe our business represents a scalable model for twenty-first century passenger travel in North America. Our goal is to build railroad systems in North America that connect major metropolitan areas with significant traffic and congestion. We believe that the economics of passenger rail service offer a highly compelling investment opportunity. In addition, we believe that passenger volume creates additional opportunities, such as sponsorship deals and transit

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oriented development of real estate at or near our stations for mixed uses including commercial, retail, restaurants and residential purposes that could generate further meaningful returns.

We intend to achieve our goals by pursuing the following strategies:

Complete the Build-Out of Our Florida Express Passenger Rail System

Over the past several years, we have built three new state-of-the-art rail stations in Miami, Fort Lauderdale and West Palm Beach, acquired rolling stock, including five new train sets (10 locomotives and 20 coaches), secured all necessary operating permits and government authorizations, and commenced service between Miami and West Palm Beach. Short-distance service (Miami to Fort Lauderdale, Miami to West Palm Beach and Fort Lauderdale to West Palm Beach) is expected, based on estimates from Louis Berger, to carry approximately 3.1 million passengers annually by the fourth quarter of 2023 or the first quarter of 2024. The determination of the year of stabilization is based on information the Company provided to Louis Berger, which information has not been validated by Louis Berger. We have commenced construction of the expansion of our Florida passenger rail system to Orlando, and we intend to further expand our rail service to Tampa. We have secured substantially all material permits, government authorizations, real estate and track rights necessary for our expansion to Orlando, and with the net proceeds from this offering, the concurrent private placement and/or future debt or equity financings, we expect to secure all funding necessary for the projected cost of our expansion to Orlando. We will utilize Florida State Road 528 (“SR528”) as a right-of-way to connect our existing rail corridor to Orlando. Our build-out to Orlando is expected to be complete in approximately three years, and is expected to increase our annual stabilized ridership to approximately 6.6 million passengers at the time of stabilization as estimated by Louis Berger. Based on estimates from Louis Berger, we expect an additional 2.9 million passengers annually on a stabilized basis by expanding our service between Orlando and Tampa.

Capitalize on Virgin Brand Awareness and Generate Cross-Selling Opportunities with Other Virgin Branded Travel Companies

We intend to capitalize on cross-selling opportunities and customer loyalty programs with other Virgin branded travel and hospitality businesses in our markets. Virgin Atlantic, a large global passenger airline, flies over 1 million passenger journeys annually between the United Kingdom and Florida and over 250,000 passenger journeys annually between the United Kingdom and Las Vegas. Virgin Hotels, a U.S hotel chain founded in 2010 and headquartered in Miami, will manage and rebrand the Hard Rock Hotel & Casino in Las Vegas to Virgin Hotels Las Vegas in 2019. Virgin Voyages, a cruise company founded in December 2014, is building four new 2,770-passenger cruise ships. The first of these will be based in Port Miami and is expected to begin voyages in 2020. We believe there are significant opportunities to grow our ridership by directing customers of other Virgin branded companies within our markets on to our rail system, including by using the planned cross-platform loyalty program affiliated with VEL.

Achieve Profitability by Capturing Modest Portion of Travel Market and Offering Competitive Pricing

We believe we can achieve profitability by charging ticket prices – and capturing a percentage of the travelers in our markets – that are lower than those of established express passenger rail systems. We currently charge fares that are substantially lower than those charged by established express rail systems over comparable distances. For example, standard passenger service fares on Amtrak’s Acela service, the most comparable intercity service in the United States to our service, average approximately $180 for short distance trips, such as New York to Philadelphia, while we expect to charge an average of approximately $50 for our Miami to West Palm Beach Service; Acela service for long distance trips, such as New York to Washington, average approximately $300, compared to our expected average fare of approximately $100 for our Miami to Orlando service. Moreover, we believe our fares are highly competitive relative to the cost of travel for the same routes via other modes such as driving, rideshare services and flying. The average cost of a next day flight between Miami and Orlando is approximately $160, and the average cost of rideshare service between Miami and Orlando is approximately $300, both higher than our expected fares. An individual traveling on an airline ticket purchased on this timeline or traveling on their own via rideshare may thus experience significant savings by using our passenger rail service. We expect to achieve our revenue projections by capturing approximately 2.0% of the estimated addressable travel market between Miami and Tampa, which is significantly lower than the approximately 10-30% market share captured by established rail systems such as Acela and Italo. We believe that our relatively lower fares will drive ridership in the early stages of our business and that there is a compelling opportunity to increase both fares and ridership in line with industry levels as our business matures.

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Build Passenger Rail Systems that Connect Major Metropolitan Areas with Significant Intercity Traffic and Congestion

We believe a persuasive opportunity exists to introduce passenger rail systems to connect metropolitan areas of sufficient distance and with significant traffic and congestion. Our expansion plans are initially focused on markets with characteristics and demographics similar to those of our Florida passenger rail system and the Vegas Expansion – connecting highly populated cities with substantial intercity travel and separated by distances of 200 to 300 miles that are “too long to drive, too short to fly.” We intend to expand into markets where we believe we can utilize existing transportation corridors – either rail, highway or a combination of both – to cost effectively build our systems, as opposed to developing entirely new corridors at potentially significantly higher costs.

Our first expansion market outside Florida is a rail service line between Las Vegas, Nevada and Southern California for which we have agreed to acquire the rights pursuant to the XpressWest Acquisition and expect to begin construction in 2019, subject to regulatory approvals. Examples of other potential expansion markets include Atlanta, Georgia to Charlotte, North Carolina (240 miles), Dallas to Houston, Texas (240 miles), Los Angeles to San Diego, California (120 miles) and Portland, Oregon to Vancouver, British Columbia (315 miles). We believe the Virgin brand could provide the opportunity for public relations events to generate media coverage in new markets and that awareness of the Virgin brand could help generate interest from riders in new markets. This increased interest from riders may allow us to penetrate new markets more quickly than we otherwise would. With our expertise, brand and scalable platform, we believe that we are well positioned to implement similar intercity passenger rail systems in a number of these markets.

Drive Organic Growth Through Increased Ridership and Revenue

We intend to grow our ridership and revenue through a number of initiatives, including capturing a larger share of the total travelers within our markets, increasing fares utilizing yield management strategies and increasing our trip frequency in response to demand, especially at peak hours and during special events. Several comparable intercity passenger rail systems typically capture between 10-30% or more of their respective travel markets. We believe we have the ability to approach similar market share as our business matures, although our target financial performance assumes lower travel market share. Louis Berger estimates the total potential addressable market of travelers across our Miami to Tampa corridor to be approximately 413 million trips annually.

Create High-Value Real Estate Development Opportunities

Because of the high number of passengers expected to pass through our downtown stations, there are several attractive retail, residential and commercial transit-oriented real estate development opportunities at or near our station sites. Currently, our Parent is developing approximately 1.5 million square feet of mixed-use office, residential, retail and parking facilities at and around our stations in Miami, Fort Lauderdale and West Palm Beach, and key tenants, including top-tier food and beverage, fashion, fitness and life-style brands, have leased and are in negotiations to lease space. We intend to pursue new real estate development opportunities at or around existing or future stations using land in Miami and Fort Lauderdale that we will own at or prior to the completion of this offering and other land we may acquire in Florida. We expect to work with or hire some or all of the same real estate development team of our Parent that has successfully developed commercial real estate in Southern Florida to develop new office, commercial, retail, entertainment, hotel and/or multi-family residential facilities, which we believe will enhance the appeal of our Florida passenger rail system.

In connection with the Vegas Expansion, we also expect to develop commercial real estate to pursue new office, commercial, retail, entertainment, hotel and/or multi-family residential facilities in Las Vegas, which we believe will enhance the appeal of the Vegas Expansion. We have entered into an agreement to acquire approximately 38 acres of land adjacent to the Las Vegas strip for potential station location and real estate development.

We expect the costs involved in pursuing real estate developments to include real estate acquisition costs, construction and permitting costs, as well as financing and leasing costs. We do not intend to use the funds from this offering and/or the concurrent private placement to pursue such real estate development opportunities. Developing real estate entails a number of significant risks such as construction or permitting delays, construction defects or the inability to obtain financing on attractive terms. The occurrence of any of these risks may prevent us from fully realizing some or all of the benefits of developing real estate.

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Capitalize on Passenger Volume to Generate Revenue from Multiple Sources

In addition to ticket sales, we intend to capitalize on passenger volume to generate revenue through a number of high margin ancillary revenue opportunities, including food and beverage sales, merchandise sales, parking fees, advertising, sponsorships and marketing affiliations (including naming rights), commissions from our travel partners and ground transportation extensions and other services. Our trains and stations provide multiple opportunities for advertisers to reach a large and captive audience. We sell advertising space on video screens, monitors, kiosks and displays at each station and on board our fleet of trains and ground transportation facilities. We also actively pursue long-term partnerships and sponsorships with a variety of organizations, including financial institutions and technology companies. In addition, we expect to generate income through travel packaging relationships with third parties such as car rental companies, hotels and theme parks.

Continuously Maintain “Safety First” Culture

The safety of our passengers, employees and the communities in which we operate is our top priority. We strive to be one of the safest rail systems in North America and are upgrading our signal system to be fully-compliant with Positive Train Control (“PTC”) standards. PTC technology facilitates a centrally monitored and controlled network to bring trains to a stop if certain safety requirements are exceeded. Installing PTC systems allow our trains to operate within a dynamic safety environment that constantly monitors speed restrictions, track maintenance and similar items and can intervene to stop a train before it reaches an unsafe condition.

We have undertaken certain initiatives to educate pedestrians and drivers on the importance of rail safety designed to prevent accidents and fatalities. We have also collaborated with Operation Lifesaver, a national nonprofit organization focused on rail safety education, to develop and activate a rail safety campaign, to distribute safety information to students and families in certain school districts in South Florida and to train approximately 40 Virgin Trains teammates to be authorized Operation Lifesaver volunteers. We are further collaborating with Operation Lifesaver to launch a state-wide rail safety initiative, including broadcast and radio public service announcements. In addition, we continuously maintain an aggressive awareness campaign consisting of partnerships with cities and counties along the corridor, the Federal Railroad Administration (“FRA”) and the Florida Department of Transportation (“FDOT”).

Strengths

Strong Momentum and Ridership Growth

Since commencing service in January 2018, we have experienced substantial growth in the number of passengers utilizing our services. We expect this trend to continue over the course of our ramp up period as we approach stabilized ridership for the South Segment, consistent with comparable system ramp up periods experienced by peer express passenger rail systems such as Acela, Eurostar and Italo, which averaged 29%, 81% and 86% of stabilized year four ridership in full years one, two and three after each system launch. For more information, see “Intercity Passenger Rail—Industry Overview—Overview—Demonstrated Ramp Up of New Intercity Rail Systems.”

We experienced a 42% increase in ridership in the second quarter of 2018 compared to the first quarter of 2018, and experienced an increase of approximately 50% in ridership in the third quarter of 2018 compared to the second quarter of 2018. The trends driving growth are continuing and, as a result, our management expects that ridership in the fourth quarter of 2018 will continue to demonstrate strong levels of growth. We believe our new brand and relationship with the Virgin Group could help accelerate our ridership growth in the future as we continue to move toward achieving stabilized ridership.

World-Class Virgin Brand and Partnership

We believe that the Virgin brand is widely recognized in the United States and is known for being innovative and entrepreneurial. We also believe that the brand is recognized worldwide from the Virgin Group’s offerings in music, passenger rail travel, air travel, hotels, wireless service and various other products and services. We believe our riders will associate the Virgin brand with a high-quality and high-value travel experience. We hope to capitalize on the strength of the Virgin brand in order to target riders who value an enhanced travel experience. Upon entering a new market, we believe existing awareness of the Virgin brand could help to generate interest from new riders that will potentially allow us to ramp up ridership faster than we otherwise would.

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Additionally, we believe that, as our partner and a shareholder, Virgin Group will further enhance our operational capabilities in the high speed intercity passenger rail space. Virgin Group has significant experience investing in the rail sector that we expect to leverage upon, including its ongoing investment in Virgin Trains, a high speed intercity passenger rail system in the United Kingdom with which passengers took more than 38 million trips during the fiscal year ended March 31, 2018.

Unique and Valuable Infrastructure

We have the distinct advantage of building our Florida passenger rail system primarily on an existing rail corridor, which has the significant benefit of reducing both construction costs and completion times relative to greenfield rail systems. As the only uninterrupted rail corridor connecting Miami to Orlando and major communities along the east coast of Florida, our rail line will be extremely difficult to replicate and creates a significant barrier to entry to the market. Moreover, most passenger rail systems globally operate on corridors that they access under temporary leases or similar arrangements and share with other independent third parties operating passenger or freight rail service. These temporary arrangements increase the cost of operating passenger service (requiring rent, access fees or concession payments), place limitations on operators of passenger rail service, and create renewal uncertainty at the end of the term of the lease. Subject to certain limitations, we own the permanent, perpetual and exclusive rights, privileges and easement in the South Segment and the North Segment, and therefore, we do not need to make concession payments to operate our business, which increases our profit margins.

Attractive Station Locations

We currently own our three stations in Miami, Fort Lauderdale and West Palm Beach. In Orlando, our station will be integrated into the Orlando International Airport’s new South Terminal and is owned by the airport and leased to us. All of our stations in South Florida are located in cities with dense populations, near government/business locations and major travel destinations and with multiple connections to public and private ground transportation, as well as local transit services. For example, our downtown Miami station is located within a five-block radius of numerous destinations, including PortMiami, American Airlines Arena, the Miami-Dade County government center complex and the Adrienne Arsht Center for the Performing Arts. The location is also served by both Metrorail (a 25-mile metropolitan rail service with approximately 20 million annual riders) and Metromover (a free, elevated automated people mover service for easy access to downtown Miami sites with approximately 9.5 million annual riders), and we expect it to become a stop for Tri-Rail (a commuter rail line with approximately 4.3 million annual riders) in the near future. We believe our station locations are irreplaceable and will result in a high level of passengers given the centralized locations and ease of connectivity.

With respect to the Vegas Expansion, we intend for the Las Vegas station to be located adjacent to the Las Vegas strip and to serve as a major inter-modal hub with access to taxis, buses, ride shares, shuttles and limousines. We expect the initial Southern California station to be located in Victorville, within an hour drive of the Los Angeles metro area, and we also intend to add additional stations and provide connections to California Metrolink.

Attractive Financial Profile

We expect that ticket sales will account for a significant majority of our revenue upon stabilization, while the remainder of our revenue will be generated from high-margin ancillary revenue attributable to food and beverage sales, merchandise sales, parking fees and long-term contracts relating to advertising, sponsorships and marketing affiliations (including naming rights), commissions from our travel partners and ground transportation extensions and other services. We believe our operating model is highly efficient and benefits from relatively predictable operating expenses. We believe that several features of our operating model enable us to react quickly to market demand, including scalable operations, flexible train and staff schedules and fares determined based on customer demand (as opposed to regulation), which provides us with the flexibility to reduce costs. Our rolling stock, composed of state-of-the art trains, will be maintained by Siemens Industry Inc. (“Siemens”) under a 30-year contract at a set price with established cost escalators, providing clarity on this meaningful expense. Additionally, while other express passenger rail operations generate high margins, they incur costs associated with leasing their corridors whereas we do not, which will benefit our margins.

Strong Private-Equity Sponsorship and Seasoned Management Team

Immediately following the completion of this offering, Virgin Trains will continue to be indirectly majority owned by funds managed by an affiliate of Fortress (such funds, the “Fortress Funds”), one of the largest global investment managers in the world with significant experience investing in the rail sector, including prior successful

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investments in RailAmerica and Florida East Coast Railway. Our senior management team is comprised of seasoned executives with experience launching, developing and growing large-scale, complex projects involving passenger rail transportation, customer-centric business and the hospitality industry. In addition, our management team’s experience in their previous executive positions has included developing a wide range of complex infrastructure and construction projects both within and outside of Florida.

Concurrent Private Placement and License Agreement

On November 15, 2018, we entered into the Virgin License Agreement with VEL. Pursuant to the terms of the Virgin License Agreement, VEL has granted to us, during the term, the right to use the Virgin brand, name, logo and certain other intellectual property as part of our corporate name and in connection with the operation of an intercity private high speed passenger rail service along certain permitted passenger rail routes in the United States (including our Florida passenger rail system and the Vegas Expansion). As a result, we intend to rebrand from “Brightline” to “Virgin Trains USA.” We expect that our intended rebranding will require us to devote substantial resources to advertising and marketing and will cause us to incur significant costs. For more information about the Virgin License Agreement, see “Business—Intellectual Property.”

Corporate Information

We were formed as AAF Holdings B LLC, a limited liability company in Delaware in August 2013 and effected a name change to Brightline Holdings LLC in March 2018 and to Virgin Trains USA LLC in November 2018. The address of our principal executive offices is currently 161 NW 6^th Street, Suite 900, Miami, FL 33136. Our website is currently www.virgintrainsusa.com. Information on or accessible through our website is not part of this prospectus.

Prior to the closing of this offering, we intend to reorganize our existing corporate structure so that the issuer of our common stock is a Delaware corporation named Virgin Trains USA Inc. The reorganization will be effected through the statutory conversion.

Our Principal Stockholder

We are a subsidiary of the Virgin Trains Stockholder and, prior to the completion of this offering, all of our outstanding equity interests (other than equity incentive awards to our management) are owned by the Virgin Trains Stockholder. Immediately following the completion of this offering, the Virgin Trains Stockholder will own approximately % of our outstanding common stock, or % if the underwriters’ over-allotment option is fully exercised. This level of share ownership is sufficient to control the vote on matters and transactions requiring stockholder approval. The Virgin Trains Stockholder is owned primarily by private equity funds managed by an affiliate of Fortress, a leading global investment manager. See “Risk Factors—Risks Related to Our Organization and Structure” and “Principal Stockholder.”

Immediately prior to the completion of this offering, we and the Virgin Trains Stockholder intend to enter into an agreement that will provide a framework for our ongoing relationship with the Virgin Trains Stockholder. For a description of this agreement, see “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”

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Organizational Structure

We are a holding company that does not conduct any business operations of our own. The following chart summarizes our organizational structure following our intended rebranding from “Brightline” to “Virgin Trains USA,” completion of this offering and our reorganization as a corporation in connection with this offering and reflects the contribution of certain subsidiaries of the Virgin Trains Stockholder to the Company in connection with this offering.

Certain wholly owned intermediate holding companies omitted for ease of presentation.

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Includes Brightline Trains LLC, our primary operating subsidiary and the owner of our 50% interest in Florida DispatchCo LLC, and Brightline Management LLC, the entity that employs our employees.

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Includes Space Coast Land Holdings LLC, Brevard County Property Holdings LLC and AAF Jacksonville Segment LLC, each of which own certain of our real property interests.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of certain reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

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not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act”;

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only two years of audited financial statements are required in addition to any required interim financial statements, and correspondingly reduced disclosure in management’s discussion and analysis of financial condition and results of operations; and

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(i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirements of holding a non-binding advisory vote on executive compensation, including golden parachute compensation.

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We may take advantage of these provisions for up to five years or until such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest to occur of (1) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities; (3) the issuance, in any three-year period, by us of more than $1.07 billion in non-convertible debt securities held by non-affiliates; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies.

Risks Associated With Our Business

Our ability to implement our business strategy is subject to numerous risks, as more fully described under the heading “Risk Factors” in this prospectus. These risks include, among others, that:

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we have limited revenue and cash flows and limited history constructing and operating a passenger railroad;

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our historical financial information may not be representative of the results we would have achieved as a separate stand-alone company and may not be a reliable indicator of our future performance or results;

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we have not yet acquired all real property interests necessary for the Tampa Expansion or the Vegas Expansion (some of which must be acquired from private parties), and our ability to acquire such interests may be adversely affected by many known and unknown factors;

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we have not yet begun construction of the Tampa Expansion or the Vegas Expansion, and there can be no assurance that the Tampa Expansion or the Vegas Expansion will operate as described herein or at all;

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we may not be able to complete the XpressWest Acquisition, which is subject to customary closing conditions;

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our ability to expand, including the Tampa Expansion and the Vegas Expansion, is dependent on our ability to raise funds through various potential sources, including equity and/or debt financing;

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cost overruns and delays in the completion of the North Segment, the Tampa Expansion or the Vegas Expansion, as well as difficulties in obtaining requisite approval or sufficient financing to pay for such costs and delays, could have a material adverse effect on our business, financial condition, operating results, cash flows, liquidity and prospects;

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the development costs of the North Segment, the Tampa Expansion and the Vegas Expansion are estimates only, and actual development costs may be higher than expected;

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our ability to complete construction of the North Segment of our Florida passenger rail system will be contingent on our ability to obtain certain land rights from Cocoa to Orlando which will require us to satisfy the conditions precedent to effect a definitive agreement with the Greater Orlando Airport Authority in connection with our Florida passenger rail system;

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any expansion through acquisitions, including the Vegas Expansion, carries certain additional risks (including the inability to maintain or renew any permits obtained in connection with such combination or acquisition);

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there can be no assurances that our operations will extend beyond our Florida passenger rail system, and our Florida passenger rail system may be our only means of generating revenue;

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our ability to extend beyond our Florida passenger rail system, including our pursuit of the Vegas Expansion, may be materially adversely affected by many known and unknown factors;

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the estimates of future ridership and revenue of our proposed Florida passenger rail service and the Vegas Expansion contained herein are based on certain assumptions that may prove to be inaccurate or incorrect;

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our license agreement with VEL is not for an indefinite period and may be terminated in certain circumstances, and the expiration or termination of such license agreement would require us to change our corporate name and undergo other significant rebranding efforts, which would require significant resources and expenses and may affect our ability to attract and retain customers, all of which may have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects;

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we will be required to devote significant resources to our intended rebranding of our business from “Brightline” to “Virgin Trains USA”;

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adverse macroeconomic and business conditions could have an adverse impact on our business;

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rising fuel costs could materially adversely affect our business;

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severe weather, including hurricanes, and natural disasters could disrupt normal business operations; and

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we face possible catastrophic loss and liability and our insurance may not be sufficient to cover our damages or liability to others.

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THE OFFERING

Common stock offered by us in this offering

shares (or shares, if the underwriters exercise in full their option to purchase additional shares).

Common stock to be outstanding immediately after this offering and concurrent private placement

shares (or shares, if the underwriters exercise in full their option to purchase additional shares).

Common stock to be owned by the Virgin Trains Stockholder after this offering and concurrent private placement

shares.

Option to purchase additional shares

We have granted the underwriters an option to purchase up to additional shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus. See “Underwriting.”

Use of Proceeds

We will receive net proceeds of approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares) from the sale of the common stock by us in this offering assuming an initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and after deducting estimated offering expenses and underwriting discounts and commissions payable by us. Each $1.00 increase (decrease) in the public offering price would increase (decrease) our net proceeds by approximately $ million. We estimate the net proceeds we will receive from the sale of shares of our common stock in the concurrent private placement will be approximately $ million. We intend to use the net proceeds from this offering, the concurrent private placement and/or future debt or equity financings to rebrand under “Virgin Trains USA”, to continue to upgrade the infrastructure in the South Segment, and to complete the construction of the North Segment, the Tampa Expansion and the Vegas Expansion, as well as for general corporate purposes. There can be no assurance that we will be able to obtain the remaining funds necessary on acceptable terms, on our desired timelines or at all. See “Use of Proceeds.”

Dividends

We do not currently anticipate paying dividends on our common stock. Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our board of directors deems relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries. Certain of our debt agreements limit, and our debt

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agreements in the future may limit, the ability of certain of our subsidiaries to pay dividends or make loans or other distributions to us. See “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and Capital Resources” and “Dividend Policy.”

Stockholders’ Agreement

We expect to enter into a stockholders’ agreement with the Virgin Trains Stockholder that would provide certain rights to the Virgin Trains Stockholder with respect to, among other things, the designation of directors for nomination and election to our board of directors, as well as certain rights to registration for certain of our securities beneficially owned, directly or indirectly, by the Virgin Trains Stockholder and Fortress and its affiliates. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”

Risk Factors

See “Risk Factors” for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Proposed Nasdaq Symbol

We intend to apply to have our common stock listed on the Nasdaq under the symbol “VTUS.”

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SUMMARY COMBINED FINANCIAL INFORMATION

The following table presents the summary combined financial information for the periods and as of the dates indicated.

The statement of operations data for the nine months ended September 30, 2018 and 2017 and the balance sheet data as of September 30, 2018 have been derived from our unaudited condensed combined financial statements included elsewhere in this prospectus. The statement of operations data for the years ended December 31, 2017 and 2016 and the balance sheet data as of December 31, 2017 and 2016 have been derived from our audited combined financial statements included elsewhere in this prospectus. The unaudited condensed combined financial statements were prepared on the same basis as our audited combined financial statements. In our opinion, such financial statements include all adjustments, consisting of normal recurring adjustments that we consider necessary for a fair presentation of the financial information for those periods.

Our historical combined financial statements have been prepared on a stand-alone basis in accordance with U.S. generally accepted accounting principles (“GAAP”) and are derived from the Virgin Trains Stockholder’s and our Parent’s accounting records using the historical results of operations and assets and liabilities attributed to our operations, and include allocations of expenses from the Virgin Trains Stockholder and our Parent. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period. You should read the summary combined financial information presented below in conjunction with the information included under the headings “Capitalization,” “Selected Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and the related notes included elsewhere in this prospectus.

	Nine Months Ended September 30,						Year Ended December 31,
(Dollars in thousands)	2018			2017			2017			2016
Statements of Operations Data:
Revenues
Passenger and customer related	$	4,754		$	—		$	—		$	—
Other		479			—			—			—
Total operating revenues		5,233			—			—			—
Operating expenses
Salaries, wages and benefits		21,941			17,757			16,487			13,889
Equipment maintenance		6,970			1,535			2,337			1
Maintenance of way		5,592			2,332			3,520			1,065
Fuel		1,395			59			23			—
Rent		3,292			567			839			405
Other operating expenses		6,741			2,803			4,482			2,325
General and administrative		22,910			10,327			15,833			6,947
Depreciation and amortization		18,392			618			880			359
Total operating expenses		87,233			35,998			44,401			24,991
Operating loss		(82,000	)		(35,998	)		(44,401	)		(24,991	)
Other income (expense)
Loss on extinguishment of debt		—			—			(327	)		—
Interest income (expense), net		(5,265	)		15			—			—
Other income		137			26			78			—
Total other income (expense)		(5,128	)		41			(249	)		—
Net loss and comprehensive loss	$	(87,128	)	$	(35,957	)	$	(44,650	)	$	(24,991	)

	As of September 30,		As of December 31,
	2018		2017		2016
Balance Sheet Data:
Properties, equipment and investment in rail, net	$	1,501,383	$	1,332,572	$	985,657
Total assets		1,836,925		1,774,354		1,258,870
Long-term debt		605,449		581,252		32,223
Invested equity – Parent’s net investment		1,061,734		1,084,210		1,129,646

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Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below together with other information set forth in this prospectus before investing in our common stock. If any of the following risks or uncertainties actually occur, our business, financial condition, prospects, results of operations and cash flow could be materially and adversely affected. In that case, the market price of our common stock could decline and you may lose all or a part of your investment. The risks discussed below are not the only risks we face. Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations or cash flows. We cannot assure you that any of the events discussed in the risk factors below will not occur.

Risks Related to Our Business

Our limited revenue and cash flows and our limited history constructing and operating a passenger railroad makes evaluating our business and future prospects difficult, and may increase the risk of your investment. There can be no guarantee that we will achieve profitability and generate positive operating cash flows in the future.

We recently commenced service between Miami and West Palm Beach, Florida. Accordingly, we only began generating cash flows from operations in 2018. Prior to the South Segment, we had not independently constructed or managed a passenger railroad, and we have never independently constructed or managed a passenger railroad outside of Florida. We have commenced construction on the North Segment and the related facilities, but do not expect this service to be operational until completion of construction in approximately three years. We are also advancing plans for the construction of the Tampa Expansion and Vegas Expansion and intend to expand to travel corridors in North America in the future. Our limited construction and operating history limits our ability to accurately evaluate our business and future prospects. We will need substantial additional funds to meet our expansion plans, including construction of the Tampa Expansion and the Vegas Expansion, and we have not yet secured such funds. Accordingly, we are subject to all the risks inherent in the establishment of a passenger railroad. Our limited operating history also may limit your ability as an investor to evaluate our prospects due to our lack of historical financial data, our unproven potential to generate profits and our limited experience as a new company in addressing issues that may affect our ability to manage the construction, operation or maintenance of a passenger rail service.

Our future liquidity may be affected by the timing of construction financing availability in relation to the incurrence of construction costs and other outflows and by the timing of receipt of cash flows in relation to the incurrence of project and operating expenses. Also, if we are unable to use available liquidity sources, or if such liquidity sources are not sufficient to cover any unexpected expenses, we may not have access to the funds required to pay the unexpected expenses. Our inability to pay costs as they are incurred could negatively affect us. Moreover, many factors (including factors beyond our control) could result in a disparity between liquidity sources and cash needs, including factors such as construction delays and breaches of agreements. In addition, if our actual capital or operating costs are higher than anticipated, our Florida passenger rail system is not successfully and timely completed, or our revenues are lower than currently anticipated, the profitability of our operations will be harmed, which could adversely affect our ability to generate positive operating cash flows and achieve profitability in the future.

We may not be successful in implementing our proposed business strategy.

Our business strategy is to build passenger rail systems where there is access to existing travel corridors and the potential to connect highly populated cities with substantial intercity travel and separated by distances that are “too long to drive, too short to fly.” There can be no assurances that we will be successful in implementing this strategy. You must consider the risks and difficulties we face as a passenger rail company with limited construction and operating history. If we do not successfully address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed.

We are significantly dependent, in the near term, upon our service in the South Segment for revenue and cash, and our future success will be dependent upon our ability to develop and construct new passenger rail systems in the North Segment and beyond. We currently operate between Miami and West Palm Beach. Service to Orlando is not expected to commence until completion of construction in approximately three years, with Tampa service expected

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to follow. Our Florida passenger rail system and any future rail systems we may develop are subject to the operating risks described herein, including, but not limited to, our ability to attract passengers, sell tickets, generate revenue and income from ancillary sources or obtain funding from additional financing sources to construct future systems and expansions beyond the South Segment.

If our business strategy is not successfully implemented, we may not be able to generate cash flows, which could have a material adverse impact on our business, contracts, financial condition, operating results, liquidity and prospects.

Our historical financial information may not be representative of the results we would have achieved as a separate stand-alone company and may not be a reliable indicator of our future performance or results.

The historical financial information included in this prospectus has been derived from the Virgin Trains Stockholder’s and our Parent’s accounting records and is limited to only two years of audited combined financial statements. The Virgin Trains Stockholder and our Parent did not separately account for our business, and we did not operate as a separate, stand-alone company for any of the historical periods presented. Therefore, our historical financial information may not reflect what our financial condition, results of operations or cash flows would have been had we been a separate, stand-alone public company prior to the completion of this offering or what our results will be in the future. This is primarily a result of the following factors:

•

our historical financial results reflect allocations of corporate expenses from the Virgin Trains Stockholder and our Parent instead of the expenses we will incur as a stand-alone public company;

•

our working capital requirements and our historical construction activities were funded by the Virgin Trains Stockholder, primarily through its borrowings. After this offering, the Virgin Trains Stockholder and our Parent will not be required, and do not intend, to provide us with additional funds to finance our operations or construction activities, so we may in the future need to obtain additional financing from lenders, through one or more public offerings or private placements of debt and/or equity securities, municipal bonds or other sources of governmental or semi-governmental financing, strategic relationships or other arrangements; and

•

significant changes may occur in our cost structure, management, financing and business operations as a result of our operating as an independent public company. These changes could result in increased costs associated with reduced economies of scale, stand-alone costs for services currently provided by the Virgin Trains Stockholder and our Parent and the legal, accounting, compliance and other costs associated with being a public company with equity securities traded on the Nasdaq.

The Company has not yet begun construction of the Tampa Expansion or the Vegas Expansion, nor has it acquired all real property interests necessary for the Tampa Expansion or the Vegas Expansion, and there can be no assurance that the Tampa Expansion or the Vegas Expansion will operate as described herein or at all.

Though we have engaged in discussions with regulatory authorities with respect to the development of the Tampa Expansion and the Vegas Expansion, we have not yet entered into any legally binding agreements with respect to the Tampa Expansion or the Vegas Expansion, nor have we begun designing, engineering or constructing the related infrastructure or station. We have also not yet obtained all of the necessary real property interests (some of which must be acquired from private parties), regulatory approvals, right of ways, permits, consents, licenses, entitlements or other authorizations for the construction and operation of the Tampa Expansion or the Vegas Expansion. If we are unable to enter into favorable contracts or to obtain necessary regulatory approvals, right of ways, permits, consents, licenses, entitlements or other authorizations, we may not be able to construct and operate the Tampa Expansion or the Vegas Expansion as described herein or at all.

In addition, we have submitted a proposal to the State of Florida for a right of way required to construct the Tampa Expansion. The state undertook a standard process to offer an opportunity for other parties to make an alternative bid for the right of way. There were no other bidders for the right of way. Expenses related to our pursuit of contracts, regulatory approvals and other authorizations related to the Tampa Expansion may be significant and will be incurred by us regardless of whether the Tampa Expansion is ultimately constructed and operational.

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In addition, construction and operation of the Tampa Expansion and the Vegas Expansion will be subject to the risks applicable to the North Segment and the rest of our Florida passenger rail system as set forth herein, including, but not limited to:

•

the successful closing of the XpressWest Acquisition;

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we may incur significant cost overruns and delays in the completion of the Tampa Expansion and the Vegas Expansion, as well as difficulties in obtaining requisite approval or sufficient financing to pay for such costs and delays;

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if the Tampa Expansion or the Vegas Expansion is not completed or operational on the schedule and in the manner anticipated, we may not generate sufficient revenue to be profitable in our anticipated timeframes or at all;

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we will incur significant capital and operating expenditures while we develop and construct the Tampa Expansion and the Vegas Expansion;

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construction of the Tampa Expansion and the Vegas Expansion is dependent upon obtaining substantial additional funding from various sources, which may not be available on our desired timeline, if at all, or may only be available on unfavorable terms;

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we will be dependent on third-party suppliers for the successful completion and success of the Tampa Expansion and the Vegas Expansion;

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our ability to complete construction of the Tampa Expansion and the Vegas Expansion will be contingent on our ability to obtain certain land and/or land rights (including the acquisition of approximately 200 acres of land in Victorville, California currently owned by private parties);

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our ability to obtain and maintain required environmental permits or other governmental authorizations and approvals, including the successful completion of any associated environmental impact reviews or other studies;

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any liquidated damages provision in our construction contracts may not be sufficient to protect us against exposure to actual damages we may suffer for delay in completion of the Tampa Expansion and the Vegas Expansion;

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the financial resources of our contractors may be insufficient to fund cost overruns or liquidated damages for which they are responsible under their contracts with respect to the Tampa Expansion and the Vegas Expansion;

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we may be subject to litigation by private parties or governmental authorities regarding aspects of any Tampa Expansion or the Vegas Expansion, which could increase our costs or delay or prevent the expansion; and

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we will be subject to governmental regulations relating to the Tampa Expansion and the Vegas Expansion, which could impose significant costs on the Tampa Expansion and the Vegas Expansion and could impede the timely completion or operation of the Tampa Expansion or the Vegas Expansion.

The actual construction and capital costs of the Tampa Expansion and the Vegas Expansion may be significantly higher, and the time to complete the Tampa Expansion and the Vegas Expansion may be significantly longer, than our current estimates. If we are unable to construct and operate the Tampa Expansion or the Vegas Expansion as described herein, or if the Tampa Expansion or the Vegas Expansion, when and if constructed, does not accomplish the goals described herein, our business, financial condition, operating results, cash flows, liquidity and prospects could be materially adversely affected.

There are no assurances that Company’s operations will extend beyond our Florida passenger rail system, and our Florida passenger rail system may be our only means of generating revenue. The Company’s ability to extend beyond our Florida passenger rail system, including our pursuit of the Vegas Expansion, may be materially adversely affected by many known and unknown factors.

Any expansion outside Florida, including the Vegas Expansion, will require significant planning and development prior to the commencement of any construction or operations. Such development would include identifying and acquiring required approvals, permits and land rights and completing environmental, engineering and

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ridership studies to determine the desirability and feasibility of constructing and operating a passenger rail system in that market. We currently do not have any experience developing, constructing or operating a passenger rail system outside Florida, and therefore have no experience with construction companies, suppliers, governmental entities or local communities in other markets. As such, we may face obstacles and risks in developing these passenger rail systems that are currently not known. There can be no assurance that we will be able to expand as planned or desired, or that such expansion will occur at all.

Any future rail systems we may develop will be subject to significant economic, competitive, regulatory and operational uncertainties, contingencies and risks, many of which are beyond our control, including, but not limited to:

•

difficulties in obtaining required land rights, permits, consents, approvals, licenses, entitlements and other authorizations from governmental agencies and other third parties for these potential markets, including the successful completion of any associated environmental impact reviews or other studies;

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incurrence of significant expenses, including, but not limited to, costs associated with construction and compliance with state and local laws and regulations (such as permit requirements, environmental regulations and taxation policies);

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difficulties in obtaining access to existing transportation corridors in order to quickly and cost effectively plan, permit and build the rail system;

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difficulty contracting with local construction companies, suppliers and service providers and obtaining materials used in the construction of rail systems, such as track and rolling stock materials;

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litigation by private parties or governmental authorities, which could increase our costs or delay or prevent the construction or operation of rail systems; and

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competition from other passenger rail system operators or other modes of transportation.

Furthermore, our ability to expand, including the Tampa Expansion and Vegas Expansion, is dependent on our ability to raise a significant amount of additional funds through various potential sources, including equity and/or debt financing.

If we are not successful expanding our operations beyond our Florida passenger rail system, including the Vegas Expansion, this system will be our only means of generating revenue and we would not be able to generate additional cash flows, which could have a material adverse impact on our business, contracts, financial condition, operating results, liquidity and prospects.

The estimates of future ridership and revenue of our proposed Florida passenger rail service and the Vegas Expansion contained herein are based on certain assumptions and management’s estimates and adjustments that may prove to be inaccurate or incorrect. Actual results could differ from the estimates contained in this prospectus.

This prospectus contains estimates of the future ridership, revenue, profitability and target EBITDA margin of our proposed Florida passenger rail service and the Vegas Expansion. These estimates should not be viewed as guidance or management’s view of the Company’s projected earnings and are not based on the Company’s historical operating results. These estimates are based upon various assumptions, including those set forth in the Florida Ridership and Revenue Study and the Florida Operations and Maintenance and Ancillary Revenue Report. In addition, our management’s estimates with respect to the Vegas Expansion are derived in part from certain information, which management has further adjusted, providing ridership, average fares and other analyses about the Victorville Phase and the Southern California and Las Vegas markets contained in the High Desert Corridor Study. Management has based its adjustment on certain of the sensitivities provided in the study. Such sensitivities are not provided in the study in contemplation of the Victorville Phase in isolation, nor do such sensitivities contemplate the cumulative effect of increases in travel time and reduced frequency of schedule. As a result, our management’s estimates of expected ridership may differ from actual results and such difference may be material. In addition, the High Desert Corridor Study was dated March 2017, and Steer Davies Gleave has not updated any of the assumptions, estimates, analyses or conclusions contained in the High Desert Corridor Study and used by our management in making the conclusions, analyses and estimates contained in this prospectus. As a result, the forecasts contained in this prospectus may differ materially from actual results. Our management’s estimates, and the estimates contained in the Florida Ridership and Revenue Study, the Florida Operations and Maintenance and Ancillary Revenue Report, and the High Desert Corridor Study are inherently subject to significant uncertainties, the degree of which increases

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with each successive period presented. For example, these estimates assume that we will be able to successfully complete and operate the South Segment, the North Segment, the Tampa Expansion and the Vegas Expansion on the schedule and in the manner anticipated. If we are unable to timely complete or operate the North Segment, the Tampa Expansion or the Vegas Expansion, we may have fewer passengers and generate less revenue than as set forth in these estimates. Experience from actual operation of the railroad and construction of our Florida passenger rail system, the Vegas Expansion and any future rail systems we may develop may identify new or unexpected conditions that could reduce the rate of construction below, or increase capital or operating costs above, current estimates for our Florida passenger rail system or the Vegas Expansion. The uncertainty of the estimates, including management’s estimates derived in part from the Florida Ridership and Revenue Study or the Florida Operations and Maintenance and Ancillary Revenue Report or based in part on the High Desert Corridor Study, is particularly heightened given the Company’s limited operating history, track record and historical financial statements on which to base the estimates. Actual results may differ materially, and the assumptions on which these estimates are based are subject to numerous risks and uncertainties, a number of which are beyond the Company’s control. If actual results are less favorable than the estimates and assumptions contained in this prospectus, we could be materially adversely affected.

These estimates were not prepared with a view toward compliance with published guidelines of the SEC, the American Institute of Certified Public Accountants, any regulatory or professional agency or body, or GAAP.

The Virgin License Agreement is not for an indefinite period of time and may be terminated in certain circumstances.

We do not own the Virgin brand or any other Virgin-related assets, as we licensed the right to use the Virgin brand pursuant to the trademark license agreement we entered into with VEL on November 15, 2018 (the “Virgin License Agreement”).

VEL controls the Virgin brand, and the integrity and strength of the Virgin brand will depend in large part on the efforts and businesses of VEL and the other licensees of the Virgin brand and how the brand is used, promoted and protected by them, which will be outside of our control. For example, negative publicity or events affecting or occurring at VEL or other entities who use the Virgin brand, including transportation companies and/or other entities unrelated to us that presently or in the future may license the Virgin brand, may negatively impact the public’s perception of us, which may have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects.

In addition, the license to the Virgin brand granted to us under the Virgin License Agreement will expire in no later than forty years under the terms of the agreement and there is no guarantee that we will renew or replace the Virgin License Agreement on commercially reasonable terms or at all. In addition, there are certain circumstances under which the Virgin License Agreement may be terminated in its entirety or with respect to specific passenger rail routes by VEL, including our breach of the Virgin License Agreement, our insolvency, our improper use of the Virgin brand, our failure to meet certain commercialization milestones, and our undergoing of a change of control to certain entities, including a competitor of VEL. Termination of the Virgin License Agreement would eliminate our rights to use the Virgin brand and may result in our having to negotiate a new or reinstated agreement with less favorable terms or cause us to lose our rights under Virgin License Agreement, including our right to use the Virgin brand, which would require us to change our corporate name and undergo other significant rebranding efforts. These rebranding efforts may require significant resources and expenses and may affect our ability to attract and retain customers, all of which may have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects.

While our rights under the Virgin License Agreement to use the Virgin brand in connection with our U.S. intercity high-speed passenger rail route business are generally exclusive, VEL may grant licenses under the Virgin brand to potential competitors in the United States under certain circumstances, including if we do not commence operations on certain of our routes by a specified time period or do not match a third-party offer to operate a new U.S. intercity high-speed passenger rail route under the Virgin name. Additionally, VEL has only granted us a license to use the Virgin brand in the United States, and the Virgin License Agreement is expressly subject to licenses granted to companies who operate similar high-speed passenger rail route businesses outside of the United States. As a result, we may not be able to prevent competitors from operating competitive businesses under the Virgin brand, both inside and outside of the United States, which could have a material adverse effect on our business, financial condition and operating results.

For more information, see “Business—Intellectual Property.”

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Protecting and defending against intellectual property claims may have a material adverse effect on our business.

Our success depends in part upon successful prosecution, maintenance, enforcement and protection of our owned and licensed intellectual property, including the Virgin brand and other intellectual property that we license from VEL under the Virgin License Agreement. Under the terms of the Virgin License Agreement, VEL has the primary right to take actions to obtain, maintain, enforce and protect the Virgin brand. If, following our written request, VEL elects not take an action to maintain, enforce or protect the Virgin brand, we may do so, at our expense, so long as doing so would not have a material adverse effect on VEL, any of VEL's other licensees or the Virgin brand and we reasonably believe failing to do so would materially adversely affect our business. Should VEL determine not to maintain, enforce or protect the Virgin brand, we and/or the Virgin brand could be materially harmed and we could incur substantial cost if we elect to take any such action. There is no guarantee that any action to defend, maintain or enforce our owned or licensed intellectual property rights will be successful, and an adverse result in any such proceeding could have a material adverse impact on our business, financial condition, operating results and prospects.

In addition, it is possible that others may claim from time to time that we are infringing the intellectual property rights of third parties. Irrespective of the validity of any such claims, we could incur significant costs and diversion of resources in defending against them, and there is no guarantee any such defense would be successful, which could have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects.

We will be required to devote resources to our intended rebranding our business and any failure of our intended rebranding efforts may affect our ability to attract and retain customers.

VEL has granted to us the right to use its name, logo and certain other intellectual property in connection with the operation of an intercity private high speed passenger rail service along certain permitted passenger rail routes in the United States (including our Florida passenger rail system and the Vegas Expansion) pursuant to the Virgin License Agreement. As a result, we intend to rebrand from “Brightline” to “Virgin Trains USA.” We expect that our intended rebranding will require us to incur costs, including additional advertising and marketing costs. In addition, our intended rebranding efforts could divert our management’s attention away from the operation of our passenger rail line, which could materially and adversely affect our business. We also cannot assure you that our customers will be receptive to our intended rebranding. A failure in our intended rebranding efforts may affect our ability to attract and retain customers, which may have a material adverse effect on our business, contracts, financial condition, operating results, liquidity and prospects.

Adverse macroeconomic and business conditions could have an adverse impact on our business.

Our ridership will be affected by the overall economic conditions of each potential rail system’s state and local region and dependent on the employment and disposable income of our passengers. Adverse economic conditions could also affect our costs for insurance and our ability to acquire and maintain adequate insurance coverage for risks associated with the passenger rail line business if insurance companies experience credit downgrades or bankruptcies.

Given the localized nature of our initial passenger rail system in Florida and the services we intend to provide with that system, our initial ridership will generally be affected by overall economic conditions in Florida and the Southeastern United States. The condition of international economies, including the Caribbean, South America, Europe and Asian economies, may also affect our revenues, as it may lead to a decreased number of tourists in Florida from these regions.

Furthermore, we will compete directly with other modes of transportation, including cars, buses, other passenger rail services and air travel. If these alternative methods of transportation become more cost-effective or attractive to our customers due to macroeconomic or legislative changes, our operating results, financial condition and liquidity could be materially adversely affected.

A deterioration of macroeconomic, business and financial conditions, particularly in Florida and the Southeastern United States, could have a material adverse effect on our operating results, financial condition and liquidity.

Rising fuel costs could materially adversely affect our business.

Fuel prices and supplies are influenced significantly by international, political and economic circumstances, and we do not currently hedge against fuel price fluctuations. Accordingly, if fuel supply shortages or unusual price

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volatility were to arise for any reason, the resulting higher fuel prices would significantly increase our operating costs. Increases in fuel price may only be passed along to our customers through increased ticket prices, which is often with delayed effect. In addition, we may elect not to pass along such increases because they could result in a decrease in ridership. Moreover, there are no assurances that these increases would cover the entire fuel price increase for a given period, or that competitive market conditions will effectively allow us to pass along this cost. While increases in prices may increase ridership, we may not be able to generate sufficient cash flows to offset higher operating costs, which could have a material adverse impact on our business, contracts, financial condition, operating results, liquidity and prospects.

Severe weather, including hurricanes, and natural disasters could disrupt normal business operations, which could result in increased costs and liabilities and decreases in revenues.

Substantially all of our operating assets are currently located on Florida’s eastern seaboard, which has experienced severe weather periodically in the past and may continue to experience severe weather in the future. In addition, climate change could result in an increase in the frequency and severity of these severe weather events, as well as causing sea levels to rise. Any significant future rise in sea level near our Florida operations could result in flooding, which could damage our infrastructure, temporarily or permanently impair our ability to function near-coastal operations effectively, require us to incur costs to protect our assets or adversely impact our customer base. Severe weather conditions and other natural phenomena, including hurricanes and other severe storms, fires and floods, may cause significant damage, destruction and business interruptions and result in increased costs, increased liabilities and decreased revenue. For example, in September 2017, Hurricane Irma caused significant damage and disrupted normal business operations in Florida. Although our operations were not directly affected by Hurricane Irma, there can be no assurance that we will be spared the impact of other major natural disasters, which could have a material adverse effect on our business, financial condition, operating results, cash flows, liquidity and prospects.

We face possible catastrophic loss and liability and our insurance may not be sufficient to cover our damages or liability to others.

The operation of any railroad carries with it an inherent risk of catastrophe, mechanical failure, collision and property loss, notwithstanding the safety protocols we have in place. In the course of constructing and operating a passenger rail service, spills or other environmental mishaps, cargo loss or damage, labor disputes or strikes or adverse weather conditions could result in a loss of revenues or increased liabilities and costs. A collision, derailment, leak, explosion, environmental mishap or other accident could cause serious bodily injury, death or extensive property damage, particularly if such accident occurs in a heavily populated area.

We intend to maintain insurance or otherwise insure against hazards in a manner that is consistent with industry practice against the accident-related risks involved in the conduct of our business and business interruptions due to natural disaster. In addition, due to the location of our assets on Florida’s eastern seaboard, we also intend to maintain windstorm coverage. However, we expect that this insurance will be subject to a number of limitations on coverage and substantial deductibles or self-insured retentions, depending on the nature of the risk insured against. This insurance may not be sufficient to cover our damages or damages to others and this insurance may not continue to be available at commercially reasonable rates. In particular, the market for windstorm coverage remains very limited and costly. It is unknown how much windstorm coverage we will purchase in the future and it is possible that our property will experience windstorm damage and utility service interruption in excess of insurance limits. In addition, we are subject to the risk that one or more of our insurers may become insolvent and would be unable to pay a claim that may be made in the future. Even with insurance, if any catastrophic interruption of service occurs, we may not be able to restore service without a significant interruption to operations which could have an adverse effect on our financial condition. For additional information regarding our insurance program, see “Business—Regulations—Insurance.”

In addition, certain losses may be either uninsurable or not economically insurable, in whole or in part. Insurance proceeds may not compensate us fully for our losses.

Cost overruns and delays in the completion of the North Segment, the Tampa Expansion and the Vegas Expansion, as well as difficulties in obtaining requisite approval or sufficient financing to pay for such costs and delays, could have a material adverse effect on our business, financial condition, operating results, cash flows, liquidity and prospects.

While construction of the South Segment is substantially complete, construction of the North Segment has only recently commenced and operation of the North Segment is not expected to commence until completion of

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construction in approximately three years. Construction of the Tampa Expansion and Vegas Expansion has not yet commenced. The actual construction and capital costs of our Florida passenger rail system and the Vegas Expansion may be significantly higher, and the time to complete the North Segment, the Tampa Expansion and the Vegas Expansion may be significantly longer, than our current estimates. While our management team has experience in the construction and operation of major infrastructure projects, including rail lines, we are a relatively new company and are subject to the inherent risks and uncertainty related to any such construction project. We have not yet executed construction contracts for certain aspects of the North Segment the Tampa Expansion or the Vegas Expansion construction and, after doing so, as construction progresses, we may decide or be forced to submit change orders to our contractors that could result in longer construction periods, higher construction costs or both.

Key factors that may affect the timing of, cost of, or our ability to complete construction of the North Segment, the Tampa Expansion and the Vegas Expansion include, but are not limited to:

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the ability to obtain additional necessary financing or capital for the construction of the North Segment, the Tampa Expansion and the Vegas Expansion, if necessary;

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the issuance and/or continued availability and maintenance of necessary permits, licenses, approvals and agreements from governmental agencies and third parties as are required to construct and operate the rail line and the related facilities;

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our ability to enter into satisfactory agreements with contractors and to maintain good relationships with these contractors in order to construct our proposed facilities (including rolling stock) within the expected cost parameters and time frame, and the ability of those contractors to perform their obligations under the contracts and to maintain their creditworthiness;

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changes or deficiencies in the design or construction of the North Segment, the Tampa Expansion or the Vegas Expansion;

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unforeseen engineering, environmental or geological problems;

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potential increases in construction and operating costs due to changes in the cost and availability of fuel, power, materials and supplies;

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the availability and cost of skilled labor and equipment;

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health, safety and personal injury (to workers and others) incidents and site accidents;

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potential opposition from governmental and non-governmental organizations, environmental groups, public interest or citizens groups, local or other groups, such as the opposition rallies that have occurred in certain counties in Florida, which may delay or prevent development activities;

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local and economic conditions;

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changes in legal and regulatory requirements;

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force majeure events, including catastrophes and adverse weather conditions;

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labor disputes and work stoppages; and

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disputes and defaults with contractors, subcontractors, architects and engineers.

Delays in the completion of the North Segment, the Tampa Expansion or the Vegas Expansion could increase the cost of completion beyond the amounts that we estimate, which could require us to obtain additional sources of financing or capital to fund our operations until the North Segment, the Tampa Expansion or the Vegas Expansion is completed (which could cause further delays). Our ability to obtain financing or capital that may be needed to cover increased costs will depend, in part, on factors beyond our control. Even if we are able to obtain financing or capital, we may have to accept terms that are disadvantageous to us and that may have a material adverse effect on our current or future business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

The development costs of the North Segment are estimates only, and actual development costs may be higher than expected.

Although construction of the South Segment of our Florida passenger rail system is substantially complete, we are in the process of soliciting bids in connection with the construction of the North Segment. We have received proposals for the substantial majority of the construction works that are necessary for construction of the North

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Segment, but we have not yet executed contracts for such construction works. Accordingly, our expected costs based on our plans as of the date of this prospectus are subject to change and may ultimately be higher than expected.

We have experienced cost overruns in connection with the construction of the South Segment and may also experience cost overruns in connection with the construction of the North Segment. For example, unforeseen or unexpected delays may increase the overall budget for our Florida passenger rail system and, under certain circumstances, we may be responsible for the increased costs. Furthermore, budgeted contingencies may not be sufficient to cover the full amount of such expenses.

Our ability to complete construction of the North Segment of our Florida passenger rail system will be contingent on our ability to obtain certain land rights from Cocoa to Orlando which will require us to satisfy the conditions precedent to effectuate a definitive agreement with the Greater Orlando Airport Authority (“GOAA”) in connection with our Florida passenger rail system.

We have executed various agreements with GOAA relating to the North Segment, including the lease for our Orlando station location, the lease of land for the development of a vehicle maintenance facility, and an easement over a portion of the corridor between Cocoa and Orlando, that are subject to the satisfaction of certain conditions in order to be released from escrow or be consummated. The escrowed agreements are set to expire on December 31, 2018. We plan to request an extension should the conditions to release not be timely met; however, there are no assurances that such extension will be granted. We have met all requisite conditions for release, except for the condition that we must have the financial wherewithal to complete our Florida passenger rail system. There can be no assurance that this pending condition will be satisfied. If we are unable to satisfy the condition, we may be unable to implement or complete our business plan and our Florida passenger rail system may ultimately be unsuccessful.

If effectuated, our lease, easement and other use agreements with FDOT, GOAA and the Central Florida Expressway Authority (“CFX”) will contain terms and conditions particular to contracts with governmental entities that are inherently risky and could have an adverse effect on our financial condition.

Our agreements with FDOT, GOAA and CFX for our Florida passenger rail system will not contain reciprocal indemnification obligations and will provide, among other things, that such parties have not waived sovereign immunity in tort under the constitution and laws of Florida and have limited liability in certain cases. As a result, we may not be able to enforce our rights fully under these agreements or obtain an adequate remedy in the event that any of these parties breaches its obligations. Further, the parties to these agreements have rights to terminate these contracts under certain scenarios.

A portion of the costs required to design, develop, construct, equip, license, finance and open our Florida passenger rail system is not guaranteed in that we have not yet entered into contractual commitments for certain aspects of the North Segment.

We have not yet entered into certain construction contracts for the completion of the North Segment, including contracts for the construction of rail infrastructure and our Orlando vehicle maintenance facility, as well as contracts for the completion of signage, off-site roadway work and utility connections. We will be responsible for those costs, including certain cost overruns incurred as part of the completion of all the elements of our Florida passenger rail system. While we believe that the overall budget for the development costs for the North Segment is reasonable, not all the work is currently covered by contractual commitments and these development costs are estimates and the actual development costs may be higher than expected. The estimates for this work may increase and, as a result, we may choose to reduce the scope of the work, revise the design criteria and modify design components to reduce the costs of constructing the North Segment. Any such reduction in scope or change in design criteria or design components could adversely affect our economic prospects, to the detriment of the investors. Any inability by us to pay development costs as they are incurred could negatively affect our company and our business operations and prospects.

Although we have budgeted $183 million in contingency funds, this amount may not be sufficient to cover the full amount of such overruns. If we are unable to use these contingency funds or if these contingency funds are not sufficient to cover these costs, we may not have the funds required to pay the excess costs, which may adversely impact our business, contracts, financial condition, operating results, liquidity and prospects.

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Once established, the limits on pricing under our remaining construction contracts may increase, and we may be responsible for the amount of any increase.

Although we plan to have most of our construction contracts subject to a fixed price or a guaranteed maximum price that requires the contractors to achieve substantial completion of their respective portions of the North Segment within a prescribed schedule, the fixed price and/or guaranteed maximum price may be appropriately increased, and the deadline for substantial completion of construction may be appropriately adjusted, on account of, among other things:

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changes of a certain magnitude in the design documents or deficiencies in the design documents;

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certain concealed or unknown physical conditions of an unusual nature which differ materially from those indicated in the contract documents or ordinarily encountered;

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changes of a certain magnitude requested or directed by us in the scope of the work to be performed pursuant to the construction contract;

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abnormal weather conditions, labor disputes or fire, in each case, that are not the responsibility of our contractor(s) or others working for or through such party, or other causes beyond their reasonable control that are or were not preventable or avoidable by reasonable efforts and due diligence by any such party or others working for or through such party;

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delays caused by an inability to continue work on the North Segment in accordance with the contemplated schedule; and

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delays caused by us, our architects or engineers or any consultant or employee thereof.

While our construction budget provides for a contingency amount of $183 million to cover cost overruns, there can be no guarantee that this contingency amount will be sufficient to cover any or all matters for which we may bear responsibility under these contracts. Similarly, we cannot guarantee that we will be able to obtain the remaining required construction contracts with fixed prices or guaranteed maximum prices on terms satisfactory to us. As a result, we would be responsible for any costs incurred in excess of our budget. Any such cost increase could have a significant negative impact on our financial condition and plan of operations.

We may expand through acquisitions of other companies or the assets of other companies, which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations.

Our business strategy may, from time to time, include acquiring other companies or the assets of other companies in order to expand our business. We cannot assure you we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, personnel and corporate cultures, realize our business strategy or manage a geographically dispersed company. Any such acquisition, including the XpressWest Acquisition, could materially and adversely affect our results of operations. Acquisitions, including the XpressWest Acquisition, involve significant risks and uncertainties, including:

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the inability to maintain or renew any permits obtained in connection with the combination or acquisition;

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the potential failure to achieve the expected benefits of the combination or acquisition;

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unanticipated costs and liabilities;

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difficulties in integrating new businesses, operations and technology infrastructure in an efficient and effective manner;

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the potential loss of key employees of the acquired businesses;

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the diversion of the attention of our senior management from the operation of our daily business;

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the potential adverse effect on our cash position to the extent that we use cash for the purchase price;

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the potential significant increase of our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition;

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the potential issuance of securities that would dilute our stockholders’ percentage ownership;

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the potential to incur large and immediate write-offs and restructuring and other related expenses; and

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the inability to maintain uniform standards, controls, policies and procedures.

Any acquisition could expose us to unknown liabilities. Moreover, we cannot assure you that we will realize the anticipated benefits of any acquisition. Acquisitions may be subject to closing conditions, including regulatory conditions, and there can be no assurance that any acquisition, including the Vegas Acquisition, will be consummated. In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology, as well as materially adversely affect our business, financial condition, operating results, cash flows, liquidity and prospects.

The liquidated damages provision in our construction contracts may not be sufficient to protect us against exposure to actual damages we may suffer for delay in completion of the North Segment.

Many of our signed construction contracts require, and future agreements are expected to require, our contractors to achieve substantial completion within a prescribed timeframe and many of our contracts (but not all) will impose on them, subject to various permitted exceptions, liquidated damages of a certain per diem amount for each day by which they fail to satisfy that requirement. However, in most circumstances, the aggregate amount of such liquidated damages payable to us will be limited (e.g., the cumulative sum of liquidated damages payable by a contractor may be limited to the sum of the fee to be paid to such contractor under its contract). We cannot assure you that construction will be completed on schedule and, if completion of the construction is delayed, our actual damages will likely be well in excess of any liquidated damages that may be payable to us by our contractors. We will be responsible for bearing any such excess damages, which may adversely affect our ability to complete construction of the North Segment within our anticipated budget, on time or at all. In addition, to the extent that our contracts contain terms that require the payment of liquidated damages in the event of delays, we are subject to the risk that delays are encountered that are not attributable to the party engaged by us and that liquidated damages would not be due to us at all as a result.

Following the closing of this offering, Parent and/or certain of its affiliates will provide a number of services to us pursuant to the Transition Services Agreement (as defined below). When such agreement terminates, we will be required to replace the services, and the economic terms of the new arrangements may be less favorable to us.

Under the terms of the Transition Services Agreement that we expect to enter into with our Parent and/or certain of its affiliates in connection with this offering, our Parent and/or certain of its affiliates will provide us specified services such as for an initial term of years following this offering, unless earlier terminated or extended according to the terms of the agreement. When the Transition Services Agreement terminates, we will be required to either enter into a new agreement with our Parent and/or certain of its affiliates or another services provider or assume the responsibility for these functions ourselves. We cannot assure you that the economic terms of the new arrangements will be similar to those under the Transition Services Agreement. If we are unable to renew or replace such arrangements on a comparable basis, our business, financial condition and results of operations may be materially and adversely affected.

For an additional discussion regarding the material terms of the Transition Services Agreement, see “Certain Relationships and Related Party Transactions—Transition Services Agreement.”

We are dependent on third-party suppliers for the successful completion and success of our Florida passenger rail system.

We may face increased prices or significant shortages of locomotive and rail supplies, since we are dependent on certain key suppliers of locomotives and rail who are in short supply. The capital-intensive nature, as well as the industry-specific requirements of the rail industry, limits the number of suppliers of core railroad items, such as locomotives and rolling stock equipment. If any of the current manufacturers stops production or experiences a supply shortage, we could experience a significant cost increase or material shortage.

Any changes in the competitive landscapes of these limited supplier markets could also result in increased prices or significant shortages of materials. Additionally, we compete with other industries for available capacity and raw materials used in the production of locomotives and certain track and rolling stock materials.

Adverse developments in international relations, new trade regulations, disruptions in international shipping or increases in global demand could make procurement of supplies more difficult or increase our operating costs. Any

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delay in the receipt of key equipment may impede our ability to complete or operate our Florida passenger rail system in a timely and cost-efficient manner, which could have a material adverse effect on our business, financial condition, operating results, cash flows, liquidity and prospects.

We are dependent on third-party contractors and service providers for the successful completion and operation of our Florida passenger rail system.

Timely and cost-effective design and completion of our Florida passenger rail system in compliance with agreed specifications is central to our business strategy and is highly dependent on the performance of the third-party contractors we engage. Our contractors’ ability to perform successfully is dependent on a number of factors, including, but not limited to, their ability to:

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design and engineer each of the required facilities and infrastructure to operate in accordance with specifications and applicable laws;

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engage and retain third-party subcontractors and procure equipment and supplies;

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respond to difficulties such as equipment failure, delivery delays, schedule changes and failure to perform by subcontractors, some of which are beyond their control;

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attract, develop and retain skilled personnel;

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post required construction bonds and comply with the terms thereof;

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manage the construction process generally, including coordinating with other contractors and regulatory agencies; and

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maintain their own financial condition, including adequate working capital.

Although some agreements may provide for liquidated damages if the contractor fails to perform in the manner required with respect to certain of its obligations, the events that trigger a requirement to pay liquidated damages may delay or impair the operation of our Florida passenger rail system, and any liquidated damages that we receive may not be sufficient to cover the damages that we suffer as a result of any such delay or impairment. The obligations of our contractors to pay liquidated damages under any such agreements may be subject to caps on liability. Furthermore, we may have disagreements with our contractors about different elements of the construction process, which could lead to the assertion of rights and remedies under their contracts and increase the cost of our Florida passenger rail system or result in a contractor’s unwillingness to perform further work on our Florida passenger rail system. If any contractor is unable or unwilling to perform according to the negotiated terms and timetable of its respective agreement for any reason or its agreement is terminated, we would be required to engage a substitute contractor, which would require the prior approval of the original contractor’s surety. This would likely result in significant project delays and increased costs, which could have a material adverse effect on our business, contracts, financial condition, operating results, cash flows, liquidity and prospects. See “—We may be subject to litigation, which could have a material adverse effect on our ability to complete our Florida passenger rail system in a timely manner or our business, financial condition, operating results, cash flows, liquidity and prospects.”

Additionally, we depend on a number of service providers in the operation of the railroad. For example, we depend on Siemens to provide all warranty repairs and maintenance on our rolling stock. While our agreement with Siemens defines a standard of performance we do not directly control Siemens. Siemens may fail to meet the performance standards promised to us or suffer disruptions that could negatively impact their service or cause them to fail to perform services reliably, professionally or at the high standard of quality that we expect. Any such failure by Siemens may materially adversely affect our business. In addition, we are highly dependent on Florida East Coast Railway, L.L.C. (“FECR”) for track maintenance and other services they provide in connection with the operation of our system. Our business could be materially adversely affected if our customers believe that our services are unreliable or unsatisfactory.

Shared use of our rail corridor with freight operations could have an adverse effect on our ability to utilize our railway efficiently, which could impact our operations and financial condition.

FECR owns the fee simple title in the existing rail right-of-way along Florida’s east coast from Miami to Jacksonville and owns the existing railroad infrastructure within our Florida rail corridor (other than portions of the railroad infrastructure in the South Segment and the North Segment owned by us and other than the approximately

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40 miles of the railroad infrastructure between Cocoa and Orlando International Airport, which will be owned by us). We own the permanent, perpetual and exclusive rights, privileges and easement over and across the real property within FECR’s main line right-of-way between Miami and Cocoa, Florida for passenger rail purposes. We may also incur additional liability, casualty and property risks as a result of shared use of the corridor with freight railroad operations and, in the event that FECR is unable to pay any maintenance or repair costs, we may be required to pay such costs to maintain our services, which could adversely affect our operations and financial condition.

While the Second Amended and Restated Joint Use and Operating Agreement dated as of December 27, 2016, as amended on June 30, 2017, and as summarized in the Memorandum of Joint Use Agreement (Shared Infrastructure) dated June 30, 2017 (the “Joint Use Agreement”), provides for the allocation of liability between FECR and us in the case of accidents, and requires both carriers to maintain appropriate insurance coverage, there are no assurances that any such liabilities will not have a material adverse effect on our business, financial condition and operating results.

Shared use of our corridor with Tri-Rail could have an adverse effect on our ability to utilize our railway efficiently, which could impact our operations and financial condition.

We are constructing incremental infrastructure at our Miami station that will allow the South Florida Regional Transportation Authority (“SFRTA”) to provide commuter rail service. We estimate the cost for this additional construction to be approximately $65 million. We have entered into an agreement with SFRTA that will obligate the public agency to reimburse the incremental infrastructure costs over a fixed period of time. As of September 30, 2018, we had a balance of $3.6 million related to costs that were not yet reimbursed by SFRTA. Our ability to receive the full reimbursement is contingent on SFRTA receiving funds from several other local and state public agencies. SFRTA has negotiated with these relevant local and state agencies, but each agency will have to issue bonds or appropriate the funds according to the funding schedule, to the extent they have not done so already. There is a risk that a public agency’s revenues will not provide coverage for its funding commitments in a future fiscal year.

Additionally, we have entered into an operating agreement with SFRTA and have finalized associated ancillary agreements to allow SFRTA to expand Tri-Rail commuter rail service and establish a new commuter rail service on our rail corridor. SFRTA will need to secure capital to construct additional infrastructure in the corridor to maintain our on time performance targets, and there is no assurance that SFRTA will get the requisite funding to establish this commuter rail service or that the new rail service, if established, will not adversely affect the efficiency of our rail service.

The financial resources of our contractors may be insufficient to fund cost overruns or liquidated damages for which they are responsible under their contracts.

Under the expected terms of the majority of our construction contracts regarding the North Segment, the parties engaged by us will be responsible for all construction costs covered by the construction contract that exceed the fixed price or guaranteed maximum price contained in the contract, subject to specific conditions and limitations. Nevertheless, we cannot assure you that any contractor will have sufficient financial resources to fund any cost overruns or liquidated damages for which it is responsible under its contract. Furthermore, while bonds or other insurance posted by these parties and/or their subcontractors may be available, those instruments may also be insufficient to cover any shortfall and would require a time-consuming claims process to be pursued in order to obtain recovery. As such, we may need to pay these excess costs in order to complete construction of the North Segment. If the opening of the North Segment is materially delayed, it could materially and adversely affect our plan of operations and financial condition.

We may experience increased labor costs and the unavailability of skilled workers or our failure to attract and retain key personnel could adversely affect us.

We are dependent upon the available labor pool of skilled employees. We compete with other infrastructure and transportation companies and other employers for qualified personnel with the technical skills and experience required to construct and operate a passenger rail line and to provide our customers with the highest quality service. We are also subject to the Fair Labor Standards Act, which governs such matters as minimum wage, overtime and other working conditions. A shortage in the labor pool of skilled workers or other general inflationary pressures or changes in applicable laws and regulations could make it more difficult for us to attract and retain personnel and could require an increase in the wage and benefits packages that we offer, thereby increasing our operating costs. In

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addition, the rail industry in general is heavily unionized, which could increase our labor costs substantially. Any increase in our labor costs could materially and adversely affect our business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

We depend on our senior management team to grow and operate our business, and if we are unable to hire, retain, manage, and motivate our key personnel, or if our new personnel do not perform as we anticipate, our business may be harmed.

Our future success depends on our continued ability to identify, hire, develop, manage, motivate, and retain qualified personnel, particularly those who have specialized skills and experience in the development and operation of passenger rail systems. In particular, we are highly dependent on our president and chief operating officer and certain other members of senior management.

We do not have long-term employment agreements with members of our senior management team, and we do not maintain key person life insurance for any employee. Any changes in our senior management team may be disruptive to our business. If we fail to retain or effectively replace members of our senior management team, or if our senior management team fails to execute our plans and strategies, our business, results of operations and financial condition could be harmed.

We are at risk of losses and adverse publicity stemming from accidents or service disruptions involving rail services.

Incidents involving rail services, media coverage thereof, as well as adverse media publicity concerning the rail industry in general, could impact demand for our service. Equipment failures, delays (including any delay in implementing our PTC system), temporary cancellations of schedules, collisions, derailments, collisions with FECR freight trains or cars, or any deterioration in the performance or quality of any of our services could result in personal injuries, damage of goods, customer claims of damages, customer refunds, significant tort liability and loss of goodwill. These problems may also lead to decreases in passengers and revenue, damage to our reputation and unexpected expenses or may divert management’s attention away from the operation of our passenger rail line, any one of which could materially and adversely affect our business. In addition, any events which impact the rail or travel industry more generally may negatively impact guests’ ability or desire to travel by rail, or interrupt our ability to obtain services and goods from key vendors in our supply chain. Any of the foregoing could have an adverse impact on our results of operations and on future industry performance.

Maintaining a good reputation is critical to our business. Reports and media coverage of rail incidents, including improper conduct by our employees, passengers or agents, crimes, security breaches, terrorist threats and attacks, derailments and other adverse events can result in negative publicity, which could lead to a negative perception regarding the safety of our passenger rail line and the satisfaction of our passengers. Anything that damages our reputation, whether or not justified, could have an adverse impact on demand, which could lead to a reduction in our sales and profitability.

Future acts of terrorism or war, as well as the threat of war, may cause significant disruptions in our business operations.

Terrorist attacks, such as those that occurred on September 11, 2001, as well as the more recent attacks on the transportation systems in Madrid and London, and government response to those types of attacks and war or risk of war may adversely affect our results of operations, financial condition or liquidity. Our Florida passenger rail system could be a direct target or indirect casualty of an act or acts of terror. Such acts could cause significant business interruption and result in increased costs and liabilities and decreased revenues, which could have an adverse effect on our operating results and financial condition. Any act of terror, retaliatory strike, sustained military campaign or war or risk of war may have an adverse effect on our operating results and financial condition by causing or resulting in unpredictable operating or financial conditions, including disruptions of rail lines, volatility or sustained increase of fuel prices, fuel shortages, general economic decline and instability or weakness of financial markets which could restrict our ability to raise capital. In addition, insurance premiums charged for some or all of our coverage could increase dramatically or certain coverage may not be available to us in the future. Any such terrorist attack, whether or not insured, could materially and adversely affect our business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

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If we fail to maintain the security of information relating to our passengers, employees, contractors or others, whether as a result of cybersecurity attacks or otherwise, we could be exposed to data loss, litigation, government investigations and costly response measures, which could disrupt our operations and harm our reputation.

From time to time, we will have access to, collect, maintain or transmit private or confidential information regarding our passengers, employees, contractors and others, as well as our business. Although we have procedures in place to safeguard such data and information, cyber-attacks are rapidly evolving and becoming increasingly sophisticated. It is possible that computer hackers and others might compromise our security measures or those that we do business with and obtain the personal information of our passengers, employees, contractors and others or our business information. A security breach of any kind could expose us to the risk of data loss, litigation, government investigations and costly response measures, and could disrupt our operations. Any resulting negative publicity could significantly harm our reputation, which could in turn cause us to lose passengers and have an adverse effect on our business and operating results.

Our reliance on technology and technological improvements may negatively impact our company.

We rely on technology and technology improvements in our business operations. If we experience significant disruption or failure of one or more of our information technology systems, including computer hardware, software, and communications equipment, we could experience a service interruption, a security breach, or other operational difficulties. Additionally, if we do not have sufficient capital to acquire new technology or are unable to implement new technology, we may suffer a competitive disadvantage within the rail industry and with companies providing other modes of transportation service.

We may be subject to litigation, which could have a material adverse effect on our ability to complete our Florida passenger rail system in a timely manner or our business, financial condition, operating results, cash flows, liquidity and prospects.

From time to time, we may be involved in or subject to claims, litigation or other proceedings that, if adversely determined, could have a material adverse effect on us and our ability to complete our Florida passenger rail system in a timely manner.

In addition, we may be subject to claims in the ordinary course of business during the construction of our Florida passenger rail system by contractors, construction workers or others who may be injured during such construction. In the course of the operation of our Florida passenger rail system, we may also be subject to claims by our customers as result of any accidents or other incidents that may occur in connection with rail travel or by employees. Risks associated with legal liability are often difficult to assess or quantify and their existence and magnitude may not be known for significant periods of time. While we maintain insurance policies that we believe are appropriate for purposes of the construction of our Florida passenger rail system and the operation of the railroad, the amount of insurance coverage may not cover, or be sufficient to cover, individually or in the aggregate, any pending, threatened or potential future claims involving, or related to, our Florida passenger rail system or the operation thereof.

Sponsorships and advertising sales may not produce revenue at the levels we expect or at all.

We expect to generate a significant portion of our ancillary revenue from advertising placements and sponsorships, including the sale of naming rights for our stations. For example, we have entered into an exclusive agreement with OutFront Media, who has the right and responsibility to market, sell, install, display and remove third-party advertising on advertising displays inside our stations, such as video displays and column wraps, and outside our stations, such as external billboards. We cannot assure you that demand for sponsorships or advertising (including naming rights) will be realized at the levels that we expect or at all. New developments in advertising may render advertising inventory of the type that we offer less desirable than new, more innovative means of reaching consumers, and market downturns or other macroeconomic trends may lead to decreased advertising spend across all media. In addition, a decrease in ridership or foot traffic at our stations would decrease the desirability of these advertising and sponsorship opportunities. If demand for sponsorships or advertising (including naming rights) at our stations is lower than we expect, our advertising inventory may not command the advertising rates that we anticipate, we may not be able to reach agreements with potential advertisers for the sale of our sponsorship or advertising inventory on satisfactory terms or at all, and our revenue and results of operations may be adversely affected.

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Our results of operations may fluctuate due to seasonality and other factors associated with the tourism industry in Florida.

Our results of operations may fluctuate due to seasonality and other factors associated with the tourism industry in Florida given that there is greater travel to Florida during the winter and spring months. As a result, we expect our revenues to be stronger in the first and fourth quarters of the year than revenues in the second and third quarters of the year, which are periods of lower travel demand in Florida. While we expect our results of operations to generally reflect this seasonality, they may also be affected by numerous other factors that are not necessarily seasonal, including, among others, extreme or severe weather, natural disasters, general economic conditions and other factors. As a result, our quarterly operating results are not necessarily indicative of operating results for an entire year and historical operating results in a quarterly or annual period are not necessarily indicative of future operating results.

Our pursuit of new real estate development opportunities entails a number of significant risks that may prevent us from fully realizing some or all of the benefits of developing real estate.

We expect the costs involved in pursuing real estate developments to include real estate acquisition costs, construction and permitting costs, as well as financing and leasing costs. Developing real estate entails a number of significant risks such as construction or permitting delays, construction defects or the inability to obtain financing on attractive terms. The occurrence of any of these risks may prevent us from fully realizing some or all of the benefits of developing real estate.

Risks Related to Our Industry and Regulation

We may not be able to obtain or maintain the required permits, consents, approvals, licenses, entitlements and other authorizations for certain components of the construction and/or operation of our Florida passenger rail system or the Vegas Expansion and any failure or delay in doing so could impede completion and/or operation of our Florida passenger rail system or the Vegas Expansion.

The design, construction and operation of our Florida passenger rail system and the Vegas Expansion are highly regulated activities. Material governmental, regulatory and non-governmental approvals and permits are required in order to construct and operate our Florida passenger rail system. We have yet to receive certain approvals, licenses, consents, permits, entitlements and other authorizations required to construct and operate certain components of the North Segment, the Tampa Expansion and the Vegas Expansion.

In particular, we will be required to obtain and maintain certain approvals for the construction and operation of the North Segment, the Tampa Expansion and the Vegas Expansion. In connection with the North Segment and the Tampa Expansion we will be required to obtain and maintain permits for certain bridges from the U.S. Army Corps of Engineers and the U.S. Coast Guard and concurrence from local municipalities of our proposed crossing closures. In connection with the Vegas Expansion, we will be required to obtain approvals from the FRA, the Federal Highway Administration, the Army Corps of Engineers, the Bureau of Land Management, the U.S. Fish and Wildlife Service, the Surface Transportation Board and other federal, state and local governmental agencies. The authorizations obtained to date from federal and state regulatory agencies contain ongoing conditions to be fulfilled and allow for additional approval and permit requirements to be imposed. Furthermore, many of our approvals, licenses, consents, permits, entitlements and other authorizations, whether already issued or to be issued, are subject to appeal periods which have not yet run and during which challenges may be asserted. We have no control over the outcome of these permit processes and we do not know whether or when any such approvals or permits can be obtained, or whether or not any existing or potential interventions or other actions by third parties will interfere with our ability to obtain and maintain such permits or approvals. There is no assurance that we will obtain and maintain the needed governmental permits, approvals and authorizations, or that we will be able to obtain them on a timely basis, and failure to obtain and maintain any of these permits, approvals or authorizations could have a material adverse effect on our business, financial condition, operating results, cash flows, liquidity and prospects. If we do not obtain or maintain the necessary approvals, licenses, permits, entitlements, consents or other authorizations in a timely manner or on favorable terms and conditions or at all, our ability to complete the North Segment, the Tampa Expansion or the Vegas Expansion or to operate our Florida passenger rail system or the Vegas Expansion may be materially adversely affected.

Laws and regulations governing construction and operation of a passenger rail system may be subject to differing interpretations and may be amended from time to time. We may not be able to comply with all such interpretations and such newly-adopted laws and regulations in the future. Any failure by us to comply may increase the cost to, or delay our ability to complete or operate our Florida passenger rail system.

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We are subject to governmental regulations relating to our Florida passenger rail system and the Vegas Expansion, which could impose significant costs on our Florida passenger rail system or the Vegas Expansion and could impede completion or operation of our Florida passenger rail system or the Vegas Expansion, which would have a material adverse effect on our company.

We are subject to the jurisdiction of various regulatory agencies, including the FRA and other state and federal regulatory agencies for a variety of economic, health, safety, labor, tax, legal and other matters. New rules or regulations by these agencies could increase our operating costs or reduce operating efficiencies. For example, the Rail Safety Improvement Act of 2008 mandated that the installation of an interoperable PTC be completed by December 31, 2015 on main lines that carry certain hazardous materials and on lines that have commuter or passenger operations. The Surface Transportation Extension Act of 2015 amended the Rail Safety Improvement Act to require implementation of PTC by the end of 2018, which deadline may be extended to December 31, 2020, provided certain other criteria are satisfied. However, even if either the regulatory requirements or the implementation date are further revised, the rule will continue to impose significant new costs on us and the rail industry. Noncompliance with these and other applicable laws or regulations could affect operations, erode public confidence in us and can subject us to fines, penalties and other legal or regulatory sanctions.

In addition, under the Americans with Disabilities Act (“ADA”), all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements could require costs to attain compliance including removal of access barriers, and non-compliance could result in the imposition of fines or in private litigants winning damages. Although we believe that our trains and stations comply, or will comply, with the present requirements of the ADA, we may be subject to audits or investigations to determine compliance with the ADA.

Railroad regulations and legislative amendments may impose costs and restrictions that could adversely affect our operations.

Under current Florida law, we are exempt from sales taxes with regard to the purchase of certain materials. The Florida legislature may amend current law, including the Florida Revenue Act and/or the Florida Rail Enterprise Act, in a manner that adversely affects the tax, regulatory, operational or other aspects of our company and accordingly increases our cost of conducting business or reduces the volume of our business. For example, amendments to Florida Statute 212.08(7)(bbb) (2013) and/or Florida Statute 341.840 (2013) could subject us to sales taxes from which we are now exempt with regard to the purchase of certain materials.

Our operations are subject to rules and regulations promulgated by various agencies and bodies of the state and local governments which have jurisdiction over such matters as employment, environment, safety, traffic and health. The impact of any new rules and regulations on our operations is unknown and cannot be predicted. Future rules and regulations may require the expenditure by us of substantial sums to effect compliance therewith. In this regard, Florida legislation regarding the regulation of high-speed passenger rails was unsuccessfully introduced during both the 2017 and 2018 legislative sessions in the Florida Senate and the Florida House of Representatives. Senate Bill 572 (the “Florida High-Speed Passenger Rail Safety Act”), filed in October 2017, proposed to shift responsibility for certain construction and maintenance costs associated with grade rail crossings from local government entities to rail companies. In addition, the proposed legislation would have imposed certain fines and penalties, in an amount not to exceed $10,000, for each violation of the Florida High-Speed Passenger Rail Safety Act or rules adopted in relation to the Florida High-Speed Passenger Rail Safety Act. Similar legislation was filed in the Florida House of Representatives (most recently known as House Bill 525, also entitled the “Florida High-Speed Passenger Rail Safety Act”). These bills may be reintroduced in future legislative sessions.

Based on the current decision of the Surface Transportation Board, a federal economic regulatory agency that is charged with resolving railroad rate and service disputes and reviewing proposed railroad mergers, our existing and proposed rail system in Florida is not subject to its regulatory jurisdiction under Title 49 of the United States Code and there are no Surface Transportation Board regulatory laws or issues that could impact claims of the investors. However, if the Surface Transportation Board were to assert jurisdiction over us in the future, then advance approval or exemption would be required before the property could be liquidated. The proceeding before the Surface Transportation Board would be subject to public comment and an independent analysis by the Surface Transportation Board of the viability of the railroad. The Surface Transportation Board could also require the property to be kept in service after authorizing abandonment if a third party offered a subsidy to make us whole during such subsidy period. The Surface Transportation Board also has the power to order the sale of the property of a regulated carrier to a financially responsible third party for the net liquidation value, which consists of the current value of the track

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and materials less the cost of removal and transportation, plus the across-the-fence value of real estate owned in fee simple, less the usual and customary costs of the sale of real estate.

In addition, if the Surface Transportation Board were to assert jurisdiction over us in the future, then advance approval or exemption might be required for our Florida passenger railroad operations and/or the construction and operation of our Florida passenger rail system. Because of the projected number of trains to be operated daily by us, the Surface Transportation Board might also require an environmental review separate or different from that review conducted by the FRA. That review could be either an environmental assessment or environmental impact statement for the new passenger operations, and would most likely be an environmental impact statement with respect to any new construction. The environmental review process could take up to three years and might result in conditions ranging from pro forma to onerous, including a requirement that we construct one or more grade separations along the line at a potentially significant cost. There is also a risk of denial or conditions so costly that we do not proceed at all. The Surface Transportation Board would also have the power to regulate fares and service while we are operating.

We may incur liability under and costs to comply with environmental laws relating to the development and operation of our Florida passenger rail system and the Vegas Expansion.

Our assets and the development and operation of our Florida passenger rail system and the Vegas Expansion are subject to a variety of federal, state and local environmental, health and safety rules and regulations regarding, among other things, discharge of pollutants into the air, water and soil, the generation, handling, storage, transportation, treatment and disposal of waste and other regulated materials, the cleanup of contaminated properties and human health and safety, air emissions associated with locomotive engines and the protection of wetlands, endangered species and other natural resources. We may incur substantial costs in order to maintain compliance with these laws and regulations. Noncompliance with these rules and regulations could result in significant fines or penalties, injunctions limiting or prohibiting our activities, delays in completing our Florida passenger rail system or the Vegas Expansion or additional costs, including liability for investigation, remediation or mitigation costs or any related claims alleging personal injury, property or natural resource damages, all of which could have a material adverse impact on our business, contracts, financial condition, operating results, liquidity and prospects.

At any time, we may be responsible for remediation costs or other liabilities as a result of the use, presence, release or disposal of regulated substances at or from any property we own or operate or to which we have sent waste for treatment or disposal. Liability may be imposed without regard to whether we knew of, or caused, the contamination and, in some cases, liability may be joint or several. We may also face additional costs, liabilities or delays as a result of any proposed or actual impact or damages to any protected species or habitats.

Any environmental liability or obligation could cause us to incur material costs outside of the current development budget for our Florida passenger rail system or the Vegas Expansion or result in material delays. In particular, undiscovered contamination, changes in law or governmental enforcement or oversight, our failure to obtain or maintain environmental permits, authorizations or other approvals, unforeseen environmental liabilities or any environmental claims or challenges by interested parties may result in additional, unexpected costs or could cause significant delays in the completion of our Florida passenger rail system or the Vegas Expansion, prevent us from completing our Florida passenger rail system or the Vegas Expansion or prevent us from developing rail systems in other jurisdictions.

We may be subject to federal, state and local taxes on our income and property and, since we have limited operating history, the impact of such taxes on our company is currently unknown.

We may be subject to federal, state and local taxes on our income and property, including our real estate assets. However, since we have limited operating history, the impact of such taxes on our company is currently unknown. In particular, we may be subject to taxes from authorities in various jurisdictions and can give no assurance as to how such authorities will assess taxes on our income and/or properties. Any tax liability could be substantial and would reduce the amount of cash available.

Changes in laws or regulations related to U.S. federal income taxation could affect us or the holders of our common stock.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. The recently enacted Tax Cuts and Jobs Act makes substantial changes to the Internal Revenue Code of 1986, as amended (the “Code”). Among those changes

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are a significant permanent reduction in the generally applicable corporate tax rate, changes in the taxation of individuals and other non-corporate taxpayers that generally but not universally reduce their taxes on a temporary basis subject to “sunset” provisions, the elimination or modification of various previously allowed deductions (including substantial limitations on the deductibility of interest and, in the case of individuals, the deduction for personal state and local taxes), and certain additional limitations on the deduction of net operating losses. The effect of these, and the many other, changes made in the Tax Cuts and Jobs Act is uncertain, both in terms of their direct effect on the taxation of an investment in our common shares and their indirect effect on the value of our assets or our common shares or market conditions generally. Furthermore, many of the provisions of the Tax Cuts and Jobs Act will require guidance through the issuance of Treasury regulations in order to assess their effect. There may be a substantial delay before such regulations are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on us. Technical corrections legislation also may be proposed with respect to the Tax Cuts and Jobs Act, the effect of which cannot be predicted.

Risks Related to Our Indebtedness

Although we believe that we will be able to raise sufficient funds to complete our Florida passenger rail system and the Vegas Expansion, there are no assurances that future sources of capital will be available on favorable terms, on a timely basis, or at all to accomplish this.

The development and completion of the North Segment, the Tampa Expansion and the Vegas Expansion are dependent upon our ability to raise funds through various potential sources, including a refinancing of the Series 2017 Bonds (as defined below), through a new issuance of private activity bonds or otherwise, and/or future debt or equity financings. See the section entitled “Description of Certain Indebtedness—Anticipated Debt Financing” for more information. Though we believe we will be able to raise sufficient funds to complete the North Segment, the Tampa Expansion and the Vegas Expansion, we have not yet secured such debt financing and there can be no assurance that such capital will be available at our desired timing, on favorable terms, on a timely basis, or at all or will be sufficient to meet our needs. Instability or disruptions of the capital markets, including credit markets, could restrict or prohibit access to financing sources and could increase the cost of financing sources. Likewise, a significant deterioration of our financial condition due to internal or external factors could also reduce credit ratings and could limit or affect our access to external sources of capital and increase financing costs.

If we are unable to raise sufficient additional capital at a reasonable cost of financing and otherwise on favorable terms and on our desired timing, it could be forced to curtail construction, development and operation activities, which will delay the development and completion of the North Segment, the Tampa Expansion or the Vegas Expansion and could have a material adverse effect on our current or future business, contracts, financial condition, operating results, cash flows, liquidity and prospects.

We have limited revenue and may not be able to generate sufficient cash to service all of our existing and future indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our existing and future debt obligations depends on our financial condition and operating performance, which are subject to the profitability of our Florida passenger rail system, prevailing economic and competitive conditions, and certain financial, business and other factors some of which are beyond our control. There can be no guarantee that we will be able to sustain successful operation of our Florida passenger rail system, or that we will complete our Florida passenger rail system as anticipated or at all. As a result, we may not be able to maintain a level of cash flow from operating activities sufficient to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to service our debt obligations and other cash requirements, we could face substantial liquidity problems and may be forced to reduce or delay investments or capital expenditures, or to sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. The agreements that govern our indebtedness may restrict us from adopting some of these alternatives. These alternative measures may not be successful and may not permit us to meet our debt obligations.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our business, financial condition

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and operating results. If we cannot make scheduled payments on our indebtedness, we would be in default, which could result in an acceleration of any such indebtedness, the termination of lenders’ commitments to loan money and/or, in the case of secured indebtedness, foreclose against the assets securing such indebtedness.

We have a substantial amount of indebtedness, which could adversely affect our business, financial condition and operating results. In addition, we may incur additional debt in the future.

Our total indebtedness is approximately $625 million and is expected to increase substantially in connection with the construction of the North Segment, the Tampa Expansion and the Vegas Expansion. For a description of our indebtedness, see “Description of Certain Indebtedness.” Our substantial indebtedness could have important consequences, including:

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increasing our vulnerability to adverse economic, industry or competitive developments;

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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness;

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limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements and general corporate or other purposes; and

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limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate.

Additionally, we may incur additional debt, which could increase the risks of adversely affecting our financial condition and the risks associated with our ability to service our debt obligations. If new debt is added to our existing debt levels, the related risks regarding our substantial leverage would increase.

Risks Related to Our Organization and Structure

If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.

Immediately following the completion of this offering, the Virgin Trains Stockholder, which is primarily owned by private equity funds managed by an affiliate of Fortress, will own approximately % of our outstanding common stock or % if the underwriters’ over-allotment option is fully exercised. As a result, the Virgin Trains Stockholder will own shares sufficient for the majority vote over all matters requiring a stockholder vote, including: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; the amendment of our certificate of incorporation and our bylaws; and our winding up and dissolution. This concentration of ownership may delay, deter or prevent acts that would be favored by our other stockholders. The interests of the Virgin Trains Stockholder may not always coincide with our interests or the interests of our other stockholders. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of us. Also, the Virgin Trains Stockholder may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders, including investors in this offering. As a result, the market price of our common stock could decline or stockholders might not receive a premium over the then-current market price of our common stock upon a change in control. In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders. See “Principal Stockholder” and “Description of Capital Stock—Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Bylaws.”

We are a holding company with no operations and will rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations and to pay dividends.

We are a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries, which own our operating assets. As a result, we will be dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends on our common stock. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. For example, certain of our debt agreements limit, and our debt agreements in the future may limit, the ability of certain of our subsidiaries to pay dividends or make loans or other distributions to us. See “Management’s

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Discussion and Analysis of Financial Conditions and Results of Operations—Liquidity and Capital Resources” and “Dividend Policy.” If we are unable to obtain funds from our subsidiaries, we may be unable to, or our board may exercise its discretion not to, pay dividends.

We do not anticipate paying any dividends on our common stock in the foreseeable future.

We have no plans to pay regular dividends on our common stock, and we anticipate that a significant amount of any free cash flow generated from our operations will be utilized to fund our operations or construction or redeem or prepay outstanding indebtedness, including debt under the loan agreement between Florida Development Finance Corporation and Brightline Trains LLC (f/k/a All Aboard Florida – Operations LLC, a limited liability company in Delaware that effected a name change in May 2018) (“Brightline Trains”) dated December 1, 2017, as amended (the “Senior Loan Agreement”) and accordingly would not be available for dividends. Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. Until such time that we pay a dividend, our investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Certain provisions of a stockholders’ agreement we expect to enter into with the Virgin Trains Stockholder (the “Stockholders’ Agreement”), our certificate of incorporation and our bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our common stock.

Certain provisions of the Stockholders’ Agreement, our certificate of incorporation and our bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors or the Virgin Trains Stockholder. These provisions provide for:

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a classified board of directors with staggered three-year terms;

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removal of directors only for cause and only with the affirmative vote of at least % of the voting interest of stockholders entitled to vote (provided, however, that for so long as the Virgin Trains Stockholder and certain affiliates of Fortress and permitted transferees beneficially own at least % of our issued and outstanding common stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote);

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provisions in our certificate of incorporation and bylaws prevent stockholders from calling special meetings of our stockholders (provided, however, that for so long as the Virgin Trains Stockholder and certain affiliates of Fortress and permitted transferees beneficially own, directly or indirectly, at least % of our issued and outstanding common stock, any stockholders that collectively beneficially own at least % of our issued and outstanding common stock may call special meetings of our stockholders);

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advance notice requirements by stockholders with respect to director nominations and actions to be taken at annual meetings;

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certain rights to the Virgin Trains Stockholder and certain affiliates of Fortress and permitted transferees with respect to the designation of directors for nomination and election to our board of directors, including the ability to appoint a majority of the members of our board of directors, plus one director, for so long as the Virgin Trains Stockholder and certain affiliates of Fortress and permitted transferees continue to beneficially own, directly or indirectly at least % of our issued and outstanding common stock. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement”;

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no provision in our certificate of incorporation or bylaws for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our common stock can elect all the directors standing for election;

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our certificate of incorporation and our bylaws only permit action by our stockholders outside a meeting by unanimous written consent, provided, however, that for so long as the Virgin Trains Stockholder and certain affiliates of Fortress and permitted transferees beneficially own, directly or indirectly, at least % of our issued and outstanding common stock, our stockholders may act without a meeting by written consent of a majority of our stockholders; and

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under our certificate of incorporation, our board of directors has authority to cause the issuance of preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders. Nothing in our certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock.

In addition, these provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by the Virgin Trains Stockholder, our management or our board of directors. Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. See “Description of Capital Stock—Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Bylaws.”

Our relationship with our Parent, including the fact that our Parent owns the mixed-use office, residential, retail and parking facilities at and around our stations in Miami, Fort Lauderdale and West Palm Beach, may create conflicts of interest or the appearance of conflicts of interest, which could adversely affect our business.

Currently, our Parent is developing approximately 1.5 million square feet of mixed-use office, residential, retail and parking facilities at and around our stations in Miami, Fort Lauderdale and West Palm Beach, and key tenants, including food and beverage, fashion, fitness and life-style brands, have leased and are in negotiations to lease space. We do not have any ability to control the decisions made by our Parent with respect to the facilities it owns at and around our stations, which may create actual or perceived conflicts of interest. Our Parent may decide that it is in its or its equityholders’ best interests to pursue such opportunities in a manner that is not consistent with the best interests of us or our stockholders. In addition, they may not desire to, or be able to, maintain such facilities in the future in a condition that meets our expectations. If such facilities were not well maintained, it could have a negative impact on the areas surrounding our passenger rail system, which could have an adverse effect on our business. These risks may be exacerbated if our Parent’s ownership stake in us were to decline over time.

Furthermore, our pursuit of new opportunities at future stations we may establish could create or appear to create potential conflicts of interest. For example, we may wish to pursue the same real estate development activities with the same food and beverage, fashion, fitness and life-style brands that have entered into agreements with our Parent. In addition, we may pursue development activities in concert with our Parent, which could also create conflicts of interest. Such conflict of interests could have a material adverse effect on our business.

Certain of our stockholders have the right to engage or invest in the same or similar businesses as us.

Fortress, the Virgin Trains Stockholder and certain of their respective affiliates engage in other investments and business activities in addition to their ownership of us. Under our certificate of incorporation, Fortress, the Virgin Trains Stockholder and their respective affiliates have the right, and have no duty to abstain from exercising such right, to engage or invest in the same or similar businesses as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees. If Fortress, the Virgin Trains Stockholder, their affiliates or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our affiliates.

In the event that any of our directors and officers who is also a director, officer or employee of any of Fortress, the Virgin Trains Stockholder or their respective affiliates, acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acts in good faith to the fullest extent permitted by law, then even if Fortress or the Virgin Trains Stockholder pursues or acquires the corporate opportunity or if Fortress or the Virgin Trains Stockholder do not present the corporate opportunity to us, such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”

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Our certificate of incorporation and bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder limitation matters, which could discourage stockholder lawsuits or limit our stockholders’ ability to bring a claim in any judicial forum that they find favorable for disputes with us or our officers and directors.

Pursuant to our certificate of incorporation and bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or (iv) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. The forum selection clause in our certificate of incorporation may have the effect of discouraging stockholder lawsuits or limiting our stockholders’ ability to bring a claim in any judicial forum that they find favorable for disputes with us or our officers and directors.

Risks Related to this Offering

An active trading market for our common stock may never develop or be sustained.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined through negotiations with the underwriters. This price may not reflect the price at which investors in the market will be willing to buy and sell our shares following this offering. Although we intend to apply to have our common stock approved for listing on the Nasdaq, an active trading market for our common stock may not develop on that exchange or elsewhere or, if developed, that market may not be sustained. Accordingly, if an active trading market for our common stock does not develop or is not maintained, the liquidity of our common stock, your ability to sell your shares of common stock when desired and the prices that you may obtain for your shares of common stock will be adversely affected. An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

Even if an active trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. The initial public offering price of our common stock will be determined by negotiation between us and the representatives of the underwriters based on a number of factors and may not be indicative of prices that will prevail in the open market following completion of this offering. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:

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variations in our quarterly or annual operating results;

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changes in our earnings estimates (if provided) or differences between our actual financial and operating results and those expected by investors and analysts;

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the contents of published research reports about us or our industry or the failure of securities analysts to cover our common stock after this offering;

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additions to, or departures of, key management personnel;

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our ability to successfully rebrand under “Virgin Trains USA”;

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any increased indebtedness we may incur in the future;

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announcements by us or others and developments affecting us;

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actions by institutional stockholders;

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litigation and governmental investigations;

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changes in market valuations of similar companies;

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speculation or reports by the press or investment community with respect to us or our industry in general;

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increases in market interest rates that may lead purchasers of our shares to demand a higher yield;

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announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic relationships, joint ventures or capital commitments; and

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general market, political and economic conditions, including any such conditions and local conditions in the markets in which our borrowers are located.

These broad market and industry factors may decrease the market price of our common stock, regardless of our actual operating performance. The stock market in general has from time to time experienced extreme price and volume fluctuations, including in recent months. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Future offerings of debt or equity securities by us may materially adversely affect the market price of our common stock.

In the future, we expect to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. In particular, we intend to seek debt financing to complete the construction of the North Segment, the Tampa Expansion and the Vegas Expansion, as well as for transit oriented real estate development opportunities. In addition, we may seek to expand operations in the future to other markets which we would expect to finance through a combination of additional issuances of equity, corporate indebtedness and/or cash from operations.

Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our common stock or both. Upon liquidation, holders of such debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us. See “Description of Capital Stock.”

The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.

After this offering, there will be shares of common stock outstanding, or shares outstanding if the underwriters exercise their over-allotment option in full. Of our issued and outstanding shares, all the common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. Following completion of the offering, approximately % of our outstanding common stock (or % if the underwriters exercise their over-allotment option in full) will be held by the Virgin Trains Stockholder and can be resold into the public markets in the future in accordance with the requirements of Rule 144. See “Shares Eligible For Future Sale.”

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We and our executive officers, directors and the Virgin Trains Stockholder (who will hold in the aggregate approximately % of our outstanding common stock immediately after the completion of this offering or % if the underwriters exercise their over-allotment option in full) have agreed with the underwriters that, subject to certain exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any common stock or any securities convertible into or exercisable or exchangeable for common stock, or in any manner transfer all or a portion of the economic consequences associated with the ownership of common stock, or cause a registration statement covering any common stock to be filed, without the prior written consent of . See “Underwriting.”

Corvina has entered into an agreement pursuant to which it has agreed to purchase from us, at a price per share equal to the initial public offering price, shares of newly issued common stock in an amount less than % of the number of shares outstanding immediately following the offering. The concurrent private placement will not be registered under the Securities Act. As a result, the shares of our common stock purchased by Corvina will be restricted securities within the meaning of Rule 144 under the Securities Act, but will be eligible for resale subject to applicable restrictions under Rule 144 or pursuant to any other exemption from registration under the Securities Act.

Pursuant to the Stockholders’ Agreement, the Virgin Trains Stockholder and certain of its affiliates and permitted third party transferees have the right, in certain circumstances, to require us to register their approximately shares of our common stock under the Securities Act for sale into the public markets. Upon the effectiveness of such a registration statement, all shares covered by the registration statement will be freely transferable. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”

The market price of our common stock may decline significantly when the restrictions on resale by our existing stockholders lapse. A decline in the price of our common stock might impede our ability to raise capital through the issuance of additional common stock or other equity securities.

The future issuance of additional common stock in connection with our incentive plans or otherwise will dilute all other stockholdings.

After this offering, assuming the underwriters exercise their over-allotment option in full, we will have an aggregate of shares of common stock authorized but unissued and not reserved for issuance under our incentive plans. We may issue all of these shares of common stock without any action or approval by our stockholders, subject to certain exceptions. Any common stock issued in connection with our incentive plans, the exercise of outstanding stock options or otherwise would dilute the percentage ownership held by the investors who purchase common stock in this offering.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price of our common stock will be substantially higher than the as adjusted net tangible book value per share issued and outstanding immediately after this offering. Our net tangible book value per share as of , 2018 was approximately $ and represents the amount of book value of our total tangible assets minus the book value of our total liabilities, after giving effect to the for 1 stock split, divided by the number of our shares of common stock then issued and outstanding. Investors who purchase common stock in this offering will pay a price per share that substantially exceeds the net tangible book value per share of common stock. If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution of $ in the net tangible book value per share, based upon the initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover of this prospectus). Investors that purchase common stock in this offering will have purchased % of the shares issued and outstanding immediately after the offering, but will have paid % of the total consideration for those shares.

We will have broad discretion in the use of a significant part of the net proceeds from this offering and may not use them effectively.

Our management currently intends to use the net proceeds from this offering in the manner described in “Use of Proceeds” and will have broad discretion in the application of a significant part of the net proceeds from this offering. The failure by our management to apply these funds effectively could result in financial losses that could

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harm our business, cause the price of our common stock to decline and delay the development of our operations. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If securities or industry analysts do not publish research or reports about our business or publish negative reports, our stock price could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one of more of these analysts ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our reporting results do not meet their expectations, our stock price could decline.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information we provide stockholders will be different than the information that is available with respect to other public companies. In this prospectus, we have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an “emerging growth company,” we will incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We expect that we will need to hire additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that the rules and regulations applicable to us as a public company may make it more difficult and more expensive for us to obtain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and

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governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

Pursuant to Sarbanes-Oxley Act Section 404, we will be required to furnish a report by our management on our internal control over financial reporting beginning with our second filing of an Annual Report on Form 10-K with the SEC after we become a public company. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Sarbanes-Oxley Act Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Sarbanes-Oxley Act Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

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USE OF PROCEEDS

We will receive net proceeds from this offering of approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares), after deducting underwriting discounts and commissions, based on an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus). If the underwriters exercise their option to purchase additional shares in full, we will receive net proceeds of approximately $ million. See “Underwriting.” We estimate the net proceeds we will receive from the sale of shares of our common stock in the concurrent private placement will be approximately $ million.

We intend to use the net proceeds from this offering, the concurrent private placement, and/or future debt or equity financings to rebrand under “Virgin Trains USA”, to continue to upgrade the infrastructure in the South Segment, and to complete the construction of the North Segment, the Tampa Expansion and the Vegas Expansion, as well as for general corporate purposes. We expect the total funds necessary to complete the construction of the North Segment will be approximately $2.1 billion, excluding a $183 million contingency fund. We expect the total funds necessary to complete the construction of the Tampa Expansion will be approximately $1.7 billion. We expect the total funds necessary to complete the contruction of the Vegas Expansion will be approximately $3.6 billion. We are currently in the process of negotiating a portion of the debt financing, but the terms of any such financing are not yet finalized. For a description of the North Segment, the Tampa Expansion and the Vegas Expansion, see “Business.” There can be no assurance that we will be able to obtain the remaining funds necessary on acceptable terms, on our desired timelines or at all.

Assuming no exercise of the underwriters’ option to purchase additional shares, a $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the net proceeds from this offering received by us, after deducting the underwriting discounts and commissions and estimated offering expenses, by approximately $ million and $ million, respectively, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

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DIVIDEND POLICY

We have not declared or paid any cash dividends on our capital stock since our inception, and we currently intend to retain all of our future earnings, if any, generated by our operations for the construction, operation and expansion of our business. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our board of directors deems relevant, including any contractual prohibitions with respect to payment of distributions. See “Risk Factors—Risks Related to Our Organization and Structure— We do not anticipate paying any dividends on our common stock in the foreseeable future.”

Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries. Certain of our debt agreements limit, and our debt agreements in the future may limit, the ability of certain of our subsidiaries to pay dividends or make loans or other distributions to us. For example, the Senior Loan Agreement and the Collateral Agency, Intercreditor and Accounts Agreement by and among Brightline Trains, Deutsche Bank National Trust Company and the other secured parties thereto, dated December 1, 2017 (the “Collateral Agency Agreement”) contain restrictions on, among other things, our subsidiaries ability to pay dividends and other distributions to Virgin Trains USA Inc. See “Management Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Risk Factors—Risks Related to the Organization and Structure—We are a holding company with no operations and will rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations and to pay dividends.”

Under Delaware law, dividends may be payable only out of surplus, which is calculated as our net assets less our liabilities and our capital, or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

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CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2018:

•

on an actual basis; and

•

on an as adjusted basis to give effect to (i) our conversion into a corporation and the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and the sale by us of shares of our common stock in the concurrent private placement and the application of the net proceeds from this offering as set forth under “Use of Proceeds” and (ii) the entry into a debt facility.

The following table is derived from and should be read together with the sections of this prospectus entitled “Use of Proceeds,” “Selected Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and related notes included elsewhere in this prospectus.

(Dollars in thousands)	As of September 30, 2018
	Actual			As Adjusted⁽¹⁾
Cash and cash equivalents	$	273
Restricted cash	$	48,675
Long-term debt
Senior Loan Agreement (Series 2017 Bonds)⁽²⁾	$	581,640
Siemens Credit Agreement⁽³⁾		24,747
Debt facility⁽⁴⁾		—
Less: current maturities		(938	)
Total long-term debt		605,449

Equity
Invested equity		1,061,734
Common stock, par value $0.01 per share; common stock authorized, actual; common stock authorized, as adjusted; common stock issued and outstanding, actual; common stock issued and outstanding, as adjusted		—
Additional paid-in capital		—
Total equity		1,061,734
Total capitalization	$	1,667,183

(1)

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the estimated initial public offering price range we show on the cover of this prospectus, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, $ million, $ million and $ million, respectively, assuming that the number of shares offered by us, which we show on the cover of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of common stock we are offering. Each increase (decrease) of 100,000 common stock at the assumed initial public offering price of $ per share, which is the midpoint of the estimated initial public offering price range we show on the cover of this prospectus, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, $ million, $ million and $ million, respectively, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(2)

Represents the aggregate principal amount of the Senior Loan Agreement, net of unamortized deferred financing costs. In December 2017, Brightline Trains entered into a loan agreement with the Florida Development Finance Corporation (the “FDFC”), pursuant to which the FDFC loaned the proceeds from the issuance of $600.0 million aggregate principal amount of its Surface Transportation Facility Revenue Bonds (Brightline Passenger Rail Project – South Segment), Series 2017 (the “Series 2017 Bonds”) to Brightline Trains. See “Description of Certain Indebtedness” for additional information.

(3)

On July 10, 2018, Brightline Trains entered into a two-year $25.0 million delayed draw term loan credit facility to be used for working capital purposes and the acquisition of rolling stock. See “Description of Certain Indebtedness” for additional information.

(4)

We have had preliminary discussions with potential lenders or other financing sources regarding a portion of the debt financing to fund the remainder of the costs to rebrand under “Virgin Trains USA” and to complete construction of the North Segment, the Tampa Expansion and the Vegas Expansion. See the section entitled “Description of Certain Indebtedness—Anticipated Debt Financing” for more information.

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DILUTION

If you invest in our common stock in this offering, you will experience immediate and substantial dilution in the net tangible book value per share of our common stock upon completion of this offering.

Our as adjusted net tangible book value as of September 30, 2018, was approximately $ , or approximately $ per share. Our as adjusted net tangible book value per share is determined by dividing our tangible net worth (tangible assets less total liabilities) by the total number of our outstanding common stock that will be outstanding immediately prior to the closing of this offering, assuming the completion of our reorganization.

After giving effect to the completion of our reorganization and the sale of common stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus), the sale of shares of our common stock in the concurrent private placement, and after deducting estimated underwriting discounts and commissions and offering expenses, our adjusted pro forma net tangible book value as of September 30, 2018 would have been approximately $ , or approximately $ per share. This represents an immediate increase in net tangible book value of $ per share. This represents an immediate increase in the net tangible book value of $ per share to our existing stockholders and an immediate dilution (i.e., the difference between the offering price and the adjusted pro forma net tangible book value after this offering) to new investors participating in this offering of $ per share.

The following table illustrates the per share dilution to new investors participating in this offering:

(1)

Dilution is determined by subtracting net tangible book value per share after giving effect to the offering from the initial public offering price paid by a new investor.

The following table summarizes on an adjusted pro forma basis as of September 30, 2018, the total number of shares of common stock owned by existing stockholders and to be owned by Corvina and the new investors in this offering, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by the new investors in this offering at $ , the midpoint of the price range set forth on the cover page of this prospectus, calculated before deducting of estimated discounts and commissions and offering expenses:

Common Stock Purchased

Total Consideration

Average
Price Per
Share

Number

Percentage

Amount

Percentage

Existing stockholders

New investors in this offering

Total

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our adjusted pro forma net tangible book value. As of September 30, 2018, by approximately $ , the adjusted pro forma net tangible book value per share after this offering by $ per share , the adjusted pro forma net tangible book value per share to Corvina after this offering by $ and the dilution in adjusted pro forma net tangible book value per share to new investors in this offering by $ per share assuming the number of shares 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 and offering expenses.

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SELECTED COMBINED FINANCIAL DATA

The following table presents the selected combined financial data for the periods and as of the dates indicated.

Our historical combined financial statements have been prepared on a stand-alone basis in accordance with GAAP and are derived from the Virgin Trains Stockholder’s and our Parent’s accounting records using the historical results of operations and assets and liabilities attributed to our operations, and include allocations of expenses from the Virgin Trains Stockholder and our Parent. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period. You should read the selected combined financial data presented below in conjunction with the information included under the headings “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and the related notes included elsewhere in this prospectus.

(Dollars in thousands)	Nine Months Ended September 30,						Year Ended December 31,
	2018			2017			2017			2016
Statements of Operations Data:
Revenues
Passenger and customer related	$	4,754		$	—		$	—		$	—
Other		479			—			—			—
Total operating revenues		5,233			—			—			—
Operating expenses
Salaries, wages and benefits		21,941			17,757			16,487			13,889
Equipment maintenance		6,970			1,535			2,337			1
Maintenance of way		5,592			2,332			3,520			1,065
Fuel		1,395			59			23			—
Rent		3,292			567			839			405
Other operating expenses		6,741			2,803			4,482			2,325
General and administrative		22,910			10,327			15,833			6,947
Depreciation and amortization		18,392			618			880			359
Total operating expenses		87,233			35,998			44,401			24,991
Operating loss		(82,000	)		(35,998	)		(44,401	)		(24,991	)
Other income (expense)
Loss on extinguishment of debt		—			—			(327	)		—
Interest income (expense), net		(5,265	)		15			—			—
Other income		137			26			78			—
Total other income (expense)		(5,128	)		41			(249	)		—
Net loss and comprehensive loss	$	(87,128	)	$	(35,957	)	$	(44,650	)	$	(24,991	)

	As of September 30,		As of December 31,
	2018		2017		2016
Balance Sheet Data:
Properties, equipment and investment in rail, net	$	1,501,383	$	1,332,572	$	985,657
Total assets		1,836,925		1,774,354		1,258,870
Long-term debt		605,449		581,252		32,223
Invested equity – Parent’s net investment		1,061,734		1,084,210		1,129,646

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements and Industry Data” for a discussion of the uncertainties, risks and assumptions associated with those statements. Actual results may differ materially from those discussed in or implied in the forward-looking statements as a result of various factors, including, without limitation, those discussed below and elsewhere in this prospectus, particularly in the section entitled “Risk Factors.”

The following discussion of our financial condition and results of operations should be read in conjunction with our combined financial statements and the notes thereto included elsewhere in this prospectus, as well as the information presented under “Selected Combined Financial Data.”

Overview

We currently operate between Miami and West Palm Beach, one of the most heavily traveled and congested regions in the United States. Upon completion of this offering, we will continue construction of the expansion of our Florida passenger rail system to Orlando, Florida, and we intend to further expand our rail service to Tampa, Florida. Louis Berger estimates the total potential addressable market of travelers across our Miami to Tampa corridor to be approximately 413 million trips annually. We can operate up to 32 trains daily that are capable of speeds of up to 125 miles per hour, and we own stations located in the heart of downtown cities and major transit hubs in Florida. We believe our passenger rail system offers travel that is faster, safer, more eco-friendly, more reliable, less expensive, more productive and more enjoyable than travel by car or air.

We estimate a fully operational annual stabilized ridership of 11.3 million passengers for the Vegas Expansion. We expect the ramp up of ridership for the Vegas Expansion will proceed at a faster rate than our Florida passenger rail system due in part to the more concentrated travel pattern in the corridor between Las Vegas and Southern California. We also expect to stabilize by fourth quarter of 2023 or the first quarter of 2024. We expect to generate approximately $863.0 million in total revenue from the Vegas Expansion in its first year of stabilized operations, which include approximately $674.0 million in ticket revenue and approximately $189.0 million in ancillary revenue (which reflects an expected $5 in additional ancillary revenue per passenger as compared to our Florida passenger rail system, based on management’s expectation that the average trip length and nature of the market served by the Vegas Expansion will result in increased demand for food and beverage and potential sponsorship opportunities). Similar to our Florida passenger rail system, we believe that the Vegas Expansion will generate compelling returns, and our goal is to generate a stabilized operation income margin, before depreciation, amortization and interest of approximately 70% of total revenue. See “Special Note Regarding Forward-Looking Statements and Industry Data” and “Risk Factors.”

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certain other intellectual property as part of our corporate name and in connection with the operation of an intercity private high speed passenger rail service along certain permitted passenger rail routes in the United States (including our Florida passenger rail system and the Vegas Expansion). As a result, we intend to rebrand from “Brightline” to “Virgin Trains USA.” We expect that our intended rebranding will require us to devote substantial resources to advertising and marketing and will cause us to incur significant costs. For more information about the Virgin License Agreement, see “Business—Intellectual Property.”

Outlook

When our Florida passenger rail system is fully built-out and operational between Miami and Orlando, we expect to carry approximately 6.6 million passengers annually, as estimated by Louis Berger. Louis Berger estimates that a fully built-out and operational service between Orlando and Tampa would carry an additional 2.9 million passengers annually, which would result in fully operational annual stabilized ridership of approximately 9.5 million passengers for our Florida passenger rail system by the fourth quarter of 2023 or the first quarter of 2024. The determination of the year of stabilization is based on information the Company provided to Louis Berger, which information has not been validated by Louis Berger. Based upon certain estimates and assumptions prepared for us by Louis Berger regarding our service between Miami, Orlando and Tampa, we expect to generate approximately $810 million of total revenue in our first stabilized year (including the South Segment from Miami to West Palm Beach, the North Segment from West Palm Beach to Orlando and the Tampa Expansion from Orlando to Tampa) after an initial ramp up period of our operations. To arrive at this estimate, our management applied a combined annual fare growth and inflation rate of approximately 2.8% to Louis Berger’s estimates, thereby projecting annualized ticket revenue of approximately $700 million upon stabilization. Louis Berger has not verified our management’s estimates. In addition, our management projects additional revenue of approximately $110 million based on the Florida Operations and Maintenance and Ancillary Revenue Report, which (based on management estimates that Louis Berger determined were reasonable) expects revenue from food and beverage, parking, naming rights, sponsorships and partnerships, merchandise, advertisement and other fees to equal approximately 14% of total revenue (or approximately $12 per passenger). We believe our services will generate a compelling return on investment given our efficient cost structure and predictable operating expenses, and target a stabilized operating income margin, before depreciation and amortization, of approximately 70% of total revenue. This estimate is based on the Florida Operations and Maintenance and Ancillary Revenue Report, which estimated operating and maintenance expense by 2023 to be approximately 30% for the South Segment and the North Segment. We expect that this margin will remain static or improve as a result of the Tampa Expansion, as a significant portion of our projected administrative and other costs are calculable or fixed and can support increased revenue without a corresponding increase in cost. In addition, we expect to generate income from real estate developments that we are pursuing or may pursue at or near our current and future stations, which is excluded from this operating income margin target. There can be no assurance that we will achieve these goals and targets, and such differences could be material.

The United States dramatically lags behind both Europe and Asia in express passenger rail service despite having one of the most developed rail and highway systems in the world. We believe we can capitalize on this extensive infrastructure to expand our services into new markets. Our expansion plans are initially focused on markets with characteristics and demographics similar to those of our Florida passenger rail system and the Vegas Expansion – connecting highly populated cities with substantial intercity travel and separated by distances of 200 to 300 miles that are “too long to drive, too short to fly.” As we have done in Florida and Las Vegas, we intend to expand into markets, including Las Vegas and Southern California, where we believe we can utilize existing transportation corridors – either rail, highway or a combination of both – to cost effectively build our systems, as opposed to developing entirely new corridors at potentially significantly higher costs.

Expected Sources of Revenue and Income

We expect to generate the majority of our total revenues and income by selling tickets to passengers traveling on our passenger rail system. We also expect to generate ancillary revenue from Passenger and customer related revenue including food and beverage sales, merchandise sales, parking fees and other services. In addition, we expect to generate ancillary revenue from Other revenues including advertising, sponsorships and marketing (including naming rights), commissions from our travel partners and ground transportation service providers and other services.

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Passenger and Customer Related Revenue

Ticket Sales– We expect to generate the majority of our total revenue by selling tickets to passengers traveling on our passenger rail system. Ticketing revenue for any period is calculated as a function of the number of passengers riding our trains for such period and the price of tickets paid by such passengers.

Food and Beverage Sales– Food and beverages will be available for purchase on our trains, as well as in our stations from “Good to Go” kiosks that we own and operate. Each of our passenger cars on each train will have food and beverage carts. Upon commencement of Orlando operations, our trains are expected to include a café car.

Merchandise Sales– Merchandise sales will include model trains and accessories, as well as hats, t-shirts and other apparel.

Parking Garages– We have entered into leases for parking garages in Miami, Fort Lauderdale and West Palm Beach with a total of approximately 1,700 parking spaces for which we will charge a fee to park. We expect the parking spaces to generate demand mostly from passengers on our rail system, with additional demand for street and event parking.

Other Services– We expect to generate revenues from, in addition to the above, other services including but not limited to baggage fees, pet fees and business center services.

Other Revenue

Advertising– We have contracted with OutFront Media for advertising inside our stations, such as video displays and column wraps, and outside our stations, such as external billboards. Under this contract, OutFront Media has the right and responsibility to market, sell, install, display and remove third-party advertising and we will receive 60% of revenues, net of initial capital costs and commissions.

Sponsorships– We have identified many partnership and sponsorship opportunities, including vendors for beverages, WiFi and snacks, arrangements involving passenger lounges, health facilities (e.g., nursing mothers’ room), rideshare with “Lyft” and marketing affiliations with “Train Presented by” and time clocks. We have secured several sponsorship contracts and are working to arrange additional sponsorships. Some sponsorships are expected to be long-term, based on facility infrastructure commitments, while others such as product placements can be modified over time. We have begun discussing naming rights for our Miami station, which we expect to cover a period of 10 years or more.

Costs of Our Business

We expect the major cost components of our business to include salary, wages and benefits, equipment maintenance, maintenance of way, fuel, rent, other operating costs (such as food and beverage costs) and general and administrative:

Salaries, wages and benefits includes the cost of salaries, employee benefits and other compensation of employees providing management, security and safety, operating, maintenance, legal, accounting, finance, information technology, human resources, revenue management and sales and marketing services.

Equipment maintenance includes the cost of regular ongoing and preventative maintenance pursuant to a 30-year maintenance agreement with Siemens, as well as capital maintenance over the life of the contract. Maintenance will be performed at a set price with an established cost escalator pursuant to the maintenance agreement with Siemens.

Maintenance of way includes the cost of maintaining the portion of our rail corridor from Cocoa to Orlando. For the remainder of our rail corridor, from Miami to Cocoa, maintenance of way is performed by FECR under the Joint Use Agreement. Pursuant to the terms of the Joint Use Agreement, FECR is responsible for maintenance of shared track and signals as well as track security and bridge tenders along the shared corridor. We reimburse FECR for our share of the costs of such services. Maintenance of way also includes costs for dispatch services. Pursuant to the Dispatching Services Agreement, DispatchCo performs dispatch functions for our trains, with the costs allocated evenly between us and FECR. See “Certain Relationships and Related Party Transactions—Transactions with FECR—Joint Use Agreement” and “Certain Relationships and Related Party Transactions—Transactions with FECR—DispatchCo” for more information.

Fuel is a function both of usage and cost. Each locomotive has a fuel capacity of 2,200 usable gallons. While we do not currently hedge against fuel price fluctuations, in the future we may enter into various derivative instruments to mitigate the effect of fluctuations in fuel prices on our operations.

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Rent includes leases of parking garages and easements with related parties. Upon lease commencement with GOAA for the Orlando station and with FDOT for the right of way along State Road 528 between Cocoa and Orlando, rent is expected to be a significant component of our future operating costs.

Other operating expenses include food and beverage costs, facilities costs, real estate tax, IT costs, royalty payments, marketing and advertising expenses and other miscellaneous costs of operating our passenger rail system.

General and administrative includes bank fees, information technology costs, legal fees, accounting fees, professional services, insurance and IT costs.

Basis of Presentation

Our historical combined financial statements are comprised of the combined net assets and operations of Virgin Trains USA LLC (f/k/a AAF Holdings B LLC, a limited liability company in Delaware that effected a name change to Brightline Holdings LLC in March 2018 and to Virgin Trains USA LLC in November 2018) and its wholly-owned subsidiaries and certain other wholly-owned subsidiaries of the Virgin Trains Stockholder, including AAF Jacksonville Segment LLC, Brightline Management LLC (f/k/a All Aboard Florida Operations Management LLC, a limited liability company in Delaware that effected a name change in May 2018), Brevard County Property Holdings LLC and Space Coast Land Holdings LLC. The Virgin Trains Stockholder is a subsidiary of our Parent.

The combined financial statements have been prepared on a stand-alone basis in accordance with GAAP and are derived from the Virgin Trains Stockholder and our Parent’s accounting records and reflect our financial position, results of operations and cash flows. The combined results are not necessarily indicative of future performance and do not reflect what the financial performance of Virgin Trains USA would have been had it been a stand-alone company during the periods presented.

Financial Operations Overview

Comparison of Operating Results for the Nine Months Ended September 30, 2018 and 2017

The following table presents, for the periods indicated, selected information from our condensed combined financial results.

	Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			Change
Revenues	$	5,233		$	—		$	5,233

Operating expenses
Salaries, wages and benefits		21,941			17,757			4,184
Equipment maintenance		6,970			1,535			5,435
Maintenance of way		5,592			2,332			3,260
Fuel		1,395			59			1,336
Rent		3,292			567			2,725
Other operating expenses		6,741			2,803			3,938
General and administrative		22,910			10,327			12,583
Depreciation and amortization		18,392			618			17,774
Total operating expenses		87,233			35,998			51,235
Operating loss		(82,000	)		(35,998	)		(46,002	)

Other income (expense)
Interest income (expense), net		(5,265	)		15			(5,280	)
Other income		137			26			111
Total other income (expense)		(5,128	)		41			(5,169	)
Net loss and comprehensive loss	$	(87,128	)	$	(35,957	)	$	(51,171	)

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Revenues

Revenue increased $5.2 million, which was driven by the commencement of rail operations between Fort Lauderdale and West Palm Beach in January 2018 and between Miami and Fort Lauderdale in May 2018 as well as sponsorship revenues commencing in January 2018.

Operating Expenses

Operating expenses increased $51.2 million, or 142%, to $87.2 million for the nine months ended September 30, 2018, as compared to $36.0 million for the nine months ended September 30, 2017. The increase in operating expenses was generally driven by increased activities to support the ramp up of our operations and to prepare for revenue generating activity, which commenced in January 2018. Salaries, wages and benefits increased $4.2 million due to an increase in headcount. Equipment maintenance increased $5.4 million due to the Company’s monthly service payment obligation with Siemens commencing in January 2018. Maintenance of way increased $3.3 million due to dispatch services associated with train operations commencing in January 2018. Fuel costs increased by $1.3 million in response to the commencement of rail operations. Rent increased $2.7 million due to the commencement of various parking garage leases. Other operating expenses increased $3.9 million due to increased cost of marketing and advertising efforts as well as food and beverage costs, and information technology associated with the commencement of rail services. General and administrative expenses increased $12.6 million primarily due to professional services, information technology, operating and occupancy costs, as well as insurance. Depreciation and amortization increased $17.8 million due to property, equipment and investment and rail placed into service in conjunction with the commencement of rail operations.

Other Income (Expense)

Total other income (expense) changed by $5.2 million for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 primarily due to interest on our Senior Loan Agreement, which commenced in December 2017, and lower amount of interest costs capitalized in 2018.

Comparison of Operating Results for the Years Ended December 31, 2017 and 2016

The following table presents, for the periods indicated, selected information from our combined financial results.

	Year Ended December 31,
(Dollars in thousands)	2017			2016			Change
Revenues	$	—		$	—		$	—

Operating expenses
Salaries, wages and benefits		16,487			13,889			2,598
Equipment maintenance		2,337			1			2,336
Maintenance of way		3,520			1,065			2,455
Fuel		23			—			23
Rent		839			405			434
Other operating expenses		4,482			2,325			2,157
General and administrative		15,833			6,947			8,886
Depreciation and amortization		880			359			521
Total operating expenses		44,401			24,991			19,410
Operating loss		(44,401	)		(24,991	)		(19,410	)

Other income (expense)
Loss on extinguishment of debt		(327	)		—			(327	)
Other income		78			—			78
Total other income (expense)		(249	)		—			(249	)
Net loss and comprehensive loss	$	(44,650	)	$	(24,991	)	$	(19,659	)

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Revenues

During 2016 and 2017, we had not yet commenced rail operations.

Operating Expenses

Operating expenses increased $19.4 million, or 78%, to $44.4 million for the year ended December 31, 2017, as compared to $25.0 million for the year ended December 31, 2016. The increase in operating expenses was generally driven by increased activities during 2017 to support the ramp up of our operations to prepare for revenue generating activity, which commenced in January 2018. Salaries, wages and benefits increased $2.6 million due to an increase in headcount. Equipment maintenance increased $2.3 million due to activities necessary for the preparation of commencing passenger rail operations. Maintenance of way increased $2.5 million due to an increase in dispatch service expenses in preparation of commencing revenue operating activity. Other operating expenses increased $2.2 million primarily due to increased marketing and advertising in preparation of commencing revenue operating activity. General and administrative increased $8.9 million primarily due to increases in costs related to legal, finance, accounting and other professional services, information technology and insurance.

Other Income (Expense)

Total other income (expense) changed by $0.2 million for the year ended December 31, 2017, primarily due to the repayment of our equipment financing credit facility which resulted in a loss of $0.3 million on extinguishment of debt.

Liquidity and Capital Resources

General

We have invested approximately $2.0 billion to date to develop and construct our Florida passenger rail system. This amount includes $667.7 million in rail infrastructure, $314.8 million in stations, $291.4 million in new rolling stock assets, and corridor and station land with an appraised value of approximately $696.0 million. Approximately $404.2 million of such investment is related to development and construction of the North Segment, primarily related to rail infrastructure.

Historically, we have relied on a combination of debt and equity contributions from the Virgin Trains Stockholder and our Parent to fund the construction of our Florida passenger rail system as well as to satisfy our liquidity needs and our contractual and other obligations. After this offering, the Virgin Trains Stockholder and our Parent will not be required, and do not intend, to provide us with additional funds to finance our operations or construction activities.

Following this offering, we intend to finance our operations and construction from the following sources:

•

our operations;

•

additional financing from lenders;

•

public offerings or private placements of debt and/or equity securities;

•

municipal bonds or other sources of governmental or semi-governmental financing;

•

strategic relationships and other arrangements; and

•

net cash proceeds from this offering.

We have commenced construction of the North Segment extending from West Palm Beach to Orlando and are pursuing our other expansion goals. We anticipate funding the remaining costs to construct the North Segment with the net proceeds from this offering, the concurrent private placement and/or future debt or equity financings. We estimate the total remaining capital expenditures relating to North Segment construction will be approximately $2.1 billion excluding the $183 million contingency fund (approximately $1.8 billion of new rail infrastructure, approximately $258.9 million for the purchase of additional rolling stock and approximately $7.1 million for construction of our station facilities). To date, we have invested approximately $404.2 million to develop and construct the North Segment, primarily related to rail infrastructure. We expect that additional funding of approximately $2.1 billion will be required to complete the North Segment. Though we believe we have access to sufficient funds in both the public and private capital markets and elsewhere, there can be no assurance that sufficient

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capital will be available on favorable terms, on a timely basis or at all for us to complete future development activities, including construction of the North Segment. For example, covenants contained in the Senior Loan Agreement limit our ability to incur additional senior debt financing (other than a revolving credit facility). However, we intend to refinance and/or remarket the Series 2017 Bonds in connection with the incurrence of additional debt financing.

We expect that development costs we will incur in connection with the Tampa Expansion and the Vegas Expansion will be funded by the net proceeds from this offering and/or future debt or equity financings . See “Risk Factors—Risks Related to our Indebtedness—Although we believe that we will be able to raise sufficient funds to complete our Florida passenger rail system and the Vegas Expansion, there are no assurances that future sources of capital will be available on favorable terms, on a timely basis or at all, to accomplish this” and “Description of Certain Indebtedness—Anticipated Debt Financing” for more information.

Liquidity

As of September 30, 2018, we had $58.3 million in current assets primarily consisting of $48.7 million of restricted cash. Restricted cash is available primarily to fund obligations resulting from our construction, development and operating activities associated with the South Segment and interest expense related to the Senior Loan Agreement, which will mature on January 1, 2047.

In July 2018, in connection with the acquisition of certain rail infrastructure equipment, we entered into a credit agreement (the “Siemens Credit Agreement”) with a lender for a maximum principal amount of $25.0 million (the “Maximum Commitment”) to be used for working capital purposes (including the acquisition of rolling stock). The credit agreement is for a term of two years at a rate of Libor plus 3.75% per annum. In addition, the credit agreement calls for us to pay the lender a structuring fee of 1.00% of the Maximum Commitment. We may be subject to mandatory prepayment if certain events occur, such as a change in majority ownership of our Company.

As of November 15, 2018, we currently expect to meet our obligations over the next 12 months through a combination of (i) available funds on hand from historical equity contributions and additional future contributions until the consummation of this offering or minimum one year from this filing by the Virgin Trains Stockholder and our Parent and (ii) funds reserved pursuant to the terms of the Series 2017 Bonds for remaining construction, development and operation activities associated with the South Segment, operations of the South Segment and interest payments pursuant to the Series 2017 Bonds. We will continue to assess our liquidity position and supplemental sources of liquidity in light of our construction, operating performance and other circumstances.

Existing Indebtedness

In addition to the Siemens Credit Agreement, in December 2017, Florida Development Finance Corporation (“FDFC”), with Deutsche Bank National Trust Company (the “Trustee”), issued $600.0 million in Series 2017 Bonds, due on January 1, 2047. FDFC is a statewide financing authority that is tasked with assisting for-profit and not-for-profit businesses with access to capital for project financing. In their role as a conduit issuer, FDFC provides qualifying projects with access to capital to support, enhance, and promote economic development in the state of Florida. Concurrently with the issuance of the Series 2017 Bonds, FDFC and Brightline Trains LLC (f/k/a All Aboard Florida — Operations LLC, a limited liability company in Delaware that effected a name change in May 2018) (“Brightline Trains”), a wholly-owned subsidiary of Virgin Trains USA LLC entered into the Senior Loan Agreement whereby the $600.0 million in proceeds from the Series 2017 Bonds were loaned to Brightline Trains.

We used the proceeds from the issuance of the Series 2017 Bonds, along with cash contributions from the Virgin Trains Stockholder, for the repayment of a certain equipment financing credit facility; the financing of the design, construction, development, and equipping of the South Segment; and repayment of advances from the Virgin Trains Stockholder to fund our construction activities. The remaining proceeds will only be expended to pay or reimburse the costs related to the South Segment. The development of the North Segment is dependent upon our ability to raise funds through various sources, including debt financings. We expect to raise additional debt and equity capital in order to fund future development activities, including the Tampa Expansion and the Vegas Expansion.

Pursuant to the Senior Loan Agreement, Brightline Trains is required to comply with various covenants for the benefit of the Trustee and the holders of the Series 2017 Bonds, such as a limitation on the ability to incur additional indebtedness subject to certain limitations set forth in the Senior Loan Agreement. Brightline Trains may not declare or pay dividends or make any distributions unless, in addition to certain additional covenants, it maintains a Total

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Debt Service Coverage Ratio (as defined in the Senior Loan Agreement) of 1.75 to 1.00 on the date of such distributions, and such dividends or distributions may not exceed $25.0 million in each calendar year. Brightline Trains has agreed to pay or cause to be paid all amounts necessary to pay the principal and purchase price of, and interest on, the Series 2017 Bonds. Brightline Trains’ payment obligations with respect to the Series 2017 Bonds and under the Senior Loan Agreement are secured by mortgage liens encumbering substantially all of the real property interests for the South Segment (including the stations), substantially all personal property of Brightline Trains, and a pledge by AAF Operations Holdings LLC, a wholly-owned subsidiary of the Company, of the membership interests in Brightline Trains. The Company was in compliance with applicable debt covenants as of September 30, 2018.

Historical Cash Flow

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017

The following table summarizes our cash flows from operating, investing, and financing activities:

	Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			Change
Net cash (used in) provided by:
Operating activities	$	(60,924	)	$	(30,547	)	$	(30,377	)
Investing activities	$	(4,820	)	$	(228,047	)	$	223,227
Financing activities	$	66,017		$	258,594		$	(192,577	)

Operating activities

Net cash used in operating activities increased $30.4 million to $60.9 million for the nine months ended September 30, 2018, compared to $30.5 million for the nine months ended September 30, 2017. The change was primarily a result of cash used to ramp up our operations and the commencement of passenger rail operations in January 2018, including increased headcount and related compensation costs, and increased operating costs, including maintenance costs, occupancy costs, and other operating costs necessary to support operation and development activities.

Investing activities

Net cash used in investing activities decreased $223.2 million to $4.8 million for the nine months ended September 30, 2018 compared to $228.0 million for the nine months ended September 30, 2017. The change was driven by a decrease in capital expenditures of $106.0 million and a decrease in restricted cash of $121.4 million held in escrow accounts to meet certain obligations related to construction, development and operation of the South Segment. This change was offset by an increase in deposits from Transit Authority of $4.2 million.

Financing activities

Net cash provided by financing activities decreased $192.6 million to $66.0 million for the nine months ended September 30, 2018, compared to $258.6 million for the nine months ended September 30, 2017. The decrease was driven by a $198.4 million decrease in Parent’s net investment, an increase in payments on our insurance note payable of $0.7 million, an increase in deferred financing costs of $1.2 million and a reimbursement from Transit Authority of $0.4 million. This change was offset by proceeds of $8.1 million pursuant to the Siemens Credit Agreement during the nine months ended September 30, 2018.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

The following table summarizes our cash flows from operating, investing, and financing activities:

	Year Ended December 31,
(Dollars in thousands)	2017			2016			Change
Net cash (used in) provided by:
Operating activities	$	(40,308	)	$	(25,920	)	$	(14,388	)
Investing activities	$	(412,634	)	$	(316,881	)	$	(95,753	)
Financing activities	$	452,942		$	342,801		$	110,141

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Operating activities

Cash used in operating activities increased $14.4 million to $40.3 million for the year ended December 31, 2017 compared to $25.9 million of cash used for the year ended December 31, 2016. The increase is primarily driven by increases in cash used to ramp up our operations to prepare for revenue generating activity, which commenced in January 2018.

Investing activities

Cash used in investing activities increased $95.8 million to $412.6 million for the year ended December 31, 2017, compared to $316.9 million of cash used for the year ended December 31, 2016. The increase in cash used in investing activities is primarily related to an increase in restricted cash of $157.2 million resulting from amounts held in escrow accounts to meet certain obligations related to construction, development and operation of the South Segment and to make interest payments pursuant to our Series 2017 Bonds. This was offset by a decrease in cash used for capital expenditures for the year ended December 31, 2017 compared to December 31, 2016.

Financing activities

Net cash provided by financing activities increased $110.1 million to $452.9 million for the year ended December 31, 2017, compared to $342.8 million for the year ended December 31, 2016. The change in cash provided by financing activities comprised of (i) $600.0 million of proceeds from our Series 2017 Bonds offset by $20.6 million in deferred financing cost payments, (ii) $91.8 million in payments to repay borrowings on our equipment financing credit facility and (iii) a change in our Parent’s net investment.

Contractual Obligations

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. The table below summarizes our obligations for indebtedness, purchase, lease, and other contractual obligations as of December 31, 2017.

(Dollars in thousands)	2018		2019		2020		2021		2022		Thereafter		Total
Long-term debt	$	—	$	—	$	—	$	—	$	—	$	600,000	$	600,000
Interest on long-term debt⁽¹⁾		18,000		33,750		33,750		33,750		33,750		545,097		698,097
Operating leases⁽²⁾		6,128		5,323		5,317		5,294		5,315		69,231		96,608
Service agreements⁽³⁾		7,780		6,904		17,194		14,644		14,798		151,536		212,856
Total	$	31,908	$	45,997	$	56,261	$	53,688	$	53,863	$	1,365,864	$	1,607,561

(1)

Reflects interest on our Senior Loan Agreement that is payable semi-annually commencing on July 1, 2018. The related Series 2017 Bonds mature on January 1, 2047 and bear interest of 5.625%.

(2)

Represents future minimum lease payments under non-cancelable operating leases for office space, parking garage, and equipment including those commencing after December 31, 2017. The table above includes payments of approximately $1.7 million pursuant to an escrow extension agreement through September 30, 2018 but excludes the executed lease agreement with GOAA related to the North Segment which is pending satisfaction of certain escrow conditions in order to be effective. Upon lease effectiveness, the future minimum non-cancelable lease payments under the lease agreement with GOAA are approximately $4.1 million annually for 50 years.

(3)

In June 2018, we amended our 30-year equipment maintenance service agreement with Siemens to attribute services between our North and South Segment, as well as enable us to terminate the contract at any time throughout the term of the agreement, subject to a 90-day written notice and payment of penalties of $5.0 million in 2018 and declining to $1.0 million in 2042 and $0.0 million in 2048.

The amended equipment service agreement calls for payments commencing upon the start of revenue generating activities for our North Segment. The projected payments, assuming the termination option is exercised in year 14, is $6.1 million in 2018, $6.0 million in 2019, $6.9 million in 2020, $16.7 million in 2021, $14.0 million in 2022 and $152.1 million thereafter. If the termination options are not exercised, the total commitment after year 2022 would increase from $152.1 million to $428.5 million. The projected payments assume the North Segment service, and associated payment obligations, commences in 2021.

Off-Balance Sheet Arrangements

We had outstanding undrawn irrevocable letters of credit commitments, fully collateralized by restricted cash, with an aggregate face amount of $10.0 million as of September 30, 2018 and December 31, 2017.

Critical Accounting Policies and Estimates

The process of preparing our financial statements in conformity with generally accepted accounting principles requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and judgments are based on historical experience, future expectations, and other factors

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and assumptions we believe to be reasonable under the circumstances. The most significant estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Actual amounts may differ from these estimates and judgments. A summary of our significant accounting policies is contained in Note 2 of our audited combined financial statements and as updated in Note 2 of our unaudited condensed combined financial statements included elsewhere in this prospectus.

Properties, Equipment, Investment in Rail and Definite-lived Intangible Assets

Key estimates related to properties, equipment, investment in rail and definite-lived intangible assets include useful lives and recoverability of carrying values. We evaluate long-lived assets for potential impairment indicators whenever events or changes in circumstances, or indicators, indicate that the carrying amount of an asset may not be recoverable.

Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate asset useful lives and future cash flows. If actual results are not consistent with our estimates and assumptions used to calculate estimated future cash flows, we may be exposed to impairment losses that could be material. We had no impairment loss for our assets for the periods presented in our combined financial statements.

Indefinite-lived Intangible Assets

Our indefinite-lived intangible assets include the Company’s right-of-way easements for passenger rail purposes which are evaluated for impairment annually as of April 1 each year and more frequently if circumstances indicate that the carrying value may be impaired. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment before performing quantitative impairment testing to determine whether we believe it is more likely than not that an asset has been impaired. We recognize an impairment loss generally if and when the carrying value of the net asset exceeds the estimated fair value. The asset’s fair value is determined by using a discounted present value model based on expected future cash flows.

Operating Leases

We evaluate each lease at inception to determine whether the lease will be accounted for as an operating or capital lease. The term of the lease used for this evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty.

Our operating lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. We recognize rent expense on a straight-line basis over the expected lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty. In addition, the commencement date of the lease term is the earlier of the date when we become legally obligated for the rent payments or the date when we take possession of the premises.

Cost Capitalization

The Company capitalizes costs related to the construction of buildings and other infrastructure for its stations, as well as investment in rail and rolling stock. Capitalization of costs ceases when an asset is substantially complete and ready for its intended use. In addition, interest costs associated with our construction projects and rolling stock are capitalized and included in the cost of the asset. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the asset using the weighted-average cost of our outstanding borrowings.

Loss Contingencies

The outcome of loss contingencies and legal proceedings and claims brought against us is subject to uncertainty. An estimated loss contingency is accrued if it is probable that an asset has been impaired or a liability has been incurred and the amount can be reasonably estimated. Determination of whether to accrue a loss requires evaluation of the probability of an unfavorable outcome and the ability to make a reasonable estimate. Changes in these estimates could affect the timing and amount of accrual of loss contingencies.

JOBS Act

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company,” or EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying

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with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the exemptions discussed above. Accordingly, the information contained herein may be different than the information you receive from other public companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC, we intend to rely on certain of these exemptions, including without limitation, (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an EGC until the earlier of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1.07 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission or SEC.

Recent Accounting Pronouncements

A summary of recent accounting pronouncements and our assessment of any expected impact of these pronouncements if known is included in Note 2 of our audited combined financial statements and as updated in Note 2 of our unaudited condensed combined financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in market factors such as interest rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.

Interest Rate Risk

We may borrow under fixed rate and variable rate debt instruments that give rise to interest rate risk. In 2017, we secured debt financing at a fixed rate of 5.625% for 30 years. In 2018, we secured credit for a term of two years at a rate of Libor plus 3.75% per annum, which upon certain events or conditions being met could increase the margin to 5.75% in 2019. Our objective in borrowing under fixed or variable rate debt is to satisfy capital requirements while minimizing our costs of capital.

Other Market Risks

Going forward our market risk exposure will include those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments or derivative instruments for trading purposes. Our exposure to market risk for changes in prices for certain commodities, such as fuel and construction materials, may adversely impact our business. To mitigate the effect of fluctuations in fuel prices on our operations, in the future we may enter into various derivative instruments. We limit our exposure to other market risks related to construction materials by entering into construction contracts with maximum price guarantees.

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INTERCITY PASSENGER RAIL – INDUSTRY OVERVIEW

Overview

Rail travel in the U.S. and throughout the world has reached an all-time high and has continued to grow at a rate faster than any other major mode of travel. According to a recent Brookings Institute report, total U.S. intercity rail passengers grew at a rate of almost double the rate of U.S. gross domestic product and approximately triple the rate of travel by air and car over the same period of time. Several factors have contributed to this growth including (i) increasing mobility and frequency of travel, (ii) growing roadway congestion, (iii) emerging new options for local “first/last mile” transportation (such as Uber, Lyft, and other rideshare options), (iv) travelers’ increasing dependence on mobile devices, staying connected and productive and (v) growing attention to the environmental footprint of transportation.

In response to the significant and increasing traveler demand for lower cost, faster and more productive travel solutions, express intercity passenger rail systems have been developed throughout a number of the world’s largest population centers, including population centers in the U.K., Europe and Asia. We believe the success of these express intercity passenger rail systems has established a proven model for profitable intercity passenger rail services that command substantial shares of their relevant travel markets. The United States is one of the most urbanized nations in the world, with 82% of the population living in urban environments, yet dramatically lags behind both Europe and Asia in express intercity rail service despite having one of the most developed rail and highway systems in the world. The significant and growing demand for express intercity rail service combined with the lack of existing service in the United States creates what we believe is a compelling opportunity to address the tremendously large and growing North American intercity travel market with a profitable and highly scalable model for twenty-first century passenger travel.

Intercity Passenger Rail

Intercity passenger rail transportation is characterized as rail service operating within medium-distance travel corridors, generally between 200 to 300 miles, that connect large population centers and experience high volumes of travelers. Intercity systems typically offer faster travel times with greater convenience, reliability and comfort than other available modes of travel in their markets, such as car and air. Intercity railroads generally operate as for-profit enterprises and are highly differentiated from commuter and local rail services that are managed to provide a public service rather than to generate profits. The table below illustrates management's view of the typical characteristics of the markets for intercity railroads and commuter and local railroads.

	Intercity Railroads	Commuter and Local Railroads
Distance (Total System):	Typically 200 to 300 miles	Typically less than 100 miles

Service Characteristics:	Moderate train frequency (typically every 30 to 60 minutes) and station stops only in large population centers	High frequency of service (typically every 10 minutes during peak times) and high number of station stops

Train Speeds:	Typically 110 mph or more	Typically 30 to 60 mph

Operating Model:	Operated as a for-profit enterprise with market-based fares, multiple classes of service and customer-centric experience	Operated as a public service, typically subsidized to maintain low fares and high frequency of service

Ownership:	Private companies	Public agencies and governments

Intercity Passenger Rail - Market Capture Rates

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that are “too long to drive, too short to fly” for many travelers, making travel by rail the most effective, efficient, and viable mode of transportation. The table below illustrates some of the most traveled corridors served by intercity railroads, nationally and internationally, and their respective market shares.

Examples of Intercity Rail Corridors and Market Shares

Intercity Rail Corridor	Distance (Miles)	Region	Operator	Market Share
Boston – New York	215	Eastern U.S.	Amtrak	15%
London – Paris	290	U.K./France	Eurostar	80%
Madrid – Seville	330	Spain	Renfe	51%
New York – Philadelphia	100	Eastern U.S.	Amtrak	29%
New York – Washington D.C.	240	Eastern U.S.	Amtrak	27%
Paris – Lyon	290	France	SNCF	72%
Rome – Milan	360	Italy	Italo	23%
Tokyo – Osaka	340	Japan	Japan Central Tokaido Shinkansen	72%

Comparable Intercity Passenger Rail Services

In the past 20 years, a number of rail services have been developed in response to consumer demand for a more efficient and faster mode of travel. Examples of these intercity rail services comparable to our business include Amtrak’s Acela service in the northeastern United States and privately owned European services Eurostar, Italo and Virgin Trains (U.K.). The table and summaries below contain publicly available information for these services including regions served, annual passengers, market share, financial information, and business descriptions.

Examples of Intercity Passenger Rail Systems

	Amtrak
	Northeast Corridor (Including Acela)	Acela	Eurostar	Italo	Virgin Trains (U.K.)
Major Cities Served:	Boston - New York - Philadelphia - D.C.		London - Paris	Rome - Milan	London - Manchester

Distance (Miles)*:	215 (Boston - NY) 100 (NY - Phila.) 240 (NY - D.C.)		290	360	160

Annual Passengers (Total System):	12.0mm	3.4mm	10.3mm	12.8mm	38.3mm

Market Share**:	15% (Boston - NY) 29% (NY - Phila.) 27% (NY - D.C)		80%	23%	N/A

Annual Revenue:	$1.3bn	$615mm	$1.2bn	$0.5bn	$1.5bn

EBITDA margin***:	37%	47%	61%	57%	55%

Represents approximate distances between selected major city pairs only; does not include distance of entire network.

Sources: Company and industry reports, press releases and news articles.

***

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Amtrak Acela and NEC

The National Railroad Passenger Corporation (“Amtrak”) introduced the Acela express rail service in 2000, representing the first high-speed intercity rail system in the U.S. capable of transporting passengers at speeds up to 150 mph between major cities in one of the most populated regions of the U.S. The Acela, which together with Amtrak’s regional train service in the Northeastern U.S., comprises Amtrak’s Northeast Corridor (“NEC”), running between Washington, D.C., New York, NY and Boston, MA with station stops in major population centers along the way including Baltimore, MD, Wilmington, DE, Philadelphia, PA, New Haven, CT and Providence, RI among others. The NEC operates an average of 70 one way trains each weekday, comprised of 32 Acela trains with hourly departures and 38 regional trains with various departures, along a corridor primarily owned by Amtrak.

The NEC is a highly profitable business segment for Amtrak. For the fiscal year ended September 30, 2017, the NEC carried 12.0 million passengers generating total revenue of $1.3 billion and adjusted operating earnings of $471.7 million (defined by Amtrak as net income before depreciation, income tax expense, non-cash portion of pension and other post retirement employment obligations and other items).

Eurostar

Eurostar International Limited (“Eurostar”) operates a high-speed passenger service between Britain, France and Belgium through the Channel Tunnel. For the fiscal year ended December 31, 2017, Eurostar carried 10.3 million passengers generating total revenue of £915.7 million and EBITDA (before infrastructure costs and equipment lease expense) of £558.4 million. Eurostar operates up to 19 trains per day between London and Paris, its two largest destinations. Unlike Virgin Trains, Eurostar does not own its rail corridor or track infrastructure and instead pays track access fees to government entities and private parties that own and lease the infrastructure to both passenger and freight rail operators. In addition, unlike Virgin Trains, Eurostar does not own a portion of its rolling stock and instead operates the equipment under lease arrangements. For fiscal 2017, total infrastructure cost were £402.8 million, and equipment lease expense was £11.5 million.

Eurostar commenced operations in 1994 and experienced a significant ramp up in ridership and revenue, typical of newly introduced passenger rail systems.

Italo

Italo – Nuovo Trasporto Viaggiatori SpA (“Italo”) operates a high-speed passenger rail service between major cities in Italy including Milan, Reggio Emilia, Florence, Rome, Naples and Venice among other locations. Italo operates on Italy’s national rail network, which is owned and maintained by Italian governmental entities and allows for competitive track access by both private and government-owned rail operators. As such, Italo competes directly with Italy’s national Trenitalia service which itself offers multiple rail services ranging from local and commuter services to high-speed, premium services. Italo operates an average of 88 weekday trains, running at speeds of up to approximately 200 miles per hour.

Italo commenced operations in 2012 with a strategy to offer high-speed, premium-only service with fares levels substantially higher than the competing Trenitalia service. After experiencing an initial ramp up in passengers and revenue, during 2015 Italo adopted a new strategy to reduce pricing and offer standard service in addition to premium class. The strategy resulted in substantial additional passengers and revenue. For the fiscal year ended December 31, 2017, Italo carried 12.8 million passengers generating total revenue of €454.9 million and EBITDA (before track access and rental and lease installments) of €259.0 million.

Virgin Trains (U.K.)

Virgin Trains (U.K.) operates a high speed passenger rail service between major cities in the United Kingdom including London, Manchester and Birmingham among other locations. Virgin Trains (U.K.) has operated the InterCity West Coast route since the privatization of British Rail in 1997, under various franchise agreements with the UK’s Department for Transport. Over the past 20 years, Virgin Trains (U.K.) has transformed the InterCity West Coast franchise, introducing the UK’s first high-speed tilting trains and a new high-frequency timetable. Virgin Trains (U.K.) currently operates over 300 train services per day across its network, running at speeds of up to 125 miles per hour.

For the fiscal year ended March 31, 2018, passengers took a total of 38 million trips with Virgin Trains (U.K.) generating total revenue of £1.2 billion and EBITDA (before track access and rental and lease payments) of £635 million.

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Demonstrated Ramp Up of New Intercity Rail Systems

Upon introduction of service, new intercity rail systems typically experience an initial high growth “ramp up” in ridership and revenue during the first three years of operation and prior to reaching mature ridership levels. This ramp up is a result of (i) market adoption of a new mode of travel and (ii) inducement of travel that had not occurred prior to the introduction of the new express intercity service. According to Louis Berger, in many markets, introducing a new mode of travel, particularly rail service that is more convenient and faster than alternative modes of travel, induces travelers to travel more frequently. This results in levels of induced travel ranging from 5% to 30%, and with the highest levels of induced travel observed on express or high-speed rail services serving multiple markets over distances of 200 to 300 miles, the exact type of market we serve and target.

A summary of the historical ramp up of Amtrak Acela, Eurostar and Italo is set forth below.

Comparable System Ramp Up Periods

Amtrak’s Acela system, Eurostar and Italo all demonstrated significant ramp up periods going into their stabilized years, averaging 29%, 81%, and 86% of stabilized ridership in full years one, two and three after each system launch.

Progression of Ridership from Launch

	Year as % of Year 4 Ridership
	Year 1			Year 2			Year 3			Year 4
Amtrak Acela		18	%		96	%		92	%		100	%
Eurostar		46	%		78	%		95	%		100	%
Italo		23	%		68	%		72	%		100	%
Average		29	%		81	%		86	%		100	%

U.S. Intercity Passenger Travel Trends

Intercity travel in the United States has reached all-time highs and we expect several powerful trends to continue to drive ridership and demand for high-speed rail service.

Growing Roadway Congestion

Growing travel demand, aging infrastructure, and significant restrictions on the ability to expand roadways all contribute to increased roadway congestion in many areas of the United States. Of the top 25 cities with the worst traffic congestion in the world, 10 are in the United States. Maintaining current roadway capacity on America’s increasingly aged roadways is tremendously expensive (governments spent more than $7 billion on I-95 in 2017 alone), and the federal government’s primary funding source to pay for road and transit repair is projected to become insolvent by 2021 according to Congressional Budget Office. As a result, U.S. roadway congestion will likely continue to deteriorate.

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This congestion is harmful to commuters, the economy and the environment. The 2017 INRIX Global Traffic Scorecard states that congestion costs drivers in the U.S. more than $305 billion in direct and indirect costs in 2017 alone, up $10 billion from 2016. Direct costs include value of fuel and time wasted in congestion while indirect costs include the increase in prices to households from freight trucks sitting in traffic.

Dependence on Mobile Devices and Productivity

Americans are spending an increasing portion of their days using mobile devices both for work and personal activities. Given the clear hazards associated with using mobile devices while driving, we believe travelers are attracted to modes of travel that enable them to use their mobile devices while in transit.

New First/Last-Mile Travel Solutions

The recent emergence of rideshare services, such as Uber and Lyft, facilitate the use of passenger rail service by providing transport to and from rail stations, which we refer to as “first and last mile connectivity.”

Travel Preferences Are Changing

Many Americans, particularly younger Americans, seek a new means of travel in lieu of driving their own cars. For example, millennials represent approximately 70% of Uber users in the United States; millennials are three times more likely than certain other age groups to use public transit, and far fewer millennials obtain driver’s licenses, with only 45% of 17 year olds holding driver’s licenses in 2014, compared to 75% in 1978. Lyft’s 2018 Economic Impact Report notes that 25% of Lyft users nationwide reported that owning a vehicle had become less important to them. These trends are expected to continue given the increasing roadway congestion, safety and environmental impact concerns as well as the cost-savings that riders often experience using rideshare services compared to driving a personal car. For example, according to a 2018 Kleiner Perkins report, UberX and Uber Pool services for weekly commuting were significantly cheaper than driving a personal car in four out of the five largest U.S. cities.

Growing Focus on Safety and the Environment

In addition to becoming more congested, we believe that many U.S. roadways are becoming increasingly dangerous. According to the Wall Street Journal, U.S. motor-vehicle deaths in recent years have hit record numbers and are increasing at an alarming rate. Road safety issues are especially acute in the Floridian markets we currently serve. A recent extensive analysis conducted by the Wall Street Journal reported that the I-95 corridor in Miami-Dade is the deadliest interstate road in America, as measured by fatalities per roadway mile.

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Compared to other modes of travel, rail is substantially more fuel efficient per trip from Miami to Orlando than driving or flying. Our locomotives are powered by diesel-electric engines consuming biodiesel fuel, meeting the highly-demanding U.S. Environmental Protection Agency’s Tier IV locomotive emissions standards. As illustrated in the chart below, we estimated that our rail service is approximately three times more fuel efficient than flying and two times more fuel efficient than driving assuming a 235 mile trip from Miami to Orlando.

Passenger Miles per Gallon by Travel Mode – Miami to Orlando

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THE FLORIDA MARKET

Florida is the third most populous state in the United States, with 20 million residents and one of the highest population and economic growth rates in the nation. Approximately 70% of the State’s population resides in cities and communities adjacent to our rail corridor. Forecasting agencies generally agree that Florida’s population growth will continue to outpace overall national trends driven by multiple factors including Florida’s high level of economic activity and available jobs, favorable tax policy (including no state personal income tax), strong incentive programs that promote new businesses to locate within the state as well as Florida’s warm climate and numerous tourist destinations. According to the Bureau of Economic and Business Research, Florida’s population is expected to grow from its current level of just over 20 million to more than 25 million by 2030, representing an average growth rate of 1.8% per year, almost 1.5 times that of the national average over the same period.

In addition to large and growing population centers, Florida attracts millions of domestic and international travelers each year. Miami International Airport is the busiest airport in Florida with more than 40 million passengers annually. Known as the gateway to Latin America, Miami is the second largest international tourist destination in the United States and home to the largest passenger cruise port in the world (followed by Port Canaveral, Florida and Port Everglades, Florida). A total of 18.7% of overseas non-resident travelers enter the United States through one of the main South Florida and Central Florida airports: Miami International Airport (12.4%), Orlando International Airport (4.1%) and Fort Lauderdale International Airport (2.2%).

The Florida Travel Market and Our Ridership

We engaged Louis Berger to assist us in the evaluation of the Florida market and the preparation of passenger ridership estimates and financial projections. Louis Berger’s analysis included the observations about the Florida market summarized below.

•

Substantial “Addressable Market” – Florida has high intercity travel volume, with individuals making over 413 million trips annually between Miami, West Palm Beach, Fort Lauderdale, Orlando and Tampa.

•

Challenging Intercity Trip – The trip between Orlando and Miami is “too long to drive, too short to fly.” Total travel time by airplane is disproportionately long for the distance, given airport security and delays. Roadway congestion can make the trip unpleasant and unpredictably long. Travel time by car can range from 3.5 to five hours, depending on traffic. South Florida’s road system already ranks as the fifth most congested in the U.S., with average local lane travel speeds of only 33 miles per hour. Travel volumes on key highways connecting Central and Southeast Florida are expected to exceed capacity by 2030, resulting in further delays and more unpredictability. We can provide travel time savings of 25% to 50% when compared to existing surface modes (auto, bus and rail). Using Virgin Trains, travel time from Orlando to Miami will be approximately 3 hours 15 minutes, which is competitive with air travel on door-to-door travel times.

•

Large and Growing Population – Florida is the third-largest state in the U.S., with a population of over 20 million residents, and it has one of the highest population and economic growth rates in the United States. Florida also hosts a major tourism industry. The State is expected to continue to grow at a pace exceeding the national average. Miami is the largest metropolitan area in Florida. In addition to its large and growing population, Florida receives over 110 million visitors every year. Miami is the second largest international tourist destination in the United States. Miami International Airport is the busiest airport in Florida, with more than 40 million passengers annually. Over 12% of overseas non-resident travelers enter the United States through Miami International Airport. In addition, Miami is home to the largest passenger cruise port in the world (followed by Port Canaveral, Florida and Port Everglades, Florida). Meanwhile, Orlando is one of the most visited cities in the United States.

•

Market Growth – In the past 30 years, population in the areas around our existing and proposed stations has grown by an annual average of 2.5%, and employment in these areas has grown by an annual average of 3%. The one-mile radius around our stations has experienced robust annual population growth from 2% to 5% since 1990. This growth continues to place pressure on the State’s transportation network. Due to the diminishing ability to expand highway corridors throughout the State, south Florida ranks as one of the nation’s top five States in terms of time spent in traffic and lowest average travel speeds.

•

No Comparable Service – There is no comparable service to Virgin Trains for intercity travel along the Miami to Orlando corridor. Automobile travel currently represents the dominant mode of intercity travel in

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this region. According to Louis Berger, 98% of trips from Southeast Florida to Orlando occur by automobile. Roadway congestion and safety risks are significant disadvantages of automobile travel. We believe we offer a more convenient and safe alternative to driving.

•

Long-Standing Interest – Given the profile of the travel market and the central location of the rail line, there has been interest among stakeholders and the public in developing passenger service on the Florida East Coast corridor for decades.

We intend for our Florida passenger rail service to generate meaningful profits. Our profitability depends, in part, on our revenue, which is composed of ticket revenue (equal to the product of ridership and ticket fares) and ancillary revenue. Our estimates of ridership and ticket revenue for service between Orlando and Miami have been validated by Louis Berger. Our estimates of ridership and ticket revenue for service between Orlando and Tampa are based on management’s estimates.

•

Ridership. We expect stabilized operations between Miami and Orlando to carry approximately 6.6 million passengers annually, as estimated by Louis Berger. After expanding to Tampa, Louis Berger expects stabilized operations to carry approximately 9.5 million passengers annually.

•

Revenue. We expect to generate approximately $810 million of total revenue in our first stabilized year for service between Miami and Tampa. To arrive at this estimate, our management applied a combined annual fare growth and inflation rate of approximately 2.8% to Louis Berger’s estimates, thereby projecting annualized ticket revenue of approximately $700 million by the fourth quarter of 2023 or the first quarter of 2024. Louis Berger has not verified our management's adjustments. The determination of the year of stabilization is based on information the Company provided to Louis Berger, which information has not been validated by Louis Berger. In addition, our management projects additional revenue of approximately $110 million based on the Florida Operations and Maintenance and Ancillary Revenue Report, which (based on management estimates that Louis Berger determined were reasonable) expects revenue from food and beverage, parking, naming rights, sponsorships and partnerships, merchandise, advertisement and other fees to equal approximately 14% of total revenue (or approximately $12 per passenger).

•

Margin. We will target a stabilized operating income margin of approximately 70% of total revenue. Accordingly, we calculate illustrative earnings before interest, taxes, depreciation and amortization (“EBITDA”) as 70% of total revenue.

The table below summarizes our estimates for ridership, fares and ticket revenue.

Estimates – First Stabilized Year	Miami to Orlando per Louis Berger*	Orlando to Tampa per Louis Berger**	Total
Ridership (total passengers)	6.6 million	2.9 million	9.5 million
Average Fare	$73	$73	$73
Ticket Revenue	$485 million	$212 million	$697 million

Includes various routes along the Miami to Orlando corridor.

Includes various routes along the Miami to Tampa corridor.

We believe our ridership and fare estimates are based on modest assumptions for market penetration rates and ticket pricing:

•

Based on a total addressable market of approximately 413 million trips per year, our total ridership estimate of 9.5 million passengers reflects approximately 2% market penetration.

•

Our estimated average fare of $73, 57% less than Acela’s average fare of $174.

We may be unable to achieve our anticipated ridership, revenue or margin in our first stabilized year. Our estimates are subject to change and may differ materially from those presented above. For a description of certain risks that may impact our ridership, revenue or margin estimates, see “Risk Factors—Risks Related to Our Business,” including “Risk Factors—Risks Related to Our Business—The estimates of future ridership and revenue of our proposed Florida passenger rail service contained herein are based on certain assumptions and may prove to be inaccurate or incorrect. Actual results could differ from the estimates contained in this prospectus.”

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BUSINESS

The information in this section and elsewhere in this prospectus is based on certain assumptions and projections regarding our Florida passenger rail system. These assumptions and projections are inherently imprecise and subject to a degree of uncertainty and actual results could differ materially from these projections. See “Risk Factors—Risks related to Our Business—The estimates of future ridership and revenue of our proposed Florida passenger rail service and the Vegas Expansion contained herein are based on certain assumptions and management’s estimates and adjustments that may prove to be inaccurate or incorrect. Actual results could differ from the estimates contained in this prospectus.”

Overview

Pursuant to the XpressWest Acquisition, we have agreed to acquire the rights to develop a high-speed rail project within a corridor between Victorville, California and Las Vegas, Nevada that is expected to be federally approved. The XpressWest Acquisition provides us with the opportunity to develop, operate and connect Las Vegas with Southern California by means of a new passenger rail system. The Vegas Expansion will link one of the most traveled routes in the United States, connecting approximately 13.4 million people living in the Los Angeles metro area with the approximately 2.2 million people living in the Las Vegas metro area, one of the most visited cities in the United States. We estimate a fully operational annual stabilized ridership of 11.3 million passengers for the Vegas Expansion. We expect the ramp up of ridership for the Vegas Expansion will proceed at a faster rate than our Florida passenger rail system due in part to the more concentrated travel pattern in the corridor between Las Vegas and Southern California. We also expect to stabilize by the fourth quarter of 2023 or the first quarter of 2024. We expect to generate approximately $863 million in total revenue from the Vegas Expansion in its first year of stabilized operations, which includes approximately $674 million in ticket revenue and approximately $189 million in ancillary revenue (which reflects an expected $5 in additional ancillary revenue per passenger as compared to our Florida passenger rail system, based on management’s expectation that the average trip length and nature of the market served by the Vegas Expansion will result in increased demand for food and beverage and potential sponsorship opportunities). Similar to our Florida passenger rail system, we believe that the Vegas Expansion could generate compelling returns, and our goal is to generate a stabilized operating income margin, before depreciation, amortization and interest of approximately 70% of total revenue.

On November 16, 2018, we announced our partnership with VEL and our intention to rebrand from “Brightline” to “Virgin Trains USA.” Through its affiliated businesses, VEL is a global leader in the passenger transportation sector with involvement in the airline, passenger rail, tour operations, hotel and cruise sectors, serving approximately 53 million customers annually across all of its platforms. Its brand, Virgin, is well recognized globally and is associated with high quality service and industry-leading customer experience. Through its Virgin Trains (UK) affiliate, VEL has over 20 years of experience operating high-speed passenger trains throughout the United Kingdom and passengers took more than 38 million trips during the fiscal year ended March 31, 2018. We believe our partnership with VEL will help enable us to accelerate our market penetration, leveraging a brand that fits the diversified population and international traveler base of our Florida market as well as the California and Las Vegas markets we intend to serve. We also expect to benefit from cross-marketing, distribution and customer loyalty programs with other VEL passenger travel businesses, many of which conduct operations within our markets. Under the terms of the agreement with respect to the concurrent private placement, Corvina has agreed to purchase from us, at a price per share equal to the initial public offering price, shares of newly issued common stock in an amount less than % of the number of shares outstanding immediately following the offering.

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We aim to execute on our growth strategy by offering three compelling benefits to intercity travelers: speed of travel, customer experience and cost savings:

Customer Experience – Whether traveling for business or leisure, passengers can maximize productivity, using mobile devices freely, and enjoy a variety of amenities, while traveling from one downtown location to another on a reliable schedule and in an environmentally friendly way. Our trains depart and arrive at our bright, new state-of-the-art stations, and all of our trains are equipped with free high-speed WiFi connections. Additionally, passengers are able to avoid travel time to the airport, airport security and sitting in commuter traffic.

These benefits are consistent with factors that have made other express passenger rail systems successful throughout the world.

The Intercity Passenger Rail Market

Our Initial Market and Operations

Miami to West Palm Beach (South Segment)

We commenced rail operations between Fort Lauderdale and West Palm Beach in January 2018 and between Miami and Fort Lauderdale in May 2018. We can operate up to 32 daily departures with a total travel time of approximately one hour. Each of our express trains has a capacity for 240 total passengers in three classes of service: Smart (which is comparable to business class), Smart+ (which includes one complimentary snack and beverage and is envisioned as an option for business and leisure travelers alike) and Select, (our premium or first-class experience). We currently own three stations, located in the downtown centers of Miami, Fort Lauderdale and West Palm Beach, all of which are near major travel destinations and have multiple connections to local transit and public ground transportation.

We also partner with rideshare companies and other providers of local transportation to facilitate our passengers’ connections to their final destinations.

We have invested approximately $1.6 billion to date to develop and construct the South Segment of our Florida passenger rail system. This amount includes $461.8 million in rail infrastructure, $303.3 million in stations,

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$258.6 million in new rolling stock assets, and corridor and station land with an appraised value of approximately $542.0 million. Funding for the investment came from a combination of cash and assets contributed by our Parent and third party debt and vendor financing.

West Palm Beach to Orlando (North Segment)

We have commenced construction of the expansion of our rail system to Orlando and expect to complete construction and begin service to Orlando in approximately three years. We expect to fund the development costs with the net proceeds from this offering, the concurrent private placement and/or future debt or equity financings.

Design and engineering for the North Segment are substantially complete, and we have completed the environmental process required under the National Environmental Policy Act and received a Record of Decision from the FRA approving the commencement of construction. We have obtained substantially all material permits and governmental authorizations for the North Segment. The extension to Orlando entails improving existing infrastructure on 129 miles of existing rail corridor and building new rail along 40 miles of existing highway corridor. We expect that construction will be executed under three primary contracts – each expected to have a fixed-price and time certain terms – for the construction of rail infrastructure and related signal systems, as well as the manufacture of additional trains.

We have invested approximately $404.2 million to date to develop and construct the North Segment. Funding for the investment came from a combination of cash and assets contributed by our Parent and third party debt and vendor financing.

Our Anticipated Expansions

Orlando to Tampa (Tampa Expansion)

We intend to construct a passenger rail system between Orlando and Tampa, Florida, a station in downtown Tampa and adjacent real estate for commercial development. We have engaged in discussions with regulatory authorities with respect to the construction of the Tampa Expansion. Based on our experience with actual South Segment costs and adjusted for track location specifics, we expect that the Tampa Expansion will require approximately $1.7 billion to complete. We anticipate financing the Tampa Expansion through the net proceeds from this offering, the concurrent private placement and/or future debt or equity financings. When and if completed, the Tampa Expansion, together with the South Segment and the North Segment, will comprise our Florida passenger rail system as discussed in this prospectus.

We have submitted a proposal with the State of Florida for a right of way required to construct the Tampa Expansion. The state undertook a standard process to offer an opportunity for other parties to make an alternative bid for the right of way, and there were no other bidders. We will advance planning for the Tampa Expansion, and we have initiated the process of selecting potential sites for the Tampa station.

In addition, we intend to enter into contracts with respect to the Tampa Expansion and to design, engineer and construct the related infrastructure and station, and we have initiated the process of receiving bids from engineering and environmental services providers. We also intend to obtain any necessary regulatory approvals, additional rights of way, permits, consents, licenses, entitlements and other authorizations for the construction and operation of the Tampa Expansion. Additionally, we expect to contract with municipal and private parties to purchase, lease or otherwise obtain the right to use land for the construction and operation of the Tampa Expansion.

Las Vegas to Southern California

We plan to introduce passenger rail service to Las Vegas, Nevada and Southern California. Pursuant to the XpressWest Acquisition, we have agreed to acquire the rights to develop a high-speed rail project within a corridor between Victorville, California and Las Vegas, Nevada that is expected to be federally approved. The XpressWest Acquisition provides us with the opportunity to develop, operate and connect Las Vegas with Southern California by means of a new passenger rail system. The Vegas Expansion will link one of the most traveled routes in the United States, connecting approximately 13.4 million people living in the Los Angeles metro area with the approximately 2.2 million people living in the Las Vegas metro area, which is one of the most visited cities in the United States.

We intend for the Las Vegas station to be located adjacent to the Las Vegas strip and to serve as a major intermodal hub with access to taxis, buses, ride shares, shuttles and limousines. We expect the initial Southern California station to be located in Victorville, within an hour drive of the Los Angeles metro area, and we also intend to add additional stations and provide connections to California Metrolink.

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Assumed initial public offering price per share

As adjusted net tangible book value per share as of September 30, 2018

Increase per share attributable to new investors in this offering and the concurrent private placement

Adjusted pro forma net tangible book value per share

Dilution in adjusted net tangible book value per share to new investors in this offering and the concurrent private placement⁽¹⁾

Virgin Trains USA LLC S-1