As filed with the Securities and Exchange Commission on February 11, 2013

Registration No. 333-182180

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2 TO FORM S-1

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933

LUXEYARD, INC.

(Exact name of registrant as specified in its charter)

Delaware

7389

30-0473898

(State or other jurisdiction

of incorporation or

organization)

(Primary Standard

Industrial Classification

Code Number)

(I.R.S. Employer

Identification Number)

8884 Venice Blvd.

Los Angeles, CA 90034

(323) 488-3574

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Delaware Business Incorporators, Inc.

3422 Old Capital Trail, Suite 700

Wilmington, DE 19808

(302) 996-5819

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies to:

Richard I. Anslow, Esq.

Anslow & Jaclin LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

Tel No.: (732) 409-1212

Fax No.: (732) 577-1188

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	þ

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE

Title of Each Class Of Securities to be Registered	Amount to be Registered (1)		Proposed Maximum Offering Price per share (2)			Proposed Maximum Aggregate Offering Price		Amount of Registration Fee

Common stock, $0.0001 par value per share, issuable upon conversion of 8% Convertible Perpetual Preferred Stock		6,868,570	$	0.35	(2)	$	2,404,000	$	275.50

Common stock, $0.0001 par value per share, issuable upon exercise of the Series C warrants		6,868,570	$	0.50	(3)	$	3,434,285	$	501.41

Total		13,737,140						$	776.91	(4)

(1)

This registration statement includes an indeterminate number of additional shares of common stock issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding shares of our common stock. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933, as amended.

(2)

Calculated based upon the conversion price of the 8% preferred stock held by the selling stockholder named in this Registration Statement.

	(3)	Calculated based upon the exercise price of the warrants held by the selling stockholder named in this Registration Statement.
	(4)	Previously paid.

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

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

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED FEBRUARY 11, 2013

13,737,140 Shares of Common Stock

LUXEYARD, INC.

This prospectus covers the sale by the selling stockholders of up to (i) 6,868,570 shares of common stock issuable upon conversion of the selling stockholders that own 8% Convertible Perpetual Preferred Stock, par value $0.0001 per share, and (ii) 6,868,570 shares of our common stock issuable upon exercise of Series C warrants held by the selling stockholders at an exercise price of $0.50 per share. The shares being sold by the selling stockholders were issued to them in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”). Our 8% preferred stock, common stock and warrants are more fully described in “Description of Securities.”

These shares will be offered for sale by the selling shareholders in accordance with the “Plan of Distribution.” We will not receive any proceeds from sales of shares of our common stock or warrants by the selling stockholders. However, to the extent the warrants are exercised for cash, if at all, we will receive the exercise price of the warrants. We will pay the expenses incurred in connection with the offering described in this prospectus, with the exception of brokerage expenses, fees, discounts and commissions, which will be paid by selling stockholders.

Our common stock is presently traded on the OTCQB (the “OTCQB”) under the symbol LUXR. On February 11, 2013, the last sale price of our shares as reported by the OTCQB was $0.012 per share. The prices at which the selling stockholders may sell the shares of common stock that are part of this offering may be market prices prevailing at the time of sale, at negotiated prices, at fixed prices, or at varying prices determined at the time of sale. See “Plan of Distribution.”

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 8 to read about factors you should consider before investing in shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is ________, 2013

TABLE OF CONTENTS

PROSPECTUS SUMMARY	4
RISK FACTORS	8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	18
DIVIDEND POLICY	18
USE OF PROCEEDS	18
DILUTION	19
PENNY STOCK CONSIDERATIONS	19
SELLING STOCKHOLDERS	19
DESCRIPTION OF BUSINESS	25
MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS	34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
DIRECTORS AND EXECUTIVE OFFICERS	45
EXECUTIVE COMPENSATION	49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	52
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	53
DESCRIPTION OF SECURITIES	55
PLAN OF DISTRIBUTION	60
LEGAL MATTERS	61
EXPERTS	61
WHERE YOU CAN FIND MORE INFORMATION	61
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES	62
INDEX TO FINANCIAL STATEMENTS

Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on information contained in this prospectus. We have not authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should carefully read the entire prospectus, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements, before making an investment decision. Our actual results may differ significantly from the results discussed in these forward-looking statements as a result of certain factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” All references to “we,” “us,” “our,” and the “company” mean Luxeyard, Inc.

Business Overview

We function as a member-based online marketplace for luxury consumer products we source from merchants and offer to our members through our website via a “flash sale” or “daily deal” at deep discounts to retail prices. In January 2012, we launched our website www.Luxeyard.com and began operations. Initially, we focused on household furnishings and goods such as furniture, lighting and bedding. On March 27, 2012, we launched LuxeStyle, our apparel and accessories line. As our member base and merchant selection increase, we expect to expand our offerings to include other consumer goods such as travel, gourmet food and beverages, consumer services events and gift cards.

Each week we conduct several “flash sale” events on our website in which we feature merchandise at steep discounts to suggested retail prices. At the beginning of each event, members receive an email describing the featured products and it directs them to our website to participate. We list events on the member homepage of our website and each event remains on our site for three to five days, depending on demand and quantity offered.

In addition to flash sales, we also feature a “Daily Deal” whereby we offer a single product on our website for a 24 hour period. Similar to flash sales, our members receive email notifications when deals commence, directing them to the member homepage for more details. Unlike other deal of the day models, members are not required to purchase a minimum number of products before the deal becomes active. In some cases, when our group buy feature is active, as more members participate in the deal, the purchase price decreases. Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase.

Members purchase products directly through our website via credit card and, in most cases, products ship directly from the merchant’s location to the member.

With our Concierge Buying program, we use a model similarly used by companies such as Facebook and Pinterest to determine customer wants. The customer participates interactively with us by pinning or liking a product. We accumulate data to determine what products customers are interested in and we then source the most popular products and offer those to the members via a sale that features special notifications and discounts for those who contributed to the process.

In April, we began a Business to Business program through which we source containers of goods and sell them to retailers via our business to business website.

The retailers are offered products prior to the arrival of the container shipments and any unsold items from the container shipment are then offered on our website. The Business to Business program is operating under the TradeYard dba and offers flash sales to businesses and daily deals to businesses.

We manage and operate the LeatherGroups web-site.

We operate in an extremely competitive “flash sales” space within internet retail, which has experienced significant growth in the number of flash sales sites over the last 24 months, and in the amount of financial support by major private equity firms. We believe our company can distinguish itself in this environment based on consumer inter-activeness of the site, our dynamic marketing plan, supply chain expertise, and engagement of industry influences through our LuxeLife Trendsetter program. In addition, we are actively exploring strategic acquisitions, geographic expansion (including initiatives in India and Australia), and product line diversification, to position the company for revenue and profitability growth. Our success will depend, among other factors, on the company’s ability to acquire and retain active members in cost-efficient ways, attract merchants at favorable terms, and regularly introduce deals of high value, quality, and relevance to our members.

Our financial statements as of December 31, 2011 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring net losses and negative cash flows from operations and expressing substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate additional revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We are continually evaluating opportunities to raise additional funds through public or private equity financings, as well as evaluating prospective business partners, and will continue to do so. However, if adequate funds are not available to us when we need them, and we are unable to enter into some form of strategic relationship that will give us access to additional cash resources, we will be required to even further curtail our operations which would, in turn, further raise substantial doubt about our ability to continue as a going concern. The anticipated amount of capital we will need to continue as a going concern is estimated at $750,000. If we fail to acquire and retain members, our revenue and business will be harmed.

Corporate Information

Our principal executive offices are located at 8884 Venice Boulevard, Los Angeles, California 90034 and our telephone number is (323) 488-3574. Our website address is www.Luxeyard.com. The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part. The information on our website is not part of this prospectus.

THE OFFERING

Common stock offered by selling stockholders		13,737,140 shares of our common stock including: up to (i) 6,868,570 shares of common stock issuable upon conversion of the selling stockholders that own 8% preferred stock, and (iii) 6,868,570 shares of our common stock issuable upon exercise of Series C warrants held by the selling stockholders at an exercise price of $0.50 per share.

Common stock outstanding before the offering		81,059,895 shares of common stock (1)

Common stock outstanding after the offering		114,504,472 shares of common stock (2)

Use of proceeds		We will not receive any proceeds from the sale of the common stock by the selling stockholders. However, we may receive up to approximately $3,434,285 in the aggregate upon the exercise of the warrants if the holders exercise them for cash. The registration of common stock pursuant to this prospectus does not necessarily mean that any of those shares will ultimately be offered or sold by the selling stockholders. We intend to use the proceeds received from any cash exercise of the warrants for working capital and general corporate purposes.

Trading Symbol		LUXR

Risk Factors		The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors”.

(1)

Based upon the total number of issued and outstanding shares as of January 24, 2013.

(2)

Based upon the total number of issued and outstanding shares as of January 24, 2013, and including (i) 8,904,287 shares of common stock issuable upon conversion of the 8% preferred stock, (ii) 441,275 shares of common stock, issuable as payment for any dividends on the 8% preferred stock, (iii) 2,700,006 shares of our common stock issuable upon exercise of Series A warrants, (iv) 2,700,006 shares of our common stock issuable upon exercise of Series B warrants, (v) 8,904,287 shares of our common stock issuable upon exercise of Series C warrants, (vi) 4,452,144 shares of our common stock issuable upon exercise of the Series D warrants, (vii) 4,452,143 shares of our common stock issuable upon exercise of the Series E warrants, and (viii) 890,429 shares of our common stock issuable upon exercise of placement agent warrants.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our shares of common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward Looking Statements” below for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.

Risks Related to Our Business

We have a history of operating losses and there can be no assurance that we can achieve or maintain profitability.

We have a history of operating losses and may not achieve or sustain profitability. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds.

Our operating results may fluctuate significantly and our stock price could decline or fluctuate if our results do not meet the expectation of analysts or investors.

We expect to experience substantial variations in our net sales and operating results from quarter to quarter. As a result of fluctuations in our revenue and operating expenses that may occur, we believe that period-to-period comparisons of our results of operations are not a good indication of our future performance. It is possible that in some future quarter or quarters, our operating results will be below the expectations of securities analysts or investors. In that case, our common stock price could fluctuate significantly or decline.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

We expect to spend approximately $4,319,715 on online marketing and advertising initiatives relating to member acquisition for the next twelve months and expect to continue to spend significant amounts to acquire additional members. We must acquire and retain members that purchase our deals in order to increase revenue and achieve profitability. We cannot assure you that the revenue from members we acquire will ultimately exceed the cost of acquiring members. If consumers do not perceive our offers to be of high value and quality or if we fail to introduce new and more relevant deals, we may not be able to acquire or retain members. If we are unable to acquire and retain members who purchase our deals in numbers sufficient to grow our business, or if members cease to purchase our deals, the revenue we generate may decrease and our operating results will be adversely affected.

In addition, some of our new members are originated from word-of-mouth or other non-paid referrals including other members, and therefore we must ensure that our members will remain loyal to our service in order for us to continue receiving those referrals. If our efforts to satisfy our members are not successful, we may not be able to acquire new members in sufficient numbers to grow our business or we may be required to incur significantly higher marketing expenses in order to acquire new members. Further, we believe that our success is influenced by the level of communication and sharing among members. If the level of usage by our member base does not grow as expected, we may suffer a decline in member growth or revenue. A failure to acquire members or a significant decrease in the level of member usage after or the launch of our website would have an adverse effect on our business, financial condition and results of operations.

If we fail to acquire and retain members, our revenue and business will be harmed.

If we fail to initially attract merchants or fail to add new merchants after the launch of our website, our revenue and business will be harmed.

We depend on our ability to attract and retain merchants that are prepared to offer products or services on compelling terms through our marketplace. We currently do not have any long-term arrangements with the vendors to guarantee the availability of deals that offer attractive quality, value and variety to consumers or favorable payment terms to the Company. We must attract and then retain merchants in order to generate and increase revenue and achieve profitability. If merchants do not find our marketing and promotional services effective or do not believe that utilizing our services provide them with a long-term increase in customers, revenue or profit, they may not make, or continue to make, offers through our marketplace. In addition, we may experience attrition in our merchants in the ordinary course of business resulting from several factors, including losses to competitors and merchant closures or bankruptcies. If we are unable to attract merchants in numbers sufficient to grow our business, or if too many merchants are unwilling to offer products or services with compelling terms through our marketplace or offer favorable payment terms to us, we may sell fewer deals and our operating results will be adversely affected.

If our efforts to market, advertise and promote products and services from our merchants are not successful, or if merchants do not believe that utilizing our services provides them with a long-term increase in customers, revenue or profit, we may not be able to attract and retain merchants in sufficient numbers to grow our business or we may be required to incur significantly higher marketing expenses or accept lower margins in order to attract merchants. A failure to attract merchants, a significant increase in merchant attrition or decrease in merchant growth would have an adverse effect on our business, financial condition and results of operation.

Our business is highly competitive. Competition presents an ongoing threat to the success of our business.

The online group buying market is extremely competitive and we expect competition in e-commerce generally, and group buying in particular, to continue to increase because there are no significant barriers to entry. A substantial number of group buying sites that feature similar business models exist and may continue to emerge. In addition to such competitors, we expect to increasingly compete against other large internet and technology-based businesses, such as Amazon, Google and Microsoft, each of which has launched initiatives which are directly competitive to our business. We also expect to compete against other internet sites that are focused on specific communities or interests and offer discount arrangements related to such communities or interests. We also compete with traditional offline discount services, as well as newspapers, magazines and other traditional media companies who provide coupons and discounts on products and services.

We believe that our ability to compete depends upon many factors both within and beyond our control, including the following:

the size and composition of our member base and the number of merchants we feature;

the timing and market acceptance of deals we offer, including the developments and enhancements to those deals offered by us or our competitors;

member and merchant service and support efforts;

selling and marketing efforts;

ease of use, performance, price and reliability of services offered either by us or our competitors;

our ability to cost-effectively manage our operations; and

our reputation and brand strength relative to our competitors.

Many of our current and potential competitors have longer operating histories, significantly greater financial, marketing and other resources and larger member bases than we do. These factors may allow our competitors to benefit from their existing customer or member base with lower customer acquisition costs or to respond more quickly than we can to new or emerging technologies and changes in consumer habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger member bases or generate revenue from their member bases more effectively than we do. Our competitors may offer deals that are similar to the deals we offer or that achieve greater market acceptance than the deals we offer. This could attract members away from our websites, reduce our market share and adversely impact our revenue. In addition, we are dependent on some of our existing or potential competitors for banner advertisements and other marketing initiatives to acquire new members. Our ability to utilize their platforms to acquire new members may be adversely affected if they choose to compete more directly with us.

If we are unable to retain favorable terms with our merchants, our revenue may be adversely affected.

The success of our business depends in part on our ability to attract, retain and increase the number of merchants who use our service. If merchants decide that utilizing our services no longer provides an effective means of attracting new customers or selling their goods and services, they may demand a higher percentage of the gross billings from each deal sold. This would adversely affect our revenue.

In addition, some competitors may accept lower margins, or negative margins, to attract attention and acquire new members. If competitors engage in group buying initiatives in which merchants receive a higher percentage of the gross billings than we offer, we may be forced to pay a higher percentage of the gross billings than we offer, which may reduce our revenue.

Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in member willingness to receive messages could adversely affect our revenue and business.

Our business will be highly dependent upon email and other messaging services. Deals offered through emails and other messages sent by us, or on our behalf by our affiliates, are expected to generate a substantial portion of our revenue. Because of the importance of email and other messaging services to our businesses, if we are unable to successfully deliver emails or messages to our members or potential members, or if members decline to open our emails or messages, our revenue and profitability would be adversely affected. Actions by third parties to block, impose restrictions on, or charge for the delivery of emails or other messages could also materially and adversely impact our business. From time to time, internet service providers block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to third parties. In addition, our use of email and other messaging services to send communications about our website or other matters may result in legal claims against us, which if successful might limit or prohibit our ability to send emails or other messages. Any disruption or restriction on the distribution of emails or other messages or any increase in the associated costs would materially and adversely affect our revenue and profitability.

If our merchants do not meet the needs and expectations of our members, our business could suffer.

Our business will depend on providing high-quality luxury deals and our brand and reputation may be harmed by actions taken by merchants that are outside our control. Any shortcomings of one or more of our merchants, particularly with respect to delivery of products or an issue affecting the quality of the deal offered or the products or services sold, may be attributed by our members to us, thus damaging our reputation, brand value and potentially affecting our results of operations. In addition, negative publicity and member sentiment generated as a result of fraudulent or deceptive conduct by our merchants could damage our reputation, reduce our ability to attract new members or retain our current members, and diminish the value of our brand.

Our business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may be severely disrupted if we lost their services.

Our future success heavily depends on the continued service of our senior management and other key employees. If one or more of our senior executives are unable or unwilling to continue to work for us in their present positions, we may have to spend a considerable amount of time and resources searching, recruiting, and integrating the replacements into our operations, which would substantially divert management’s attention from our business and severely disrupt our business. This may also adversely affect our ability to execute our business strategy. Key executives are Braden Richter, Chief Executive Officer and President, Bryan Semmens, Chief financial Officer, Jerry Wilkerson, Chief Technology Officer and Chief Operating Officer, and Josh Thompson, Chief Marketing Officer, The Chief Financial Officer was not contractually bound to the Company and recently left the Company. The company operates in an industry that changes rapidly and is highly competitive, and it may be difficult to attract new candidates if any of our senior executives leave. Moreover, if any of our senior executives joins a competitor or forms a competing company, we may lose customers, suppliers, know-how, and key employees.

If one or more of our senior executives are unable or unwilling to continue to work for us in their present positions, we may have to spend a considerable amount of time and resources searching, recruiting, and integrating the replacements into our operations, which would substantially divert management’s attention from our business and severely disrupt our business. This may also adversely affect our ability to execute our business strategy. Moreover, if any of our senior executives joins a competitor or forms a competing company, we may lose customers, suppliers, know-how, and key employees.

Our senior management member, Jerome Wilkerson, COO/CTO, owns a business that is in potential competition with our business.

Mr. Wilkerson has been our Chief Technology and Information Officer since November 8, 2011. Mr. Wilkerson has also served as Chief Technical & Information Officer of our subsidiary, LY Retail-California, since September 2011. Since 2002 he has also owned his own retail ecommerce business, Home Loft, Inc., with which LuxeYard is currently under a Management Services Agreement. This business is a retail business that sells furniture under various brand names through Internet websites which may be in potential competition with our business.

Our senior management’s limited experience managing a publicly traded company may divert management’s attention from operations and harm our business.

Our senior management team has relatively limited experience managing a publicly traded company and complying with federal securities laws, including compliance with recently adopted disclosure requirements on a timely basis. Our management will be required to design and implement appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements, and any failure to do so could lead to the imposition of fines and penalties and harm our business.

We may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan.

Our success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. As we become a more mature company in the future, we may find our recruiting and retention efforts more challenging. We will be seeking to hire a significant number of personnel, including certain key management personnel. If we do not succeed in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively. The loss of any key employee, including members of our senior management team, and our inability to attract highly skilled personnel with sufficient experience in our industries could harm our business.

Our business is impacted by general economic conditions and related uncertainties affecting markets in which we operate.

General economic conditions, in particular conditions that impact consumer spending and construction and industrial activity, could adversely impact our business. These conditions could result in reduced demand for our deals, increased order cancellations and returns, an increased risk of excess and obsolete inventories and increased pressure on the prices of our products.

Difficult economic conditions could also increase the risk of extending credit to our retailers. Although we believe that our use of a commercial factor reduces such risk, the factor may at any time terminate or limit its approval of shipments to a particular customer, and the likelihood of the factor doing so may increase as a result of current economic conditions. Such an action by the factor could result in the loss of future sales to the affected customer.

We depend on the continued growth of online commerce.

The business of selling goods and services over the internet, particularly through coupons, is dynamic and relatively new. Concerns about fraud, privacy and other problems may discourage additional consumers and merchants from adopting the internet as a medium of commerce. In order to expand our member base, we must appeal to and acquire members who historically have used traditional means of commerce to purchase goods and services and may prefer internet analogues to our offerings, such as the retailer’s own website. If these consumers prove to be less active than our earlier members, or we are unable to gain efficiencies in our operating costs, including our cost of acquiring new members, our business could be adversely impacted.

Government regulation of the internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.

We are subject to general business regulations and laws as well as regulations and laws specifically governing the internet and e-commerce. Existing and future regulations and laws could impede the growth of the internet or other online services. These regulations and laws may involve taxation, tariffs, member privacy, anti-spam, data protection, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the internet as the vast majority of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues raised by the internet or e-commerce. In addition, it is possible that governments of one or more countries may seek to censor content available on our websites and applications or may even attempt to completely block access to our websites. Adverse legal or regulatory developments could substantially harm our business. In particular, in the event that we are restricted, in whole or in part, from operating in one or more countries, our ability to retain or increase our member base may be adversely affected and we may not be able to maintain or grow our revenue as anticipated.

Failure to comply with federal, state and international privacy laws and regulations, or the expansion of current or the enactment of new privacy laws or regulations, could adversely affect our business.

A variety of federal and state laws and regulations govern the collection, use, retention, sharing and security of consumer data. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. In addition, various federal, state and foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy matters. For example, recently there have been Congressional hearings and increased attention to the capture and use of location-based information relating to users of smartphones and other mobile devices. We will post privacy policies and practices concerning the collection, use and disclosure of member data on our websites and applications. Several internet companies have incurred penalties for failing to abide by the representations made in their privacy policies and practices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders or other federal, state or international privacy or consumer protection-related laws, regulations or industry self-regulatory principles could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could adversely affect our business. In addition, a failure or perceived failure to comply with industry standards or with our own privacy policies and practices could result in a loss of members or merchants and adversely affect our business. Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party web “cookies” for behavioral advertising. The regulation of these cookies and other current online advertising practices could adversely affect our business.

We may suffer liability as a result of information retrieved from or transmitted over the internet and claims related to our service offerings.

We may be sued for defamation, civil rights infringement, negligence, patent, copyright or trademark infringement, invasion of privacy, personal injury, product liability, breach of contract, unfair competition, discrimination, antitrust or other legal claims relating to information that is published or made available on our websites or service offerings we make available. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable. If any of these events occurs, our net income could be materially and adversely affected.

We are subject to risks associated with information disseminated through our websites and applications, including consumer data, content that is produced by our staff and errors or omissions related to our product offerings. Such information, whether accurate or inaccurate, may result in our being sued by our merchants, members or third parties and as a result our revenue and goodwill could be materially and adversely affected.

Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our websites and applications, and any significant disruption in service on our websites or applications could result in a loss of members, customers or merchants.

Members access our deals through our websites. Our reputation and ability to acquire, retain and serve our members and customers are dependent upon the reliable performance of our websites and the underlying network infrastructure. As our member base and the amount of information shared on our websites continue to grow, we will need an increasing amount of network capacity and computing power. We have spent and expect to continue to spend substantial amounts on data centers and equipment and related network infrastructure to handle the traffic on our websites and applications. The operation of these systems is expensive and complex and could result in operational failures. In the event that our member base or the amount of traffic on our websites grows more quickly than anticipated, we may be required to incur significant additional costs. Interruptions in these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of our websites and applications, and prevent our members from accessing our services. A substantial portion of our network infrastructure is hosted by third-party providers. Any disruption in these services or any failure of these providers to handle existing or increased traffic could significantly harm our business. Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. If we do not maintain or expand our network infrastructure successfully or if we experience operational failures, we could lose current and potential members and merchants, which could harm our operating results and financial condition.

Our business depends on the development and maintenance of the internet infrastructure.

The success of our services depends largely on the development and maintenance of the internet infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security, as well as timely development of complementary products, for providing reliable internet access and services. The internet has experienced, and is likely to continue to experience, significant growth in the number of users and amount of traffic. The internet infrastructure may be unable to support such demands. In addition, increasing numbers of users, increasing bandwidth requirements or problems caused by viruses, worms, malware and similar programs may harm the performance of the internet. The backbone computers of the internet have been the targets of such programs. The internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of internet usage generally as well as the level of usage of our services, which could adversely impact our business.

We will incur increased costs as a result of being a public company.

We face increased legal, accounting, administrative and other costs and expenses as a public company that we do not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, as well as new rules and regulations subsequently implemented by the Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board (the “PCAOB”), impose additional reporting and other obligations on public companies. We expect that compliance with these public company requirements will increase our costs and make some activities more time-consuming. A number of those requirements will require us to carry out activities we have not done previously. For example, we will adopt new internal controls and disclosure controls and procedures. In addition, we will incur additional expenses associated with our SEC reporting requirements. Furthermore, if we identify any issues in complying with those requirements (for example, if we or our accountants identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions of us. We also expect that it will be difficult and expensive to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in corporate governance and reporting requirements. We expect that the additional reporting and other obligations imposed on us by these rules and regulations will increase our legal and financial compliance costs and the costs of our related legal, accounting and administrative activities significantly. These increased costs will require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

We may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may dilute the interests of our common stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures. The anticipated amount of capital we will need to continue as a going concern is estimated at $750,000.

Risks Related to Ownership of Our Common Stock

Our common stock has a limited trading market, which could affect your ability to sell shares of our common stock and the price you may receive for our common stock.

Our common stock is currently traded on the OTCQB under the symbol “LUXR.” There is only limited trading activity in our securities. We have a relatively small public float compared to the number of our shares outstanding. Accordingly, we cannot predict the extent to which investors’ interest in our common stock will provide an active and liquid trading market. Due to our limited public float, we may be vulnerable to investors taking a “short position” in our common stock, which would likely have a depressing effect on the price of our common stock and add increased volatility to our trading market. The volatility of the market for our common stock could have a materially adverse effect on our business, results of operations and financial condition. There cannot be any guarantee that an active trading market for our securities will develop or, if such a market does develop, will be sustained. Accordingly, investors must be able to bear the financial risk of losing their entire investment in our common stock.

Our common stock is quoted only on the OTCQB, which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTCQB. The OTCQB is a significantly more limited market than the New York Stock Exchange or The NASDAQ Stock Market. The quotation of our shares on the OTCQB may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock, and could have a long-term adverse impact on our ability to raise capital in the future.

If we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with the SEC.

Compliance with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external, resources and represents a significant cost for us. We estimate that we will incur approximately $250,000 in costs in connection with compliance with the periodic reporting requirements required by the SEC on an annual basis. If we are unable to continue to devote adequate funding and the resources needed to maintain such compliance, while continuing our operations, we may be forced to deregister with the SEC. If we file for deregistration, our common stock will no longer be listed on the OTCQB, and it may suffer a decrease in, or absence of, liquidity as after the deregistration process is complete, our common stock will only be tradable on the “Pink Sheets.”

Because we became public by means of a “reverse merger,” we may not be able to attract the attention of major brokerage firms.

Additional risks may exist since we will become public through a “reverse merger.” Securities analysts of major brokerage firms may not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. We cannot assure you that brokerage firms will want to conduct any secondary offerings on behalf of our company in the future.

The sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.

Any sale of common stock by us in a future private placement offering could result in dilution to the existing stockholders as a direct result of our issuance of additional shares of our capital stock. In addition, our business strategy may include expansion through internal growth, by acquiring members email lists, or by establishing strategic relationships with targeted customers and vendor. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related to goodwill and other tangible assets if we acquire another company and this could negatively impact our earnings and results of operations.

There may be future sales or other dilution of our common stock, including from the conversion of our 8% preferred stock, and the exercise of our warrants, which may materially adversely affect the market price of our common stock and negatively impact a holder’s investments.

We are not restricted from issuing additional common stock, including any securities that are convertible into or exercisable for, or that represent the right to receive, common stock or any substantially similar securities. We may issue additional preferred stock, except, if it ranks senior to, or on parity with, our 8% preferred stock, we must obtain the consent of holders of our 8% preferred stock. In addition, quarterly dividends payable on our 8% preferred stock may be paid “in-kind,” at our option, in additional shares of 8% preferred stock. The market price of our common stock could decline as a result of sales of a large number of issuances of common stock, 8% preferred stock, warrants or similar securities in the market in the future or the perception that such issuances could occur. For example, if we issue preferred stock in the future that (i) has a preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding-up, (ii) has voting rights that dilute the voting power of our common stock or (iii) is convertible into our common stock, the rights of holders of our common stock or the market price of our common stock could be adversely affected.

Each share of our 8% preferred stock is convertible into, and each warrant is exercisable for, at the option of the holder, shares of our common stock. The conversion or exercise of some or all of our 8% preferred stock or warrants, as applicable, will dilute the ownership interest of existing holders of our common stock. Any sales in the public market of our common stock issuable upon such conversion or exercise could adversely affect prevailing market prices of the outstanding shares of our common stock or 8% preferred stock or warrants. In addition, the existence of our 8% preferred stock and warrants may encourage short selling or arbitrage trading activity by market participants because the conversion of our 8% preferred stock or exercise of our warrants could depress the price of our common stock.

Furthermore, grants of restricted common stock and options have been made to our officers and key employees under our management incentive and other employee incentive plans.

Together with these grants, there are currently outstanding 8,904,287 shares of our 8% preferred stock that are currently convertible into 8,904,287 shares of our common stock and warrants to purchase 24,099,003 shares of our common stock and 3,608,246 stock grants relating to various agreements. Upon the vesting of restricted shares, the conversion of our 8% preferred stock or the exercise of warrants and options, these securities would have a dilutive effect on our outstanding shares of common stock.

Future sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future securities offerings.

Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future through a public offering of its securities.

The market price of our common stock may be volatile and may be affected by market conditions beyond our control.

The market price of our common stock is subject to significant fluctuations in response to, among other factors:

variations in our operating results and market conditions specific to companies offering group-buying deals;

changes in financial estimates or recommendations by securities analysts;

the emergence of new competitors;

operating and market price performance of other companies that investors deem comparable;

changes in our board or management;

sales or purchases of our common stock by insiders;

commencement of, or involvement in, litigation;

changes in governmental regulations; and

general economic conditions and slow or negative growth of related markets.

In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the market price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs it could cause the price of our common stock to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to the board of directors and management.

We do not intend to pay dividends on our common stock for the foreseeable future, and you must rely on increases in the market prices of our common stock for returns on your investment.

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” as an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our shares of common stock are “penny stock” and we are subject to Rule 15g-9 under the Exchange Act (the “Penny Stock Rule”). This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

There can be no assurance that our shares of common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock was exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.

Until the conversion of our 8% preferred stock or the exercise of our warrants, holders of these securities do not have identical rights as holders of our common stock, but they will be subject to all changes made with respect to our common stock.

Before converting shares of our 8% preferred stock, holders of our 8% preferred stock are not entitled to any rights with respect to our common stock (other than voting rights and rights to receive dividends or other distributions on our common stock), but they are subject to all changes affecting our common stock. In addition, holders of warrants are not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock), but they also will be subject to all changes affecting our common stock. Even though holders of our 8% preferred stock vote on an as-converted basis with holders of our common stock, they will only be entitled to exercise all of the rights of a holder of our common stock upon conversion of their 8% preferred stock and only as to matters for which the record date occurs on or after the applicable conversion date and to the extent permitted by law, although they will be subject to any changes in the powers, preferences or special rights of our common stock that may occur as a result of any stockholder action. Similarly, holders of our warrants will have rights with respect to our common stock only if they receive our common stock upon exercise of the warrants and only as of the date when such holder becomes a record owner of the shares of our common stock upon such exercise. For example, with respect to warrants, if an amendment is proposed to our certificate of incorporation or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the date a warrant holder is deemed to be the owner of the shares of our common stock due upon exercise of the warrants, the exercising warrant holder will not be entitled to vote on the amendment, although such holder will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.

In the event of our voluntary or involuntary liquidation, winding-up or dissolution, our 8% preferred stock will rank senior to our common stock but junior to all of our liabilities.

In the event of our voluntary or involuntary liquidation, winding-up or dissolution, the holders of our 8% preferred stock may exercise their rights to convert all or a portion of stock into common stock. Each holder of 8% preferred stock that does not exercise its rights to convert shall be entitled to receive out of our assets, for each share of 8% preferred stock, cash in an amount equal to (i) the original issue price plus (ii) all accrued but unpaid dividends on the shares, before any payment or distribution shall be made on the common stock, but after payment of all outstanding indebtedness and all amounts due on liquidation, dissolution or winding-up in respect of all preferred stock of the Corporation which by its terms is senior to the 8% preferred stock, if any.

Our 8% preferred stock is perpetual in nature.

Shares of our 8% preferred stock represent a perpetual interest in the Company and, unlike indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. Therefore, holders should be aware that they may be required to bear the financial risks of an investment in our 8% preferred stock for an indefinite period of time, unless such holders convert, at their option, their shares of 8% preferred stock into common stock.

A fundamental transaction with respect to us may trigger certain rights for the purpose of our 8% preferred stock.

The certificate of designations of our 8% preferred stock contains a covenant that if a “fundamental transaction”, as defined in the certificate of designations of our 8% preferred stock, occurs, then such event will be treated as liquidation for purposes of a liquidation preference in the certificate of designations. In which case, the holders of our 8% preferred stock may exercise their rights to convert all or a portion of stock into common stock. Each holder of preferred stock that does not exercise its rights to convert shall be entitled to receive out of our assets, for each share of preferred stock, cash in an amount equal to (i) the original issue price plus (ii) all accrued but unpaid dividends on the shares, before any payment or distribution shall be made on the common stock, but after payment of all outstanding indebtedness and all amounts due on liquidation, dissolution or winding-up in respect of all preferred stock of the Corporation which by its terms is senior to the 8% preferred stock, if any. Any change of control transaction with respect to the Company may also negatively affect the liquidity, value or volatility of our common stock and thereby negatively impact the value of our 8% preferred stock (and our warrants). Additionally, the provisions of our 8% preferred stock related to fundamental transactions could have the effect of discouraging third parties from pursuing certain transactions with us, which may otherwise be in the best interest of our stockholders.

The adjustment to the exercise price for warrants exercised in connection with an anti-dilutive adjustment event may not adequately compensate you for any lost value of your warrants as a result of such transaction.

If a specified corporate event or transaction constituting a dilutive event occurs, under certain circumstances we will decrease the exercise price for warrants exercised in connection with such dilutive adjustment event. The decrease in the exercise price will be determined based on the date on which the dilutive event occurs or becomes effective and the price paid per share of our common stock in such dilutive event. The adjustment to the exercise price for warrants exercised in connection with a dilutive event may not adequately compensate you for any lost value of your warrants as a result of such dilutive event.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward looking statements that involve risks and uncertainties, principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact contained in this prospectus, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this prospectus, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assumes no obligation to update any such forward-looking statements.

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus. Before you invest in our securities, you should be aware that the occurrence of the events described in the section entitled “Risk Factors” and elsewhere in this prospectus could negatively affect our business, operating results, financial condition and stock price. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this prospectus to conform our statements to actual results or changed expectations.

DIVIDEND POLICY

We plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will depend on our financial condition, operating results, capital requirements and such other factors as our Board of Directors deems relevant. In addition, our credit facility restricts our ability to pay dividends.

Each holder of our 8% preferred stock, in preference and priority to the holders of all other classes of stock, shall be entitled to receive, with respect to each share of 8% preferred stock, dividends, commencing from the date of issuance of such share of preferred stock, at the rate of eight percent (8%) per annum. The 8% preferred stock dividends are cumulative, whether or not earned or declared, and are to be paid by us quarterly in arrears on the first business day of January, April, July and October in each year. The 8% preferred stock dividends are to be paid to each holder of 8% preferred stock in cash out of legally available funds. The 8% preferred stock dividends may also be paid in shares of common stock under certain circumstances.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the common stock by the selling stockholders. However, we may receive up to approximately $3,434,285 in the aggregate upon the exercise of the warrants if the holders exercise them for cash. The registration of common stock pursuant to this prospectus does not necessarily mean that any of those shares will ultimately be offered or sold by the selling stockholders. We intend to use the proceeds received from any cash exercise of the warrants for working capital and general corporate purposes.

DILUTION

We are not selling any of the shares of our common stock or 8% preferred stock in this offering. All of the shares sold in this offering will be held by the selling stockholders at the time of the sale, so that no dilution will result from the sale of the shares.

PENNY STOCK CONSIDERATIONS

Our common stock will be a penny stock, therefore, trading in our securities is subject to penny stock considerations. Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC.

Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

SELLING STOCKHOLDERS

The common shares being offered for resale by the selling stockholders consist of 13,737,140 shares of our common stock that are issued and outstanding, including up to (i) 6,868,570 shares of common stock issuable upon conversion of the selling stockholders that own 8% preferred stock, and (ii) 6,868,570 shares of our common stock issuable upon exercise of Series C warrants held by the selling stockholders at an exercise price of $0.50 per share. These holders include investors in our private placement that closed on May 31, 2012 for the sale of units consisting of an aggregate of (i) 8,904,287 shares of 8% preferred stock, (ii) Series C warrants to purchase 8,904,287 shares of common stock, (iii) Series D warrants to purchase up to 4,452,144 shares of common stock, and (iv) Series E warrants to purchase up to 4,452,143 shares of common stock.

The following table sets forth certain information regarding the selling stockholders and the shares offered by them in this prospectus. Each selling stockholder’s percentage of ownership is based upon 81,059,895 shares of common stock outstanding as of January 24, 2013 and all securities which the person has the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of a convertible security.

Name of Selling Stockholder	Shares Beneficially Owned prior to Offering		Percentage Beneficially Owned prior to Offering			Shares to Offer (1)			Shares Beneficially Owned after Offering		Percentage Beneficially Owned After Offering
Black Mountain Equities, Inc. (2)		435,652		*			285,714	(3)		149,938		*
Heights Capital Management (4)		2,622,620		3.13	%		1,720,000	(5)		902,620		1.10	%
Cranshire Capital Master Fund, Ltd. (6)		1,306,955		1.59	%		857,144	(7)		449,811		*
Erick Richardson		435,652		*			285,714	(8)		149,938		*
FireRock Capital, Inc. (9)		2,439,988		3.06	%		285,714	(10)		2,154,274		2.72	%
HCP Opportunity Fund, L.P. (11)		731,894		*			480,000	(12)		251,894		*
Kingsbrook Opportunities Master Fund LP (13)		871,305		1.06	%		571,430	(14)		299,875		*
Next View Capital LP (15)		3,476,496		4.11	%		2,280,000	(16)		1,196,496		1.45	%
Octagon Capital Partners LP (17)		871,302		1.06	%		571,428	(18)		299,874		*
Pergament Multi-Strategy Opportunities, LP (19)		8,713,021		9.71	%		5,714,284	(20)		2,998,737		3.57	%
Schottenstein Capital Partners, L.P. (21)		261,390		*			171,428	(22)		89,962		*
Silverrock II, Ltd. (23)		1,056,114		1.29	%		342,856	(24)		713,258		*
Warberg Opportunistic Trading Fund L.P. (25)		261,390		*			171,428	(26)		89,962		*
Total		23,483,779					13,737,140			9,746,639

* Less than 1%

(1)

Includes the shares underlying 8% preferred stock and warrants issued to investors in a Private Placement that closed May 31, 2012.

(2)

Adam Baker may be deemed to be the beneficial owner of the shares of our common stock held by Black Mountain Equities, Inc. Mr. Baker disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(3)	Includes (i) 142,857 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 142,857 shares of common stock issuable upon the exercise of the Series C Warrant.

(4)

Martin Kubinger, as Investment Manager, may be deemed to be the beneficial owner of the shares of our common stock held by Heights Capital Management. Mr. Kubinger disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(5)

Includes (i) 860,000 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 860,000 shares of common stock issuable upon the exercise of the Series C Warrant.

(6)

Cranshire Capital Advisors, LLC (“CCA”) is the investment manager of Cranshire Capital Master Fund, Ltd. (“Cranshire Master Fund”) and has voting control and investment discretion over securities held by Cranshire Master Fund. Mitchell P. Lopin (“Mr. Kopin”), the president, sole member and the sole member of the Board of Directors of CCA, has voting control over CCA. As a result, each of Mr. Kopin and CCA may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by Cranshire Master Fund.

(7)

Includes (i) 428,572 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 428,572 shares of common stock issuable upon the exercise of the Series C Warrant.

(8)

Includes (i) 142,857 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 142,857 shares of common stock issuable upon the exercise of the Series C Warrant.

(9)

Seth Fireman and Neil Rock may be deemed to be the beneficial owner of the shares of our common stock held by FireRock Capital, Inc. Mr. Fireman and Mr. Rock disclaim beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(10)

Includes (i) 142,857 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 142,857 shares of common stock issuable upon the exercise of the Series C Warrant. Firerock Capital’s shares are also subject to a Lock-Up Letter Agreement, dated May 31, 2012. Under this agreement the shares are restricted until December 31, 2012.

(11)

Jason Hammerman may be deemed to be the beneficial owner of the shares of our common stock held by HCP Opportunity Fund, L.P. Mr. Hammerman disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(12)

Includes (i) 240,000 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 240,000 shares of common stock issuable upon the exercise of the Series C Warrant.

(13)

Kingsbrook Partners LP (“Kingsbrook Partners”) is the investment manager of Kingsbrook Opportunities Master Fund LP (“Kingsbrook Opportunities”) and consequently has voting control and investment discretion over securities held by Kingsbrook opportunities. Kingsbrook Opportunities GP LLC (“Opportunities GP”) is the general partner of Kingsbrook Opportunities and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Opportunities. KB GP LLC (“GP LLC”) is the general partner of Kingsbrook partners and may be considered the beneficial owner of any securities deemed to be beneficially owned by Kingsbrook Partners. Ari J. Storch, Adam J. Chill and Scott M. Wallace are the sole managing members of Opportunities GP and GP LLC and as a result may be considered beneficial owners of any securities deemed beneficially owned by Opportunities GP and GP LLC. Each of Kingsbrook Partners, Opportunities GP, GP LLC and Messrs. Storch, Chill and Wallace disclaim beneficial ownership of these securities.

(14)

Includes (i) 285,715 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 285,715 shares of common stock issuable upon the exercise of the Series C Warrant.

(15)

Stewart Flink may be deemed to be the beneficial owner of the shares of our common stock held by Next View Capital LP. Mr. Flink disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(16)

Includes (i) 1,140,000 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 1,140,000 shares of common stock issuable upon the exercise of the Series C Warrant.

(17)

Steven Hart may be deemed to be the beneficial owner of the shares of our common stock held by Octagon Capital Partners LP. Mr. Hart disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(18)

Includes (i) 285,714 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 285,714 shares of common stock issuable upon the exercise of the Series C Warrant.

(19)

Arthur J. Pergament may be deemed to be the beneficial owner of the shares of our common stock held by Pergament Multi-Strategy Opportunities, LP. Mr. Pergament disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(20)

Includes (i) 2,857,143 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 2,857,143 shares of common stock issuable upon the exercise of the Series C Warrant.

(21)

Corey M. Schottenstein and Gary L. Schottenstein may be deemed to be the beneficial owners of the shares of our common stock held by Schottenstein Capital Partners, L.P. Mr. Schottenstein and Mr. Schottenstein disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(22)

Includes (i) 85,714 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 85,714 shares of common stock issuable upon the exercise of the Series C Warrant.

(23)

Ezzat Jallad may be deemed to be the beneficial owner of the shares of our common stock held by Silverrock II, Ltd. Mr. Jallad disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(24)

Includes (i) 171,429 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 171,429 shares of common stock issuable upon the exercise of the Series C Warrant.

(25)

Daniel Warsh and Jonathan Blumberg may be deemed to be the beneficial owners of the shares of our common stock held by Warberg Opportunistic Trading Fund L.P. Mr. Warsh and Mr. Blumberg disclaim beneficial ownership of such shares, except to the extent of his pecuniary interest therein.

(26)

Includes (i) 85,714 shares of common stock issuable upon the conversion of the 8% preferred stock and (ii) 85,714 shares of common stock issuable upon the exercise of the Series C Warrant.

Except as disclosed in the table above, to our knowledge, none of the selling stockholders or beneficial owners:

●

has had a material relationship with us other than as a stockholder at any time within the past three years;

●

has ever been one of our officers or directors or an officer or director of our affiliates; or

●

are broker-dealers or affiliated with broker-dealers.

With respect to those selling stockholders noted above who are or were affiliated with registered broker-dealers, each has represented to us that the shares being registered for resale were purchased in the ordinary course of business and, at the time of purchase, such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute the shares.

The following table sets forth certain information regarding the warrants and preferred stock held by the selling stockholders. See the “Description of Securities” section beginning on page 55 for a description of the preferred stock and various warrants.

Schedule A

	Schedule A Shares (8% Preferred)						Series C Warrants				Series D Warrants				Series E Warrants				Market Price
Name of Selling Stockholder	5/31/2012		Dividend		Conversion Price		5/31/2012		Exercise Price		5/31/2012		Exercise Price		5/31/2012		Exercise Price		5/31/2012		Shares to Offer		Market Value		Conversion Value		Discount
Black Mountain Equities, Inc.		142,857		9,178		0.35		142,857		0.50		71,429		0.35		71,429		0.50		1.3300		285,714		582,208		185,355		396,852
Cranshire Capital Master Fund, Ltd.		428,572		27,534		0.35		428,572		0.50		214,286		0.35		214,286		0.50		1.3300		857,144		1,746,622		556,066		1,190,556
Erick Richardson		142,857		9,178		0.35		142,857		0.50		71,429		0.35		71,429		0.50		1.3300		285,714		582,208		185,355		396,852
FireRock Capital, Inc.		142,857		9,178		0.35		142,857		0.50		71,429		0.35		71,429		0.50		1.3300		285,714		582,208		185,355		396,852
HCP Opportunity Fund, L.P.		240,000		15,419		0.35		240,000		0.50		120,000		0.35		120,000		0.50		1.3300		480,000		978,107		311,397		666,711
Heights Capital Management		860,000		55,251		0.35		860,000		0.50		430,000		0.35		430,000		0.50		1.3300		1,720,000		3,504,884		1,115,838		2,389,046
Kingsbrook Opportunities Master Fund LP		285,715		18,356		0.35		285,715		0.50		142,858		0.35		142,858		0.50		1.3300		571,430		1,164,418		370,712		793,706
Next View Capital LP		1,140,000		73,240		0.35		1,140,000		0.50		570,000		0.35		570,000		0.50		1.3300		2,280,000		4,646,009		1,479,134		3,166,875
Octagon Capital Partners LP		285,714		18,356		0.35		285,714		0.50		142,857		0.35		142,857		0.50		1.3300		571,428		1,164,413		370,710		793,703
Pergament Multi-Strategy Opportunities, LP		2,857,143		183,559		0.35		2,857,143		0.50		1,428,571		0.35		1,428,571		0.50		1.3300		5,714,284		11,644,132		3,707,102		7,937,030
Schottenstein Capital Partners, L.P.		85,714		5,507		0.35		85,714		0.50		42,857		0.35		42,857		0.50		1.3300		171,428		349,324		111,213		238,111
Silverrock II, Ltd.		171,429		11,014		0.35		171,429		0.50		85,714		0.35		85,714		0.50		1.3300		342,856		698,647		222,426		476,221
Warberg Opportunistic Trading Fund L.P.		85,714		5,507		0.35		85,714		0.50		42,857		0.35		42,857		0.50		1.3300		171,428		349,324		111,213		238,111
Total		6,868,572		441,277		0.35		6,868,572		0.50		3,434,287		0.35		3,434,287		0.50		1.3300		13,737,140		27,992,504		8,911,876		19,080,626

The following table sets forth certain information regarding the Company’s proceeds from the selling stockholders in various private placement transactions.

Schedule B

	Gross Proceeds
Name of Selling Stockholder	11/8/2011		12/15/2011		5/31/2012		Finders Fees	Net Proceeds
Amir Mireskandri		33,483		50,000		100,000			183,483
Black Mountain Equities, Inc.		-		-		50,000			50,000
Braden Richter		-		-		50,000			50,000
Capital Ventures International		-		-		301,000			301,000
Core Energy Enterprises, Inc.		-		100,000		-			100,000
Cranshire Capital Master Fund, Ltd.		-		-		150,000			150,000
David S. Nagelberg		20,000		50,000		-			70,000
Equity Highrise Inc.		50,000		-		-			50,000
Erick Richardson		-		-		50,000			50,000
FireRock Capital, Inc.		-		-		50,000			50,000
HCP Opportunity Fund, L.P.		-		-		84,000			84,000
Huttner 1999 Partnership Ltd.		25,000		-		412,500			437,500
Jeff A. Sater		50,000		-		-			50,000
Jeff Lamont		25,000		-		-			25,000
Jinsun, LLC		77,500		-		37,500			115,000
Jonathan Camarillo Trust		-		-		112,500			112,500
Joseph R. Lee		50,000		-		-			50,000
Kay Holdings, Inc.		10,000		-		-			10,000
Kevin Lisman		25,000		-		-			25,000
Khaled Alattar		96,517		-		-			96,517
Kingsbrook Opportunities Master Fund LP		-		-		100,000			100,000
Lance Baral		20,000		-		-			20,000
Lee Bear I, LLC		25,000		-		-			25,000
Mark Trotter		22,500		50,000		-			72,500
Market Byte LLC Defined Benefit & Trust		25,000		-		-			25,000
Maxim Group LLC		-		-		-			-
Next View Capital LP		-		-		399,000			399,000
Octagon Capital Partners LP		-		-		100,000			100,000
Pergament Multi-Strategy Opportunities, LP		-		-		1,000,000			1,000,000
Robert Gleckman		-		50,000		-			50,000
Robert Klinek $ Susan Pack JTWROS		-		100,000		-			100,000
Schottenstein Capital Partners, L.P.		-		-		30,000			30,000
Sean Crowley		-		50,000		-			50,000
Silverrock II, Ltd.		-		-		60,000			60,000
Sun Bear, LLC		25,000		-		-			25,000
Sunrise Securities, Inc.		-		-		-			-
Thomas Hudson		25,000		-		-			25,000
Warberg Opportunistic Trading Fund L.P.		25,000		-		30,000			55,000
William W. Bartlett, Jr.		-		-		-			-
Total		630,000		450,000		3,116,500			4,196,500

The following table sets forth certain information regarding the Company’s prior securities transactions with the selling shareholders, affiliates of the selling shareholders, and any person with whom any selling stockholder has a contractual relationship regarding transactions involving the Company’s securities.

Schedule C

Name of Selling Stockholder		Date of Transaction	Market Price @ 5/24/12		Market Price @ 9/30/12		Common Shares		Committed Not issued Common			Series A Warrants			Series B Warrants			Series C Warrants			Series D Warrants			Series E Warrants			Convertible Debt			Schedule A Shares			Allocation of Dividend Shares			Placement agent warrant			Total
Series A Warrant - PPM 18 Investors	{a}	11/8/2011	$	1.32	$	0.15		1,575,000		1,575,000			1,575,000			-			-			-			-			-			-			-			-
Series B Warrants - PPM 18 Investors	{a}	11/8/2011	$	1.32	$	0.15		1,575,000		1,575,000			-			1,575,000			-			-			-			-			-			-			-
Series A Warrant - PPM 7 Investors	{a}	12/15/2011	$	1.32	$	0.15		1,125,000		1,125,000			1,125,000			-			-			-			-			-			-			-			-
Series B Warrants - PPM 7 Investors	{a}	12/15/2011	$	1.32	$	0.15		1,125,000		1,125,000			-			1,125,000			-			-			-			-			-			-			-
Black Mountain Equities, Inc.	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			142,857			71,429			71,429			-			142,857			9,178			-
Cranshire Capital Master Fund, Ltd.	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			428,572			214,286			214,286			-			428,572			27,534			-
Erick Richardson	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			142,857			71,429			71,429			-			142,857			9,178			-
FireRock Capital, Inc.	{b}	5/24/2012	$	1.32	$	0.15		500,000		1,504,336			-			-			142,857			71,429			71,429			-			142,857			9,178			-
HCP Opportunity Fund, L.P.	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			240,000			120,000			120,000			-			240,000			15,419			-
Heights Capital Management	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			860,000			430,000			430,000			-			860,000			55,251			-
Kingsbrook Opportunities Master Fund LP	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			285,715			142,858			142,858			-			285,715			18,356			-
Next View Capital LP	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			1,140,000			570,000			570,000			-			1,140,000			73,240			-
Octagon Capital Partners LP	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			285,714			142,857			142,857			-			285,714			18,356			-
Pergament Multi-Strategy Opportunities, LP	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			2,857,143			1,428,571			1,428,571			-			2,857,143			183,559			-
Schottenstein Capital Partners, L.P.	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			85,714			42,857			42,857			-			85,714			5,507			-
Silverrock II, Ltd.	{b}	5/24/2012	$	1.32	$	0.15		200,000		-			-			-			171,429			85,714			85,714			333,333			171,429			11,014			-
Warberg Opportunistic Trading Fund L.P.	{b}	5/24/2012	$	1.32	$	0.15		-		-			-			-			85,714			42,857			42,857			-			85,714			5,507			-
Total								700,000		1,504,336			2,700,000			2,700,000			6,868,572			3,434,287			3,434,287			333,333			6,868,572			441,277			-			28,984,664
											{c}		10	%		10	%		26	%		13	%		13	%		1	%		26	%		2	%		0	%

{a} These securities are subject to the transaction that were outstanding prior to the transaction and held by persons other than the selling shareholders, affiliates of the company, or affiliates of the selling shareholders.

{b} Name of Selling Stockholder, affiliate of the Company, or affiliate of the selling stockholder.

{c} Represents the percentage of total issued and outstanding securities that were issued or issuable in the transaction (assuming full issuance), with the percentage calculated by taking the number of shares issued and outstanding prior to the applicable transaction and held by persons other than the selling shareholders, affiliates of the Company, or affiliates of the selling shareholders, and dividing that number by the number of shares issued or issuable in connection with the applicable transaction.

DESCRIPTION OF BUSINESS

Business Overview

We function as a member-based online marketplace for luxury consumer products we source from merchants and offer to our members through our website via a “flash sale” or “daily deal” at deep discounts to retail prices. In January 2012, our launched our website www.Luxeyard.com and began operations. We launched with the product line of home goods and furniture. On March 27, 2012, we launched LuxeStyle apparel line. Initially, we focused on household furnishings and goods such as furniture, lighting and bedding. We recently expanded into apparel and accessories. As our member base and merchant selection increase, we expect to expand our offerings to include other consumer goods such as travel, gourmet food and beverages, consumer services events and gift cards.

Each week we conduct several “flash sale” events on our website in which we feature merchandise at steep discounts to suggested retail prices. At the beginning of each event, members receive an email describing the featured products and directing them to our website to participate. We list events on the member homepage of our website and each event remains on our site for three to five days, depending on demand and quantity offered.

In addition to flash sales, we also feature a “Daily Deal” whereby we offer a single product on our website for a 24 hour period. Similar to flash sales, our members receive email notifications when deals commence, directing them to the member homepage for more details. Unlike other deal of the day models, members are not required to purchase a minimum number of products before the deal becomes active. In some cases, when our Group Buy feature is active, as more members participate in the deal, the purchase price decreases.

Members purchase products directly through our website via credit card and, in most cases, products ship directly from the merchant’s location to the member.

With our Concierge Buying program, we use a model similarly used by companies such as Facebook and Pinterest to determine customer wants. We then source the most popular products and offer those to the members via a sale that features special notifications and discounts for those who contributed to the process.

In April we began a Business to Business program through which we source containers of goods and sell them to retailers. The retailers are offered products prior to the arrival of the container shipments and any unsold items from the container shipment are then offered on our website.

Our Corporate History and Background

We incorporated under the laws of the Delaware on December 31, 2007 under name “Top Gear, Inc.” From inception until the closing of the securities exchange (“Securities Exchange”) with LY Retail, LLC, a Texas limited liability company (“LY Retail-Texas”) on November 8, 2011, we sought to develop and commercialize a kosher certification service with a goal of becoming a leading kosher food certification organization. During that time, we had no revenue and our operations were limited to capital formation, organization and development of our business plan. As a result of the Securities Exchange, we ceased our prior operations and we now operate as an e-commerce marketplace that connects merchants to consumers by offering luxury goods and services at a discount.

LY Retail-Texas was organized as a limited liability company under the laws of Texas on April 20, 2011. Immediately prior to the closing of the Securities Exchange, Amir Mireskandari and Khaled Alattar were the members of LY Retail-Texas.

On November 8, 2011 and concurrently with the Securities Exchange transaction, we formed a wholly owned subsidiary under name LY Retail, LLC (“LY Retail-CA”) in the State of California. All of the operating activity of the Company was transferred to LY Retail-CA and LY Retail-Texas ceased all activity.

Acquisition of LY Retail-Texas

On November 8, 2011, we completed the Securities Exchange whereby we acquired all of the issued and outstanding membership interests of LY Retail-Texas in exchange for 30,349,998 shares of our common stock which shares constituted approximately 52.43% of our issued and outstanding shares of common stock as of and immediately after the consummation of the Securities Exchange. As a result of the Securities Exchange, LY Retail-Texas became our wholly owned subsidiary and Amir Mireskandari and Khaled Alattar became our principal stockholders. The Securities Exchange was treated as a recapitalization effected through a securities exchange, with LY Retail-Texas as the accounting acquirer and the Company the accounting acquiree.

Reorganization and Spin-Out

On November 8, 2011 and immediately prior to the Securities Exchange, we (i) entered into a contribution and assumption agreement (the “Contribution and Assumption Agreement”) with TGRE SubCo, Inc., a Delaware corporation formed as our wholly owned subsidiary for the purposes of spinning out the operations of Top Gear, Inc. (“SpinCo”) pursuant to which we contributed all of our assets to SpinCo and SpinCo assumed all of our debts and other liabilities (the “Reorganization”); and (ii) immediately following the Reorganization, we entered into an agreement of sale (the “Agreement of Sale”) with Omri Amos Shalom (“Shalom”) and Akiva Bergman (“Bergman”), our former principal shareholders, pursuant to which we sold to Shalom and Bergman all of our interest in SpinCo in exchange for a total of 119,000,000 shares of our common stock held by Shalom and Bergman (the “Spin-Out”). The shares of common stock acquired from Shalom and Bergman in the Spin-Out were cancelled following the Securities Exchange.

Financing Transactions

November 2011 Equity Offering

On November 8, 2011 and immediately following the Securities Exchange, we completed a private offering of units consisting of an aggregate of (i) 3,150,012 shares of our common stock, (ii) Series A warrants to purchase 1,574,998 shares of common stock which have a five-year term and an initial per share exercise price of $0.30, subject to adjustment as described below (the “Series A Warrants”), and (iii) Series B warrants to purchase 1,574,998 shares of common stock which have a five-year term and an initial per share exercise price of $0.60, subject to adjustment as described below (the “Series B Warrants”). The price per unit was $0.20 for an aggregate purchase price of approximately $630,000. As described below, approximately $217,500 of the Purchase Price was paid via the delivery to the Company of promissory notes previously issued by LY Retail-Texas to certain of its bridge investors (which such investors included the LY Retail-Texas Members).

Subscription Agreement. The units were offered and sold to the subscribers in the offering pursuant to a subscription agreement dated as of November 8, 2011.

Exchange of Bridge Notes. Certain of the subscribers (each, a “Bridge Investor” and collectively the “Bridge Investors”) delivered promissory notes issued by LY Retail-Texas prior to the Securities Exchange (each, a “Bridge Note” and collectively the “Bridge Notes”) as payment of such Bridge Investor’s purchase price for the units. To the extent the principal amount of a Bridge Investor’s Bridge Note was greater than such Bridge Investor’s purchase price for the units, the Company, on behalf of LY Retail-Texas, paid the remaining principal amount of such Bridge Note from the proceeds of the offering. Accordingly, Bridge Notes in the aggregate principal amount of $217,500 were exchanged for units in the offering and the Company paid $62,500 of the remaining principal amount of the Bridge Notes to the Bridge Investors out of the proceeds from the offering. As a result, the Bridge Notes are deemed to be cancelled and are of no further force and effect.

Antidilution Protection. Subject to certain exceptions, if at any time during the twelve (12) months following the closing of the offering the Company issues or sells shares of its common stock at a price per share less than $0.30 (as adjusted for any stock dividend, stock split, stock combination or other similar transaction), the Company is required to promptly thereafter issue to each subscriber following such new issuance that number of shares of its common stock equal to the greater of (I) zero and (II) the difference of (i) the quotient of (x) such subscriber’s purchase price divided by (y) the price per share of the new issuance, less (ii) the number of shares of common stock previously issued to such Subscriber pursuant to the Subscription Agreement (as adjusted for any stock dividend, stock split, stock combination or other similar transaction).

Warrants. The Series A Warrants have a five-year term and are exercisable for an aggregate of 1,574,998 shares of our common stock at an initial per share exercise price of $0.30, subject to adjustment as set forth below. The Series B Warrants have a five-year term and are exercisable for an aggregate of 1,574,998 shares of our common stock at an initial per share exercise price of $0.60 (the exercise price was reset to $0.30 effective May 1, 2012), subject to certain adjustment, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. In addition, subject to certain exceptions, if at any time after the closing date, the Company issues or sells any shares of its common stock at a price per share less than the exercise price of the applicable warrant, then immediately after such new issuance, the exercise price of the applicable warrant then in effect shall be reduced to an amount equal to the price per share of such new issuance. If the warrants are not registered with the Securities Act, the warrants can be exercised on a cashless basis.

Registration Rights Agreement. In connection with offering, we entered into a registration rights agreement with the subscribers granting the subscribers piggy-back registration rights with respect to the shares and the shares of common stock underlying the warrants.

Lock-Up Agreements. In connection with offering, we entered into lock-up agreements with each of Braden Richter, our newly appointed President and Chief Executive Officer and member of our Board of Directors, Kevin Walker, our newly appointed Chief Financial Officer, Chief Operating Officer and Secretary, Jerry Wilkerson, our newly appointed Chief Technology and Information Officer, Joshua Thompson, our newly appointed Chief Marketing Officer, and Khaled Alattar, one of our new principal stockholders, pursuant to which each of them agreed not to transfer any of our capital stock held directly or indirectly by them for an eighteen month period following the closing of the offering. In addition, we entered into a lock-up/leak-out agreement with Amir Mireskandari, our newly appointed Chairman of our Board of Directors and one of our new principal stockholders, pursuant to which he agreed not to transfer any of our capital stock held directly or indirectly by him for a nine month period following the closing of the offering and for the nine months thereafter to limit any transfers to 850,000 shares of common stock in any 30 day period and 170,000 shares of common stock on any single day.

December 2011 Equity Offering

On December 15, 2011 we completed a private offering of units consisting of an aggregate of (i) 2,250,016 shares of our common stock, (ii) Series A Warrants to purchase 1,125,008 shares of our common stock which have a five-year term and an initial per share exercise price of $0.30, subject to adjustment, and (iii) Series B Warrants to purchase 1,125,008 shares of our common stock which have a five-year term and an initial per share exercise price of $0.60 (the exercise price was reset to $0.30 effective May 1, 2012), subject to adjustment. The price per unit was $0.20 for an aggregate purchase price of $450,000 (the “Purchase Price”). The subscribers are entitled to piggy-back registration rights with respect to the shares and the shares of common stock underlying the Warrants and other similar rights as the offering closed on November 8, 2011.

January 2012 Term Note

On January 25, 2012 we borrowed cash in the amount $25,000 from one of our shareholders. The loan bears 10% annual interest and has a maturity of April 20, 2012. The loan is evidenced by a promissory note. This note was converted to a debenture in the April 2012 financing.

Convertible Debentures

During the period from January to April, 2012 we entered into several Debenture Purchase Agreements with certain investors whereby we issued and sold to the investors 10% Convertible Debentures which are convertible into shares of our common stock at a conversion price of $0.30 per share, subject to adjustment. The conversion price is adjusted downward if, at any period that the debentures are outstanding, the Company issues any additional stock or securities convertible into shares of common stock at a price less than the applicable conversion price. The aggregate original principal amount of all Convertible Debentures is $2,915,000. Based on the aggregate original principal amount sold, the minimum number of common shares we may be required to issue is 9,716,667, which may be increased if we issue common stock at a price less than the applicable conversion price.

May 2012 Equity Offering

On May 31, 2012 we completed the sale of units pursuant to a Securities Purchase Agreement dated May 24, 2012. The units sold in the offering consisted of an aggregate of (i) 8,904,287 shares of our 8% preferred stock, (ii) Series C warrants to purchase 8,904,287 shares of our common stock which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment, (iii) Series D warrants to purchase up to 4,452,144 shares of common stock which have a 90-day term and an initial per share exercise price of $0.35, subject to adjustment, and (iv) Series E warrants to purchase up to 4,452,143 shares of common stock which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment. The price per unit was $0.35 for aggregate gross proceeds of approximately $3,116,500, which includes $225,000 from investors that converted existing debt into the offering. Maxim Group LLC was the placement agent for the offering.

Forward Split and Name Change

On November 30, 2011, the Board and the shareholders representing more than 50% of our common stock approved a 1:17 forward split and change in the Company’s name. The forward split was declared effective by Financial Industry Regulatory Authority, or FINRA, as of February 8, 2012. All share and per share amounts in this prospectus, and in the accompanying consolidated financial statements and notes thereto, reflect the forward split for all periods presented.

On January 9, 2012, we filed a Certificate of Amendment to our Articles of Incorporation to change the corporate name from “Top Gear, Inc.” to “Luxeyard, Inc.” The amendment was effective as of January 9, 2012. In connection with the name change, we have applied for a new trading symbol “LUXR” for the Company’s common stock, which is quoted on the OTC Bulletin Board. Both the name change and symbol change have been approved by FINRA and became effective as of February 13, 2012.

Asset Purchase Transaction

On February 22, 2012, LY Retail-CA completed an asset purchase of eOpulence, LLC, a New York limited liability Company (“eOpulence”) for an aggregate purchase price consisting of options to purchase 300,000 shares of the common stock of the Company under the Company’s 2012 Stock Option Plan at an exercise price of $0.30 per share. The options were issued to Antonio Lopez, the majority owner of eOpulence. We also entered into a lock-up agreement with Mr. Lopez pursuant to which he agreed not to transfer any of the options, or the common shares received as a result of his exercise of the options, for an eighteen month period following the closing of the transaction.

Increase in Authorized Shares

Effective May 2, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase the total number of authorized shares from one hundred million (100,000,000) shares of which all were common stock, to five hundred fifty million (550,000,000) shares of which five hundred million (500,000,000) shares shall be common stock, par value $0.0001, and fifty million (50,000,000) shares shall be blank check preferred stock, par value $0.0001. The amendment was declared effective as of May 2, 2012.

Our Service

We function as a member-based online marketplace for luxury consumer products. We source from merchants and offer to our members through our website via a “flash sale” or “daily deal” at deep discounts to retail prices. In January 2012, we launched our website www.Luxeyard.com and began operations. We launched with the product line of home goods and furniture. On March 27, 2012, we launched LuxeStyle apparel line. Initially, we focused on household furnishings and goods such as furniture, lighting and bedding. We recently expanded into apparel and accessories. As our member base and merchant selection increase, we expect to expand our offerings to include other consumer goods such as travel, gourmet food and beverages, consumer services events and gift cards. On May 1, 2012, we entered into operating agreements with Jaxon International, LLC (Jaxon) and Home Loft, Inc. to operate its Leather Groups (LG) website. Jaxon is a traditional “bricks and mortar” retail location and LG is a retail web site. On August 6, 2012, we entered into a Management Services Agreement with Ferris Holding Company, Inc., a Delaware corporation, DBA “Bari Leather Furniture” (Bari) to operate its Bari Leather Furniture website. Both Bari and Jaxon Management Services Agreements have been since terminated.

Each week we conduct several “flash sale” events on our website in which we feature merchandise at steep discounts to suggested retail prices. At the beginning of each event, members receive an email describing the featured products and directing them to our website to participate. We list events on the member homepage of our website and each event remains on our site for three to five days, depending on demand and quantity offered.

In addition to flash sales, we also feature a “Daily Deal” whereby we offer a single product on our website for a 24 hour period. Similar to flash sales, our members receive email notifications when deals commence, directing them to the member homepage for more details. Unlike other deal of the day models, members are not required to purchase a minimum number of products before the deal becomes active. In some cases, when our Group Buy feature is active, as more members participate in the deal, the purchase price decreases.

Members purchase products directly through our website via credit card and, in most cases, products ship directly from the merchant’s location to the member.

With our Concierge Buying program, we use a model similar to Facebook and Pinterest to determine what customers want. We then source the most popular products and offer those to the members via a sale that features special notifications and discounts for those who contributed to the process.

In April, we began a Business to Business program through which we source containers of goods and sell them to retailers via our business to business website. The retailers are offered products prior to the arrival of the container shipments and any unsold items from the container shipment are then offered on our website. The Business to Business program is operating under the TradeYard dba and offers flash sales to businesses and daily deals to businesses.

Over the next twelve months, we anticipate expenses of up to $12.4 million, including general, administrative and corporate expenses and we expect revenue of up to $29.3 million and cost of goods sold of $20.8 million. We anticipate that we will need an additional $4 million in financing in the next twelve months to facilitate our growth. We have implemented cost savings measures to reduce our overhead, including reduction in staff and reduction in facilities. We intend to pursue our strategy of acquiring the targeted companies that will increase our revenue and at the same time reduce our cost of obtaining merchandise because we will be able to obtain greater discounts with larger orders. We will also be able to leverage our infrastructure and obtain economies of scale and replicate our technology across the various verticals. Based on the historical results for LG, combined with the expected growth for our web sales, we expect to be able to execute our business plan.

We manage and operate the LeatherGroups web-site.

Additionally, we syndicate sales events and product sales with other flash sale and daily deal websites wherein we provide goods to be sold on their websites.

Distribution

We are distributing our offerings directly to members through email, our website, and social networks.

Email . We send emails containing descriptions of each week’s flash sales and each deal of the day. Members are able to link directly from the email to the deals on our website to learn more and participate.

Websites. Visitors are prompted to register as a member when they first visit our website and thereafter use the website as a portal to view access and participate in our deals.

Social Networks. We publish our deals through various social networks such as Facebook and Twitter. Notifications are tailored to the particular format of each social networking platform.

Marketing

We have increased our visibility, and are continuing to build our brand and source members through a variety of marketing initiatives, including search engine marketing, directory listing, social media marketing, referral programs and affiliate marketing, “pay per click” programs, news and reviews and email campaigns. We launched an extensive marketing campaign in November, 2011.

Search Engine Marketing. We have created an extensive keyword-rich home page and secondary pages to improve search engine rankings. We first initiate an in-depth market analysis from which reveal how the target audience and competitors currently interact online, who the key influencers are, and the ways to connect with our target audience in a transparent non-obtrusive fashion. Then we seek to develop an understanding of how our business model, our target market, our competition, and our specific goals intersect and interact. This critical business intelligence focuses on current and future trends in our industry. During this intelligence gathering we are also able to specifically identify the underlying nature and extent of our business needs, competition, and desired outcome. In addition we can identify any concerns we may have in regards to the types of development necessary for our web site, the effect of the marketing on our brand name, when we can expect results, and also allow us to lay the strategic foundation for our ongoing social media marketing, pay per click and link building campaigns.

Social Media Marketing. An effective social media marketing strategy involves strategic business intelligence gathering and a clear understanding of our industry, competitors and target market. Our social media identity and the venues in which we created an extensive presence are readily identified once we have clearly identified our target market and desired marketing approach. We infiltrate various social media venues including but not limited to: social media sites such as Facebook and Twitter, trade organizations and associated blogs, RSS directories, discussion boards and forums, news/social aggregate sites, mashups, microblogging, online video and photo sharing, podcasting, product sharing, service sharing, public relations and social media releases, social networks, fan clubs, group applications, widgets, events and Wikipedia, where we develop an extensive network of link building, bookmarking and tagging to our online destination. In the future we will also develop and utilize our internal forum so that our members can review our deals on our website.

Link Building and Affiliate Marketing. We believe that one of the hardest parts of web marketing is building link recognition. Obtaining massive numbers of relevant “referral links” has become one of the central focuses of web marketing strategy. The ideal mixture of link building options are selected to craft a customized link plan made for long run return on investment and high ranking results. We use the following methods to obtain more referral links, including directory submission, article submission, social bookmarking, blog and forum review, affiliate / strategic partner links and forum activity.

Pay Per Click Marketing Solution . Pay per click and run of network keyword marketing solutions drive highly interested traffic that provides us with the member base we require. By purchasing the proper keywords and using this marketing solution, we are able to attract the value-added traffic to reach the quality traffic that is actively looking for what we sell at the exact time they are looking to buy. We will utilize both top-tier and long-tail keywords to identify potential traffic sources. We will then create closely related keyword groups and convert keyword groups into advertisement groups. We create landing pages that are relevant to our keywords and advertisement text. This Pay Per Click Marketing Solution is a service we are using, not providing, and we are currently using this service intermittently for marketing efforts.

Directory Listing . We will submit the website to all available (both paid and unpaid) directories in order to increase our presence online, and the number of back-links pointing to our site.

News/Reviews/RSS . We submit internally created and user driven and paid-for news articles, review and RSS feeds to associated websites, blogs and news agencies to increase our audience and increase the number of referral links driving traffic to and increase the rankings of our pages.

Email Campaigns . We will continue to develop and increase our member base through internal member development and member email lists acquisition. These email campaign will also alert existing members of currents events or sales to increase sales from our existing customers.

Press Release. We submit official press releases to appropriate agencies of all developments and milestones reach by us. This will increase our presence online and increase our ranking in search engine positions.

Operations

Our business operations are divided into the following core functions:

Identification of Luxury Deals

Sourcing . We feature or plan to expand to the following types of products for our website:

Volume Discount Items – From time to time, merchants may have overstocked inventory or production lines that have excess capacity and therefore increase production that can be consumed regularly. These products are mostly cataloged, photography ready and have a market based pricing. We seek discounts of 40-60% of regular wholesale prices with a minimum number of units guaranteed by the merchant; and

Discontinued Items – This category primarily targets distributors. Products in this category may include excess inventory, retailer discontinued items and seasonal items. We contact such vendors seeking to dispose of such items on a mass scale; and

Original Equipment Manufacturers (OEM) – We source products with established brands on an OEM basis, with a strong focus on the value proposition and at times exclusive products for our website.

Sourcing Process. The process of sourcing our offerings includes the following:

Vendor Negotiations – Our team of buyers negotiates price reductions to regular wholesale prices based on commitments for product depth. We do not offer products unless merchants are committed to significant price discounts.

Securing Product – Vendors commit to availability of product when a product is featured. We verify and confirm allocation or availability of products before featuring the product in a deal.

Price Comparisons – Our sourcing groups canvas retail and internet suppliers for price comparisons for similar products. We do not offer products unless there is a substantial discount to similar products.

Vendor Agreements – Vendor agreements play a crucial role in our business model. We leverage our group buying power to obtain extremely discounted pricing on luxury items. We obtain agreements with our vendors before featuring the vendor’s products on our website. We do not enter into formal agreements with our vendors. Instead, we intend to source products through individual purchase orders.

The E-Commerce Platform

We post deals on our website, via email and on social network websites. Daily deals are automatically sent to our members, “tweeted” to our Twitter account, and posted to our Facebook page.

Logistics & Shipping

Almost all items sold on our website are shipped directly from vendors to our member customers. We coordinate deliveries through package and “less than truckload” (LTL) delivery companies to achieve savings in rates for our members. Our member care department coordinates and monitors shipments from vendors to member customers. Members are able to track shipments through our website. We also purchase containers of goods directly from manufactures and warehouse and ship these goods ourselves.

Customer Service

We have a dedicated member care group with two primary functions. One is to answer questions about products, procedures and our business philosophy. In addition, our member care group monitors shipments, delivery problems and handles other aspects of post purchase issues that arise. All customer returns are sent directly to suppliers. Member Care and Finance coordinate this process.

Competition

In the past few years, the number of group buying sites has grown rapidly. The markets for the products that we offer are very competitive, are rapidly evolving and have relatively low barriers to entry. In addition to other online retailers, we compete with the physical stores, catalogs and websites of traditional offline retailers. Competition may increase in the future, which could require us to reduce prices, increase advertising expenditures or take other actions that may have an adverse effect on our operating results. We believe that competition in our market is based predominantly on:

price;

brand recognition;

product selection;

product availability;

ease-of-use of website; and

order delivery performance and customer service.

We compete with a variety of group buying websites such as GroupOn.com, Gilte.com, OneKingsLane.com and Woot.com. In addition we compete with multi-category retailers such as Google.com, Amazon.com, Overstock.com and Wal-Mart and specialty retailers or manufacturers. Many of our competitors have greater brand recognition, longer operating histories, larger customer bases and significantly greater financial, marketing and other resources than we do. New technologies and the continued enhancement of existing technologies also may increase competitive pressures on our company.

We compete not only for members, but also for favorable merchant selection and product allocations. Some of our competitors could enter into exclusive distribution arrangements with our merchants and deny us access to their products, devote greater resources to marketing and promotional campaigns and devote substantially more resources to their website and systems development than us. In addition, some merchants whose products are offered on our website may also sell their products directly to end-users.

We believe that we enjoy the following competitive advantages:

Our management team has a proven record of success in launching internet startups and a successful experience in the home furnishings industry. Braden Richter, our President and Chief Executive Officer, has been an entrepreneur for over twenty-five years. We believe his knowledge of design and sales strategy gleaned from previous experience with leading U.S. furniture retailers help us gain success in the luxury group-buying markets and in our negotiations with merchants.

We provide deeper discounts by delivering higher sales volume to merchants, thereby lowering prices for our members. We negotiate merchandise prices based on purchase or closeout volume and opportunity buys. Sourcing is price sensitive and low mark-up margins are strictly enforced, so that members are benefit from low prices on our products.

We position our brand as a luxury website and offer products on an “exclusive” or “limited” basis which we believe makes providers of high-end products more comfortable in featuring their products on our website at reduced prices.

To maximize sales and ensure positive cash flow, we leverage viral digital media marketing avenues with a particular emphasis on the social aspect of group buying.

Strategic Alliance

On April 16, 2012, we announced a strategic alliance with buyinvite, one of Australia's premier members-only private sale sites. Our two companies launched joint sales events featuring each other's respective brands to a collective audience of over two million members. buyinvite is one of Australia's leading flash retail websites with over 1.2 million members throughout Australia and New Zealand. It is the only 100 percent Australian owned and operated shopping club.

For Luxeyard, the partnership represents an international sales channel that extends its distribution to a new, scalable consumer marketplace. Under the agreement, buyinvite operates sales featuring products from Luxeyard, exposing its members to a wide range of U.S. designer apparel, accessories and home furnishings.

Government Regulation

We are subject to a number of laws and regulations that affect companies generally and specifically those conducting business on the internet, many of which are still evolving and could be interpreted in ways that could harm our business. Existing and future laws and regulations may impede our growth. These regulations and laws may cover taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, electronic contracts and other communications, consumer protection, web services, the provision of online payment services, unencumbered internet access to our services, the design and operation of websites, and the characteristics and quality of products and services. It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the internet, e-commerce, digital content and web services. Unfavorable regulations and laws could diminish the demand for our products and services and increase our cost of doing business.

Properties

Our principal executive offices are located in 8884 Venice Blvd., Los Angeles, CA 90034. As of the date of this prospectus, the properties listed below represented our materially important facilities. We believe that our properties are generally suitable to meet our needs for the foreseeable future. However, we continue to seek additional space as needed to satisfy our growth.

Description of Use	Square Footage		Location	Term	Rent/Month
Corporate office facilities		2,000	Marina Del Rey, CA	From September 2011 through September 2012	$	4,800
Warehouse and Office Facilities		5,313	Los Angeles, CA	March 1, 2012 to February 28, 2014	$	9,564
Warehouse and Office Facilities		5,500	Brooklyn , New York	March 15, 2012 to March 13, 2013	$	4,583
Corporate Apartment		980	New York, New York	April 3, 2012 to April 2, 2012	$	2,695

Intellectual Property

We regard the protection of our copyrights, service marks, trademarks, trade secrets and other intellectual property rights as critical to our future success. We rely on various intellectual property laws and contractual restrictions to protect our proprietary rights in products and services. We have acquired and registered our domain names with regulatory bodies in an effort to protect these intellectual property rights. It is our policy to enter into confidentiality and invention assignment agreements with our employees and contractors and nondisclosure agreements with our suppliers and strategic partners in order to limit access to and disclosure of our proprietary information. We cannot assure you that these contractual arrangements or the other steps taken by us to protect our intellectual property will prove sufficient to prevent misappropriation of our technology or to deter independent third-party development of similar technologies.

We do not have any trademarks as of the date of this prospectus.

Employees

As of February 2013, we had 12 full-time employees. From time to time, we may hire additional workers on a contract basis as the need arises.

Legal Proceedings

On May 2, 2012, the Company and Pacific Capital Group, Inc. (“PCG”) executed a Memorandum of Understanding (the “MOU”) that contemplates PCG providing consulting services to the Company in exchange for an option to purchase shares of the Company. In subsequent discussions and email correspondence, the parties have considered various quantities of shares to be subject to purchase by PCG, and the most recent amount under consideration was 2,000,000. In emails between the Company and PCG, both parties have discussed whether “the deal is dead” without an investment from PCG and, to date, the parties have not resolved the number of shares PCG is eligible to purchase. Accordingly, there are outstanding, unresolved disputes between the parties with respect to the MOU related to: (i) whether the MOU constitutes a binding agreement and, if so, (ii) the number of option shares, if any, subject to the MOU, and (iii) the scope of PCG’s consulting services contemplated by the MOU.

On September 24, 2012, the Company received $1,500,000 in connection with the settlement of a lawsuit filed by the Company and Amir Mireskandari, the chairman of the Board of Directors and interim CEO, against certain shareholders of the Company on August 23, 2012 in the US District Court by the Southern District of Texas, Houston Division.

On September 18, 2012, Khaled Alattar filed suit against the Company in the District Court of Harris County, Texas. The Company was joined in the lawsuit by other defendants. The defendants in the action include various persons or entities who plaintiff alleges aided in fraud against the plaintiff. The plaintiff alleges that the defendants unlawfully “pumped” the Company’s stock and then “dumped” the Company’s unrestricted stock. Plaintiff seeks actual damages, exemplary damages, disgorgement of profits, attorney’s fees, and other litigation costs. The Company believes that the case is without merit and intends to defend it vigorously.

On October 12, 2012, Jinsun, LLC filed suit against LuxeYard Chairman and interim Chief Executive Officer, Amir Mireskandari in the 157^th District Court of Harris County, Texas for breach of contract. Jinsun seeks damages for Mr. Mireskandari’s alleged breach of the Company’s Lock-up and Lock-out Agreements. Plaintiff claims loss in value to the Company’s stock and financing ability. On November 12, 2012, Mr. Mireskandari filed an answer to the complaint and counterclaim against Jinsun for breach of contract and attorneys’ fees for a groundless suit.

On October 23, 2012, XL Marketing Corp. filed suit against the Company in the New York State Supreme Court, alleging breach of contract and seeking damages in the amount of $201,000 (including interest and attorneys’ fees) in unpaid invoices. The Company believes that the case is without merit and intends to defend it vigorously.

On November 9, 2012, the Company filed suit in the 127^th District Court of Harris County, Texas against the Company’s former CEO, Braden Richter, his wife, Victoria Richter, and the Richters’ furniture store, Jaxon International, LLC. This proceeding stemmed from Mr. Richter’s alleged conspiracy with defendants in a prior suit during the parties’ settlement negotiations in Texas, and breach of fiduciary duties in his handling of the Jaxon related-party transaction during his time as CEO of the Company. The complaint also alleges conspiracy between the defendants. The Company seeks damages in an amount exceeding $500,000.

On November 13, 2012, LY Retail, LLC (California), the Company’s wholly-owned subsidiary, filed suit in Los Angeles Superior Court against Ferris Holding Co. dba Bari Leather Furniture (“Bari”), Lou Ferris, Tom Tilaro, Braden Richter, Victoria Richter, Jaxon International, LLC, Bryan Semmens, First Data Merchant Services Corp., and Banc of America Merchant Services, LLC for breach of contract, fraud, conspiracy, among other claims. This case stems from a breach of the management services agreement between the Company and Bari, and other defendants’ conspiracy to convert Company funds. The Company seeks damages in an amount exceeding $600,000.

On December 18, 2012, the Company and LY Retail, LLC (California), the Company’s wholly-owned subsidiary, filed suit in Los Angeles Superior Court against Braden Richter, Victoria Richter, and Jaxon International, LLC (“Jaxon”) for fraud, conspiracy, breach of contract, breach of fiduciary duty, among other claims. The case stems from Jaxon’s breach of the management services agreement between the Company and Jaxon, and our former CEO, Braden Richter and the other defendants’ fraud and breach of fiduciary duties stemming from this related-party transaction.

On December 27, 2012, an Involuntary Petition for bankruptcy, entitled In re Luxeyard, Inc. (Case No. 12-bk-51986-BR), was filed against the Company by three creditors of the Company. The petition was filed in the United States Bankruptcy Court, Central District of California. The date that jurisdiction was assumed was December 27, 2012. The Petitioners have claimed that they have debts totaling $66,220.

The Company believes that the Petitioners’ claims are without merit, fraudulent and unsubstantiated, brought in bad faith by friends and business associates of our previous CEO, Mr. Braden Richter, who was terminated for cause. The Company intends to aggressively contest the involuntary bankruptcy petition and will pursue all available grounds for dismissal.

The Company had filed suit against Defendant Kevan Casey and his associates for manipulation of the Company’s stock price. The Company has strong evidence showing that some of these defendants were working and continue to work with Mr. Richter. Mr. Richter was terminated for cause on October 23, 2012 stemming from this conspiracy and other violations of his duties as CEO. Subsequently, the Board of Director’s investigation revealed that Mr. Richter had filed a personal Chapter 7 bankruptcy petition in 2006 and received a discharge of more than $80 million in debt in 2007. The investigation also revealed that Mr. Richter conspired with his wife, Victoria Richter, to defraud the Company. Mr. and Mrs. Richter, through their company, Jaxon International, LLC, received a $308,000 loan from the Company and refused to pay it back. The Company then filed suit against Mr. and Mrs. Richter on December 18, 2012 for fraud, breach of fiduciary duty, conspiracy, and conversion, among other causes of action, in Los Angeles Superior Court (case no. BC497730).

The involuntary petition was filed against the Company by a business associate of Mr. Richter, Mr. Philip Ison of Ison Furniture, LLC, who has falsified a $16,000 claim against the Company, and has included another of his associated companies, based overseas, which has no colorable claim against the Company. Mr. Richter and Mr. Ison engineered this petition despite Mr. Ison’s withholding from LuxeYard over $100,000 worth of the Company’s inventory which currently remains in his possession and that he is refusing to release.

The Company strongly believes this is an attempt by Mr. Richter, who has stated that he has a business affiliation with Mr. Casey and Mr. Ison, to harm the Company. LuxeYard has pending litigation against the aforementioned parties and is confident that it will prevail against these fraudulent attempts to ruin LuxeYard before its legitimate claims against Mr. Richter and related parties can be brought to light.

MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock trades on the OTCQB under the symbol LUXR. Our common stock had been quoted on the OTC Bulletin Board since March 2, 2011. From March 2, 2011 until February 11, 2012, we traded under the symbol TGRE. Effective February 13, 2012, our symbol changed to LUXR based on the forward split and name change. The following table sets forth the range of high and low bid quotations for the applicable period. These quotations as reported by the OTC Bulletin Board reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

	Bid Quotation
Financial Quarter Ended	High ($)		Low ($)
December 31, 2012	$	0.16	$	0.02
September 30, 2012	$	0.47	$	0.10
June 30, 2012	$	2.32	$	0.33
March 31, 2012	$	0.90	$	0.47
December 31, 2011		N/A		N/A
September 30, 2011		N/A		N/A
June 30, 2011		N/A		N/A
March 31, 2011 (since March 2, 2011)		N/A		N/A

Holders

At January 24, 2013, there were 81,059,895 shares of our common stock outstanding, and our shares of common stock were held by approximately 92 stockholders of record. At January 24, 2013, there were 8,904,287 shares of our 8% preferred stock outstanding, and our shares of 8% preferred stock were held by 19 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

Dividends

We have never declared or paid a cash dividend. Any future decisions regarding dividends are made by our Board of Directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our Board of Directors has complete discretion on whether to pay dividends. Even if our Board of Directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant.

Each holder of our 8% preferred stock, in preference and priority to the holders of all other classes of stock, shall be entitled to receive, with respect to each share of 8% preferred stock, dividends, commencing from the date of issuance of such share of 8% preferred stock, at the rate of eight percent (8%) per annum. The 8% preferred stock dividends are cumulative, whether or not earned or declared, and are to be paid by us quarterly in arrears on the first business day of January, April, July and October in each year. The 8% preferred stock dividends are to be paid to each holder of 8% preferred stock in cash out of legally available funds. The 8% preferred stock dividends may also be paid in shares of common stock under certain circumstances.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes our plan-based awards as of September 30, 2012.

Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders		10,782,167	$	0.22		2,222,833
Equity compensation plans not approved by security holders:		-		-		-
Total		10,782,167	$	0.22		2,222,833

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition for the fiscal years ended December 31, 2011 and 2010, as well as for the nine month period ended September 30, 2012, and should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this Registration Statement.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Registration Statement. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

We function as an online marketplace for luxury consumer products. We source from merchants and offer products to our members through our website via a “flash sale” or “daily deal” at deep discounts to retail prices. In January 2012, we launched our website www.LuxeYard.com and began operations. We launched with the product line of home goods and furniture. On March 27, 2012, we launched our LuxeStyle vertical, consisting of apparel lines. Initially, we focused on household furnishings and goods such as furniture, lighting and bedding. As our member base and merchant selection increase, we expect to expand our offerings to include other consumer goods such as travel, gourmet food and beverages, consumer services events and gift cards. On May 1, 2012, we entered into operating agreements with Jaxon International, LLC (Jaxon) and Home Loft, Inc. to operate its Leather Groups (LG) website. Jaxon is a traditional “brick and mortar” retail location and LG is a retail web site. Subsequent to September 30, 2012, the operating agreement with Jaxon was terminated. On August 6, 2012, we entered into a Management Services Agreement with Ferris Holding Company, Inc., a Delaware corporation, DBA “Bari Leather Furniture” (Bari) to operate its Bari Leather Furniture website. Effective September 27, 2012, the operating agreement with Ferris Holding Company, Inc. was also terminated.

Each week we conduct several “flash sale” events on our website in which we feature merchandise at steep discounts to suggested retail prices. At the beginning of each event, members receive an email describing the featured products and directing them to our website to participate. We list events on the member homepage of our website and each event remains on our site for three days or longer, depending on demand and quantity offered. We also offer products in “static” events, which are available for sale until our inventory is depleted.

In addition to flash sales, we also feature a “Daily Deal” whereby we offer a single product on our website for a 24 hour period. Similar to flash sales, our members receive email notifications when deals commence, directing them to the member homepage for more details. Unlike other deal of the day models, members are not required to purchase a minimum number of products before the deal becomes active. In some cases, when our Group Buy feature is active, as more members participate in the deal, the purchase price decreases.

Members purchase products directly through our website via credit card and, in most cases, products ship directly from the merchant’s location to the member.

With our Concierge Buying program, we use a platform similar to Facebook and Pinterest to determine what items are in high demand by our customers. We then source the most popular products and offer those items to or members via a sale that features special notifications and discounts for those who contributed to the process.

In April, we began a business-to-business program through which we source containers of goods and sell them to retailers via our business-to-business website [TradeYardUSA.com]. The retailers are offered products prior to the arrival of the container shipments and any unsold items from the container shipment are then offered on our website. The business-to-business program is operating under the TradeYard dba and offers flash sales to businesses and daily deals to businesses.

We manage the LeatherGroups web-site [LeatherGroups.com]. We also have syndicate sales events and product sales with other flash sale and daily deal websites wherein we provide goods to be sold on their websites.

Recent Developments

Financing

We raised approximately $1,080,000 in gross proceeds in 2011 from two separate offerings. In addition, Bridge Notes in the principal amount of approximately $217,500 were exchanged for units in the offering and $62,500 in Bridge Notes was paid out of the proceeds of the offering.

In 2012, we have raised approximately $2,915,000 in debentures and raised $3,116,500 from securities units offering (the “offering”). This amount includes Bridge Notes in the amounts of $225,000 exchanged for units in the offering. Gross proceeds from the offering were $2,891,500. Accordingly, we had $5,806,500 in actual gross proceeds from the debentures and offering after deducting the principal amount of Bridge Notes exchanged at the closing of the offering, but before deducting any expenses incurred by the Company in connection with the offering.

Debentures

During the period from January to April 2012, we entered into certain Debenture Purchase Agreements (the “Purchase Agreement”) with certain investors (the “Holder” or “Holders”) whereby we issued and sold to the Holders certain 10% Convertible Debentures which are convertible into shares of our common stock (collectively, the “Notes”), $0.0001 par value per share (the “Shares”), at a conversion price of $0.30 per share, subject to adjustment. The aggregate original principal amount of all Notes is $2,915,000. Based on the aggregate original principal amount sold by the Company, the minimum Shares we may be required to issue is 9,716,667.

Securities

On May 24, 2012, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with several investors whereby the Company sold units consisting of (i) 8,904,287 shares of its 8% Convertible Preferred Stock common stock (the “Shares”), (ii) Series C warrants to purchase 8,904,287 shares of its common stock which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment (the “Series C Warrants”), (iii) Series D warrants to purchase 4,452,144 shares of common stock which have a 90 day term from the effectiveness of the Form S-1 filed with the SEC on June 18, 2012 and an initial per share exercise price of $0.35, subject to adjustment (the “Series D Warrants”), and (iv) 4,452,143 Series E warrants which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment and exercise of the Series D Warrants (the “Series E Warrants”). The price per unit was $0.35 for an aggregate purchase price of $3,116,500.

Increase in Authorized Shares

Effective May 2, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase the total number of authorized shares to five hundred fifty million (550,000,000) shares of which five hundred million (500,000,000) shares shall be common stock, par value $0.0001, and fifty million (50,000,000) shares shall be blank check preferred stock, par value $0.0001. The Amendment was declared effective as of May 2, 2012.

Operating Agreements

On May 1, 2012, the Company entered into an operating agreement with Jaxon International, LLC, a California Limited Liability Company (“Jaxon”). Jaxon is owned by the wife of the Company’s CEO and Director. Subsequent to September 30, 2012, the operating agreement with Jaxon was terminated.

On May 1, 2012, the Company entered into an operating agreement with HomeLoft, Inc. to operate its LeatherGroups (LG) web site. HomeLoft is owned by the Company’s Chief Operating Officer.

On August 6, 2012 the Company entered a Management Services Agreement with Ferris Holding Company, Inc., a Delaware corporation, DBA “Bari Leather Furniture” (Bari) to operate its Bari Leather Furniture website. Effective September 27, 2012, the operating agreement with Ferris Holding Company, Inc. was terminated.

Our Business

We have successfully launched our web site and our home furnishings and apparel divisions. Additionally, we have experienced growth in membership, which were 732,149 on November 15, 2012. We are focused on strengthening our relationships with vendors/suppliers and forming strategic alliances with other web-based merchants who act as distribution partners. During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations::

Continue scaling our marketing campaign to attract a high volume of quality members to our website. Marketing initiatives consist of search engine optimization, social media marketing, referral and affiliate marketing programs, pay-per-click search and display advertising and public relations;

Expand upon our member relations and communication activities, with email retention and activation campaigns, additional editorial content and Celebrity Trendsetter involvement that will increase our site traffic and build our brand;

Continue to improve upon the ability for our website to deliver a high-quality consumer ecommerce experience, the hallmark of which is access to luxury products at affordable prices for our members;

Identify and partner with more merchants whose products we want to feature on our website. We believe featuring a variety of merchants makes our marketplace more attractive to members;

Expand our product offering to include additional vertical market segments, which may include travel, gourmet food and beverages, consumer services, events and gift cards;

·	Establish new domestic and international syndication partnerships with companies whose existing customer base can extend the distribution of our products;

Build on the momentum of our Concierge Buying and Group Buy features, which currently differentiate us and we believe hold tremendous value as consumers increasingly leverage their collective buying power to identify, share and pay for products at the intersection of social, mobile and ecommerce technologies;

	·	Expand our business-to-business operation into a key market differentiator and one that will scale on the basis of our ability to source products for thousands of smaller vendors and
		Expand our buying power with the addition of like-kind website alliances through operating agreements and/or acquisitions.

As two of the operational agreements we entered into were terminated, our revenue decreased and our projected growth has declined. Over the next twelve months, we expect to grow steadily while improving profitability. We anticipate that we will need additional financing in the next twelve months to improve operations and facilitate our growth. We have implemented cost savings measures to reduce our overhead, including reduction in staff and reduction in facilities. We intend to pursue our strategy of establishing alliances through operating agreements and/or acquisitions with the targeted companies that will increase our revenue and at the same time reduce our cost of obtaining merchandise because we will be able to obtain greater discounts with larger orders. We will also be able to leverage our infrastructure and obtain economies of scale and replicate our technology across the various verticals.

Results of Operations

Results of Operations for the Nine Month Ended September 30, 2012

For the nine months ended September 30, 2012, we had revenues of $1,435,433 compared to revenue of $0 for the period from inception to September 30, 2011. For the three month period ended September, 30, 2012 our revenue was $574,381 representing a 19% quarter-to-quarter decrease. The decrease is mainly brought about by the termination of our operating agreements with Jaxon and Ferris Holding Company and our decreased sales from our website in the third quarter. Our net profit for the nine months ended September 30, 2012 was $6,020,384 and for the three month period ended September 30, 2012 was $3,402,370 compared to a $47,544 loss for the period from inception to September 30, 2011. The income was primarily from a gain on our complex derivatives of $19,361,166 for the nine month period ended September 30, 2012 and a gain of $5,862,241 for the three month period ended September 30, 2012. These gains were triggered by a drop in the market value of our common shares. Operating loss for the nine month period ended September 30, 2012 was $13,289,725 and for the three month period ended September 30, 2012 was $3,613,370. A contributing factor to this loss was the fair market value of the 343,894 restricted shares issued for services provided by our CEO and various vendors in the amount of $98,049 and 5,752,072 restricted shares valuing $5,867,967 for the three and nine months ended September 30, 2012, respectively. Our other significant expenses were payroll of $1 Million for the three month and $2.3 Million for the nine month periods ended September 30, 2012 and marketing of $141,000 for the three month and $717,055 for nine month periods ended September 30, 2012. As of September 30, 2012, we had total current assets of $802,922 and total current liabilities of $5,710,245 compared to total current assets of $326,842 and total current liabilities of $390,091 at December 31, 2011.

The Company recognized revenue and cost of goods sold for operating the Jaxon retail store. The Company paid a monthly overhead allocation of $45,000 to cover Jason’s fixed operating expenses. During the nine months ended September 30, 2012, the Company recorded $457,968 of sales and $236,944 of cost of goods sold for the Jaxon store. An overhead allocation of $180,000 was paid to Jaxon during the period.

The Company paid a $50,000 non-refundable deposit to HomeLoft. For operating the HomeLoft’s Leathergroups.com website, the Company receives all of the revenue for products that it sells and recognizes the costs of goods sold. During the nine months ended September 30, 2012, the Company recorded $172,067 of sales and $47,720 of cost of goods sold for Leathergroups.

Results of Operations for the Year Ended December 31, 2011

We have conducted minimal operations during the fiscal year ended December 31, 2011 and we have generated revenues of $2,038 during this period. We had net losses of $1,038,447 for fiscal 2011. Our auditor has expressed doubt as to whether we are able to continue to operate as going concern due to the fact that we have had limited revenues since inception and will need to raise capital to further our operations.

Liquidity and Capital Resources

As of September 30, 2012 we had cash of $448,474 compared to cash of $154,400, on December 31, 2011. Our primary uses of cash were for marketing expenses, employee compensation, and working capital. The main sources of cash were from the proceeds from the private offering of its securities, from the issuances of debt in the form of debentures and from the settlement of a lawsuit filed by the Company and Amir Mireskandari, the chairman of the Board of Directors (Mireskandari v. Gann), against certain shareholders of the Company. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

An increase in working capital requirements,

Our plans to acquire additional web-sites and compatible businesses

Infrastructure Improvements

Addition of administrative and sales personnel as the business grows,

Increases in advertising, public relations and sales promotions as we commence operations,

Development of new members and market initiation, and

The cost of being a public company and the continued increase in costs due to governmental compliance activities.

The following summarizes the key components of the Company’s cash flows for the nine months 2012 and for fiscal 2011:

	Nine Months Ended September 30, 2012			For the Period from April 20 (Inception) to September 30, 2011
Cash flows used in operating activities	$	(5,311,048	)	$	(34,933	)
Cash flows used in investing activities		(362,603	)		(1,774	)
Cash flows from financing activities		5,967,725			120,000

Net increase in cash and cash equivalents	$	294,074		$	83,293

We plan to fund our activities during the fiscal 2012 and beyond through the sale of debt or equity securities or bank financing. We are subject to certain restrictions under the terms of the private placements that closed in 2011 and 2012 which could affect our ability to obtain additional financing. We cannot be certain that such funding will be available on acceptable terms or available at all. To the extent that we raise additional funds by issuing debt or equity securities or through bank financing, our stockholders may experience significant dilution. If we are unable to raise funds when required or on acceptable terms, we may have to significantly scale back, or discontinue, our operations.

Going Concern

Our financial statements have been prepared on a going concern basis. As of September 30, 2012, we have generated minimal revenues since inception. We expect to finance our operations primarily through our existing cash, our operations and any future financing. However, there exists substantial doubt about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore, there is substantial doubt as to our ability to continue as a going concern. Our ability to complete additional offerings is dependent on the state of the debt and/or equity markets at the time of any proposed offering, and such market’s reception of the Company and the offering terms. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable.

Our business is capital intensive. Our ability to grow is dependent upon favorably obtaining outside capital and generating cash flows from operating activities necessary to fund our investment activities. There is no assurance that we will be able to achieve profitability. Since our future operations will continue to be dependent on successful execution of our business plan and our acquisition activities and our ability to seek and secure capital from external sources, should we be unable to achieve sustainable profitability this could cause any equity investment in the Company to decline in value.

Major sources of funds in the past for us have included the debt or equity markets. While we have achieved a significant increase in our Gross Margin from the flash web site and from our Management Services Agreements, we do not have positive cash flow. We will have to rely on these capital markets to fund future operations and growth. Our business model is focused on acquiring LeatherGroups and other verticals as well as retail sales from our web-site and wholesale sales generated by TradeYard. Our ability to generate future revenues and operating cash flow will depend on successful retail and wholesale sales and the ability to execute our business plan, which will require us to continue to raise equity or debt capital from outside sources.

The Company has ongoing capital commitments to acquire LeatherGroups subject to their underlying terms. Subject to the Company’s due diligence investigation of LG and its online business and subject to the parties’ negotiations and execution of a definitive agreement, the Company has capital commitments to acquire LG for $250,000 cash to be paid over four months, and 350,000 options to purchase shares of LuxeYard common stock and the amount of options equal to the quotient of $122,500 divided by the difference between the average closing market stock price of LuxeYard, Inc. common shares during the five trading days immediately prior to the transaction closing, and $0.35. Failure to meet such ongoing commitments may result in the loss of the ability to make this acquisition. This ongoing commitment may also cause us to seek additional capital from sources outside of the Company. The current uncertainty in the credit and capital markets, and the economic downturn, may restrict our ability to obtain needed capital.

In the current fiscal year, we continue to seek additional financing for our planned development and growth activities. We obtain financing through various methods, including issuing debt securities, equity securities, bank debt, or combinations of these instruments which could result in dilution to existing security holders and increased debt and leverage. No assurance can be given that we will be able to obtain funding under any loan commitments or any additional financing on favorable terms, if at all.

Critical Accounting Estimates

Use of Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of September 30, 2012 and December 31, 2011, and expenses for the nine and three months ended September 30, 2012 and the period from inception to September 30, 2011. Actual results could differ from those estimates made by management.

Revenue Recognition

Most of our vendor relationships follow a traditional retail model and only do revenue sharing in a small segment of apparel sales. We recognize revenue from product sales when the following four criteria are met: pervasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

We provide all customer care and support for the merchandise sold on our website and we are not acting as agents for the vendors. Our members have a relationship only with us and we are responsible for fulfillment and customer satisfaction. We have traditional merchant-vendor relationships with our vendors and are not acting as their agent.

Product sales represent revenue from the sale of products and related shipping fees where we are the seller of record. Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier.

We record and report revenue on the gross amount billed to customers when the following indicators are met:

· we are the primary obligor in the transaction

· we are subject to inventory risk and credit risk for amount billed to the customer

· we have latitude in establishing prices and selecting suppliers

If we have a revenue sharing arrangement with a vendor, that sale is recorded net of the vendors share.

Deferred Revenue

Deferred revenue represents all payments received from customers in excess of revenue earned based on money received for products that have not shipped.

Refunds

At the end of the accounting period, we record an allowance for estimated customer refunds. We accrue costs associated with refunds in accrued expenses on the consolidated balance sheets. The cost of refunds where the amount payable to the merchant is recoverable is recorded in the consolidated statements of operations as a reduction to revenue.

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out (“FIFO”) method, and are valued at the lower of cost or market value. This valuation requires us to make judgments, based on currently-available information about likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category

Income Taxes

We are subject to income taxes in the U.S. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rate could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in foreign currency exchange rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations.

We are subject to audit in various jurisdictions, and such jurisdictions may assess additional income tax against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits and any related litigation could be materially different from historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our operating results or cash flows in the period or periods for which that determination is made.

We account for income taxes using the liability method, under which deferred income tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized.

Stock Options

We use the Black-Scholes-Merton option-pricing model to determine the fair value of stock options. The determination of the grant date fair value of options using an option-pricing model is affected by our estimated common stock fair value as well as assumptions regarding a number of other complex and subjective variables. These variables include the fair value of our common stock, our expected stock price volatility over the expected term of the options, stock option exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows:

Fair Value of Our Common Stock. Prior to our reverse merger in November 2011 and subsequent stock split in February 2012, our stock had been publicly traded but with the business model of the predecessor company, Top Gear, Inc. Accordingly, until we began operations as Luxeyard, Inc. We estimated the fair value of common stock as discussed in "Common Stock Valuations" below.

Expected Term. The expected term represents the period of time the stock options are expected to be outstanding and is based on the "simplified method" allowed under SEC guidance. We used the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options.

Volatility. Because prior to our reverse merger in November 2011 and subsequent stock split in February 2012, our stock had been publicly traded but with the business model of the predecessor company, Top Gear, Inc., the expected stock price volatility was estimated by taking the average historic price volatility for publicly-traded options of comparable industry peers similar in size, stage of life cycle and financial leverage, based on daily price observations over a period equivalent to the expected term of the stock option grants. We did not rely on implied volatilities of traded options in our industry peers' common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

Risk-free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.

Dividend Yield. We do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes-Merton model changes significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously.

Common Stock Valuation

The fair value of the common stock underlying our stock options was determined by our board of directors, or the Board, which intended that all options granted were exercisable at a price per share not less than the per share fair value of our common stock underlying those options on the date of grant. The assumptions we use in the valuation model are based on future expectations combined with management judgment. In the absence of a public trading market prior to our initial public offering in November 2011, the Board, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each option grant, including the following factors:

•

the prices, rights, preferences and privileges of our preferred stock relative to the common stock;

•

the prices of our preferred stock sold to outside investors in arms-length transactions;

•

our operating and financial performance;

•

current business conditions and projections;

•

the hiring of key personnel;

•

the history of our company and the introduction of new products and services;

•

our stage of development;

•

the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions;

•

any adjustment necessary to recognize a lack of marketability for our common stock;

•

the market performance of comparable publicly-traded companies; and

•

the U.S. and global capital market conditions.

Derivative and Fair Value

Fair Value of Financial Instruments

Financial instruments are recorded at fair value in accordance with the standard for “Fair Value Measurements codified within ASC 820.” Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 -Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 -Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

The Company has derivative instruments, in the form of warrants and embedded conversion options, that are measured at fair value on a recurring basis using Level 3 inputs.

Other Estimates

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts receivable – related party, accounts payable and accrued expenses, and convertible debentures approximate their fair market value based on the short-term maturity of these instruments.

Cash and Cash Equivalents

We consider cash on hand and demand deposits with original maturities of three months or less as cash and cash equivalents for the purpose of the statement of cash flows.

Share-Based Payments

The Company accounts for share-based awards to employees in accordance with FASB ASC 718 “Stock Compensation”. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period). The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model.

Share-based awards to non-employees are accounted for in accordance with ASC 505-50, wherein such awards are expensed over the period in which the related services are rendered at their fair value.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Management Consideration of Alternative Business Strategies

In order to continue to protect and increase shareholder value management believes that it may, from time to time, consider alternative management strategies to create value for the company or additional revenues. Strategies to be reviewed may include acquisitions; roll-ups; strategic alliances; joint ventures on large projects; and/or mergers.

Management will only consider these options where it believes the result would be to increase shareholder value while continuing the viability of the company.

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers are listed below. The number of directors is determined by our board of directors. All directors hold office until the next annual meeting of the board or until their successors have been duly elected and qualified. Officers are elected by the board of directors and their terms of office are, except to the extent governed by employment contract, at the discretion of the board of directors.

Directors and Executive Officers

On November 8, 2011, in connection with the closing of the Securities Exchange, Shalom and Bergman resigned from our Board of Directors and as officers of the Company. Also effective upon the closing of the Securities Exchange, Amir Mireskandari and Braden Richter were appointed to our Board of Directors to fill the vacancies created by the resignations of Shalom and Bergman. In addition, our Board of Directors appointed Mr. Richter to serve as our President and Chief Executive Officer, Mr. Walker as our Chief Financial Officer, Chief Operating Officer and Secretary, Jerry Wilkerson as our Chief Technology and Information Officer and Joshua Thompson as our Chief Marketing Officer, all effective immediately upon the closing of the Securities Exchange.

On December 20, 2011, the Company and Mr. Kevin Walker mutually agreed upon the termination of Mr. Walker’s employment as Chief Financial Officer, Chief Operating Officer and Secretary of the Company. The Board of Directors of the Company approved the termination on February 8, 2012. There was no disagreement between Mr. Walker and the Company on any matter relating to the Company’s operations, policies or practices that resulted in his termination as the Chief Financial Officer, Chief Operating Officer and Secretary of the Company.

On February 8, 2012, the Board appointed Margot Ritcher as the Chief Financial Officer and Secretary and Steve Beauregard as the Chief Operating Officer of the Company effective January 9, 2012 and December 1, 2011, respectively.

On March 12, 2012, the Board appointed Jack Guerrero as Investment Relations Officer. Mr. Guerrero resigned in July 2012.

On August 22, 2012 Steve Beauregard resigned as our Chief Operating Officer.

On August 24, 2012, the Company appointed Jerry Wilkerson as the Company’s Chief Operating Officer.

Effective September 7, 2012, Margot Ritcher resigned as Chief financial Officer and Secretary of the Company. Commencing September 7, 2012, Bryan Semmens acted as the Company’s new principal financial officer. Mr. Semmens resigned on October 3, 2012.

Effective October 3, 2012, Jerry Wilkerson was appointed interim Chief Financial Officer.

On October 8, 2012, our Board of Directors elected Ashu Ladha and Guy Elhanany as directors of the Company. Ashu Ladha and Guy Elhanany were each elected to serve on the Board of Directors as an “independent director” as defined by Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock Market, Inc. (the “Nasdaq Marketplace Rules”).

Effective October 23, 2012, Braden Richter was terminated for cause as our Chief Executive Officer and resigned as Company’s director and Amir Mireskandari stepped in as interim Chief Executive Officer until a replacement can be found.

The following sets forth information about our directors and executive officers as of the date of this prospectus:

Name	Age	Position	Since
Amir Mireskandari	42	Chairman and Interim Chief Executive Officer	November 2011 and October 2012
Jerry Wilkerson	40	Chief Technology Officer, Chief Operating Officer, and Interim Chief Financial Officer	November 2011, August 2012, and October 2012
Joshua Thompson	34	Chief Marketing Officer	November 2011
Ashu Ladha	54	Director	October 2012
Guy Elhanany	42	Director	October 2012

Amir Mireskandari was appointed as Chairman of our Board of Directors on November 8, 2011 and became Interim Chief Executive Officer on October 23, 2012. Mr. Mireskandari founded Miresco Investment Services in 1999 and currently serves as its President and Chief Executive Officer. Miresco focuses on sales and distribution of home furnishings, distressed asset and distressed retail operations. Mr. Mireskandari also serves as Chief Executive Officer of Retail Management Partners, a company formed in 2010 for the purpose of operating the concessions of the high-end home furnishings, accessories, rugs, and art departments of The Great Indoors, a division of Sears. Mr. Mireskandari is also a member of the Board of Directors of The Lugano Group Incorporated, a FINRA broker-dealer that concentrates on frontier markets, which he co-founded in 1995. The Lugano Group offers securities brokerage, financial advisory, and investment promotion services to global institutions. Mr. Mireskandari also co serves as Chairman of the Board of Directors of Glenmont Ventures, a boutique private equity firm he co-founded 2009. Mr. Mireskandari holds the FINRA General Securities Representative (Series 7) and Principal (Series 24), Financial and Operations Principal (Series 28), and Uniform Securities Agent (Series 63) licenses. He earned his BBA and MBA in International Business from George Washington University. He completed postgraduate studies in Management at Harvard Business School. We believe Mr. Mireskandari’s extensive experience in the luxury home furnishings industry and his capital markets knowledge will enable him to provide valuable insight as we seek to implement our business plan and raise capital to fund our operations.

Jerry Wilkerson was appointed Chief Operating Officer on August 24, 2012 and interim Chief Financial Officer on October 3, 2012. Prior to these positions, Mr. Wilkerson was our Chief Technology and Information Officer, since November 8, 2011. Mr. Wilkerson has also served as Chief Technical & Information Officer of our subsidiary, LY Retail-California, since September 2011. Since 2002, he has also owned his own retail ecommerce business. This business is a retail business that sells furniture under various brand names through Internet websites. Mr. Wilkerson brings us a wealth of knowledge and experiences in the web development and information technology sector and has more than ten years experience in retail technology. Throughout his career, Mr. Wilkerson has been involved in various technology position and retail management along with familiarity with several ecommerce platforms. Mr. Wilkerson has extensive Microsoft training along with in depth information technology training. He has over twenty years’ experience in programming, focusing on web design, since 1999.

Joshua Thompson was appointed Chief Marketing Officer of the Company on November 8, 2011. Mr. Thompson has served as chief marketing officer of our subsidiary, LY Retail-California, from September 2011 until its merger with Top Gear. He spent most of his early career in brand development and marketing at Legal Match from May 2001 through 2011. Mr. Thompson has extensive experience in brand development and marketing campaigns. He graduated from Humboldt State University with a Bachelor of Science degree in Business Administration in 2000.

Ashu Ladha was elected as a member of our board of directors on October 8, 2012. He also serves as a member of the Audit Committee. Mr. Ladha conceptualized and organized one of the most innovative home textiles businesses. He worked actively with KingFisher (UK) to establish its India office, global supply chain organizations and social responsibility programs. He has served as senior partner in ITI South Africa since 2000, as well as partner in a strategy and consulting company, a board member in a few home furnishing companies and Architectural firm, and has an advisory position with investment funds.

Guy Elhanany was elected as a member of our board of directors on October 8, 2012. He also serves as a member of the Audit Committee. Since 1995, Mr. Elhanany has served as the president of Ameri Builders, a general contractor that specializes in residential new construction, custom hills side residential building, and industrial work, besides building custom project for clients. Ameri Builders has engaged in the development of residential custom homes in the Los Angeles area since 1997.

Family Relationships

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

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our current directors or executive officers, except where indicated has, during the past ten years:

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time, except Director Ashu Ladha who filed a voluntary petition for Chapter 7 bankruptcy on October 5, 2010 and received a discharge in June 27, 2011;

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Code of Ethics

The former members of our Board of Directors adopted a Code of Ethics applicable to our principal executive, financial and accounting officers on January 13, 2011. Although our newly appointed executive officers are subject to this Code of Ethics, the newly appointed members of our Board of Directors intend to adopt of new Code of Ethics. However, no formal steps have been taken by the Board of Directors in this regard.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information regarding each element of compensation that paid or awarded to the named executive officers for the years ended December 31, 2011 and December 31, 2012.

Name and Principal Position	Year		Salary($)		Bonus		All Other Compensation ($)		Total ($)
Braden Richter		2011	$	69,230	$	0	$	0	$	69,230
Former President and Chief Executive Officer		2012	$	230,750	$	0	$	0	$	230,750

Steve Beauregard		2011	$	5,770	$	0	$	0	$	5,770
Former Chief Operating Officer		2012	$	111,708	$	0	$	0	$	111,708

Jerry Wilkerson		2011	$	37,500	$	0	$	0	$	37,500
Chief Operating Officer, Chief Technology and Information Officer, and Interim Chief Financial Officer		2012	$	138,177	$	0	$	0	$	138,177

Joshua Thompson		2011	$	31,250	$	0	$	0	$	31,250
Chief Marketing Officer		2012	$	123,068	$	0	$	0	$	123,068

Omri Amos Shalom		2011	$	0	$	0	$	0	$	0
Former Chief Executive Officer, Chief Financial
Officer and Director

Akiva Bergman		2011	$	0	$	0	$	0	$	0
Former Secretary and Director

Kevin Walker		2011	$	40,000	$	0	$	0	$	40,000
Former Chief Financial Officer, Chief Operating Officer and Secretary

Amir Mireskandari
Interim Chief Executive Officer		2012	$	0	$	0	$	0	$	0

Employment Agreements

On November 8, 2011, we entered into an employment agreement with LY Retail-CA, and Braden Richter, as our President and Chief Executive Officer, effective November 23, 2011, for a period of five years until November 22, 2016. We agreed to pay a base salary of $300,000 per annum during the term with an annual cumulative increase of not less than 4% and bonus under certain conditions. Pursuant to the agreement, Mr. Richter was also granted an option to purchase 1,950,000 shares of our common stock under the stock option plan. On October 23, 2012, the Board of Directors terminated Mr. Braden Richter’s employment as Chief Executive Officer effective immediately.

On November 8, 2011, we entered into an employment agreement with LY Retail-CA and Steve Beauregard, as our Chief Operating Officer, effective December 1, 2011, for a period of three years until November 30, 2014. We agreed to pay a base salary of $175,000 per annum, provided that, if the Company meets its fiscal goals for the previous year, Mr. Beauregard shall be paid the sum of $200,000 for the second year of the term and $250,000 for the third year of the term. Mr. Beauregard will be also designated as a participant in the bonus plan of $300,000 which will be shared amongst the participants. Pursuant to the agreement, Mr. Beauregard was also granted an option to purchase 1,950,000 shares of our common stock under the stock option plan. On August 22, 2012, we and Mr. Steve Beauregard mutually agreed upon the termination of Mr. Beauregard’s employment as Chief Operating Officer effective retroactively to August 17, 2012. The Board of Directors of the Company approved the termination on August 22, 2012. Such employment agreement was terminated immediately.

On November 8, 2011, we entered into an employment agreement with LY Retail-CA and Jerry Wilkerson, as our Chief Technology Officer, effective December 1, 2011, for a period of three years until November 30, 2014. We agreed to pay a base salary of $150,000 per annum, provided that, if the Company meets its fiscal goals for the previous year, Mr. Wilkerson shall be paid the sum of $200,000 for the second year of the term. For each year thereafter, the Board shall review such base salary and shall provide a minimum of 4% annual increase in its discretion. Mr. Wilkerson will be also designated as a participant in the bonus plan of $300,000 which will be shared amongst the participants. Pursuant to the agreement, Mr. Wilkerson was also granted an option to purchase 1,950,000 shares of our common stock under the stock option plan.

On November 8, 2011, we entered into an employment agreement with LY Retail-CA and Joshua Thompson, as our Chief Marketing Officer, effective December 1, 2011, for a period of three years until November 30, 2014. We agreed to pay a base salary of $125,000 per annum with an annual cumulative increase of not less than 4% at the discretion of the Board. Mr. Thompson will be also designated as a participant in the bonus plan of $300,000 which will be shared amongst the participants. Pursuant to the agreement, Mr. Thompson was also granted an option to purchase 1,950,000 shares of our common stock under the stock option plan.

On February 27, 2012, we entered into an employment agreement with LY Retail-CA and Christian Vega, as our LY Retail-CA’s Chief of Business Development, effective February 27, 2012, for a period of three years until February 20, 2015. We agreed to pay a base salary of $110,000 per annum during the term with increase to $150,000 on attainment of certain milestones. Pursuant to the agreement, Mr. Vega was also granted an option to purchase 200,000 shares of our common stock. Mr. Vega’s employment was terminated effective September 14, 2012.

On March 12, 2012, we entered into an employment agreement with LY Retail-CA, and Tony Winders, as Executive Vice President of Revenue of LY Retail-CA, effective March 12, 2012, for a period of three years until March 11, 2015. We agreed to pay a base salary of $120,000 per annum during the term with an increase to $132,500 per annum based the attainment of certain milestones and an increase to $150,000 based on certain milestones. Mr. Winders was designated as a participant in the Company’s Key Employee Cash Bonus Plan. Such bonus pool of was raised to from $300,000 to $500,000 with the addition of new participants. Pursuant to the agreement, Mr. Winders was also initially granted an option to purchase 250,000 shares of our common stock and will be granted an additional 250,000 on attainment of certain milestone. Mr. Winders’ employment was terminated effective June 11, 2012.

Pursuant to the agreements, all the above executives are also entitled to other standard benefits such as insurance plan, vacation and reimbursement of reasonable out-of-pocket expenses.

Severance Agreement

In connection with the termination of Kevin Walker as our executive officer, we entered into a severance agreement with LY Retail-Texas and Kevin Walker on December 20, 2011 pursuant to which we agreed to pay to Mr. Walker any unpaid salary, unreimbursed expenses and a severance payment. The severance payment equals to three months of Mr. Walker’s base salary and is payable in two installments of $13,333.33 and $11,688 for a sum of $38,352. In addition, Mr. Walker was granted an option to purchase 400,010 shares of our common stock under our stock option plan.

In connection with the termination of Tony Winders as our Executive Vice President of LY Retail-CA, we entered into a severance agreement with Mr. Winders, dated and effective June 11, 2012, (“Termination Date”), pursuant to which we agreed to pay to Mr. Winders a $10,000 lump sum severance payment. The severance payment equals to one month of Mr. Winders’ base salary.

In connection with the termination of Steve Beauregard as our Chief Operating Officer, we entered into a severance agreement with Mr. Beauregard, dated August 22, 2012, to be retroactively effective August 17, 2012 (“Termination Date”), pursuant to which we agreed to pay to Mr. Beauregard any unpaid salary, unreimbursed expenses, and a severance payment. The severance payment equals to 80% of Mr. Beauregard’s base salary and is payable in 26 installments of $5,384.62 for a sum of $140,000 and a one month continuation of his health, dental, and vision benefits. In addition, Mr. Beauregard’s stock options in the amount of 1,950,000 shares previously granted under his employment will vest immediately as of the Termination Date.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the number of securities underlying outstanding plan awards for each named executive officer as of December 31, 2011.

	Option Awards								Stock Awards
	Number of Securities Underlying Unexercised Options (#)	Number of Securities Underlying Unexercised Options (#)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date			Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($) (4)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Name	Exercisable	Unexercisable
Braden Richter		1,950,000		1,300,000	$	0.20		10/1/21
Joshua Thompson		1,950,000		1,300,000	$	0.20		9/26/21
Jerry Wilkerson		1,950,000		1,300,000	$	0.20		9/26/21
Steve Beauregard		1,950,000		1,300,000	$	0.20		11/1/21
Kevin Walker		400,010			$	0.20		9/26/21

Director Compensation

The Company has not compensated any of its directors for service on the Board of Directors. Management directors are not compensated for their service as directors; however they may receive compensation for their services as employees of the Company. The compensation received by our management directors is shown in the “Summary Compensation Table” above.

2012 Stock Option Plan

On February 24, 2012, the Board and majority shareholders of the Company approved the Luxeyard, Inc. 2012 Stock Option Plan (the “Plan”). The Plan gives us the ability to grant stock options, restricted stock, stock appreciation rights (SARs), and other stock-based awards (collectively, “Awards”) to employees or consultants of the Company or of any subsidiary of the Company and to non-employee members of our advisory board or our Board of Directors or the board of directors of any of our subsidiaries. Our Board of Directors believes that adoption of the Plan is in the best interests of our company and our stockholders because the ability to grant stock options and make other stock-based awards under the Plan is an important factor in attracting, stimulating and retaining qualified and distinguished personnel with proven ability and vision to serve as employees, officers, consultants or members of the Board of Directors of our company and our subsidiaries, and to chart our course towards continued growth and financial success. Therefore, our Board of Directors believes the Plan will be a key component of our compensation program.

As of September 30, 2012, 2,508,547 shares of our common stock remained available for future grants under the Plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding our shares of common stock beneficially owned as of January 24, 2013 for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of January 24, 2013. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of January 24, 2013 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, 8884 Venice Blvd., Los Angeles, CA 90034.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Common Stock (1)
Executive Officers and Directors
Amir Mireskandari (2)		19,225,553 (3)		23.35	%
Jerry Wilkerson (4)		0		0	%
Joshua Thompson (4)		0		0	%
Ashu Ladha		0		0	%
Guy Elhanany		0		0	%
All directors and executive officers as a group (5 persons)		19,225,553		23.35	%

Other 5% Shareholders
Huttner 1999 Partnership Ltd. 22 Latigo Road Durango, Co 81301		4,553,218 (5)		5.35	%
Pergament Multi-Strategy Opportunities LP (6) 237 Park Avenue, 9^th Floor New York, NY 10017		8,571,429 (6)		9.56	%

* Less than 1%

(1) Based on 81,059,895 shares of common stock issued and outstanding January 24, 2013 and 8,904,287 shares of preferred stock issued and outstanding as of January 24, 2013

(2) In connection with the private placement closed on November 8, 2011, Mr. Mireskandari entered into a lock-up/leak-out agreement with the Company pursuant to which he is restricted from offering, pledging, selling, contracting to sell, selling any option or contracting to purchase, lend, transfer or otherwise dispose of any shares of common stock of the Company or any other securities convertible or exercisable for shares of the Company’s common stock for the nine month period following the closing of the offering and for an additional nine months following such period, to limit any transfers to 850,000 shares of common stock in any 30 day period and 170,000 shares of common stock on any single day.

(3) Includes (i) 17,944,668 shares of common stock, (ii) 83,708 shares of common stock underlying Series A Warrants and 167,416 shares of common stock underlying Series B Warrants issued to Mr. Mireskandari in the private placement closed on November 8, 2011 that are immediately exercisable, (iii) 125,000 shares of common stock underlying Series A Warrants and 250,000 shares of common stock underlying Series B Warrants issued to Mr. Mireskandari in the private placement closed on December 15, 2011 that are immediately exercisable, (iv) 83,333 shares of common stock upon conversion of certain convertible debenture dated January 26, 2012, (v) 285,714 shares of preferred stock issued in a private placement dated May 31, 2012, and (vi) 285,714 shares of common stock underlying Series C Warrants issued in a private placement dated May 31, 2012.

(4) Messrs. Richter, Beauregard, Wilkerson, Thompson and Alattar entered into lock-up agreements with the Company pursuant to which each is restricted from offering, pledging, selling, contracting to sell, selling any option or contracting to purchase, lend, transfer or otherwise dispose of any shares of common stock of the Company or any other securities convertible or exercisable for shares of the Company’s common stock for a period of eighteen month.

(5) Richard Huttner has voting and control power over the shares held by this entity. Includes (i) 580,001 shares of common stock, (ii) 62,501 shares of common stock underlying Series A Warrants and 125,002 shares of common stock underlying Series B Warrants issued to Huttner 1999 Partnership Ltd in the private placement closed on November 8, 2011 that are immediately exercisable,(iii) 250,000 shares of common stock upon conversion of certain convertible debenture dated January 26, 201 (iv) 1,178,571 shares of preferred stock issued to Huttner 1999 Partnership Ltd in the private placement closed May 31, 2012, (v) 1,178,571 shares of common stock underlying Series C Warrants issued in a private placement dated May 31, 2012, (vii) 589,286 shares of common stock underlying Series D Warrants issued in a private placement dated May 31, 2012, and (viii) 589,286 shares of common stock underlying Series E Warrants issued in a private placement dated May 31, 2012

(6) Steven T. Brown has voting and control power over the shares held by this entity. Includes (i) 2,857,143 shares of preferred stock issued to Pergament Mult-Strategy Opportunities LP in the private placement closed May 31, 2012, (ii) 2,857,143 shares of common stock underlying Series C Warrants issued in a private placement dated May 31, 2012, (iii) 1,428,571 shares of common stock underlying Series D Warrants issued in a private placement dated May 31, 2012, and (iv) 1,428,571 shares of common stock underlying Series E Warrants issued in a private placement dated May 31, 2012.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

The following includes a summary of transactions since the beginning of fiscal 2010, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000 and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions, except where indicated.

Pursuant to the Securities Exchange Agreement, on November 8, 2011, we issued 30,349,998 shares of our common stock to Amir Mireskandari and Khaled Alattar, the former members of LY Retail-Texas. Immediately following the Securities Exchange, Mireskandari and Alattar became our principal stockholders. Mr. Mireskandari was also appointed as the Chairman of our Board of Directors.

Pursuant to the private placement that closed on November 8, 2011, we issued (i) 167,416 shares of our common stock to Mireskandari and 482,579 shares of our common stock to Alattar; (ii) Series A Warrants exercisable for 83,708 shares of our common stock to Mireskandari and Series A Warrants exercisable for 241,298 shares of our common stock to Alattar; and (iii) Series B Warrants exercisable for 83,708 shares of our common stock to Mireskandari and Series B Warrants exercisable for 241,298 shares of our common stock to Alattar. In consideration for the purchase price for such securities, Mireskandari and Alattar delivered to the Company Bridge Notes in the aggregate principal amount of $115,000. In addition, Mireskandari paid $15,000 in cash.

Pursuant to the private placement that closed on December 15, 2011, we issued (i) 250,002 shares of our common stock to Mireskandari (ii) Series A Warrants exercisable for 125,001 shares of our common stock to Mireskandari (iii) Series B Warrants exercisable for 125,001 shares of our common stock to Mireskandari for which Mr. Mireskandari paid $50,000 in cash.

Pursuant to a convertible debenture dated January 26, 2012, Mr. Mireskandari contributed a debenture amount of $50,000 convertible into 166,667 shares of our common stock and Mr. Alattar contributed a debenture amount of $175,000 convertible into 583,333 shares of our common stock.

On November 8, 2011, we entered into the Agreement of Sale with Shalom and Bergman pursuant to which we sold our equity interest in SpinCo to Shalom and Bergman in exchange for 119,000,000 shares of our common stock.

Prior to the Securities Exchange, LY Retail-Texas and Mireskandari and Alattar entered into Bridge Notes in the aggregate principal amount of $115,000. As set forth above, such Bridge Notes were exchanged for units in the offering.

	·	On January 26, 2012, we subleased approximately 5,313 square feet of office and warehouse space in Los Angeles California from a related party (“Venice” lease). The lease is a twenty four month operating lease with monthly rent expense of $9,564 per month. Braden Richter, the Company’s former CEO and Director is related to the sublessor of our subleased office space in Los Angeles, California. Payments on the sub-lease were $66,944 from February 1 (inception) to September 30, 2012. The Company paid a deposit on this lease of $29,797. In April 2012, the Company issued 300,000 shares of common stock with a fair value of $240,000 to the CEO as consulting fees. Subsequent to September 30, 2012, Braden was terminated from his role of CEO and Director.
	·	In May 2012, we entered into an MOU with Home Loft, Inc. to acquire their Leather Groups, web site and certain assets. Our Chief Operating and Technology Officer owns Home Loft, Inc. We have not reached a formal agreement as of this date.
		On May 8, 2012, the Company entered into a management agreement with Home Loft, Inc. to manage its LeatherGroups (LG) web site. Home Loft is owned by the Company’s new COO. Pursuant to the agreement, the Company paid a $50,000 deposit to Home Loft which is reported as other asset in the consolidated balance sheet. In exchange, the Company receives and recognizes all revenues for all products sold in the website as well as the related cost of goods sold since it bears the risk and rewards related to these sales. During the nine months ended September 30, 2012, the Company recorded $172,067 of sales and $47,720 of cost of goods sold in connection with this agreement.
	·	On May 1, 2012, the Company entered into a management agreement with Jaxon International, LLC (Jaxon), a company owned by the wife of the Company’s former CEO and Director. Pursuant to the agreement, the Company managed Jaxon’s retail store business and paid Jaxon a monthly overhead allocation of $45,000 to cover its fixed operating expenses. In exchange, the Company receives and recognized all revenues generated from the retail stores as well as the related cost of goods sold since it bore the risks and rewards related to the sales. During the nine months ended September 30, 2012, the Company recorded $457,968 of sales and $228,968 of cost of goods sold in connection with this agreement.
	·	Steve Beauregard, our former COO, is the founder and a majority stockholder in Regard Solutions, Inc., (“Regard”). We had an agreement with Regard for Technical Services and Project Management. Steve Beauregard was terminated from his role of COO effective August 17, 2012. As such, the agreement with Regard was also terminated. The Company incurred expenses of $511,818, from Regard for the nine months ended September 30, 2012. In April 2012, the Company issued 50,000 restricted shares of common stock with a fair value of $40,000 to Regard as finder’s fee.
	·	On May 31, 2012 the Company loaned $308,000 to Jaxon. This note bears interest at the rate of 8% per annum and is payable on demand. The purpose of the loan was to buy out the equity interest of the other member in anticipation of the Company’s acquisition of Jaxon. Subsequent to September 30, 2012, this agreement was terminated. The Company has a pending litigation with Braden Richter, the former CEO to recoup damages resulting from the agreement as well as the collection of the related note receivable.
	·	During the third quarter of 2012, the Company’s chairman of the Board of Directors and interim CEO, loaned the Company a total of $575,000. The notes bear no interest and are payable when the Company closes an equity or equity linked financing of $500,000 and above. The note holder also has the option to convert the notes into securities issuable in such financing. During the three months ended September 30, 2012, the Company made repayments to the notes amounting to $225,000. As of September 30, 2012, the notes have an outstanding balance of $350,000.

DESCRIPTION OF SECURITIES

Authorized Capital Stock

Our authorized capital stock consists of 500,000,000 shares of common stock at a par value of $0.0001 per share and 50,000,000 shares of preferred stock at a par value of $0.0001 per share, of which 10,000,000 is designated as 8% Convertible Perpetual Preferred Stock. As of January 24, 2013, 81,059,895 shares of our common stock and 8,904,287 shares of our 8% preferred stock were issued and outstanding.

Common Stock

Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Our common stock does not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of our capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our certificate of incorporation. Although there are no provisions in our charter or by-laws that may delay, defer or prevent a change in control, the board of directors is authorized, without shareholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect. Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

Preferred Stock

Our certificate of incorporation provides that we are authorized to issue up to 50,000,000 shares of preferred stock with a par value of $0.0001 per share. Our Board of Directors has the authority, without further action by the stockholders, to issue from time to time the preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the board may determine. The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.

8% Convertible Perpetual Preferred Stock

On May 25, 2012, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation (the “Certificate”) establishing the voting powers, designations, preferences, limitations, restrictions and relative rights of the 8% preferred stock.

Dividends. Each holder of Shares is entitled to receive dividends at the rate of eight percent per year of the original issue price of $0.35 per share, as adjusted for any combinations, consolidations, recapitalizations, reorganizations, reclassifications, stock distributions, stock dividends (other than any dividend paid on the 8% Convertible Preferred Stock) or splits. The 8% preferred stock dividends are cumulative, whether or not earned or declared, and are to be paid quarterly. The Company may elect pay dividends in cash, or the Company may elect to pay the dividends in shares of Common Stock if certain equity conditions occur, including this Registration Statement being effective. The number of shares that the Company will pay in the form of a dividend is determined by dividing the amount of the 8% preferred stock due by the market price of the Common Stock on the date that dividend is payable. As a result of the Company’s option to elect to pay dividends in the form of Common Stock in lieu of cash, the Company is registering 441,275 shares of Common Stock for the 8,904,287 shares of 8% preferred stock that have been issued. This figure is based on a common stock per share price of $1.13 per share, the last sale price of our shares as reported by the OTCQB on June 13, 2012 (which was the last practicable date before the initial Registration Statement on Form S-1 was filed), over a two year period at a 8% dividend per year.

Liquidation Rights. Upon the voluntary or involuntary liquidation, winding-up or dissolution of the Company, the holders of the Shares may exercise their rights to convert all or a portion of their Shares into common stock. Each holder of Shares that does not exercise its rights to convert shall be entitled to receive out of the assets of the Company, for each Share, cash in an amount equal to (i) the original issue price plus (ii) all accrued but unpaid dividends on the shares, before any payment or distribution shall be made on the Junior Stock (as defined in the Certificate), but after payment of all outstanding indebtedness and all amounts due on liquidation, dissolution or winding-up in respect of all preferred stock of the Company which by its terms is senior to the Shares, if any. If the assets of the Company available for distribution to the holders of the Shares upon any liquidation, dissolution or winding-up of the Company are insufficient to pay the full preferential amount to which the holders are entitled, then the holders of the Shares shall share in such distribution of assets pro rata in accordance with the amount that would be payable on such distribution if the amounts to which the holders of Shares were entitled were paid in full. A Fundamental Transaction (as defined in the Certificate) shall be treated as a liquidation for purposed of the liquidation preference contained in the Certificate. Prior to the consummation of such Fundamental Transaction, the holders of Shares may exercise their rights to convert all or a portion of their Shares into Common Stock.

Voting Rights . With respect to any matter on which the holders of common stock shall be entitled to vote, the holders of Shares shall vote together with the holders of common stock, and not as a separate class, and each share shall have a number of votes equal to the number of shares of common stock then issuable upon conversion.

Optional Conversion by Holder . The holder of any Shares has the right at such holder's option to convert the Shares into such number of shares of fully paid and nonassessable shares of common stock as is determined by dividing the original issue price by the conversion price, multiplied by the number of Shares being converted. The “conversion price” is the lower of (i) $0.35 per share (subject to the adjustments to the conversion price listed below); or (ii) the Market Price on the date of such conversion for which the Conversion Price is being applied; provided, however, solely for purposes of clause (ii), the Market Price shall never be less than $0.10 (subject to adjustment for stock splits, stock combinations and similar events affecting the Common Stock).

Adjustments to Conversion Price. The conversion price of the Shares are subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, reorganizations, mergers or other corporate changes. In addition, subject to certain exceptions, if at any time after the Closing Date, the Company issues or sells any shares of its common stock (including options and convertible securities) at a price per share less than the applicable conversion price of the Shares then in effect issue price (each, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the conversion price of the Shares then in effect shall be reduced to an amount equal to the price per share of such Dilutive Issuance.

Warrants

The Series A Warrants have a five-year term and are exercisable for an aggregate of 2,700,006 shares of our common stock at an initial per share exercise price of $0.30, subject to adjustment as set forth below.

The Series B Warrants have a five-year term and are exercisable for an aggregate of 2,700,006 shares of our common stock at an initial per share exercise price of $0.60 (the exercise price was reset to $0.30 effective May 1, 2012), subject to certain adjustment, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. In addition, subject to certain exceptions, if at any time after the closing date, the Company issues or sells any shares of its common stock at a price per share less than the exercise price of the applicable warrant, then immediately after such new issuance, the exercise price of the applicable warrant then in effect shall be reduced to an amount equal to the price per share of such new issuance. If the warrants are not registered with the Securities Act, the warrants can be exercised on a cashless basis.

The Series C Warrants have a five-year term and are exercisable for an aggregate of up to 8,904,287 shares of the Company’s common stock at an initial per share exercise price of $0.50, subject to adjustment as set forth below.

The Series D Warrants have a 90 day term from the effectiveness of this registration statement and are exercisable for an aggregate of up to 4,452,144 shares of the Company’s common stock at an initial per share exercise price of $0.35, subject to adjustment as set forth below.

The Series E Warrants have a five-year term and are exercisable for an aggregate of up to 4,452,143 shares of the Company’s common stock at an initial per share exercise price of $0.50, subject to adjustment as set forth below. The Series E Warrants can not be exercised unless the Series D warrants are exercised.

The exercise prices of the Series C Warrants, Series D Warrants and Series E Warrants are subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. In addition, subject to certain exceptions, if at any time after the closing date, the Company issues or sells any shares of its common stock (including options and convertible securities) at a price per share less than the exercise price of the applicable Warrant (each, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the exercise price of the applicable Warrants then in effect shall be reduced to an amount equal to the price per share of such Dilutive Issuance. The warrants can be exercised on a cashless basis if certain conditions are met.

Purchase Rights . In addition to any adjustments pursuant to the warrant, if at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of common stock, then the holder will be entitled to acquire the aggregate purchase rights which the holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete exercise of the warrant immediately before the date on which a record is taken for the grant, issuance or sale of such purchase rights.

Fundamental Transactions. The Company may not enter into or be party to a Fundamental Transaction (as defined in the warrant) unless (i) the successor entity assumes in writing all of the obligations of the Company under the warrant in form and substance reasonably satisfactory to the holders of a majority of the Company warrants outstanding on such date (the “Required Holders”) and approved by the Required Holders prior to such Fundamental Transaction, and (ii) the successor entity is a publicly traded corporation whose common stock is quoted on or listed for trading on an approved exchange.

Limitation on Directors’ Liability

Delaware law authorizes Delaware corporations to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach of a director’s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations to limit available relief to equitable remedies such as injunction or rescission. Our certificate of incorporation limits the liability of our directors to us and our stockholders to the fullest extent Delaware law permits. Specifically, no director will be personally liable for monetary damages for any breach of the director’s fiduciary duty as a director, except for liability:

●

for any breach of the director’s duty of loyalty to us or our stockholders;

●

for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

●

for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law (the “DGCL”); and

●

for any transaction from which the director derived an improper personal benefit.

This provision could have the effect of reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders. Our bylaws provide indemnification to our officers and directors and other specified persons with respect to their conduct in various capacities. See “Indemnification of Directors and Officers.”

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or person controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

Anti-Takeover Effects of Provisions of the DGCL and our Certificate of Incorporation and Bylaws

Provisions of the DGCL and our certificate of incorporation and bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders.

Delaware Anti-Takeover Statute. We were subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

We are not subject to Section 203 of the DGCL because we do not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders and we have not elected by a provision in our original certificate of incorporation to be governed by Section 203. Unless we adopt an amendment of our certificate of incorporation by action of our stockholders expressly electing not to be governed by Section 203, we would generally become subject to Section 203 of the DGCL at such time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders, except that the restrictions contained in Section 203 would not apply if the business combination is with an interested stockholder who became an interested stockholder before the time that we have a class of voting stock that is either listed on a national securities exchange or held of record by more than 2,000 stockholders.

Amendments to Our Certificate of Incorporation. Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation’s certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would:

●

increase or decrease the aggregate number of authorized shares of such class;

●

increase or decrease the par value of the shares of such class; or

●

alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.

If any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for the purposes of this provision.

Vacancies in the Board of Directors. Our bylaws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a majority of the remaining members of our board of directors then in office, even if such majority is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors. Each such directors shall hold office until his or her successor is elected and qualified, or until the earlier of his or her death, resignation or removal.

Special Meetings of Stockholders. Under our bylaws, special meetings of stockholders may be called at any time by our President whenever so directed in writing by a majority of the entire board of directors. Special meetings can also be called whenever one-third of the number of shares of our capital stock entitled to vote at such meeting shall, in writing, request one. Under the DGCL, written notice of any special meeting must be given not less than 10 nor more than 60 days before the date of the special meeting to each stockholder entitled to vote at such meeting.

No Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will not provide for cumulative voting.

Listing

Our common stock is listed on the OTCQB under the symbol “LUXR.”

Transfer Agent

The transfer agent and registrar for our common stock is VStock Transfer, LLC. The transfer agent’s address is 77 Spruce Street, Suite 201, Cedarhurst, NY 11516, and its telephone number is (212) 828-8436.

PLAN OF DISTRIBUTION

The common shares being offered for resale by the selling stockholders consist of 17,371,458 shares. We will pay any fees and expenses incurred by us incident to the registration of the securities.

Each selling stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTCQB or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling securities:

•

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

•

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

•

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

•

an exchange distribution in accordance with the rules of the applicable exchange;

•

privately negotiated transactions;

•

settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

•

in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such securities at a stipulated price per security;

•

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

•

a combination of any such methods of sale; or

•

any other method permitted pursuant to applicable law.

The selling stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The selling stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus and certain other legal matters as to Delaware law will be passed upon for us by Anslow & Jaclin LLP, Manalapan, New Jersey.

EXPERTS

Our audited consolidated financial statements appearing in this prospectus and registration statement have been audited by MaloneBailey, LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We filed with the SEC a registration statement under the Securities Act for the common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement.

We file annual, quarterly, and current reports and other information with the SEC. Our filings with the SEC are available to the public on the SEC’s website at www.sec.gov. Those filings are also available to the public on our corporate website at www.Luxeyard.com. The information we file with the SEC or contained on, or linked to through, our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at the SEC’s prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus is a part, at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of our company under Delaware law or otherwise, our company has been advised that the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

LUXEYARD, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2012			December 31, 2011

ASSETS

Current Assets:
Cash	$	448,474		$	154,400
Restricted cash		-			150,000
Accounts receivable		1,142			600
Inventory		195,768			5,466
Prepaid expenses and other current assets		157,538			16,376
Total current assets		802,922			326,842

Property and equipment, net of accumulated depreciation of $44,163 and $695 as of September 30, 2012 and December 31, 2011, respectively		195,548			16,869
Deferred financing costs net of amortization of $26,764 as of September 30, 2012		118,686			-
Note receivable -related party		308,000			-
Other asset		50,000			-

TOTAL ASSETS	$	1,475,156		$	343,711

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable		798,916			63,426
Accrued liabilities		267,594			158,206
Advances from shareholder		50,000			-
Accrued interest		167,337			-
Notes payable – related party		350,000			-
Derivative liabilities		4,076,398			158,758
Deferred revenue		-			9,701
Total current liabilities		5,710,245			390,091

Convertible debentures, net of debt discount of $1,559,153 and $ 0 on September 30, 2012 and December 31, 2011 respectively		1,060,847			-
Total liabilities		6,771,092			390,091

Commitments and contingencies		-			-

Stockholders' Deficit:
Preferred A stock, $0.0001 par value, 50,000,000 authorized shares and 8,904,287 and 0 shares outstanding as of September 30, 2012 and December 31, 2011, respectively		890			-
Common stock, $0.0001 par value, 500,000,000 (2011 - 100,000,000) authorized shares; 71,042,045 and 63,290,000 issued and outstanding shares as of September 30, 2012 and December 31, 2011, respectively		7,105			6,329
Additional paid in capital		(9,200,071	)		985,738
Retained earnings (deficit)		3,896,140			(1,038,447	)

Total Stockholders' Deficit		(5,295,936	)		(46,380	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,475,156		$	343,711

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-1

LUXEYARD, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three			Three			Nine			From April 20
	Months Ended			Months Ended			Months Ended			(Inception) to
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011

REVENUE
Total Revenue	$	574,381		$	-		$	1,435,433		$	-

COST OF GOODS SOLD
Cost of Sales		940,675			-			1,750,611			-

GROSS LOSS		(366,294	)		-			(315,178	)		-

OPERATING EXPENSES
Selling, general and administrative		3,101,945			43,754			12,347,680			47,544
Impairment loss		-			-			192,753			-
Stock compensation expense		130,872			-			312,733			-
Registration rights penalties		-			-			77,913			-
Depreciation		14,259			-			43,468			-

Total Operating Expenses		3,247,076			43,754			12,974,547			47,544
Operating Loss		(3,613,370	)		(43,754	)		(13,289,725	)		(47,544	)

Other Income (Expenses)
Gain on derivatives		5,862,241			-			19,361,166			-
Other income		1,515,150			-			1,524,514			-
Interest expense		(361,651	)		-			(1,575,571	)		-

NET INCOME (LOSS)		3,402,370			(43,754	)		6,020,384			(47,544	)
Deemed dividend related to incremental beneficial conversion feature on preferred stock		-			-			(1,085,797	)		-
Preferred dividends		(62,330	)		-			(83,505	)		-

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	3,340,040		$	(43,754	)	$	4,851,082		$	(47,544	)

Earnings (Loss) Per Common Share
Basic	$	0.04		$	(0.00	)	$	0.06		$	(0.00	)
Diluted	$	(0.05	)	$	(0.00	)	$	(0.20	)	$	(0.00	)

Weighted Average Outstanding Common Shares
Basic		70,708,557			30,350,000			67,132,509			30,350,000
Diluted		79,441,890			30,350,000			74,666,494			30,350,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-2

LUXEYARD, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

NINE MONTHS ENDED SEPTEMBER 30, 2012

(UNAUDITED)

	Common Stock				Series A Preferred Stock				Additional			Retained Earnings
	Shares		Amount		Shares		Amount		Paid-in Capital			(Deficit)			Total

Balance, December 31, 2011		63,290,000	$	6,329		-	$	-	$	985,738		$	(1,038,447	)	$	(46,380	)

Shares issued for services		6,002,072		600		-		-		5,409,207			-			5,409,807

Issuance of preferred stock for cash		-		-		8,904,287		890		3,115,610			-			3,116,500

Stock issued for conversion of debentures		1,000,307		100		-		-		299,872			-			299,972

Stock issued due to exercise of warrants		378,000		38		-		-		(38	)		-			-

Stock issued for deferred financing costs		71,666		8		-		-		81,943			-			81,951

Stock issuance costs		300,000		30		-		-		(400,305	)		-			(400,275	)

Stock option expense		-		-		-		-		312,733			-			312,733

Stock options issued for acquisition of assets		-		-		-		-		260,297			-			260,297

Derivative liability related to warrants		-		-		-		-		(21,982,187	)		-			(21,982,187	)

Resolution of derivative liabilities		-		-		-		-		1,631,262			-			1,631,262

Deemed dividend on preferred stock		-		-		-		-		1,085,797			(1,085,797	)		-

Net income		-		-		-		-		-			6,020,384			6,020,384

Balance, September 30, 2012		71,042,045	$	7,105		8,904,287	$	890	$	(9,200,071	)	$	3,896,140		$	(5,295,936	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-3

LUXEYARD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine			Nine
	Months Ended			Months Ended
	September 30, 2012			September 30, 2011
Cash flows from operating activities
Net income (loss)	$	6,020,384		$	(47,544	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation		43,468			-
Amortization of deferred financing costs		26,764			-
Impairment loss		192,753			-
Amortization of debt discount		1,368,728			-
Derivative gain		(19,361,166	)		-
Stock-based compensation		5,722,540			-
Changes in operating assets and liabilities					-
Accounts receivable		(542	)		-
Inventory		(190,302	)		-
Prepaid expenses and other assets		(141,162	)		-
Accounts payable		735,492			4,391
Accrued liabilities		281,696			8,220
Deferred revenue		(9,701	)		-
Net cash used in operating activities		(5,311,048	)		(34,933	)

Cash flows from investing activities
Restricted cash		150,000			-
Notes receivable - related party		(308,000	)		-
Deposit to LeatherGroups		(50,000	)		-
Purchase of property and equipment		(154,603	)		(1,774	)
Net cash used in investing activities		(362,603	)		(1,774	)

Cash flows from financing activities
Proceeds from issuance of preferred stock		2,716,225			-
Proceeds from convertible debentures and bridge notes		3,415,000			120,000
Proceeds from notes payable – related party		575,000			-
Advances from shareholder		50,000			-
Deferred financing costs		(63,500	)		-
Repayment of notes payable – related party		(225,000	)		-
Repayment of bridge notes		(500,000	)		-
Net cash provided by financing activities		5,967,725			120,000

Net increase in cash and cash equivalents		294,074			83,293

Cash and cash equivalents at beginning of period		154,400			-

Cash and cash equivalents at end of period	$	448,474			83,293

Supplemental disclosures of cash flow information
Cash paid for interest		71,001			-
Cash paid for income taxes		-			-

Non cash investing and financing activities
Conversion of debentures and accrued interest into common stock		299,972			-
Shares issued for stock issuance costs		81,950			-
Warrant derivatives		21,982,187			-
Resolution of derivative liabilities		1,631,262			-
Debt discount on convertible debentures and bridge notes		2,927,881			-
Deemed dividend on preferred stock		1,085,797			-
Acquisition of eOpulence assets		67,544			-

F-4

LUXEYARD INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation and Going Concern

Basis of Presentation

Luxeyard Inc., (the “Company”, “we” or “our”), a Delaware Corporation, is an internet company selling luxury goods on a flash web site. Luxeyard, Inc. is the parent company of the wholly owned subsidiaries, LY Retail, LLC (“LY Retail Texas”), incorporated under the laws of the State of Texas on April 20, 2011 and LY Retail, LLC incorporated in the State of California on November 8, 2011.

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2012 due to seasonal and other factors. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes of our 2011 Annual Report on Form 10-K.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. For the nine months ended September 30, 2012, the Company has incurred operating losses and negative operating cash flows which raise doubt on its ability to continue as a going concern.

Management Plans to Continue as a Going Concern

The Company continues to implement plans to enhance its ability to continue as a going concern. We continue to make web-site improvements to make our site more accessible and improve purchasing. We have eliminated unprofitable operating agreements with Jaxon and Bari and continue to enhance our operating agreement with LeatherGroups, so that we can obtain economies of scale in our sales, marketing and administrative costs. We have reduced our salary expense from reduction of our work force.

The Company has not yet established a positive cash flow on a company-wide basis. It will be necessary for the Company to obtain additional funding from the private or public debt or equity markets in the future. However, the Company cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern. The Company’s consolidated financial statements as of September 30, 2012 do not include any adjustments that might result from the inability to implement or execute the Company’s plans to improve our ability to continue as a going concern.

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Luxeyard, Inc. and its wholly-owned subsidiaries, LY Retail Texas and LY Retail, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The consolidated financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of September 30, 2012 and December 31, 2011, and expenses for the three and nine months ended September 30, 2012 and the period from inception to September 30, 2011. Actual results could differ from those estimates made by management.

Revenue Recognition

We recognize revenue from product sales when the following four criteria are met: pervasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

F-5

We record and report revenue on the gross amount billed to customers when the following indicators are met:

· we are the primary obligor in the transaction

· we are subject to inventory risk and credit risk for amount billed to the customer

· we have latitude in establishing prices and selecting suppliers

Sales, where we have a revenue sharing arrangement with a vendor, are recorded net of the vendors’ share.

Refunds

Inventories

Earnings (Loss) per Common Share

The Company’s Series C, D and E warrants participate in dividends (“participating securities”) and as such, we are required to use the two-class method in computing earnings per share. The calculation of basic earnings per share (EPS) using the two-class method excludes income attributable to these participating securities from the numerator and excludes the dilutive impact of those shares from the denominator. Fully diluted earnings per common share is computed similar to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of our share-based awards is computed using the treasury stock method, which assumes that all share-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The dilutive effect of our Series A convertible preferred stock and convertible debentures is computed using the if-converted method, which assumes conversion at the beginning of the year.

The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation for the three and nine months ended September 30, 2012:

Three months ended September 30, 2012	Net income attributable to common shareholders (Numerator)			Shares (Denominator)		Per share Amount
Net income, net of preferred dividends	$	3,340,040
Less: Income allocated to participating securities		(671,976	)
Basic earnings per common share		2,668,064			70,708,557	$	0.04
Effect of dilutive securities
Stock options and warrants		(3,944,928	)		-
Convertible debentures		(2,891,931	)		8,733,333
Diluted earnings per common share	$	(4,168,795	)		79,441,890	$	(0.05	)

Common stock equivalents related to the Series A convertible preferred stock of 8,904,287 were not included in the denominators of the diluted earnings per common share as their effect would be anti-dilutive.

Nine months ended September 30, 2012	Net income attributable to common shareholders (Numerator)			Shares (Denominator)		Per share Amount
Net income, net of preferred dividends	$	4,851,082
Less: Income allocated to participating securities		(538,596	)
Basic earnings per common share		4,312,486			67,132,509	$	0.06
Effect of dilutive securities
Stock options and warrants		(19,016,577	)		7,533,985
Convertible debentures		-			-
Diluted earnings per common share	$	(14,704,091	)		74,666,494	$	(0.20	)

Common stock equivalents related to the convertible debentures and the Series A convertible preferred stock of 17,637,620 were not included in the denominators of the diluted earnings per common share as their effect would be anti-dilutive.

F-6

Fair Value of Financial Instruments

Level 1 -Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 3 -Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The following table presents the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2012 and December 31, 2011:

	September 30, 2012		Level 1		Level 2		Level 3
Warrants	$	3,092,018		-		-	$	3,092,018
Embedded conversion options		984,380		-		-		984,380
Total	$	4,076,398		-		-	$	4,076,398

	December 31, 2011		Level 1		Level 2		Level 3
Warrants	$	158,758	$	-	$	-	$	158,758
Embedded conversion options		-		-		-		-
Total	$	158,758	$	-	$	-	$	158,758

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

Balance at December 31, 2011	$	158,758
Fair value of embedded conversion derivative liability at issuance charged to debt discount		2,927,881
Fair value of derivative liability related to warrants issued		21,982,187
Settlement of derivative liabilities		(1,631,262	)
Derivative gains in other expense		(19,361,166	)
Balance at September 30, 2012	$	4,076,398

The fair value of the derivative liabilities are calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liabilities are recorded in other expense in the consolidated statement of operations. The derivatives related to the embedded conversion options and warrants were valued using the Black-Scholes pricing model on the issuance date with the following assumptions:

Risk-free interest rate	-	0.10% to 0.77%
Stock price	-	$0.69 to $1.32
Dividend yield	-	0%
Volatility factor	-	151% to 440%
Expected life (years)	-	1.76 to 5.0 years

At September 30, 2012, the derivatives related to the embedded conversion options and warrants were valued using the Black-Scholes pricing model with the following assumptions:

Risk-free interest rate	-	0.17% to 0.63%
Stock price	-	$0.15
Dividend yield	-	0%
Volatility factor	-	232% to 414%
Expected life (years)	-	1.34 to 4.65 years

As indicated above, the Company’s stock price is a key input in the Black-Scholes model. The stock price as of September 30, 2012 was lower than on the initial measurement date of the derivative instruments, which resulted to a lower derivative liability as of September 30, 2012 and a derivative gain for the period then ended.

Share-Based Payments

The Company accounts for share-based awards to employees in accordance with FASB ASC 718 “ Stock Compensation” . Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period). The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model.

F-7

Share-based awards to non-employees are accounted for in accordance with ASC 505-50, wherein such awards are expensed over the period in which the related services are rendered at their fair value.

Reclassifications

Certain accounts in the prior year have been reclassified to conform to the current year financial statement presentation.

Recent Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

3. Asset Purchase

On February 22, 2012 we acquired certain office equipment and other related assets of eOpulence, LLC for a total purchase price of $260,297 equivalent to the fair value of 300,000 common stock options. These options have an exercise price of $0.30 per share and will expire on November 30, 2021. The fair value was calculated using the Black-Scholes pricing model using the following assumptions:

Risk-free interest rate	-	2.7%
Stock price	-	$0.90
Dividend yield	-	0%
Volatility factor	-	216%
Expected life (years)	-	3.0 years

We recognized an impairment loss related to the assets acquired of $192,753 for the nine months ended September 30, 2012, because the fair market value of the acquired assets was less than the consideration paid.

4. Related Party Transactions

Braden Richter, the Company’s former CEO and Director is related to the sublessor of our subleased office space in Los Angeles, California. Payments on the sub-lease were $66,944 from March 1 (inception) to September 30, 2012. The Company paid a deposit on this lease of $29,797. In April 2012, the Company issued 300,000 shares of common stock with a fair value of $240,000 to the CEO as consulting fees. Subsequent to September 30, 2012, Braden was terminated from his role of CEO and Director.

Steve Beauregard, our former COO, is the founder and a majority stockholder in Regard Solutions, Inc., (“Regard”). We had an agreement with Regard for Technical Services and Project Management. Steve Beauregard was terminated from his role of COO effective August 17, 2012. As such, the agreement with Regard was also terminated. The Company incurred expenses of $511,818, from Regard for the nine months ended September 30, 2012. In April 2012, the Company issued 50,000 restricted shares of common stock with a fair value of $40,000 to Regard as finder’s fee.

On May 1, 2012, the Company entered into a management agreement with Jaxon International, LLC (Jaxon), a company owned by the wife of the Company’s former CEO and Director. Pursuant to the agreement, the Company managed Jaxon’s retail store business and paid Jaxon a monthly overhead allocation of $45,000 to cover its fixed operating expenses. In exchange, the Company receives and recognized all revenues generated from the retail stores as well as the related cost of goods sold since it bore the risks and rewards related to the sales. During the nine months ended September 30, 2012, the Company recorded $457,968 of sales and $228,968 of cost of goods sold in connection with this agreement.

On May 31, 2012 the Company loaned $308,000 to Jaxon. This note bears interest at the rate of 8% per annum and is payable on demand. The purpose of the loan was to buy out the equity interest of the other member in anticipation of the Company’s acquisition of Jaxon. Subsequent to September 30, 2012, this agreement was terminated. The Company has a pending litigation with Braden Richter, the former CEO to recoup damages resulting from the agreement as well as the collection of the related note receivable.

On May 1, 2012, the Company entered into a management agreement with Home Loft, Inc. to manage its LeatherGroups (LG) web site. Home Loft is owned by the Company’s new COO. Pursuant to the agreement, the Company paid a $50,000 deposit to Home Loft which is reported as other asset in the consolidated balance sheet. In exchange, the Company receives and recognizes all revenues for all products sold in the website as well as the related cost of goods sold since it bears the risk and rewards related to these sales. During the nine months ended September 30, 2012, the Company recorded $172,067 of sales and $47,720 of cost of goods sold in connection with this agreement.

In May and June 2012, the Company received three advances from a shareholder totaling $50,000 which remained outstanding as of September 30, 2012. These advances bear no interest and are due on demand.

During the third quarter of 2012, the Company’s chairman of the Board of Directors and interim CEO, loaned the Company a total of $575,000. The notes bear no interest and are payable when the Company closes an equity or equity linked financing of $500,000 and above. The note holder also has the option to convert the notes into securities issuable in such financing. During the three months ended September 30, 2012, the Company made repayments to the notes amounting to $225,000. As of September 30, 2012, the notes have an outstanding balance of $350,000.

F-8

5. Debt

Convertible debentures

During the nine months ended September 30, 2012, the Company issued and sold 10% Convertible Debentures amounting to $2,915,000. These debentures are convertible to 9,716,667 shares of the Company’s common stock at $0.30 per share and mature on January 31, 2014. The related debenture agreement also provides for a mandatory conversion any time prior to the maturity date if all of the following criteria are met: a) the common shares underlying the debentures are registered in a registration statement under the Securities Act or are available for resale pursuant to Rule 144; b) the Company’s share prices for a period of 10 consecutive days remain at or above $1 and c) the daily volume of the Company’s stock during such consecutive 10 day period is at least 50,000. At the same time, the conversion price is adjusted downward if, at any period that the debentures are outstanding, the Company issues any additional stock or securities convertible into shares of common stock at a price less than the applicable conversion price.

In connection with the sale of the convertible debentures, the Company incurred costs from third parties amounting to $145,450. These costs were recognized as deferred financing costs and amortized over the term of the debentures. Amortization for the nine months ended September 30, 2012 amounted to $26,674.

The Company evaluated the terms of the debentures under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815-15 and determined that the embedded conversion option of the debentures require derivative accounting treatment due to reset provisions in the conversion price. The fair value of the embedded conversion option amounted to $5,967,574 of which $2,427,881 was recognized as a debt discount to the debentures and the difference of $3,539,693 as a “day 1” derivative loss. The debt discount is accreted to interest expense over the term of the debentures. Amortization expense for the nine months ended September 30, 2012 amounted to $1,368,728.

During the nine months ended September 30, 2012, debentures plus accrued interest of $299,972 were converted into 1,000,307 shares of common stock. Upon conversion of the debentures, the Company recognized the unamortized discount to interest expense, the derivative liability related to the embedded conversion option was marked to market at the date of conversion and the fair value of $1,098,914 was reclassified to additional paid in capital.

Bridge notes

During the nine months ended September 30, 2012, the Company issued bridge notes to two lenders totaling $500,000. In connection with these notes, the Company paid fixed interest and loan origination fees totaling to $71,000 and issued 630,000 warrants with an exercise price of $0.50 years and a term of 5 years. The warrant agreements provide that for a period of 1 year from issuance, the exercise price of the warrants shall be adjusted downward if the Company issues any additional common stock or securities convertible into shares of common stock at a price less than the applicable exercise price. These notes were fully paid as of September 30, 2012.

The Company evaluated the terms of the warrants under FASB ASC 815-15 and determined that the warrants require derivative accounting treatment due to reset provisions in the exercise price. The fair value of the warrants amounted to $816,599 of which $500,000 was recognized as a debt discount to the bridge notes and the difference of $316,599 as a “day 1” derivative loss. Upon full payment of the notes, the debt discount was fully amortized to interest expense.

In June 2012, the warrants were exercised and the Company issued 378,000 shares of common stock to the lenders. The related derivative liability was marked to market at the date of exercise and the fair value of $532,349 was reclassified to additional paid in capital.

6. Equity

Common stock

The Company enters into several consulting agreements with vendors who accept stock payments in lieu of cash or who are awarded restricted common shares of the Company’s stock based on certain performance milestones. During the nine months ended September 30, 2012, the Company issued 6,002,072 shares of common stock with a fair market value of $5,409,807 for services.

During the nine months ended September 30, 2012, the Company issued 1,000,307 shares of common stock due to conversion of the convertible debentures (see Note 5).

During the nine months ended September 30, 2012, the Company issued 378,000 shares of common stock from the cashless exercise of warrants.

During the nine months ended September 30, 2012, the Company issued 371,666 shares of common stock, with a fair value of 345,950, to placement agents and these accounted for as stock issuance costs.

Series A Convertible Preferred Stock

On May 24, 2012, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with several investors whereby the Company sold units consisting of (i) 8,904,287 shares of its 8% Series A Convertible Preferred Stock, (ii) 8,904,287 Series C warrants, (iii) 4,452,144 Series D warrants and (iv) 4,452,143 Series E warrants. The price per unit was $0.35 for an aggregate purchase price of $3,116,500.

F-9

In connection with the Purchase Agreement, the Company is subject to certain limitations, namely: a) the Company is allowed to do subsequent placements up to $5 million with the consent of the preferred stockholders; b) the Company cannot file a registration statement covering the securities sold in such placements until 150 days after the registration statement is declared effective; c) the Company has to offer investors, who purchased at least $200,000 in the offering, 50% of the securities being offered in the subsequent placement; d) the Company cannot offer securities that are convertible into common stock at a price which varies or may vary with the market price of the common stock (unless the conversion price cannot be less than $0.35 without the consent of the preferred stockholders.

The Series A Convertible Preferred Stock pays cumulative dividends at 8% per annum , payable in cash or shares of common stock every quarter, as long as, among other things, the preferred stock is registered. For the nine months ended September 30, 2012, cumulative dividends amount to $83,505. The preferred stock is convertible into common stock at any time at the option of the holder at a conversion price equal to the lower of $0.35 or the market price but the market price shall never be less than $0.10. The market price is determined as 90% of weighted average prices of the common stock for 5 trading days preceding the conversion.

In connection with the Purchase Agreement, the Company also entered into a registration rights agreement with the investors pursuant to which the Company was required to file a registration statement within 15 days and to have the registration statement declared effective within 105 days of the closing of the offering. Failure to meet the deadline will require the Company to make pro rata payments to each investor, as liquidated damages, an amount equal to 1% of the aggregate amount invested by such investor for each 30-day period or pro rata for any portion thereof; provided, however, such damages shall cease to accrue on the 180 ^thday following the closing date of the offering. As of September 30, 2012, the Company determined that it is probable that it will incur such damages and have accrued $77,913 as of September 30, 2012 in connection with this registration rights agreement.

The Company evaluated the embedded conversion option under FASB ASC 815-15 and determined that it is clearly and closely related to the host contract, the preferred stock, and does not require to be bifurcated. The Company evaluated the preferred stock for a beneficial conversion feature. The Company determined that a beneficial conversion feature of $1,085,797 existed which was recognized as a deemed dividend on the preferred stock with a corresponding credit to additional paid in capital.

Warrants

As disclosed above, the Company issued Series C, D and E warrants in connection with the sale of its Series A Convertible Preferred Stock. The Series C warrants have a five-year term and an exercise price of $0.50 per share, subject to adjustment while the Series D and E warrants have a 90-day term (from the effectiveness of the Form S-1 filed on June 18, 2012) and five-year term, respectively, with an exercise price of $0.35 per share, subject to adjustment. The exercise prices are adjusted downward if, at any period that Series C, D and E warrants are outstanding, the Company issues any shares of common stock at a price less than the applicable exercise price.

The Company evaluated the terms of the warrants under FASB ASC 815-15 and the determined that the warrants require derivative accounting treatment due to reset provisions in the exercise price. The fair value of the warrants amounted to $21,982,187 and was debited against additional paid in capital at issuance and marked to market at every reporting period (see Note 2).

The following is a summary of warrant transactions for nine months ended September 30, 2012

	Number of warrants			Weighted average exercise price		Weighted average remaining contractual life (years)		Intrinsic value
Outstanding at December 31, 2011		5,400,000		$	0.30		4.15	$	-
Granted		19,329,003			0.46		-		-
Exercised		(630,000	)		0.50		-		-
Forfeited/cancelled		-			-		-		-
Outstanding at September 30 , 2012		24,099,003		$	0.42		3.72		-

Exercisable at September 30 , 2012		24,099,003		$	0.42		3.30		-

Stock options

During the nine months ended September 30, 2012, the Company granted 2,958,241 options to employees, consultants, and board members with exercise prices ranging from $0.30 to $1.85 per share and a term of 5-10 years. Of the total options granted in 2012, 163,241 vested immediately and 2,795,000 options vests over a period of 36 months. No options are exercisable until the expiration of the Lock-Up agreement on November 15, 2012.

F-10

The options have a weighted average fair value of $0.51 and were valued using the Black-Scholes pricing model. Significant assumptions used in the valuations include the following:

Risk-free interest rate	-	0.58% to 2.23%
Stock price	-	$0.30 to $1.85
Dividend yield	-	0%
Volatility factor	-	389% to 448%
Expected life (years)	-	5.84 to 10.0 years

						Weighted-average
						remaining
				Weighted-average		contractual life
	Number of options			exercise price		(years)		Intrinsic value
Outstanding at December 31, 2011		8,876,546		$	0.21		9.77	$	-
Granted		3,258,241		$	0.44
Exercised		(50,000	)	$	0.30
Forfeited		(1,588,334	)	$	0.35
Outstanding at September 30, 2012		10,496,453		$	0.26		8.85	$	-

Vested at September 30, 2012		7,036,981		$	0.22		8.96	$	-

During the nine months ended September 30, 2012, stock compensation expense recognized amounted to $312,733 and the unamortized stock compensation expense as of September 30, 2012 w as $567,679

On August 8, 2012 the board approved a one time offer to employees whose options had been granted with an exercise price above $0.35. The offer allowed them to elect to cancel their higher priced options and to concurrently be granted an option to purchase shares of same quantity of common stock at $0.35. The employees retain their original vesting schedule. Eighteen employees with option grant prices ranging from $0.51 to $1.55 accepted the offer and options to purchase 742,000 shares of common stock were cancelled and options to purchase 742,000 of restricted common shares were granted. The cancellation and replacement of the above options was accounted as a modification, however, there was no incremental compensation expense that resulted from this amendment.

7. Commitments and Contingencies

Litigations

The Company is party to various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. There are three complaints filed against LuxeYard. These claims involve claims of breach of contract, unjust enrichment, fraud, money had and received, constructive trust, and unpaid invoices. Based on the information presently available, management and in-house counsel believe that only one of these complaints is probable for liability. It pertains to an unpaid vendor invoice for services. The estimated amount of liability for this claim is under $20,000.

The Company also received a Notice of Conversion dated September 28, 2012 to convert Convertible Perpetual Preferred Stock into common stock. The conversion value equals $10,000 with 66,667 of common shares to be issued. As of November 16, 2012, this conversion has not been made and is pending contingencies to be resolved.

On September 24, 2012, the Company received $1,500,000 in connection with the settlement of a lawsuit filed by the Company and Amir Mireskandari, the chairman of the Board of Directors ( Mireskandari v. Gann), against certain shareholders of the Company. The settlement amount was recorded in other income. Legal fees associated with this settlement amounted to $394,500.

Leases

During the three months ended September 30, 2012, the Company entered into two lease agreements for warehouse space. Both properties are located in High Point, North Carolina. The base rent for one is 2,215 sq. ft. at $23 per sq. ft. per year. The agreement was effective August 1, 2012 and expires on April 30, 2013. The base rent for the other is $6,000 per month starting September 25, 2012 and expiring on September 24, 2013.

Management Service Agreement

On August 6, 2012 the Company entered into a management services agreement with Ferris Holding Company, Inc., (“Ferris”) to manage its retail business that sells furniture through its website ( www.barileather.com ) (“online business”). Effective September 27, 2012, this management service agreement was terminated. Legal actions are pending to recoup damages. Pursuant to the agreement, the Company was to pay Ferris a monthly fee of $45,000 and in exchange, the Company will receive all revenues generated from the online business but will also be responsible for the payment of the related costs of any goods sold.

8. Subsequent events

On November 28, 2012, 542,856 shares of the Series A Convertible Preferred Stock were converted to 1,988,699 common shares.

On various dates from November 2012 through January 2013, the Company issued 6,100,000 common shares to various consultants for services provided.

On December 21, 2012, the Company purchased from a stockholder certain securities and debt instruments for a total consideration of $100, as set out below:

1,553,573 common shares

857,143 shares of Series A Convertible Preferred Stock

7,353 and 117,648 Series A and B warrants, respectively

321,429, 160,714, and 160,714 Series C, D and E warrants, respectively and

Convertible debentures amounting to$75,000

On January 10, 2013, the Company entered into a settlement agreement with a vendor whereby the Company settled outstanding invoices with the latter totaling to $33,003 for $9,000 to be paid in two installments on January 14, 2013 and February 13, 2013.

On January 16, 2013, Sunrise Securities Corp (“Sunrise”) agreed to transfer back to the Company 1.98 million common shares previously issued to them on February 28, 2012. The Company released Sunrise of any liability or performance of the contract as a result of the return of the shares.

F-11

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Luxeyard, Inc.

Los Angeles, CA

We have audited the accompanying consolidated balance sheet of Luxeyard, Inc. and its subsidiaries (collectively the “Company”) as of December 31, 2011 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the period from April 20, 2011 (inception) to December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Luxeyard, Inc. and its subsidiaries as of December 31, 2011 and the results of their operations and their cash flows for the period from April 20, 2011 (inception) to December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company incurred operating losses and negative operating cash flows which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP

www.malone-bailey.com

Houston, Texas

April 16, 2012

F-12

Luxeyard, Inc.

CONSOLIDATED BALANCE SHEET

	December 31, 2011

ASSETS
Cash	$	154,400
Restricted cash		150,000
Accounts receivable		600
Inventory		5,466
Prepaid expense		16,376

Total Current Assets		326,842

Property and equipment, net		16,869

TOTAL ASSETS	$	343,711

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	63,426
Accrued liabilities		158,206
Deferred revenue		9,701
Derivative liability		158,758

Total Liabilities		390,091

Commitments and contingencies		-

Stockholders' Deficit:
Common stock, $0.0001 par value.100,000,000 authorized shares; 63,290,000 issued and outstanding shares at December 31, 2011		6,329
Additional paid in capital		985,738
Accumulated deficit		(1,038,447	)

Total Stockholders' Deficit		(46,380	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	343,711

The accompanying notes are an integral part of these consolidated financial statements.

F-13

Luxeyard, Inc.

CONSOLIDATED STATEMENT OF OPERATIONS

	For the Period From April 20, 2011 (Inception) To December 31, 2011
REVENUE
Total Revenue	$	2,038

COST OF GOODS SOLD
Cost of Sales		2,322

GROSS LOSS		(284	)

OPERATING EXPENSES
Selling, general and administrative		953,143
Stock compensation expense		84,325
Depreciation		695

Total Operating Expenses		1,038,163

NET LOSS	$	1,038,447

Basic and Diluted Loss Per Share	$	(0.03	)

Weighted Average Outstanding Shares		36,869,882

The accompanying notes are an integral part of these consolidated financial statements.

F-14

Luxeyard, Inc.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From April 20, 2011 (Inception) To December 31, 2011

					Additional						Total
	Common Stock				Paid-In			Retained			Stockholders
	Shares		Amount		Capital			Earnings			Deficit

Balance April 20, 2011		30,350,000	$	3,035	$	(3,035	)	$	-		$	-

Common stock issued to original Top Gear stockholders		27,540,000		2,754		(2,754	)		-			-

Common stock issued for cash, net of issuance costs		4,312,500		431		848,569			-			849,000

Conversion of related party bridge notes into common stock		575,000		58		114,942			-			115,000

Conversion of third party bridge notes into common stock		512,500		51		102,449			-			102,500

Derivative liability related to warrants		-		-		(158,758	)		-			(158,758	)

Stock compensation expense		-		-		84,325			-			84,325

Net loss		-		-		-			(1,038,447	)		(1,038,447	)

Balance December 31, 2011		63,290,000	$	6,329	$	985,738		$	(1,038,447	)	$	(46,380	)

The accompanying notes are an integral part of these consolidated financial statements.

F-15

Luxeyard, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

	For The Period From April 20, 2011 (Inception) To December 31, 2011
Cash flows from operating activities
Net loss	$	(1,038,447	)
Adjustments to reconcile net income to net cash used in operating activities
Depreciation		695
Stock compensations expense		84,325
Changes in operating assets and liabilities
Accounts receivable		(600	)
Inventory		(5,466	)
Prepaids		(16,376	)
Accounts payable		63,426
Accrued liabilities		188,962
Deferred revenue		9,701
Net cash used in operating activities		(713,780	)

Cash flows from investing activities
Purchase of equipment and leasehold improvements		(17,564	)
Net cash used in investing activities		(17,564	)

Cash flows from financing activities
Proceeds from debt		280,000
Proceeds from sale of common stock		605,744
Net cash provided by financing activities		885,744

Net decrease in cash and cash equivalents		154,400

Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period	$	154,400

Supplemental disclosures of cash flow information
Cash paid for interest	$	-
Cash paid for income taxes		-

Non cash financing activities
Conversion of bridge notes into common stock	$	217,500
Derivative liability related to warrants		158,758
Common stock issued to original TIGR stockholders and recapitalization		5,789
Bridge notes settled directly from proceeds from sale of common stock		62,500

The accompanying notes are an integral part of these consolidated financial statements.

F-16

LUXEYARD INC.

DECEMBER 31, 2011

NOTES TO FINANCIAL STATEMENTS

1. Basis of Presentation and Nature of Operations

Basis of Presentation

Luxeyard Inc., (the “Company”, “we” or “our”), a Delaware Corporation, is an internet company selling luxury goods on a flash web site. Luxeyard, Inc. is the parent company of the wholly owned subsidiaries, LY Retail, LLC (“LY Retail Texas”), incorporated under the laws of the State of Texas on April 20, 2011 and LY Retail, LLC (“LY Retail”) incorporated in the State of California on November 8, 2011. The Company has adopted a fiscal year end of December 31.

Nature of Operations

On November 8, 2011, Top Gear Inc., a Delaware corporation (“Top Gear”) acquired all of the membership units of LY Retail Texas on April 20, 2011. LY Retail Texas exchanged all of its membership for the issuance of 1,785,294 shares (30,350,000 shares post-split) of Top Gear’s common stock pursuant to a Securities Exchange Agreement between LY Retail Texas, LY Retail Texas’s former members, Top Gear and the former principal stockholders of Top Gear. As a result of this transaction, LY Retail Texas became a wholly-owned subsidiary of Top Gear and its former members became the controlling stockholders of Top Gear. The transaction was accounted for as a reverse merger and recapitalization of Top Gear affected by a securities exchange, wherein LY Retail Texas is considered the acquirer for accounting and financial reporting purposes.

Immediately prior to the securities exchange, Top Gear contributed substantially all of its assets and liabilities to a subsidiary and then spun out the subsidiary to its former controlling stockholders in exchange for the cancellation of a total of 7,000,000 shares (pre-split) of our common stock previously held by them.

Concurrently with this transaction, LY Retail was incorporated in the State of California as a wholly owned subsidiary of the Company on November 8, 2011 and all of the operating activity of the Company was transferred to LY Retail and LY Retail Texas ceased all activity. At year end LY Retail and LY Retail Texas are wholly owned subsidiaries of Top Gear.

On January 9, 2012, Top Gear filed a Certificate of Amendment to our Articles of Incorporation to change the corporate name from “Top Gear, Inc.” to “Luxeyard, Inc.” The amendment was effective as of January 9, 2012. The name change was declared effective by Financial Industry Regulatory Authority, or FINRA, as of February 13, 2012.

Going Concern

Our financial statements have been prepared on a going concern basis. As of December 31, 2011, we have generated minimal revenues since inception. We expect to finance our operations primarily through our existing cash, our operations and any future financing. However, there exists substantial doubt about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financing, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our capital needs. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our operations would be materially negatively impacted. Therefore, there is substantial doubt as to our ability to continue as a going concern. Our ability to complete additional offerings is dependent on the state of the debt and/or equity markets at the time of any proposed offering, and such market’s reception of the Company and the offering terms. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable.

The Company has ongoing capital commitments to acquire LeatherGroups (LG) subject to their underlying terms. Subject to the Company’s due diligence investigation of LG and its online business and subject to the parties’ negotiations and execution of a definitive agreement, the Company has capital commitments to acquire LG for $250,000 cash to be paid over four months, and 350,000 options to purchase shares of LuxeYard, Inc. common stock and the amount of options equal ot the quotient of $122,500 divided by the difference between the average closing market stock price of LuxeYard, Inc. common shares during the five trading days immediately prior to the transaction closing, and $0.35. Failure to meet such ongoing commitments may result in the loss of the ability to make these acquisitions. These ongoing commitments may also cause us to seek additional capital from sources outside of the Company. The current uncertainty in the credit and capital markets, and the economic downturn, may restrict our ability to obtain needed capital.

In the current fiscal year, we continue to seek additional financing for our planned development and growth activities. We plan to obtain financing through various methods, including issuing debt securities, equity securities, bank debt, or combinations of these instruments which could result in dilution to existing security holders and increased debt and leverage. No assurance can be given that we will be able to obtain funding under any loan commitments or any additional financing on favorable terms, if at all.

F-17

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Luxeyard, Inc. and its wholly-owned subsidiaries, LY Retail Texas and LY Retail. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of December 31, 2011, and expenses for the period ended December 31, 2011, and cumulative from inception. Actual results could differ from those estimates made by management.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Restricted Cash

Restricted cash represents proceeds from the sale of the Company’s common stock which is held in escrow as of December 31, 2011. These were released to the Company on February 10, 2012.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable are derived from amounts due from the credit card company that processes the credit card transactions from customers. Since accounts are settled daily, the balance represents one day’s sales. The Company records an allowance for uncollectible accounts which reduces the stated value of receivables on the balance sheet. This allowance is calculated based on a historical estimate. The allowance for uncollectible accounts at December 31, 2011 was $0.

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization are provided using the straight-line method over their estimated useful lives, generally three to seven years. Leasehold improvements are amortized over their estimated useful economic lives or the term of the lease, whichever is shorter. Management periodically evaluates economic lives in order to determine recoverability in light of current technological conditions and expected cash flows. Maintenance and repairs are charged to operating expenses as incurred.

Revenue Recognition

We record and report revenue on the gross amount billed to customers when the following indicators are met:

we are the primary obligor in the transaction

we are subject to inventory risk and credit risk for amount billed to the customer

we have latitude in establishing prices and selecting suppliers

F-18

Deferred Revenue

Deferred revenue represents all payments received from customers in excess of revenue earned based on money received for products that have not shipped.

Cost of Sales

Cost of sales consists primarily of direct costs associated with the goods and services the Company provides. Shipping and handling costs billed to customers are included in revenues. Shipping and handling costs are reported as a component of cost of sales.

Sales and Marketing

Sales and marketing costs consist primarily of payroll and related expenses for personnel engaged in marketing, customer service and sales functions, advertising and promotional expenditures and payments made to agencies for emails and other marketing activities and advertising expense.

Advertising and other promotional costs, are expensed as incurred,

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued and if the additional common shares were dilutive. Basic and diluted earnings per share for the period ended December 31, 2011 are the same as any incremental common stock equivalent would be anti-dilutive.

Income Taxes

The Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

The Company also accounts for uncertain tax positions in accordance with ASC 740 which addresses how we should recognize, measure and present in our financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Pursuant to this guidance, the Company can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50% likely of being realized upon settlement. No liability for unrecognized tax benefits was recorded as of December 31, 2011.

F-19

Fair Value of Financial Instruments

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. Our derivative liabilities are classified as level 3.

	Level 1		Level 2		Level 3
Derivative liability - warrants	$	-	$	-	$	158,758
Total	$	-	$	-	$	158,758

The fair value of the warrant liabilities at inception and at December 31, 2011 was approximately $158,000, accordingly, we did not recognize any derivative gain or loss when the instruments were marked to market at year-end.

Share-Based Payments

The Company accounts for share-based awards to employees in accordance with FASB ASC 718 “Stock Compensation” . Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period). The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model.

Share-based awards to non-employees are accounted for in accordance with ASC 505-50, wherein such awards are expensed over the period in which the related services are rendered at their fair value.

Recent Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

3. Merger

On November 8, 2011, the Company entered into a series of transactions pursuant to which it acquired LY Retail Texas, spun-out the Company’s prior operations from the Company’s former principal stockholders, directors and officers, and completed a private offering of its securities. The following summarizes the foregoing transactions:

F-20

Acquisition of LY Retail Texas. The Company acquired all of the membership interests of LY Retail Texas in exchange for the issuance of 30,350,000 shares of the Company’s common stock pursuant to a Securities Exchange Agreement between the Company, its former principal stockholders, LY Retail Texas and the former members of LY Retail Texas. As a result of this transaction, LY Retail Texas became our wholly owned subsidiary and the former members of LY Retail Texas became our controlling stockholders. The transaction was accounted for as reverse merger and a recapitalization effected by a securities exchange, wherein LY Retail Texas is considered the acquirer for accounting and financial reporting purposes.

Reorganization and Spin-Out of Top Gear Business. Immediately prior to the acquisition of LY Retail Texas, the Company contributed substantially all of our assets to SpinCo, and, in exchange, SpinCo assumed all of the Company’s liabilities. In addition, the Company transferred all of its ownership interest in SpinCo to Shalom and Bergman in exchange for the cancellation of a total of 119,000,000 shares of the Company’s common stock previously held by Shalom and Bergman.

Financing Transactions. Immediately following the acquisition of LY Retail Texas, the Company completed a private offering of units consisting of an aggregate of (i) 3,150,012 shares of the Company’s common stock, (ii) Series A warrants to purchase 1,575,000 shares of common stock which have a five-year term and a per share exercise price of $ 0.30, and (iii) Series B warrants to purchase 1,575,000 shares of common stock which have a five-year term and a per share exercise price of $ 0.60. The aggregate purchase price of the units was approximately $630,000.

On December 15, 2011, the Company completed a second private offering of (i) the aggregate number of shares of common stock, $0.0001 par value per share, of the Company at a per share purchase price of $0.20 in an aggregate of 2,250,000 shares of Common Stock (ii) a five year warrant to initially acquire up to 1,125,000 of additional shares of Common Stock at an exercise price of $0.30 per share Series A Warrants (iii) a five year warrant to initially acquire up to 1,125,000 of additional shares of Common Stock at an exercise price of $0.60 per share the “Series B Warrants”. The aggregate purchase price of the units was approximately $450,000.

Subject to certain exceptions, if at any time during the twelve (12) months following the closing of the offering the Company issues or sells shares of its common stock at a price per share less than $0.30 (as adjusted for any stock dividend, stock split, stock combination or other similar transaction), the Company is required to promptly thereafter issue to each subscriber following such new issuance that number of shares of its common stock equal to the greater of (I) zero and (II) the difference of (i) the quotient of (x) such subscriber’s purchase price divided by (y) the price per share of the new issuance, less (ii) the number of shares of common stock previously issued to such Subscriber pursuant to the Subscription Agreement (as adjusted for any stock dividend, stock split, stock combination or other similar transaction).

Exchange of Bridge Notes. Certain of the Subscribers (each, a “Bridge Investor” and collectively the “Bridge Investors”) delivered promissory notes issued by LY Retail Texas prior to the securities exchange mentioned above (each, a “Bridge Note” and collectively the “Bridge Notes”) as payment of such Bridge Investor’s purchase price for the units. To the extent the principal amount of a Bridge Investor’s Bridge Note was greater than such Bridge Investor’s purchase price for the units, the Company, on behalf of LY Retail Texas, paid the remaining principal amount of such Bridge Note from the proceeds of the Offering. Accordingly, Bridge Notes in the aggregate principal amount of $217,500 were exchanged for units in the Offering and the Company paid $62,500 of the remaining principal amount of the Bridge Notes to the Bridge Investors out of the proceeds from the Offering. As a result, the Bridge Notes are deemed to be cancelled and are of no further force and effect.

Forward Split. On February 14, 2012 the Company effectuated a 17:1 forward stock split of its common stock. The forward split was retroactively applied resulting in a price per share of $0.20; (ii) an exercise price of the Series A Warrants of $0.30 per share; and (iii) the exercise price of the Series B Warrants of $0.60 per share.

Registration Rights Agreement

On the Closing Date and in connection with Offering, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Subscribers granting the Subscribers piggy-back registration rights with respect to the Shares and the shares of common stock underlying the Warrants (the “Warrant Shares”).

F-21

Lock-Up Agreements

On the Closing Date and in connection with Offering, we entered into lock-up agreements (collectively, the “Lock-Up Agreements”) with each of Braden Richter, our newly appointed President and Chief Executive Officer and member of our Board of Directors, Kevin Walker, our newly appointed Chief Financial Officer, Chief Operating Officer and Secretary, Jerry Wilkerson, our newly appointed Chief Technology and Information Officer, Joshua Thompson, our newly appointed Chief Marketing Officer, and Khaled Alattar, one of our new principal stockholders, pursuant to which each of them agreed not to transfer any of our capital stock held directly or indirectly by them for an eighteen month period following the closing of the Offering. In addition, we entered into a lock-up agreement (the “Lock-Up/Leak-Out Agreement”) with Amir Mireskandari, our newly appointed Chairman of our Board of Directors and one of our new principal stockholders, pursuant to which he agreed not to transfer any of our capital stock held directly or indirectly by him for a nine month period following the closing of the Offering and for the nine months thereafter to limit any transfers to 50,000 shares of common stock in any 30 day period and 10,000 shares of common stock on any single day.

Warrants

Warrants associated with the Round 2 financing -The Series A Warrants have a five-year term and are exercisable for an aggregate of 1,125,000 shares of our common stock at an initial per share exercise price of $0.30, subject to adjustment as set forth below. The Series B Warrants have a five-year term and are exercisable for an aggregate of 1,125,000 shares of our common stock at an initial per share exercise price of $0.60, subject to adjustment set forth below.

The exercise prices of the Series A Warrants and Series B Warrants are subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes. In addition, subject to certain exceptions, if at any time after the respective Closing Dates, the Company issues or sells any shares of its common stock at a price per share less than the exercise price of the applicable Warrant, then immediately after such new issuance, the exercise price of the applicable Warrant then in effect shall be reduced to an amount equal to the price per share of such new issuance. If the Warrants are not registered with the Securities Act, the Warrants can be exercised on a cashless basis.

Anti-dilution features of the warrants require derivative accounting. ( See Note 11)

4. Property and Equipment

Property and equipment consists of the following:

Furniture and fixtures	$	7,928
Equipment		9,636

		17,564
Less: Accumulated depreciation		(695	)

Net carrying value	$	16,869

5. Accrued Liabilities

Accrued liabilities consist of the following:

Accrued marketing costs	$	100,000
Accrued salary and other expenses		58,206
	$	158,206

F-22

6. Income Taxes

The Company’s net deferred income tax asset as of December 31, 2011, after applying enacted corporate income tax rates, are as follows:

Net operating loss carry forward	$	333,943
Valuation allowance		(333,943	)
Total		-

As of December 31, 2011, the Company has unused net operating loss carryforwards of approximately $954,000 which will begin to expire in 2031. The Company provided a full valuation allowance to the deferred tax asset as of December 31, 2011 because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carry-forwards in certain situations where changes occur in the stock ownership of a company. In the event the Company has a change in ownership, utilization of the net operating loss carry-forwards could be restricted.

7. Related Party Transactions

The Company's CEO and Director is related to the sublessor of the 8884 Venice Blvd. (See Note 12).

Steve Beauregard, our COO is the founder and a majority stockholder in Regard Solutions, Inc., (“Regard”). We have entered into an agreement with Regard for Technical Services and Project Management. The Company incurred $90,623 in expense from Regard of which $83,435 was paid as of December 31, 2011.

Pursuant to the Securities Exchange Agreement, on November 8, 2011, we issued 30,350,000 common shares to Amir Mireskandari and Khaled Alattar, the former members of LY Retail, Texas. Immediately following the securities exchange, Mireskandari and Alattar became our principal stockholders. Mr. Mireskandari was also appointed as the Chairman of our Board of Directors.

Additionally, in connection with our Round 1 and Round 2 Financing, we issued (i) 417,416 shares of our common stock to Mireskandari and 482,584 shares of our common stock to Alattar; (ii) Series A Warrants exercisable for 208,708 shares of our common stock to Mireskandari and Series A Warrants exercisable for 241,292 shares of our common stock to Alattar; and (iii) Series B Warrants exercisable for 208,708 shares of our common stock to Mireskandari and Series B Warrants exercisable for 241,292 shares of our common stock to Alattar. In consideration for the purchase price for such securities, Mireskandari and Alattar delivered to the Company Bridge Notes in the aggregate principal amount of $115,000 and cash of $15,000.

Prior to the securities exchange, LY Retail Texas and Mireskandari and Alattar entered into Bridge Notes in the aggregate principal amount of $115,000. As set forth above, such Bridge Notes were exchanged for units in the Offering.

8. Bridge Notes

On various dates in September and October 2011, the Company issued promissory notes in the aggregate principal amount of $280,000 (collectively, the “Bridge Notes”) to certain investors. These notes bear no interest and have an average term of 30 days.

F-23

As disclosed in Notes 3 and 7, $217,500 of these notes were settled with units issued from the Company’s private offering and the balance of $62,500 was paid directly from proceeds of the private offering. No gain or loss was recognized on the settlement of the Bridge Notes.

9. Commitments and Contingencies

Operating Leases

On September 26, 2011 the Company entered into an operating lease for office space in Marina Del Rey California (the “Glencoe” lease). The lease term commenced October 1, 2011 and ends September 30, 2011. Rent expense for the year 2011 was $39,829.

Minimum Lease Expense

Subsequent to year end, the Company entered into three leases for office and warehouse space in Los Angeles, California (“Venice” lease); in Brooklyn, New York (“New York” lease) and a Corporate Apartment in New York, New York (“Wall Street” lease). See Subsequent Events Note. Minimum lease expense is as follows:

Year	Glencoe		Venice		New York		Wall Street		Total
2012	$	43,273	$	105,197	$	43,542	$	16,170	$	208,182
2013		-		114,761		11,458		-		126,219
2014		-		9,563		-		-		9,563
Total	$	43,273	$	229,521	$	55,000	$	16,170	$	343,964

Severance Agreement

In connection with the termination of Kevin Walker as our executive officer, we entered into a severance agreement with LY Retail and Kevin Walker on December 20, 2011 pursuant to which we agreed to pay Mr. Walker any unpaid salary, unreimbursed expenses and a severance payment equivalent to three months of Mr. Walker’s base salary. The severance pay is payable in two installments of $13,334 and one installment of $11,688 for a total amount of $38,352. Mr. Walker was also granted an option to purchase 400,010 shares of common stock at an exercise price of $0.20 per share.

Marketing Agreements

In November the Company engaged XL Marketing, Corporation to provide email drops to various target markets and to provide other marketing related series. Marketing expense related to this contract will be approximately $180,000 per month.

On November 23, 2011 the Company entered into to a nine month agreement with Placements Media, Inc. (“Placements”) to provide marketing consulting services. The compensation for the performance based component of the contract is $12,000 in December 2011 and January 2012 and $15,000 per month thereafter. Placements also earns commission based on sliding scale percentages applied on the XL Marketing spend with rates ranging from 4% to 18%. For the period ended December 31, 2011, Placements earned commissions amounting to $53,557. Additionally, Placements can earn options of up to 50,000 shares of common stock based on certain membership milestones.

Technology Infrastructure Agreement

In November, 2011, LY Retail entered into an agreement with Regard Solutions Corporation for project management and technical services for a monthly fee of $35,000 for a period of two months. This agreement was amended on December 31, 2011 to extend the term to April 30, 2012 for a monthly fee of $42,531. Technical fees incurred for the period ended December 31, 2011 amounted to $90,623.

Litigation

From time to time, the Company is party to various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. Based on the information presently available, management believes that resolution of these matters will not have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows.

F-24

10. Stock Option Plan

In September 2011, the Company adopted the 2011 Stock Option Plan (the Plan). The Plan provides for the granting of options to purchase shares of common stock to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options (ISOs) or non-qualified stock options (NSOs). ISOs may be granted only to Company employees (including officers and directors who may also be employees). NSOs may be granted to Company employees and consultants. The Company reserved 13,005,000 shares of common stock for issuance under the Plan as of December 31, 2011, of which 8,876,546 were subject to outstanding options and other awards and 4,128,454 were available for future grants of share-based awards.

Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, and (ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The Board of Directors determined the value of the underlying stock by considering a number of factors, including historical and projected results, the risks the Company faced at the time of issuance, the rights of the Company’s preferred securities and the lack of liquidity of the Company’s common stock. Options granted under the Plan generally vest ratably over a 36 month period. It is the Company’s policy to grant stock options to employees and nonemployees at exercise prices equal to the fair value of the underlying stock at the date of the grant.

The following is a summary of stock options granted, canceled, and outstanding under the plan for the year ended December 31, 2011:

	Number of Stock Options			Exercise Price		Weighted- Average Exercise Price		Weighted average remaining contractual life (years)
Outstanding at April 1, 2011		-		$	-	$	-		-
Granted		10,426,538			0.20 - 0.30		0.21		9.77
Cancelled		(1,549,992	)		0.20		0.20		-
Exercised		-			-		-		-
Balance at December 31, 2011		8,876,546		$	0.20-0.30	$	0.21		9.77

The following is a summary of stock options vested as of December 31, 2011:

	Vested Options		Exercise Price		Weighted- Average Exercise Price		Weighted average remaining contractual life (years)

December 31, 2011		2,868,143	$	0.20 - 0.30	$	0.20		9.77

No options are exercisable until the expiration of the Lock-Up agreement on November 8, 2012.

F-25

At December 31, 2011, 4,128,454 options remained available for future grants under the Plan. The weighted-average grant date fair value of options granted during the period ended December 31, 2011 was $ 0.03. Outstanding options as of December 31, 2011 have an intrinsic value of zero.

The options were valued using the Black-Scholes-pricing model. Significant assumptions used in the valuation include the following:

Expected term	5.40 - 5.84 years
Expected volatility	415% - 447	%.
Risk free interest rate	0.82% - 2.03	%
Expected dividend yield	0	%

During the period ended December 31, 2011, stock compensation expense recognized under the plan was $84,325.

As of December 31, 2011 there was $199,679 of unrecognized compensation related to stock options granted, which is expected to be recognized over a weighted-average period of 2.8 years.

11. Warrants

Warrants associated with the Round 1 financing -The Series A Warrants have a five-year term and are exercisable for an aggregate of 1,575,000 shares of our common stock at an initial per share exercise price of $0.30, subject to adjustment as set forth below. The Series B Warrants have a five-year term and are exercisable for an aggregate of 1,575,000 shares of our common stock at an initial per share exercise price of $0.60. At the closing date of November 8, 2011 Series A warrants had a fair market value of $46,304 and Series B warrants had a fair market value of $46,304. The fair market value of the warrants was computed using the Black-Scholes pricing model with the following assumptions:

Risk-free interest rate 0.92 %

Dividend yield 0%

Volatility factor 429%

Expected life (years) 5 years

On December 15, 2011, warrants associated with the Round 2 financing -The Series A Warrants have a five-year term and are exercisable for an aggregate of 1,125,000 shares of our common stock at an initial per share exercise price of $0.30, subject to adjustment as set forth below. The Series B Warrants have a five-year term and are exercisable for an aggregate of 1,125,000 shares of our common stock at an initial per share exercise price of $0.60. At the closing date of December 15, 2011 Series A warrants had a fair market value of $33,075 and Series B warrants had a fair market value of $33,075. The fair market value of the warrants was computed using the Black-Scholes pricing model with the following assumptions:

Risk-free interest rate 0.86%

Dividend yield 0%

Volatility factor 416%

Expected life (years) 5 years

At December 31, 2011, the warrants had a fair value of $158,758 and this fair value was included in the derivative liability balance. There was no difference in fair value from the grant date to December 31, 2011. The following assumptions were used in the Black-Sholes option pricing model at December 31, 2011.

Risk-free interest rate 0.83%

Dividend yield 0%

Volatility factor 412%

Expected life (years) 4.86 years

F-26

The weighted average exercise price is $0.45 for all outstanding warrants. The weighted average remaining contractual term for all warrants outstanding is 4.86 years. As of December 31, 2011, the outstanding warrants had an intrinsic value of zero.

12. Subsequent Events

Leases

On January 26, 2012, the Company subleased approximately 5,313 square feet of office and warehouse space in Los Angeles California from a related party (“Venice” lease). The lease is a twenty four month operating lease with monthly rent expense of $9,564 per month.

On March 15, 2012, the Company subleased approximately 5,500 square feet of office and warehouse space in Brooklyn New York in conjunction with the acquisition of eOpulence, (the “New York” lease). The lease is one year operating lease with option to extend for 3.5 years. The monthly rent expense is $4,583.33.

On March 22, 2012 the Company leased a corporate apartment in downtown New York. The lease begins April 3, 2012 and is a six month operating lease with monthly rent expense of $2,695.

Adoption of 2012 Stock Plan

On February 24, 2012, the Board and majority shareholders of the Company approved the Luxeyard, Inc. 2012 Stock Option Plan (the “Plan”). 13,050,000 shares of common stock with authorized under this plan. The Plan is intended to recognize the contributions made to the Company by its associates (including associates who are members of the Board of Directors), directors, consultants and advisors of the Company or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate, and to improve the ability of the Company or an Affiliate to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. To this end, the Plan provides for the grant of stock options. Stock options granted under the Plan may be Non-Qualified Stock Options or ISOs, as provided herein, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an Affiliate shall in all cases be Non-Qualified Stock Options.

eOpulence Asset Purchase

On February 22, 2012 our subsidiary, LY Retail, purchased the fixed assets of eOpulence, a New York limited liability Company ("eOpulence") for purchase price consisting options to purchase 300,000 shares of common stock at an exercise price of $.30 per share. The fair market value of the stock options at the purchase date was $260,297. The fair value was calculated using the Black Scholes pricing model with the following assumptions

Risk-free interest rate -2.7%

Dividend yield 0%

Volatility factor 416%

Expected life (years) 3.0 years

Share-based awards

On February 27, 2012, in connection with his employment agreement, the Company granted 200,000 common stock options to our Chief of Business Development Officer.

On March 12, 2012, in connection with his employment agreement, the Company granted 250,000 common stock options to our Executive Vice President of Revenue. He will also be granted an additional 250,000 on attainment of certain milestones.

F-27

On February 28, 2012, the Company engaged a consultant for institutional financial public relations. As compensation, the Company will pay the consultant 30,000 common shares per month for a period of one year. Additionally the Company will issue a non-cancellable “Option” for up to 4 million shares of outstanding stock at $.80 per share vesting as soon as practicable, subject to shareholder and/or regulatory approval.

On March 1, 2012 the Company retained a third party as investor relations counsel. The contract is for a minimum of six months for $5,000 a month plus a one-time grant on the initiation of the engagement of restricted shares of common stock with a fair market value of $30,000 on the contract start date. A second grant in the like cash value amount will be granted on the achievement of certain milestones.

Financing

On January 25, 2012, the Company borrowed cash in the amount $25,000 from one of the Company’s shareholders. The loan bears 10 % annual interest and has a maturity of April 20, 2012.

As of April 16, 2012, we sold an aggregate of $2,125,000 debentures in the form of convertible notes, which are convertible into 7,083,334 shares of our common stock, with a conversion price of $0.30 per share, subject to adjustment.

F-28

13,737,140 Shares of Common Stock

LUXEYARD, INC.

PROSPECTUS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The date of this prospectus is ____ , 2013

PART II— INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses Of Issuance And Distribution.

Securities and Exchange Commission registration fee	$	2,500
Federal Taxes		0
State Taxes and Fees		0
Transfer Agent Fees	$	775
Accounting fees and expenses		0
Legal fees and expense	$	105,000
Blue Sky fees and expenses	$	5,875
Miscellaneous		0
Total	$	114,150

All amounts are estimates other than the SEC’s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling stockholders. The selling stockholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

Item 14. Indemnification of Directors and Officers.

Section 102(b)(7) of the Delaware General Corporation Law allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the directors breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation provides for this limitation of liability.

Section 145 of the General Corporation Law of the State of Delaware provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, or were, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or directors has actually and reasonably incurred.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Our bylaws provide that we will indemnify our directors and officers to the fullest extent authorized by the General Corporation Law of the State of Delaware and shall pay expenses incurred (including attorneys’ fees) in defending any proceeding in advance of its final disposition upon receipt of an undertaking, by an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise.

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person.

We maintain a general liability insurance policy that covers liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

Item 15. Recent Sales of Unregistered Securities.

On May 31, 2012, we completed a private offering of units consisting of an aggregate of (i) 8,904,287 shares of its 8% preferred stock, (ii) Series C warrants to purchase 8,904,287 shares of its common stock which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment, (iii) Series D warrants to purchase up to 4,452,144 shares of common stock which have a 90 day term and an initial per share exercise price of $0.35, subject to adjustment, and (iv) Series E warrants to purchase up to 4,452,143 shares of common stock which have a five-year term and an initial per share exercise price of $0.50, subject to adjustment. The price per unit was $0.35 for aggregate gross proceeds of approximately $3,116,500.

On April 24, 2012, we completed a private placement by issuing to the investors, Notes aggregating $ 2,915,000 that are convertible into an aggregate of 9,716,667 Shares at a conversion price of $0.30 per share, subject to adjustment.

On December 15, 2011, we completed a private offering of units consisting of an aggregate of (i) 2,250,016 shares of our common stock, (ii) Series A Warrants to purchase 1,125,008 shares of our common stock which have a five-year term and an initial per share exercise price of $0.30, subject to adjustment, and (iii) Series B Warrants to purchase 1,125,008 shares of our common stock which have a five-year term and an initial per share exercise price of $0.60, subject to adjustment. The price per unit was $0.20 for an aggregate purchase price of $450,000 (the “Purchase Price”).

On November 8, 2011, we completed a private offering of units consisting of an aggregate of (i) 3,150,012 shares of our common stock, (ii) Series A warrants to purchase 1,574,998 shares of common stock which have a five-year term and an initial per share exercise price of $0.30, subject to adjustment as described below (the “Series A Warrants”), and (iii) Series B warrants to purchase 1,574,998 shares of common stock which have a five-year term and an initial per share exercise price of $0.60, subject to adjustment as described below (the “Series B Warrants”). The price per unit was $0.20 for an aggregate purchase price of approximately $630,000.

The above securities were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D (“Regulation D”) promulgated under the Securities Act. The Company made this determination based on the representations of the investors which included, in pertinent part, that each such investor was an “accredited investor” within the meaning of Rule 501 of Regulation D and upon such further representations from each investor that (i) such investor is acquiring the securities for its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (ii) such investor agrees not to sell or otherwise transfer the purchased securities or shares underlying such securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (iii) such investor has knowledge and experience in financial and business matters such that such investor is capable of evaluating the merits and risks of an investment in us, (iv) such investor had access to all of the Company’s documents, records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and conditions of the Offering and to obtain any additional information which the Company possessed or was able to acquire without unreasonable effort and expense, and (v) such investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.

The shares of common stock issued to the former members of Luxeyard in connection with the Securities Exchange were offered and sold in a private transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act. Our reliance on Section 4(2) of the Securities Act was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offerees and us.

Item 16. Exhibits.

See Exhibit Index following the signature page.

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(5) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereonto duly authorized, in the City of Los Angeles, State of California, on February 11, 2012.

	LUXEYARD

	By:	/s/ Amir Mireskandari
		Amir Mireskandari
		President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Jerome Wilkerson
		Jerome Wilkerson
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Braden Richter, Bryan Semmens and Amir Mireskandari, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by the registration statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Capacity	Date

/s/ Amir Mireskandari	Chief Executive Officer and Director (Chairman)	February 11, 2013
Amir Mireskandari	(Principal Executive Officer)

/s/ Jerome Wilkerson	Chief Financial Officer	February 11, 2013
Jerome Wilkerson	(Principal Financial Officer and Principal Accounting Officer)

/s/Ashu Ladha	Director	February 11, 2013
Ashu Ladha

/s/Guy Elhanany	Director	February 11, 2013
Guy Elhanany

EXHIBIT INDEX

Exhibit Number		Description
2.1		Securities Exchange Agreement, dated November 8, 2011, by and among the Company, Omri Amos Shalom, Ankiva Bergman, LY Retail, LLC, Amir Mireskandari and Khaled Alattar (3)
3.1		Articles of Incorporation (1)
3.2		Bylaws (1)
3.3		Certificate of Amendment to Articles of Incorporation (5)
3.4		Certificate of Amendment to Articles of Incorporation, dated May 2, 2012 (8)
3.5		Certificate of Designation - 8% Convertible Perpetual Preferred Stock (9)
5.1		Opinion of Anslow & Jaclin, LLP *
10.1		Contribution and Assumption Agreement, dated November 8, 2011, by and between the Company and TGRE SubCo, LLC (3)
10.2		Agreement of Sale, dated November 8, 2011, by and among the Company, Omri Amos Shalom and Ankiva Bergman (2)
10.3		Subscription Agreement dated November 8, 2011 (3)
10.4		Form of Series A Warrant dated November 8, 2011 (3)
10.5		Form of Series B Warrant dated November 8, 2011 (3)
10.6		Registration Rights Agreement dated November 8, 2011 (3)
10.7	(a)	Lock Up Agreement with Braden Richter dated November 8, 2011 (3)
	(b)	Lock Up Agreement with Kevin Walker dated November 8, 2011 (3)
	(c)	Lock Up Agreement with Joshua Thompson dated November 8, 2011 (3)
	(d)	Lock Up Agreement with Jerry Wilkerson dated November 8, 2011 (3)
	(e)	Lock Up Agreement with Khaled Alattar dated November 8, 2011 (3)
10.8		Lock Up/Leak Out Agreement with Amir Mireskandari dated November 8, 2011 (3)
10.9		Subscription Agreement dated December 15, 2011 (4)
10.10		Form of Series A Warrant dated December 15, 2011 (4)
10.11		Form of Series B Warrant dated December 15, 2011 (4)
10.12		Registration Rights Agreement dated December 15, 2011 (4)
10.13		Employment Agreement with Braden Richter, dated November 8, 2011. (5)
10.14		Employment Agreement with Steve Beauregard, dated November 8, 2011. (5)
10.15		Employment Agreement with Jerry Wilkerson, dated November 8, 2011. (5)
10.16		Employment Agreement with Joshua Thompson, dated November 8, 2011. (5)
10.17		Employment Agreement with Christian Vega, dated February 27, 2012. (6)
10.18		Employment Agreement with Tony Winders, dated March 12, 2012. (6)
10.19		Severance Agreement with Kevin Walker, dated December 20, 2011. (5)
10.20		Luxeyard, Inc. 2012 Stock Option Plan. (5)
10.21		Asset Purchase Agreement, dated February 22, 2012, by and between LY Retail, LLC and eOpulence, LLC. (6)
10.22		Form of Debenture Purchase Agreement (7)
10.23		Form of 10% Convertible Debenture (7)
10.24		Securities Purchase Agreement dated May 24, 2012 (9)
10.25		Form of Series C Warrant (9)
10.26		Form of Series D Warrant (9)
10.27		Form of Series E Warrant (9)
10.28		Registration Rights Agreement dated May 24, 2012 (9)
10.29		Form of Placement Agent Warrant (9)
14.1		Code of Ethics (2)
21.1		List of Subsidiaries (6)
23.1		Consent of MaloneBailey, LLP *
23.2		Consent of Anslow & Jaclin, LLP (included in Exhibit 5.1)
101		Interactive Data File [incorporated by reference to Exhibit 101 filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed on April 16, 2012 and Quarterly Report on Form 10-Q/A for the period ended September 30, 2012 filed on November 19, 2012 with the SEC]

* filed herewith.

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on July 12, 2010.

(2) Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on January 18, 2011.

(3) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 15, 2011.

(4) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2011.

(5) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 2, 2012.

(6) Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2012.

(7) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 27, 2012.

(8) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 4, 2012.

(9) Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 25, 2012.

Luxeyard, Inc. S-1/A