As Filed with the Securities and Exchange Commission on July 22, 2014

Registration No. 333-196953

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

FORM S-1/A
(Amendment No. 1)

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

ARMADA WATER ASSETS, INC.

(Exact name of registrant as specified in its charter)


Nevada	1389	46-1255-999
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

2425 Fountain View Drive; Suite 300
Houston, Texas 77057
(832) 804-8312

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

Maarten Propper
Chief Executive Officer
Armada Water Assets, Inc.
2425 Fountain View Drive; Suite 300
Houston, Texas 77057
(832) 804-8312

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

Copies to:


Stephen M. Cohen, Esq. Stephen R. Brill, Esq. Fox Rothschild LLP 2000 Market Street Philadelphia, Pennsylvania 19103-3222 (215) 299-2000		Mitchell S. Nussbaum, Esq. Angela M. Dowd, Esq. Loeb & Loeb, LLP 345 Park Avenue New York, New York 10154 (212) 407-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable following the effectiveness of this Registration Statement.

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

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

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

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

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


Large accelerated filer o		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company x

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CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾		Amount of Registration Fee
Common Stock⁽²⁾	$	20,125,000	$		$	20,125,000	$	2,592.10
Underwriter’s common stock purchase warrants⁽³⁾⁽⁴⁾		—	$	—	$	—	$	—
Common stock included in underwriter’s common stock purchase warrants⁽²⁾⁽⁴⁾	$	1,093,750	$	—	$	1,093,750	$	140.87
Total	$	21,218,750			$	21,218,750	$	2,732.97	⁽⁵⁾

(1)

Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes the underwriter’s option to purchase additional shares to cover over-allotments, if any.

(2)

Pursuant to Rule 416 under the Securities Act of 1933, as amended, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

(3)

No fee required pursuant to Rule 457(g) under the Securities Act of 1933, as amended.

(4)

Represents 5% of the shares to be sold in this offering including shares that may be sold upon exercise of the underwriter’s over-allotment option. The underwriter’s warrants are exercisable at a per share price equal to 125% of the common stock public offering price.

(5)

The Registrant previously paid $2,704.80 of the registration fee in connection with the initial filing of this registration statement.

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

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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 we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.


PRELIMINARY PROSPECTUS		SUBJECT TO COMPLETION		DATED JULY 22, 2014

2,500,000 Shares
Common Stock

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ARMADA WATER ASSETS, INC.

This is the initial public offering of Armada Water Assets, Inc. Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price of our shares of common stock will be between $5.00 and $7.00 per share.

We have applied to have our shares of common stock listed on the NASDAQ Capital Market under the symbol “AWA”. No assurance can be given that such application will be approved.

We qualify as an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. Please read the related disclosure on page 25 of this prospectus.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus for a discussion of information that should be considered before investing in our common stock.

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


	Per Share	Total
Public Offering Price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds to us, before expenses	$	$

(1)

The underwriter will receive compensation in addition to the discounts and commissions described above, which compensation consists of (i) five-year compensation warrants entitling the underwriter to purchase 5.0% of the aggregate number of shares issued in this offering, including shares issued pursuant to the exercise of the over-allotment option, with an exercise price equal to 125% of the price per share of the common stock sold in this offering and (ii) a non-allocable expense allowance equal to 1% of the aggregate public offering price. We have also agreed to reimburse the underwriter for certain specific expenses incurred by the underwriter (up to a maximum amount of $100,000 for all such expenses) including (i) an amount not to exceed $25,000 for the legal fees of the underwriter’s counsel and (ii) up to $20,000 of the underwriter’s actual accountable road show expenses upon completion of this offering. See “Underwriting” beginning on page 103 for a description of compensation payable to the underwriter by us.

We have granted the underwriter an option to purchase up to 375,000 additional shares of our common stock from us at the public offering price, less the underwriting discounts and commissions, within 45 days from the date of this prospectus, to cover over-allotments of the shares, if any. If the underwriter exercises the option in full, the total underwriting discounts and commissions payable will be $ , and the total proceeds to us, before expenses, will be $ .

Delivery of the shares of common stock will be made on or about , 2014.

Aegis Capital Corp

The date of this prospectus is , 2014.

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	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		11
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		28
USE OF PROCEEDS		29
DETERMINATION OF OFFERING PRICE		30
DIVIDEND POLICY		31
CAPITALIZATION		32
DILUTION		35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		37
BUSINESS		48
MANAGEMENT		77
EXECUTIVE COMPENSATION		82
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		88
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		90
DESCRIPTION OF SECURITIES		93
SHARES ELIGIBLE FOR FUTURE SALE		100
UNDERWRITING		103
LEGAL MATTERS		108
EXPERTS		108
ADDITIONAL INFORMATION		108
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		109

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, and the underwriter has 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. This prospectus may only be used where it is legal to offer and sell these securities.

Until , 2014 (the 25^th day after the date of this prospectus), 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 dealers’ obligation to deliver a prospectus when acting as underwriter, and with respect to their unsold allotments or subscriptions.

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

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Industry and Market Data

In this prospectus, we rely on and refer to information and statistics regarding our industry. We obtained this statistical, market and other industry data and forecasts from publicly available information. While we believe that the statistical data, market data and other industry data and forecasts are reliable, we have not independently verified the data.

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PROSPECTUS SUMMARY

This summary highlights information contained throughout this prospectus and is qualified in its entirety by reference to the more detailed information and financial statements included elsewhere herein. Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes and the information set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Our business involves significant risks. You should carefully consider the information under the heading “Risk Factors” beginning on page 11 of this prospectus.

As used in this prospectus, unless otherwise indicated, the terms “we,” “our,” “us,” “Company” and “Armada” refer to Armada Water Assets, Inc., and its subsidiaries.

Overview

We are a newly-formed growth company that began operations in the first quarter of 2013 with the strategic objective of delivering a one-stop full water-cycle service solution consisting of water supply, treatment, disposal, handling and transport services, to the oil and gas industry. Our strategy was developed to capitalize on the growing demand for water supply and frac-flow back and produced water remediation services associated with the recent growth of, and technology changes within, the U.S. oil and gas industry.¹

During 2013, we acquired four businesses that we believe will form the basis for an all-inclusive operating platform of water supply, water logistics and water treatment solutions to the U.S. oil and gas industry. Through these acquisitions, we intend to offer a cost-effective, full water cycle service solution for the treatment and reuse of associated production water from producing oil and gas wells, as well as the flow-back water produced by hydraulic fracturing (often referred to as “frac-ing”) of geologic structures. We intend to do this by integrating and leveraging our prior acquisitions to organically expand the scope of our oil field services and to offer our proprietary water treatment solutions. We also intend to expand the size and scope of our service offerings through the further acquisition of established and synergistic businesses that provide for growth opportunities in key basins. The expected value drivers of our existing, and any future targeted businesses are: access to and development of proprietary treatment technologies and solutions; geographic proximity to active exploration and production fields; access to key customers that offer growth and cross-selling opportunities; and industry reputation and experience.

As we assemble, integrate and grow our operating platform, we are offering our customers a unique one-stop solution for their water supply, transport and treatment needs. When fully developed, we believe that our all-inclusive model will offer a compelling value proposition not otherwise readily available in the market, by, among others, offering our customers an opportunity to reduce their water transportation, disposal and procurement costs and streamline their field operations and procurement process, while further enabling the promotion of environmental responsibility and stewardship.

We are organized along four distinct service lines: Water Logistics, Water Sales, Water Treatment and Water Disposal. Together these business lines offer our customers a full-service model for their oil-field water management needs. We currently serve customers in three key oil and gas basins in the United States: Permian; Piceance; and DJ.

Nicot, J. -P., 2012, Current and future water demand of the Texas oil and gas and mining sectors and potential impact on aquifers: GCAGS Journal, v. 1; U.S. Department of the Interior, Bureau of Reclamation, Oil and Gas Produced Water Management and Beneficial Use in the Western United States, September 2011.

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Our business lines are described in the chart below:

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Industry and Market

According to the U.S. Department of Energy², in 2007 there were an estimated 1 million actively producing oil and gas wells in the United States generating about 21 billion barrels (bbl) of contaminated produced water annually. In 2009, for every one barrel of oil and gas produced in the U.S. there was, on average, 7.6 barrels of produced water (i.e., water accompanying oil and gas extracted from wells). This ratio is expected to grow to approximately 12 barrels of produced water for every barrel of oil by 2015³. The amount of produced water, and the contaminants and their concentrations present in produced water usually vary significantly over the lifetime of a field.

We believe that the handling, transportation, procurement, and disposal of production water and flow-back water in the oil and gas industry is one of the most significant short and long-term operational challenges facing every major and independent oil company that uses frac-ing techniques. This is particularly the case as handling, transporting, procuring and disposing of production water and flow-back water are some of the most material long term operational costs facing oil and gas operations. Transportation is believed to be the single largest water-related cost for the producers, with industry sources estimating that: approximately 76% of transportation costs attributable to produced and flow-back waters; and approximately 26% of oil production costs attributable to the disposal of produced and flow-back water.⁴

According to a study by Lux Research⁵, the flow back water cleanup market from hydraulic fracturing is forecast to grow nine-fold to $9 billion in 2020, a 28% annual growth rate, while in addition, the total value of the produced water market is set to grow from $5.0 billion in 2010 to $9.9 billion in 2025 — a compound annual growth rate of 4.7%.

We believe that the oil and gas industry now recognizes that production water and flow-back water can be successfully treated, recycled and reused in hydraulic fracturing operations, thereby minimizing use of precious groundwater and underground water aquifers and the attendant costs. The residual oils, concentrated brine and “clean” water are all marketable commodities generated by the treatment process. We believe that production water and flow-back water can be delivered to central locations and efficiently and profitably separated into marketable derivatives; all to the benefit of the industry and the environment.

Our Water Treatment Solutions: The Armada Treatment Train System

We have recently completed construction of our first water treatment facility at our Harley Dome site. This facility houses our first generation proprietary “treatment train” system through which we intend to offer water treatment solutions that enable the complete treatment of contaminated production water and frac-flowback water. We expect to offer these solutions by using a “treatment train” system that consists of proprietary and sequenced processes, systems and equipment. Our treatment train has been designed with a modular approach incorporating separate components that can be serviced or interchanged without operational interruptions. This is intended to minimize footprint, reduce operating costs and optimize operational efficiency. The treatment train combines a number of existing separation technologies using conventional and “off-the-shelf” components enhanced by a proprietary mixing methodology to deliver an efficient cost-effective system that is scalable according to operational needs. At the heart of our treatment train system is an innovative high sheer reactor, which acts as a molecular accelerator, dynamically accelerating the natural vibration and spin of molecules in the process stream, which decreases the energetic barriers to separation. The proprietary process, when coupled with conventional separation techniques, is expected to produce a significant decrease in overall energy consumption, thereby significantly reducing operating and capital costs.

We are in the process of commissioning our first generation treatment train at our Harley Dome facility. Commercial scale testing and customer deployment commenced during the third quarter of 2014. While the

U.S. Department of Energy, Argonne National Laboratory, Produced Water Volumes and Management Practices in the United States, September 2009.

U.S. Department of the Interior, Bureau of Reclamation, Oil and Gas Produced Water Management and Beneficial Use in the Western United States, September 2011.

⁴

Niobrara Report, Niobrara and Bakken: How Water Management is Improving Operational Efficiencies, Phil Winner, June 23, 2013.

⁵

Lux Research, Risk and Reward in the Frack Water Market, May 2012.

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equipment and components that constitute our treatment train system are conventional “off-the-shelf” components and have been utilized in the water treatment industry for many years, our proprietary mixing methodology remains unproven in the treatment of production and frac-flowback water. We are continuing to optimize our water treatment process based on the results achieved during our testing phase. In addition, we are also in the design/engineering phase of the development of a second-generation treatment train, and prototype test units are expected to be deployed in the fourth quarter of 2014. The second generation treatment train, which we refer to as Gen II, will incorporate new technologies and improvements gained through Harley Dome testing as well as other development work.

In conjunction with commissioning our Harley Dome facility, which is a fixed, centralized-collection water treatment facility, we are also developing mobile treatment train units that can be deployed at specific customer sites for treating production and frac-flowback water. This treated water can then be reused by the customer for drilling and completion activities, including frac-ing. To complement the development of our mobile treatment train process, in June 2014 we entered into an agreement with RecyClean Consulting Services Inc. (“RecyClean”), to serve as the exclusive licensee to distribute and operate proprietary mobile frac-flowback water treatment units called the HydroPod^TM system.

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Strengths and Competitive Advantages

We believe that the following are the strengths and competitive advantages of our company:

•

Our proprietary treatment technology for produced and frac-flowback water has a cost structure that is competitive with current water disposal and handling practices.

•

Our holistic approach to our water treatment solutions ensures maximum operational flexibility for our customers while minimizing equipment footprint and operating costs and optimizing capital employed.

•

Our all-inclusive water-cycle service solution will offer our customers the opportunity to reduce water transportation, disposal and procurement costs and streamline field operations and the procurement process in a manner that we believe is unique to our competitive peer group in its breadth of coverage as most of our competitors do not offer a complete menu of oil field and water treatment solutions.

•

Our initial acquisitions provide a platform upon which material cross-selling opportunities may be realized along multiple lines of businesses and customers.

•

The customer base and relationships that our acquired oil field services and logistics businesses should enable us to gain market recognition among significant targeted customers and accelerate the commercialization of our water treatment solutions.

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•

Our management has extensive experience in the oil and gas service industry. We expect this will enable us to facilitate the execution of our business plan in the rapidly evolving produced and frac-flowback water segment of the oil and gas industry.

Risk Factors

Investing in these securities involves a high degree of risk. As an investor you should be able to withstand a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 11 of this prospectus.

Company Data and Organizational Chart

Our principal executive offices are located at 2425 Fountain View Drive; Suite 300, Houston, Texas, and our telephone number is (832) 804-8312. We maintain a website at www.armadawater.com. Information contained on our website does not constitute part of this prospectus.

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Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act and we are eligible to take advantage of certain exemptions from various reporting and financial disclosure requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, (i) presenting only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations in this prospectus, (ii) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these exemptions. As a result, investors may find investing in our common stock less attractive.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. As a result, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have

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different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B).

We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

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The Offering

Common stock outstanding:

9,112,050 shares⁽¹⁾

Common stock offered by us:

2,500,000 shares.

Over-allotment option to be offered by us

We have granted the underwriter the right to purchase up to additional shares of common stock from us at the public offering price less the underwriting discount within 45 days from the date of this prospectus to cover over-allotments.

Common stock to be outstanding after this offering:

16,650,018 shares⁽²⁾

Use of proceeds:

We intend to use the net proceeds (after deducting offering expenses) from this offering (i) to satisfy the balance of certain indebtedness incurred by us in connection with our Summit acquisition, (ii) to pay the costs incurred in the development of our water treatment facility and of our first generation treatment train system, and for the continued development of new water treatment facilities and systems, (iii) towards strategic acquisitions and continued capital projects and improvements, (iv) towards other capital expenditures, and (v) for working capital and general corporate purposes. Please refer to the section entitled “Use of Proceeds” for additional information.

Underwriter Compensation
Warrants

We will issue to the underwriter, upon closing of this offering, compensation warrants entitling the underwriter to purchase 5.0% of the aggregate number of shares of common stock issued in this offering, including shares issued pursuant to the exercise of the overallotment option. The underwriter warrants will have a term of five years and may be exercised at an exercise price equal to 125% of the price per share of this offering, commencing 12 months after the date of effectiveness of the Registration Statement on Form S-1 of which this prospectus forms a part.

Dividend policy

We do not anticipate declaring or paying any cash dividends on our common stock following our initial public offering.

Risk factors

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus.

Market for our Securities

We have applied for the listing of our common stock on NASDAQ Capital Market under the symbol “AWA”.

Transfer Agent and Registrar

Island Stock Transfer.

(1)

In February 2014, we completed a 1 for 3 reverse stock split of our common stock, whereby the holders of our common stock received one share of common stock for every three shares owned by such holders. Unless otherwise indicated in this prospectus, all numbers are reflected on a post-split basis.

(2)

The number of shares of our common stock to be outstanding immediately after this offering as shown above assumes: (i) that all of the shares offered hereby are sold; (ii) that $2.5 million in principal amount of our convertible promissory notes issued from October 2013 to January 2014 are converted into 595,238 additional shares of common stock upon completion of this offering; (iii) that 41,667 shares of our common stock are issued to certain officers and directors upon completion of this offering; (iv) that all of our outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are converted into 3,019,813 shares of common stock upon

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completion of this offering, and (v) that all of our outstanding shares of Series E Preferred Stock are converted into 1,331,250 shares of common stock upon completion of this offering, and is based on 9,112,050 shares of common stock outstanding as of July 22, 2014. This number of shares does not include 375,000 shares of our common stock subject to the underwriter’s over-allotment option and also excludes the following:

•

1,353,333 shares of our common stock issuable upon exercise of stock options outstanding as of July 22, 2014, at a weighted average exercise price of $4.69;

•

1,605,000 shares of our common stock available for future awards pursuant to our long-term incentive plan;

•

317,136 shares of our common stock potentially issuable upon the election of the holders of approximately $1.9 million principal amount of our indebtedness outstanding as of July 22, 2014, issued in connection with our acquisition of our Summit business unit to convert such indebtedness into shares of common stock;

•

1,333,333 shares of our common stock as may be issuable if we exercise our option to acquire RecyClean Consulting Services, Inc. pursuant to an Exclusive Distributor Agreement entered into in June 2014;

•

50,000 shares of our common stock issuable upon completion of this offering in connection with our acquisition of trucks and equipment in March 2014;

•

40,000 shares of our common stock issuable upon the extension of our Exclusive Distributor Agreement with RecyClean or the closing of an acquisition of RecyClean;

•

125,000 shares (143,570 shares if the underwriter’s over-allotment is exercised in full) of common stock issuable upon the exercise of the common stock purchase warrant issued to the underwriter in connection with this offering, having an exercise price of $7.50; and

•

998,958 shares of our common stock issuable upon exercise, if at all, of common stock purchase warrants outstanding as of July 22, 2014, at a weighted average exercise price of $6.52. See “Description of Securities.”

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Summary Consolidated Financial Data

The following tables summarize our consolidated financial and other data. We have derived the summary consolidated statement of operations data for the year ended December 31, 2013 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary consolidated statement of operations data for the three months ended March 31, 2014 and our balance sheet data as of March 31, 2014 from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair statement of the unaudited interim condensed consolidated financial statements. The results below in the statement of operations table include our historical and pro forma, as adjusted, results and are not necessarily indicative of the results to be expected for any future periods. We have not presented historical results for the three months ended March 31, 2013 as our operations during such time consisted mainly of general and administrative costs and limited activities from Barstow Production Water Solutions, LLC, which we acquired in February 2013. The pro forma as adjusted consolidated statement of operations include our acquisitions of Barstow Production Water Solutions, LLC, Devonian Acquisition Corp., Summit Holdings, Inc., and Western Slope Acquisition Corp. in this prospectus as if they occurred on January 1, 2013 and the consolidated balance sheet data reflects the balance sheet data as of March 31, 2014 as adjusted to reflect the issuance of 2,500,000 shares of common stock in this offering at a price of $6.00 per share, issuances of common stock and preferred stock, promissory notes and lines of credit, and the conversion of indebtedness into common stock and preferred stock as of March 31, 2014. You should read this information together with the sections entitled “Capitalization,” “Management’s Discussion and Analysis of Financial Condition & Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.


*(dollars in thousands, except share and per share data)*	For the Three Months Ended March 31, 2014 *(unaudited)*			For the Year Ended December 31, 2013			Pro Forma, As Adjusted, For the Year Ended December 31, 2013
Statement of Operations Data:
Revenues	$	6,611		$	11,154		$	16,948
Total Operating Expenses⁽¹⁾		8,021			14,522			22,202
Loss from Operations before Non-Operating Expenses		(1,410	)		(3,368	)		(5,254	)
Non-Operating Expenses⁽²⁾		192			1,022			1,451
Net (loss)/Pro-forma net (loss)	$	(1,602	)	$	(4,390	)	$	(6,705	)
Net (loss) per share of common stock/Pro-forma net (loss) per share of common stock	$	(0.21	)	$	(0.73	)	$	(1.05	)
Basic and diluted weighted average shares of common stock outstanding used in computing net (loss) per share/Pro forma basic and diluted weighted average shares of common stock outstanding used in computing net (loss) per share		7,577,700			5,982,540			6,397,557

(1)

Included in pro forma as adjusted for the year ended December 31, 2013 is approximately $109,000 of additional depreciation that would have been recorded due to the step up in basis of approximately $4.749 million in property, plant and equipment assets that resulted from purchase accounting from our acquisitions in 2013 if they had occurred on January 1, 2013. Also included is approximately $602,000 in additional amortization expense included in pro forma as adjusted for the year ended December 31, 2013 that resulted from the intangibles (as more fully disclosed in Footnote 8 to the Armada Water Assets, Inc. audited consolidated financial statements for the year ended December 31, 2013 included in this registration statement) that resulted from purchase accounting from our acquisitions in 2013 if they had occurred on January 1, 2013.

(2)

Included in pro forma as adjusted for the year ended December 31, 2013 is approximately $358,000 of additional interest expense that would have been recorded due to the promissory notes and other interest bearing obligations issued as part of the consideration for our acquisitions in 2013 if they had occurred on January 1, 2013.

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	As of March 31, 2014
*(dollars in thousands, except share and per share data)*	Actual (unaudited)		Pro Forma As Adjusted⁽¹⁾⁽²⁾⁽³⁾
Balance Sheet Data:
Cash and Cash Equivalents	$	1,618		17,822
Total Current Assets		6,123		22,327
Total Assets		40,438		56,642
Total Current Liabilities		22,555		12,413
Long Term Liabilities		7,885		4,074
Total Stockholders’ Equity⁽⁴⁾	$	9,998	$	40,155

(1)

A $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share of our common stock, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) each of cash, total assets, and total stockholders’ equity by approximately $2.3 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(2)

Gives effect to (i) the additional issuance of 50,000 shares of common stock through private placements, (ii) the conversion of approximately $5.9 million of our acquisition promissory notes (including accrued interest) and approximately $2.7 million of our short term promissory notes (including accrued interest) into shares of preferred stock and 1,244,626 shares of common stock, (iii) the subsequent conversion of an aggregate of 21,581,173 shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock into 3,019,813 shares of common stock, (iv) the issuance and subsequent automatic conversion of 1,331,250 shares of Series E Preferred Stock into 1,331,250 shares of common stock, (v) the repayment of approximately $1.5 million of our acquisition promissory notes from the proceeds of the offering of our Series E Preferred Stock, (v) the repayment of approximately $0.5 million of short-term obligations incurred in connection with the Summit acquisition from the proceeds of this offering, and (vii) the automatic conversion of $2.5 million principal amount of convertible promissory notes into an aggregate of 595,238 shares of common stock.

(3)

Gives further effect to the issuance and sale of 2,500,000 shares of common stock in this offering at the assumed initial public offering price of $6.00 per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total stockholders’ equity by approximately $2,287,500, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares in the number of shares offered by us at the assumed initial public offering price would increase (decrease) each of cash and cash equivalents, working capital, total assets and total stockholders’ equity by approximately $5,490,000. The pro forma information discussed above is illustrative only and will be adjusted based on the actual initial public offering price and other terms of our initial public offering determined at pricing.

(4)

Includes temporary equity of $320,000.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors in addition to other information in this prospectus before purchasing our common stock. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific to our company, our industry and our stock. In addition to these risks, our business may be subject to risks currently unknown to us. If any of these or other risks actually occurs, our business may be adversely affected, the trading price of our common stock may decline and you may lose all or part of your investment.

We have acquired a number of businesses to form our operating platform, all of which must be integrated in our all-inclusive operating model.

During 2013, we implemented our business plan by acquiring a number of businesses and business opportunities that will form the foundation of our operating platform. Many of these acquired entities were suffering losses at the time we acquired them. Until we can reorganize and integrate these various businesses to create our planned all-inclusive operating model, and until we have the capital necessary to implement our business plan, we will continue to remain an early-stage stage company presenting material risks of investment. We have a very limited history of operations upon which to evaluate our future prospects. We have a need to integrate diverse business units, an uncertain ability to develop commercial service offerings, and a history of operating losses and significant capital needs. We are, in addition, faced with all of the risks associated with a company in the early stages of development.

We are subject to significant operating risks.

Our business is subject to numerous additional risks associated with a relatively new, low-capitalized company engaged in our business sector. Such risks include, but are not limited to, competition from well-established and well-capitalized companies, risks associated with pricing, volumes, drilling methods and continued demand within the oil and gas industry, regulatory and environmental risks, as well as unanticipated difficulties regarding the marketing and sale of our services. There can be no assurance that we will ever generate sufficient commercial sales or achieve profitability. Should this be the case, our common stock could become worthless and investors in our common stock or other securities could lose their entire investment.

In order to carry out our intended business plan, we will require the funding provided from this offering. As well, in order to continue our growth in the future, we will likely require significant additional funding to fund new acquisitions, and for the acquisition and development of new water treatment technologies and facilities. There is no guarantee that we will be able to raise any additional capital and we have no current arrangements for any such financing. The inability to obtain any such funding could materially affect our longer-term ability to implement our business plan.

We have a limited operating history and our historical financial statements may not provide a meaningful understanding of our future prospects.

As of the date of this prospectus, we have limited financial information on which to evaluate our prospects. We had no operations in 2012 as our principal operations commenced in 2013; thus our 2012 historic audited financial statements provide no meaningful financial information about us.

In addition, we do not believe that our 2013 audited financial statements provide information meaningful to an understanding of our future prospects, since through March 31, 2014, we remained in the early-stage of our development, having only acquired our first operating businesses in February 2013, and having spent most of the year acquiring, restructuring and integrating our acquired operations and developing our plan of operations.

Our operating losses and limited liquidity may cause concern about our expansion and growth plans in 2014 and beyond.

We do not expect that any material positive cash flow will be developed from our operations until the fourth quarter of 2014, if at all. We have experienced operating losses and a working capital deficit since our

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inception. For the year ended December 31, 2013, we incurred a net loss of approximately $4.4 million on revenues of $11.2 million, and as of December 31, 2013, we had a working capital deficit of $10.4 million. For the three months ended March 31, 2014, we incurred a net loss of approximately $1.6 million on revenues of $6.6 million, and as of March 31, 2014, we had a working capital deficit of $16.4 million. We have significant amounts outstanding in the form of lines of credit, short term notes and payables, and the current portion of long-term debt that could drain a significant amount of our existing liquidity should we be unable to roll over those obligations as they mature throughout 2014. We anticipate using several million dollars of the proceeds of this offering to repay a portion of the foregoing obligations. If we are unable to complete this offering in the near term, then we will need to seek alternative financing arrangements to satisfy these obligations. If we are unable to obtain such alternative financing on terms acceptable to us, then our ability to execute our operational growth and acquisition strategy would be subject to significant uncertainty such that we may be required to scale back to a strategy that only allows us to maintain our operations as they are today until such time as we are able to acquire such financing on terms acceptable to us.

The absence of any significant operating history for us makes forecasting our future revenue and expenses difficult, and we may be unable to adjust our spending in a timely manner to compensate for unexpected revenue shortfalls or unexpected expenses.

As a result of our limited consolidated operating history, it is difficult to accurately forecast our future revenue. In addition, we have limited meaningful historical financial data upon which to base planned operating expenses. Current and future expense levels are based on our operating plans and estimates of future revenue. Revenue and operating results are difficult to forecast because they generally depend on our ability to promote and sell our services. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which would result in further substantial losses. We may also be unable to expand our operations in a timely manner to adequately meet demand to the extent it exceeds expectations.

We have been dependent on a few major customers for a significant portion of our revenue. Our revenue could decline if we are unable to maintain or develop relationships with additional customers and our results of operations could be adversely affected if any one of these customers reduces their demand for our services or is unable to meet their financial obligations to us.

During the year ended December 31, 2013, we had two customers who accounted for approximately 67% of our total revenues. If we are unable to diversify our customer base, our future results will be heavily dependent on these customers. Our dependence on a limited number of customers means that the loss of a major customer or any reduction in orders by a major customer would materially reduce our net sales and adversely affect our results of operations. We expect that sales to relatively few customers will continue to account for a significant percentage of our net sales for the foreseeable future. However, these customers or our other customers may not use our services at current levels in the future, if at all. If any one of these customers reduces their demand for our services, or if they are unable to pay us in full for the services that we have provided, it will have a material adverse effect on our operations.

We incurred substantial indebtedness in connection with our recent acquisitions.

In connection with our acquisition of Summit in June 2013, we issued purchase money indebtedness in an aggregate amount of $4.5 million, consisting of $2.0 million payable on a short-term basis, and $2.5 million payable pursuant to promissory notes that mature in January 2017. Through February 15, 2015, this long-term indebtedness is convertible at the option of the holder into shares of our common stock at the price at which our common stock is sold in this offering. To date, we have repaid approximately $1.5 million of the short-term obligations, and we intend to repay the $0.5 million balance of the short-term obligations from the proceeds of this offering.

In addition, certain of our target businesses were acquired subject to additional indebtedness. ORL is obligated to repay, and we agreed to guaranty, a $1.25 million revolving line of credit maturing on July 8, 2014, and a term loan in the principal amount of $0.65 million maturing on February 8, 2018. We repaid the revolving facility in July 2014. Harley Dome is obligated to repay monthly interest and principal under a $1.0 million purchase money note, the current principal balance of which is approximately $0.6 million. Harley Dome was also acquired subject to a mechanics lien in the amount of approximately $0.9 million.

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Western Slope is also obligated to pay $0.3 million under a promissory note maturing on December 15, 2014 issued in connection with the prior acquisition of UB Water. Summit is obligated to pay a $1.0 million credit facility, as described in more detail under the risk factor entitled “We may be required to repay our $1 million Summit Credit Facility”.

We may be required to repay our $1 million Summit Credit Facility.

In addition to the purchase money indebtedness issued as part of the acquisition, Summit was acquired under and subject to a $1.0 million credit facility that matured on April 5, 2014. As of July 21, 2014, the outstanding balance of the credit facility was $0.9 million. The facility matured in early April 2014, but has been extended through August 15, 2014. If we are not able to further extend this facility and subsequently refinance it with a different lender, we intend to use a portion of the proceeds from this offering to repay this debt.

ER&PWD Joint Venture, LLC, a subsidiary of our Harley Dome business unit, is a party to a lawsuit related to unpaid construction costs charged by subcontractors in the construction of our Utah-based waste treatment facility. See “Business-Legal Proceedings.” ER&PWD was an early-stage participant in the organization of the waste treatment project, however, was neither the title owner nor a developer of the project. Third parties that served as general contractors of the project are also parties to the lawsuit. As ER & PWD had virtually no role in the project, we do not believe we are legally responsible for the damages asserted. Rather, we believe that the general contractors of the project are responsible for payment of the claims asserted, as they were responsible for hiring the sub-contractors and administering the project. Accordingly, we will vigorously defend against these claims. However, in connection with the lawsuit, a mechanics lien has been placed on the property on which the facility is located. In addition to the risk of a foreclosure, this encumbrance could also limit us in our efforts to raise capital or use the property as collateral in a loan transaction. While there is currently one proceeding outstanding related to this matter, there were additional unpaid subcontractors involved in the project and we cannot provide any assurance that such subcontractors will not file actions against us in the future.

If the foregoing case is not settled on terms favorable to us, we would continue to incur significant costs defending against this claim. The outcome of this legal proceeding is inherently uncertain and could be unfavorable to us.

We may not be able to grow successfully through future acquisitions or successfully manage future growth.

Our business strategy includes growth through the acquisitions of other complementary businesses. We have previously acquired several businesses, many of which were losing money at the time of such acquisitions, to incorporate into our business plan. We may not be able to identify attractive acquisition opportunities or successfully acquire those opportunities identified. In addition, we may not be successful in integrating current or future acquisitions into our existing operations, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management’s attention. Even if we are successful in integrating our current or future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies or earnings gains, that we expected from such acquisitions, which may result in the commitment of our capital resources without the expected returns on such capital. Also, competition for acquisition opportunities may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions.

We may need to raise further capital to finance our acquisition strategy.

Our business strategy includes growth through the acquisitions of other complementary businesses. In order to complete acquisitions, we will need to raise additional funds in the future, and such funds may not be available on commercially reasonable terms, if at all. If we cannot raise enough funds on acceptable terms, we may not be able to fully implement our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This could seriously harm our business, financial condition and results of operations.

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We depend on our management, without whose services our business operations could be adversely affected or cease.

At this time, our management is wholly responsible for the development and execution of our business plan. If our management should choose to leave us for any reason before we hire additional personnel, our operations could be adversely effected. Even if we are able to find additional personnel, it is uncertain whether we could find qualified management who could develop our business along the lines described herein or would be willing to work for compensation that we could afford.

We will need to increase the size of our organization, and may experience difficulties in managing growth.

We are a small company with a limited management team, and limited corporate infrastructure. We expect to continue to experience a period of significant expansion in headcount, facilities, infrastructure and overhead to address potential growth and market opportunities and to meet our new reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Future growth will impose significant added capital requirements, as well as added responsibilities on members of management, including the need to identify, recruit, maintain and integrate new personnel. Our future financial performance and our ability to compete effectively will depend, in part, on our ability to manage any future growth effectively.

We expect our operating expenses to increase substantially in the future as we attempt to grow our business, and we may need to raise additional funds to meet the demands of growth initiatives.

We expect that our operating expenses will increase substantially over the next 12 months as we endeavor to implement growth initiatives, both organically and through acquisitions. As a result, we may need to raise additional funds in the future, and such funds may not be available on commercially reasonable terms, if at all. If we cannot raise funds on acceptable terms, we may not be able to implement our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This could seriously harm our business, financial condition and results of operations.

In order to meet our capital needs, we may be required to make additional borrowings or be required to issue new debt securities in the capital markets. We can provide no assurances that we will be able to access the debt capital markets or do so on favorable terms. If new debt is added to our current debt levels, the related risks we now face could intensify, limiting our ability to refinance existing debt on favorable terms. We will depend primarily on operations to fund our expenses and to pay the principal and interest on our outstanding debt. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business, economic, competitive, legislative, regulatory and other factors beyond our control. If we do not have enough money to pay the principal and interest on our outstanding debt, we may be required to refinance all or part of our existing debt, sell assets, borrow additional funds or sell additional equity. If our business does not generate sufficient cash flow from operations or if we are unable to incur indebtedness sufficient to enable us to fund our liquidity needs, we may be unable to plan for or respond to changes in our business that would prevent us from maintaining or increasing our business and cause our operating results and prospects to be affected adversely.

We may not be able to fully develop the water treatment solutions we are presently targeting.

We believe that one of our competitive advantages will be our ability to develop an all-inclusive oil field services business that offers proprietary and innovative water treatment systems and solutions. Towards that end, we have started the commissioning phase of our Harley Dome water treatment facility that includes a proprietary treatment train system for the treatment of contaminated production and flow-back water. In conjunction with commissioning our Harley Dome facility, which is a fixed, centralized-collection water treatment facility, we are also in the process of developing and deploying mobile treatment train units that can be deployed at specific customer sites for treating production and frac-flowback water. Also, we have recently become an exclusive licensee to distribute and operate the RecyClean HydroPod^TM mobile treatment units which feature a complementary water treatment solution. We are also seeking to acquire other treatment and servicing solutions and technologies as we expand our business. These solutions, and other similar water remediation technologies, are a material component of our planned business model.

We are still in the initial testing phase of our treatment train system and have just begun customer testing of our mobile units, including the RecyClean HydroPods^TM. We have yet to fully deploy the Harley Dome

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facility or test the treatment train system at expected operating volumes. We have also not engaged independent engineers or our own personnel to conduct testing to determine long-term effectiveness of such systems, nor have we deployed these solutions with any customers to determine commercial acceptance. Accordingly, we can offer no assurances as to the long-term effectiveness or commercial viability of our fixed site facilities or our mobile treatment systems.

Our HydroPod^TM license is for a short-term period with no assurances that we will be able to extend the license or acquire RecyClean.

We have recently signed an agreement to, for a period of up to one year, become an exclusive licensee to distribute and operate the RecyClean HydroPod^TM mobile treatment units, which feature a proprietary water treatment solution. In consideration for the license, we agreed to pay $500,000 in cash, and issue 40,000 shares of our common stock, with an additional 40,000 shares of our common stock due on the earlier of (i) six months after the effective date of the agreement, if we choose to renew the term of the agreement for an additional six months, or (ii) if we exercise our right to acquire RecyClean. During the term of the agreement, we have the exclusive right, but not the obligation, to acquire the business of RecyClean for $2.0 million, 1,333,333 shares of our common stock (which amount is calculated by dividing $8.0 million by the price per share of common stock in this offering), and royalty payments over a five year period, provided that a number of material conditions to closing are satisfied. These include the completion by us of such field testing, as we believe is satisfactory, to demonstrate long-term product validation and product performance in accordance with certain operational specifications. These also include the completion by us of a comprehensive legal due diligence examination of RecyClean, including its intellectual property rights, and the receipt of certain third party approvals. We may find that the one year license is inadequate to provide us with a meaningful water treatment solution. Further, there can be no assurances that we will elect to exercise our option to purchase RecyClean within the one-year term or, if we elect to exercise our option, that we will be able to complete such an acquisition.

Our proposed water treatment solutions are unproven and may not achieve widespread market acceptance among our prospective customers. If we are unable to sell our water treatment systems, our business will suffer.

Our treatment train combines a number of existing separation technologies using conventional and “off-the-shelf” components enhanced by a proprietary mixing methodology. Our solutions and processes for water treatment will compete with other forms of water treatment technologies that currently are in operation throughout the United States. Our water treatment solutions and the systems on which they are based may not achieve widespread market acceptance. Our success with both fixed water treatment facilities, such as our Harley Dome water treatment facility, and mobile water treatment units, including the RecyClean HydroPods^TM, will depend on our ability to market our system and services to businesses on terms and conditions acceptable to us and to establish and maintain successful relationships with various water providers and state regulatory agencies.

We believe that market acceptance of our system will depend on many factors including:

•

our current and future relationships with market participants within the oil and gas industry;

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our team of experienced professionals;

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the perceived advantages of our system over competing water treatment solutions;

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the safety and efficacy of our system;

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the availability of alternative water treatment solutions;

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the pricing and cost effectiveness of our system;

•

our ability to access businesses and water providers that may use our system;

•

the effectiveness of our sales and marketing efforts;

•

publicity concerning our system and technology or competitive solutions;

•

timeliness in assembling and installing our system on or near customer sites;

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•

our ability to respond to changes in regulations; and

•

our ability to provide effective service and maintenance of our systems to our customers’ satisfaction.

If our system fails to achieve or maintain market acceptance or if new technologies are introduced by others that are more favorably received than our systems, are more cost effective, or otherwise render our systems obsolete, we may not be able to sell our systems. If we are unable to sell our systems, our business and prospects would suffer.

Our operations are subject to extensive environmental laws and regulations. Our operating costs may increase as a result of complying with environmental laws and regulations. We also could incur substantial costs as a result of violations of or liabilities under such laws and regulations.

Our existing and planned water operations are subject to extensive federal, state and local laws and regulations, which govern the protection of the environment, health and safety, water allocation rights, and the manner in which we collect, treat, discharge and dispose of wastewater. These requirements include the United States Clean Water Act of 1972, which we refer to as the “Clean Water Act”. We may also be required to obtain various environmental permits from regulatory agencies for our operations. Certain of these permits require substantial lead time to obtain and, once obtained, require that certain compliance tasks must be completed on a regular basis in order to maintain such permits. State regulatory agencies also set conditions and standards for the water and wastewater services we deliver. If we deliver water or wastewater services to our customers that do not comply with regulatory standards, or otherwise violate environmental laws, regulations or permits, or other health and safety and water quality regulations, we could incur substantial fines, penalties or other sanctions or costs or damage to our reputation. In the most serious cases, regulators could force us to discontinue operations. We will incur substantial operating and capital costs on an ongoing basis to comply with environmental laws and regulations and other health and safety and water quality regulations. These laws and regulations, and their enforcement, have tended to become more stringent over time, and new or stricter requirements could increase our costs.

Although we may seek to recover ongoing compliance costs in our pricing, there can be no guarantee that such pricing may be sustained in the marketplace. We may also incur liabilities under environmental laws and regulations requiring us to investigate and clean up environmental contamination at our properties or at off-site locations where we have disposed of waste or caused adverse environmental impacts. We may also be subject to liability if we improperly handle, transport, process or dispose of frac-flowback water. The discovery of previously unknown conditions, the improper handling by us of frac-flowback water or other materials, or the imposition of cleanup obligations in the future, could result in significant costs, and could adversely affect our financial condition, results of operations, cash flow and liquidity. Such remediation losses may not be covered by our insurance policies and may make it difficult for us to secure insurance in the future at acceptable rates. If any remediation losses that are not covered by insurance are excessive, we may be required to significantly curtail our operations.

Our business depends on spending by the oil and natural gas industry in the United States, and this spending may be adversely affected by industry and financial market conditions that are beyond our control.

We will depend on our customers’ willingness to make operating and capital expenditures to explore, develop and produce oil and natural gas in the United States. Declines in these expenditures, due to the low oil and/or natural gas price environment or other factors, could result in project modification, delays or cancellations, general business disruptions, and delays in, or nonpayment of, amounts owed to us. Customers’ expectations for lower market prices for oil and natural gas, as well as the availability of capital for operating and capital expenditures, may also cause our customers to curtail spending, thereby reducing demand for our services. Industry conditions are influenced by numerous factors over which we have no control.

The volatility of the oil and natural gas industry and the impact on exploration and production activity could adversely impact the level of drilling activity by some of our customers or in some of the regions in which we operate. For example, in late 2011 and 2012, natural gas spot prices fell significantly, resulting in a decline in the number of active drilling rigs operating in many recognized shale deposits. This transition in

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exploration and production activity has caused and may continue to cause a decline in the demand for our services in affected regions where we operate or plan to operate, and may adversely affect the price of our services and the financial results of our operations. In addition, reduced discovery rates of new oil and natural gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger oil and natural gas prices, due to reduced frac-ing activity and reduced production water from existing wells to the extent existing production is not replaced and the number of producing wells for us to service declines.

Improvements in or new discoveries of alternative energy technologies or frac-ing methodologies could have a material adverse effect on our financial condition and results of operations.

Because our business will depend on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies (such as wind, solar, geothermal, fuel cells and biofuels) that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse impact on our business, financial condition and results of operations. In addition, technological changes could decrease the quantities of, or eliminate the need for, water required frac-ing operations or otherwise affect demand for our services. In recent years, energy producers have sought to reduce water consumption in their frac-ing operations by using additives to thicken water or using water alternatives, such as liquid propane. If the use of such materials expands in the oil and gas industry and water consumption is reduced, our business could be materially and adversely affected.

Increased regulation of hydraulic fracturing could result in the reduction in drilling and completing new oil and natural gas wells or minimize water use or disposal, which could adversely impact the demand for our services.

Demand for our services depends, in large part, on the level of exploration and production of oil and gas and the oil and gas industry’s willingness to purchase our services. Most of our anticipated customer base uses hydraulic fracturing to stimulate production from new oil and gas wells. Hydraulic fracturing is a process that is used to release hydrocarbons, particularly natural gas, from certain geological formations. The process involves the injection of water (typically mixed with significant quantities of sand and small quantities of chemical additives) under pressure into the formation to fracture the surrounding rock and stimulate movement of hydrocarbons through the formation. The process is subject to regulation by state and federal authorities and agencies, certain of whom are currently conducting comprehensive studies of the potential environmental impacts of hydraulic fracturing activities. Future federal, state or local laws or regulations could significantly restrict, or increase costs associated with hydraulic fracturing and make it more difficult or costly for producers to conduct hydraulic fracturing operations, which could result in a decline in exploration and production. New laws and regulations, and new enforcement policies by regulatory agencies, could also expressly restrict the quantities, sources and methods of water use and disposal in hydraulic fracturing and otherwise increase our costs and our customers’ cost of compliance, which could minimize water use and disposal needs even if other limits on drilling and completing new wells were not imposed. Any decline in exploration and production or any restrictions on water use and disposal could result in a decline in demand for our services and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our logistics business subjects us to the risks of operating within the trucking industry; the trucking industry is extremely competitive and fragmented.

One of our lines of business involves the transport of water via our road trucking and logistics unit. Thus, we are subject to the risks of operating within the trucking industry. The trucking industry is extremely competitive and fragmented. No single carrier in the water logistics market has a significant market share. We compete with many other carriers of varying sizes, customers’ private fleets, railroads and, in certain instances, with pipelines which may limit our growth opportunities and reduce profitability. Historically, competition has created downward pressure on the trucking industry’s pricing structure. Many trucking companies with which we compete have greater financial resources than we do.

We believe that one of the most significant competitive factors that impacts demand for our services is rates, and we may be forced to lower our rates based on our competitors’ pricing decisions, which would reduce our profitability. In fact, certain markets that we serve, or intend to serve, have experienced fierce price

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competition in recent years. With respect to our water logistics business, we also compete with intermodal transportation, pipelines and railroads. Intermodal transportation has increased in recent years. Growth in such forms of transport could adversely affect our market share, net sales and profit margins. Competition from non-trucking modes of transportation and from intermodal transportation would likely increase if state or federal fuel taxes were to increase without a corresponding increase in taxes imposed upon other modes of transportation.

Additional trends include current and anticipated consolidation among our competitors which may cause us to lose market share as well as put downward pressure on pricing. Some of our competitors are larger, have greater financial resources and have less debt than we do. As a result, those competitors may be better able to withstand a change in conditions within our industry and in the economy as a whole. If we do not compete successfully, our operating margins, financial condition, cash flows and profitability could be adversely affected.

Our water logistics business may suffer if production shifts away from or slows in the shale regions in which we have or plan to have operations.

Our water logistics business currently serves customers in the oil, gas and hydraulic fracturing energy markets in the Western slope of Colorado and eastern Utah, the DJ basin area in central and northern Colorado, and the Permian basin. A shale region may yield only oil or gas or both commodities, depending upon the region. In the past, hydraulic fracturing activity has shifted among shales as the relative prices of oil and gas make drilling for one commodity more profitable than another. Oil or gas drilling may shift away from the shale regions in which we have operations because of these commodity price swings or for other reasons over which we have no control, such as resource discovery, new pipeline access, local drilling costs or state regulation. While certain business assets may be redistributed among shales, assets such as terminals, disposal wells and certain customer contracts are specific to discrete shale regions. Even business assets that may be redistributed or repurposed may require time and expenditures for conversion for optimal use in a different shale region or for a different service. A drilling shift away from or slowdown in shales in which we have assets could result in asset-related charges and decreased revenues and have a material adverse effect on our results of operations.

The trucking industry is subject to regulation, and changes in trucking regulations may significantly increase our costs.

As a motor carrier, we are subject to federal regulation by the Federal Motor Carrier Safety Administration, or “FMCSA,” a unit within the United States Department of Transportation, or “DOT”, and by various federal, state, and provincial agencies. These regulatory authorities exercise broad powers governing various aspects such as operating authority, safety, hours of service, hazardous materials transportation, financial reporting and acquisitions. There are additional regulations specifically relating to the trucking industry, including testing and specification of equipment, product-handling requirements and drug testing of drivers. Any downgrade in our DOT safety rating (as a result of the new CSA regulations described below or otherwise) could adversely affect our business.

In December 2010, the FMCSA began to rate individual driver safety performance inclusive of all driver violations over 3-year time periods under regulations known as the CSA. CSA is an FMCSA initiative designed to provide motor carriers and drivers with attention from FMCSA and state partners about their potential safety problems with an ultimate goal of achieving a greater reduction in large truck and bus crashes, injuries, and fatalities. Prior to these regulations, only carriers were rated by the DOT and the rating only included out-of-service violations and ticketed offenses associated with out-of-service violations.

The trucking industry is subject to possible regulatory and legislative changes that may affect the economics of the industry by requiring changes in operating practices, emissions or by changing the demand for common or contract carrier services or the cost of providing trucking services. Possible changes include:

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increasingly stringent environmental regulations, including changes intended to address climate change;

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restrictions, taxes or other controls on emissions;

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•

regulation specific to the hydraulic fracturing industry and logistics providers to the industry;

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changes in the hours-of-service regulations, which govern the amount of time a driver may drive in any specific period;

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requirements leading to accelerated purchases of new trailers;

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mandatory limits on vehicle weight and size;

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driver hiring restrictions;

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increased bonding or insurance requirements; and

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regulations imposed by the Department of Homeland Security.

From time to time, various legislative proposals are introduced, including proposals to increase federal, state, or local taxes, including taxes on motor fuels and emissions, which may increase our or our independent affiliates’ operating costs, require capital expenditures or adversely impact the recruitment of drivers.

Restrictions on emissions or other climate change laws or regulations could also affect our customers that use significant amounts of energy or burn fossil fuels in producing or delivering the products we carry. We also could lose revenue if our customers divert business from us because we have not complied with their sustainability requirements.

The loss of qualified drivers or other personnel could limit our growth and negatively affect operations.

During periods of high trucking volumes, there is substantial competition for qualified drivers in the trucking industry. Regulatory requirements, including CSA (discussed above), and an improvement in the economy could reduce the number of eligible drivers. Furthermore, certain geographic areas have a greater shortage of qualified drivers than other areas. We operate, and intend to operate, in geographic areas where there have been driver shortages in the past. Difficulty in attracting qualified personnel, particularly qualified drivers, could require us to increase driver compensation, forego available customer opportunities and underutilize the trucks in our network. These actions could result in increased costs and decreased revenues. In addition, we may not be able to recruit other qualified personnel in the future.

Geopolitical conditions and global economic factors may adversely affect us.

Uncertain geopolitical conditions and global economic factors may adversely affect our business. Adverse factors affecting economic conditions worldwide have contributed to a general inconsistency in the oil and gas industry and may adversely impact our business, resulting in reduced demand for water remediation and supply in the oil and gas industry. The current and ongoing uncertainty of the international economic situation, civil unrest, terrorist activity and military actions may continue to adversely affect global economic conditions. Economic and market conditions could deteriorate as a result of any of the foregoing reasons. We may experience material adverse effects on our business, financial condition, results of operations and cash flows as a consequence of the foregoing factors.

Weather conditions, natural hazards, availability of water supplies and competing uses may interfere with our sources of water, demand for water services and our ability to supply water to customers.

Our ability to meet the existing and future water demands of our customers depends on an adequate supply of water. In our Texas operations, we are deemed to own the water residing on or under our property. However, in certain other states, sources of public water supply, including rivers, lakes, streams and groundwater aquifers are held in the public trust and are not owned by private interests. As such, in those states, we would not expect to own the water that we use in our operations, and the availability of our water supply is established through allocation rights and passing-flow requirements set by governmental entities. Passing-flow requirements set minimum volumes of water that must pass through specified water sources, such as rivers and streams, in order to maintain environmental habitats and meet water allocation rights of downstream users. Allocation rights are imposed to ensure sustainability of major water sources and passing flow requirements are most often imposed on source waters from smaller rivers, lakes and streams. These

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requirements can change from time to time and adversely impact our water supply. Drought, overuse of sources of water, the protection of threatened species or habitats or other factors may limit the availability of ground and surface water.

Unlike our Texas operation, we obtain our water in Colorado from a third-party supplier. This supplier is currently pursuing industrial water rights in a proceeding pending before the Colorado Water Court, and is currently operating under the temporary authority to sell water pending the resolution of this proceeding. We do not anticipate that this proceeding will be resolved for some time, during which we expect to continue purchasing water from this supplier. Any adverse decision by the Water Court could limit the amount of water we can purchase from this supplier, which may require us to seek alternative sources of water at higher prices than we are currently paying this supplier. This could have a material adverse effect on our financial condition and results of operations.

Governmental restrictions on water use may also result in decreased use of water services, even if our water supplies are sufficient to serve our customers, which may adversely affect our financial condition and results of operations. Seasonal drought conditions that would impact our water services are possible across all of our service areas, and drought conditions currently exist in several areas of the United States. If a regional drought were to occur affecting our service areas and adjacent systems, governmental restrictions may be imposed on all systems within a region independent of the supply adequacy of any individual system. Following drought conditions, water demand may not return to pre-drought levels even after restrictions are lifted. Cool and wet weather may also reduce demand for water, thereby adversely affecting our financial condition, results of operations, cash flow and liquidity.

Service interruptions due to severe weather events are possible across all contemplated service areas. These include winter storms and freezing conditions in colder climate service areas, high wind conditions in service areas known to experience tornados, earthquakes in service areas known to experience seismic activity, high water conditions for facilities that could be located in or near designated flood plains, hurricanes in coastal service areas and severe electrical storms which are possible across all contemplated service areas. These weather events may affect the condition or operability of our facilities, limiting or preventing us from delivering water or wastewater services to our customers, or requiring us to make substantial capital expenditures to repair any damage. Any interruption in our ability to supply water or to collect, treat and properly dispose of wastewater, or any costs associated with restoring service, could adversely affect our financial condition and results of operations. Furthermore, losses from business interruptions or damage to our facilities might not be covered by our insurance policies and such losses may make it difficult for us to secure insurance in the future at acceptable rates.

Risks associated with the collection and delivery of water may impose significant costs.

If the water collection systems fail, overflow or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to aquatic life and economic damages, which may not be recoverable in rates. This risk is most acute during periods of substantial rainfall or flooding, which are the main causes of sewer overflow and system failure. Liabilities resulting from such damage could adversely and materially affect our business, results of operations and financial condition. Moreover, in the event that we are deemed liable for any damage caused by overflow, our losses might not be covered by insurance policies, and such losses may make it difficult for us to secure insurance in the future at acceptable rates.

Contamination of our sources of water could result in service interruptions and human exposure to hazardous substances and subject us to civil or criminal enforcement actions, private litigation and cleanup obligations.

Our current and contemplated future water supplies could be subject to contamination, including contamination from naturally-occurring compounds, chemicals in groundwater systems, pollution resulting from man-made sources, such as perchlorate and methyl tertiary butyl ether (MTBE), and possible terrorist attacks. In the event that our water supply is contaminated, we may have to interrupt the use of that water supply until we are able to substitute the supply of water from another water source, including, in some cases, through the purchase of water from a third-party supplier. In addition, we may incur significant costs in order to treat the contaminated source through expansion of our current treatment facilities, or development of new

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treatment methods. If we are unable to substitute water supply in a cost-effective manner, our financial condition, results of operations, cash flow, liquidity and reputation may be adversely affected. We might not be able to recover costs associated with treating or decontaminating water supplies through our prices, or such recovery may not occur in a timely manner. Moreover, we could be held liable for environmental damage as well as damages arising from toxic tort or other lawsuits or criminal enforcement actions or other consequences arising out of human exposure to hazardous substances in our drinking water supplies.

Changes in laws and regulations over which we have no control can significantly affect our business and results of operations.

Any governmental entity that regulates our operations may enact new legislation or adopt new regulations or policies at any time, and new judicial decisions may change the interpretation of existing legislation or regulations at any time. The individuals who serve as regulators are elected or are political appointees. Therefore, elections which result in a change of political administration or new appointments may also result in changes in the individuals who serve as regulators and the policies of the regulatory agencies that they serve. New laws or regulations, new interpretations of existing laws or regulations, or changes in agency policy, including as a response to shifts in public opinion, or conditions imposed during the regulatory hearing process may affect our business in a number of ways.

There is no current trading market for our common stock, and there is no assurance of an established public trading market, which would adversely affect the ability of our investors to sell their securities in the public market.

Our common stock is not currently listed or quoted for trading on any national securities exchange or national quotation system. We have applied for the listing of our common stock on the NASDAQ Capital Market under the symbol “AWA”. There is no guarantee that NASDAQ, or any other securities exchange or quotation system, will permit our shares to be listed and traded.

The market price and trading volume of shares of our common stock may be volatile.

When and if a market develops for our securities, the market price of our common stock could fluctuate significantly for many reasons, including reasons unrelated to our specific performance, such as reports by industry analysts, investor perceptions, or announcements by our competitors regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other large companies within our industry experience declines in their share price, our share price may decline as well. Fluctuations in operating results or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the price of our securities.

Quarterly operating results may fluctuate in the future due to a variety of factors that could negatively affect revenues or expenses in any particular quarter, including vulnerability of our business to a general economic downturn; changes in the laws that affect our products or operations; competition; compensation related expenses; application of accounting standards; and our ability to comply with all necessary regulatory permits and/or licenses to conduct our business. In addition, if the market price of our shares should ever drop significantly, stockholders could institute securities class action lawsuits against us, even though there may be no legal basis for any such lawsuit. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources.

We have provided registration rights to certain holders of our common stock that will require us to register their shares after the completion of this initial public offering. The exercise of these registration rights may substantially reduce the market price of our common stock and the existence of these rights may make it more difficult for us to complete future offerings.

Between April and July 2013 we granted registration rights to the purchasers of 2,108,333 shares of our common stock in connection with the private placements of these shares. While these shares are not being registered as part of this offering, we are required to file with the SEC a reoffer registration statement to register such shares after the expiration of a waiting period as determined by the underwriter.

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We also granted to the placement agent with respect to these private placements piggyback registration rights on 203,333 shares of common stock underlying warrants granted to the placement agent as partial compensation for its services in connection with these private placements. Such registration rights do not require us to include the placement agent’s warrant shares in an initial public offering, and therefore such shares are not included in this offering. However, the placement agent may elect to include its warrant shares in the reoffer registration statement described in the paragraph above.

In addition, a warrant to purchase 125,000 shares of common stock that we will issue to the underwriter as partial compensation for its services as underwriter will provide for certain “demand” and “piggyback” registration rights at our expense with respect to the underlying shares of common stock during the five and seven year periods commencing six months after the effective date of the registration statement on Form S-1 of which this prospectus forms a part.

Upon the consummation of this offering, we will have a total of 16,650,018 shares of common stock outstanding (based on the number of shares outstanding as of July 21, 2014). Following the completion of this offering, the shares covered by registration rights will represent approximately 13.5% of our outstanding common stock (or 13.2%, if the underwriter exercises in full its option to purchase additional shares). Registration of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

The presence of this additional number of shares of common stock eligible for trading in the public market may substantially reduce the market price of our common stock. In addition, the existence of these holders’ registration rights may make it more difficult for us to complete future public offerings and may reduce the amount of capital that we are able to raise for our own account in these offerings.

If you purchase securities in this offering, you will suffer immediate dilution of your investment.

Assuming our sale of shares of common stock at an assumed public offering price of $6.00 per share of common stock (the midpoint of the range set forth on the cover page of this prospectus), and after deducting the underwriting discount and commissions and estimated offering expenses, our pro forma, as-adjusted net tangible book value as of March 31, 2014 would be approximately $7.68 million, or $0.75 per share of common stock outstanding. The sale of shares of common stock in this offering represents an immediate increase in net tangible book value of $1.40 per share of common stock to our existing stockholders and an immediate dilution of $5.25 per share of common stock to the new investors purchasing common stock in this offering. Purchasers of common stock in this offering will have contributed approximately 66% of the aggregate price paid by all owners of our common stock but will own only approximately 29% of our common stock outstanding after this offering.

Additional dilution will be immediately experienced upon the completion of this offering due to the issuance of certain shares to management and the automatic conversion of existing convertible promissory notes and shares of our preferred stock, and may be further be experienced upon exercise of our outstanding options and warrants, and upon the conversion of our convertible promissory notes entered into in connection with our Summit acquisition.

Upon completion of our initial public offering, we will be required to issue: (i) 595,238 shares of common stock upon the conversion of $2.5 million of convertible promissory notes previously issued by us in private placement transactions; (ii) 3,019,813 shares of common stock upon the conversion of our outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, (iii) 1,331,250 shares of common stock upon the conversion of our outstanding shares of Series E Preferred Stock, (iv) 41,667 shares of common stock to certain of our executive officers and directors, and (v) 50,000 shares of common stock in connection with the acquisition of trucks and equipment. We may also issue additional shares of common stock if the holders of the $1.9 million principal amount promissory notes issued in connection with our acquisition of Summit elect to convert such notes into shares of common stock, and if the holders of our outstanding options and warrants choose to exercise such options and warrants. As of the date of this prospectus, we had outstanding options and warrants to purchase an aggregate of 2,352,291 shares of our common stock. These options and warrants have been issued subject to an average exercise price of $5.46 per share. If all of the foregoing options, warrants, convertible preferred stock and convertible notes

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had been exercised or converted as of March 31, 2014, net tangible book value per share after this offering would have been $2.10 and total dilution per share to new investors would have been $3.90, or 65%, assuming no exercise of the over-allotment option. In addition, we may in the future issue additional shares of our common stock upon the exercise or conversion of any additional options, warrants, convertible debt, or preferred shares we may issue in the future.

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

Our intent is to generally use the net proceeds from this offering in the manner identified in this prospectus, including as set forth under the Section entitled “Use of Proceeds.” However, our management will have broad discretion in the application of the net proceeds from this offering subject to our obligation to repay approximately $0.9 million of our outstanding credit facility, $0.5 million in short term indebtedness, and certain other payables, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our securities. We are not required to allocate the net proceeds from this offering to any specific investment or transaction and, therefore, you cannot determine at this time the value or propriety of our application of the proceeds. Moreover, you will not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use our proceeds. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our securities to decline. Pending the application of these funds, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If we continue to fail to maintain effective internal control over financial reporting, the price of our shares of common stock may be adversely affected.

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls in the future, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require us to assess the effectiveness of our internal control over financial reporting annually and to report our conclusion in our annual report on form 10-K. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.

In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

In connection with the preparation of our financial statements for the year ended December 31, 2013, our auditors identified material weaknesses in the design and operating effectiveness of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, that creates a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses that we identified resulted from (i) insufficient written policies and procedures for accounting and financial reporting with respect to formal process and timeline for the closing the books and records and preparing financial statements at the end of each reporting period, (ii) insufficient monitoring and control over the books and records maintained on third party supplier IT systems, (iii) lack of password and access controls certain accounting information, (iv) lack of knowledge of generally accepted accounting principles, (v) insufficient control information provided to management, and (vi) overreliance on manual accounting subsystems and limited review of input information by management.

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We are taking steps that we believe will address the underlying causes of the material weakness described above, primarily through the implementation of formal policies and a company-wide financial system, along with hiring additional personnel. However, if we fail to effectively remediate deficiencies in our control environment, we may be unable to accurately report our financial results, or report them within the time frames required by law or exchange regulations.

To date, we have not conducted a review of our internal controls for the purpose of providing the reports required by Section 404. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the applicable stock exchange. Any such action could adversely affect our financial results or investors’ confidence in us and could cause our stock price to decline. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect our stock price. Inadequate internal controls could also cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, which could have a negative effect on our stock price.

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

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. For example, on January 30, 2009, the SEC adopted rules requiring companies to provide their financial statements in interactive data format using the extensible Business Reporting Language, or XBRL. We are required to comply with these rules. Our management and other personnel will need to devote a substantial amount of time and financial resources to comply with these requirements, as well any new requirements implemented by the SEC. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly and could lead to a diversion of management time and attention from revenue generating activities to compliance activities. We are currently unable to estimate these costs with any degree of certainty. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors and board committees or as executive officers and more expensive for us to obtain director and officer liability insurance.

If NASDAQ or any other national securities exchange or national quotation system does not list our shares of common stock, our shares of common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.

Our common stock, which is not currently listed or quoted for trading, may be considered to be a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Exchange Act, once, and if, it starts trading. Our common stock may be a “penny stock” if it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is NOT traded on a “recognized” national exchange; or (iii) is issued by a company that has been in business less than three years with net tangible assets less than $5 million.

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from

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the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price and trading volume of our common stock could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of us the trading price for our common stock and other securities would be negatively affected. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our securities, the price of our securities would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities could decrease, which could cause the price of our common stock and other securities and their trading volume to decline.

We do not foresee paying cash dividends on our common stock in the foreseeable future and, as a result, our investors’ sole source of gain, if any, will depend on capital appreciation, if any.

We do not plan to declare or pay any cash dividends on our shares of common stock in the foreseeable future. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors’ sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of our common stock at or above the price they paid for them.

We have adopted an equity incentive plan under which we may grant securities to compensate employees and other services providers, which could result in increased share-based compensation expenses and, therefore, reduce net income.

Under current accounting rules, we would be required to recognize share-based compensation as compensation expense in our statement of operations, based on the fair value of equity awards on the date of the grant, and recognize the compensation expense over the period in which the recipient is required to provide service in exchange for the equity award. If we grant equity compensation to attract and retain key personnel, the expenses associated with share-based compensation may adversely affect our net income. However, if we do not grant equity compensation, we may not be able to attract and retain key personnel or be forced to expend cash or other compensation instead. Furthermore, the issuance of equity awards would dilute the stockholders’ ownership interests in our company.

We are an “emerging growth company” and we cannot be certain that the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

The JOBS Act permits “emerging growth companies” like us to rely on some of the reduced disclosure requirements that are already available to smaller reporting companies. As long as we qualify as an emerging growth company or a smaller reporting company, we would be permitted to omit the auditor’s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act, and are also exempt from the requirement to submit “say-on-pay”, “say-on-pay frequency” and “say-on-parachute” votes to our stockholders and may avail ourselves of reduced executive compensation disclosure that is already available to smaller reporting companies.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended. An emerging growth company can therefore

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delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of this exemption. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and could cause our stock price to decline.

While we currently qualify as an “emerging growth company” under the JOBS Act, we will lose that status at the latest by the end of 2019, which will increase the costs and demands placed upon our management.

We will continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion (as indexed for inflation); (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under this prospectus; (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or (iv) the date on which we are deemed to be a ‘large accelerated filer,’ as defined by the Securities and Exchange Commission, which would generally occur upon our attaining a public float of at least $700 million. Once we lose emerging growth company status, we expect the costs and demands placed upon our management to increase, as we would have to comply with additional disclosure and accounting requirements, particularly if we would also no longer qualify as a smaller reporting company.

The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares.

FINRA has adopted rules that require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.

Our articles of incorporation and bylaws and Nevada law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.

Our articles of incorporation and bylaws could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 50,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. We currently have 22,937,423 shares of preferred stock outstanding, consisting of 3,751,157 shares of Series A Preferred Stock, 10,127,500 shares of Series B Preferred Stock, 6,202,516 shares of Series C Preferred Stock, 1,500,000 Series D Preferred Stock and 1,331,250 shares of Series E Preferred Stock. The shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock have liquidation and dividend preferences in priority to our common stock, although such preferred stock will automatically be converted into common stock upon completion of this offering. We may issue additional preferred shares to facilitate future acquisitions or financings. The issuance of any additional preferred stock could materially adversely affect the rights of the

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holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

Provisions of our articles of incorporation and bylaws and Nevada law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, the articles of incorporation and bylaws and Nevada law, as applicable, among other things:

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do not provide for cumulative voting in the election of directors;

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require the approval of the holders of at least 66 2/3% of the voting power of our shares in order to remove a director; and

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authorize the issuance by the Board of “blank check” preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super-majority voting, special approval, dividend or other rights or preferences superior to the rights of the holders of our common stock.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this prospectus contains certain forward-looking statements which include information relating to future events, future financial performance, financial projections, business strategies, expenditures, competitive environment, plans and objectives of management for future operations and regulations. All statements other than statements of historical facts contained or incorporated by reference in this prospectus are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “may,” “could,” “should,” “would,” “predict,” “potential,” “future,” “plan,” “intend” and “expect” and similar expressions generally identify forward-looking statements. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: our limited assets; our lack of operating history; our ability to raise additional capital; changes in business conditions; limited availability of suitable acquisition candidates, continued services of our executive management team; competition between us and other companies in the water treatment; supply and disposal industry, legislative or regulatory changes; legal claims against us; technological developments in the energy industry; reduced oil and natural gas production; reduction in available water sources; and statements of assumption underlying any of the foregoing, as well as other factors set forth under the caption “Risk Factors” on page 11 of this prospectus. Moreover, new risks regularly emerge and it is not possible for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this prospectus. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.

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USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $12,725,000 million from the sale of shares of common stock offered in this offering, or approximately $14,785,000 million if the underwriter exercises its over-allotment option in full, based on an assumed initial public offering price of $6.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $2.3 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 250,000 in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $1.4 million, assuming the initial public offering price per share stays the same. An increase of 250,000 in the number of shares we are offering, together with a $1.00 increase in the assumed initial public offering price per share, would increase the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $3.9 million. A decrease of 250,000 in the number of shares we are offering, together with a $1.00 decrease in the assumed initial public offering price per share, would decrease the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, by approximately $3.4 million. We do not expect that a change in the offering price per share or the number of shares by these amounts would have a material effect on our intended uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.

We intend to use the net proceeds from this offering as follows:

•

repayment of approximately $0.5 million related to short-term notes issued in connection with our acquisition of Summit;

•

approximately $4.0 million towards strategic acquisitions;

•

approximately $2.0 million towards the payment of costs incurred in the development of our water treatment facility and of our first generation treatment train system;

•

approximately $5.0 million for continued capital projects and improvements, including development of new water treatment facilities and systems; and

•

the remaining net proceeds will be used for general corporate purposes, including ongoing operations, vendor payables and expansion of the business, potential regulatory submissions and hiring additional personnel to support the continued expansion of our operations.

In addition, we have a line of credit with a remaining balance of approximately $0.9 million which matures in mid-August 2014. If we are unable to refinance these credit facilities in the near term, we may be required to repay up to approximately $0.9 million in indebtedness from the proceeds of this offering.

The expected use of the net proceeds from this offering represents our current intentions based on our present plans and business conditions. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received from this offering. The amounts and timing of our actual expenditures will depend on numerous factors including the completion of, and cost to operate, our water treatment facility. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of management regarding the application of the net proceeds from the offering. We may find it necessary or advisable to reallocate the net proceeds of this offering; however any such reallocation would be substantially limited to the categories set forth above to use the net proceeds for other purposes. Pending such uses set forth above, we plan to invest the net proceeds in government securities and other short-term investment grade, marketable securities.

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DETERMINATION OF OFFERING PRICE

The anticipated purchase price range of $5.00 to 7.00 per share of common stock offered in this offering was determined by our board of directors, in consultation with our underwriter. We did not seek or obtain an opinion of a financial advisor in establishing the purchase price. The actual offering price will be determined through negotiations between us and the underwriter. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriter believe to be comparable to us, estimates of our business potential, including our prospects for growing our services, the present state of our development, our capital structure and other factors deemed relevant. The actual offering price will not necessarily be related to our book value, tangible book value, multiple of earnings or any other established criteria of fair value and may or may not be considered the fair value of our common stock to be offered in this offering. You should not assume or expect that, after this offering, our shares of common stock will trade at or above the purchase price in any given time period.

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DIVIDEND POLICY

We do not expect to declare or pay any cash dividends on our common stock in the foreseeable future, and we currently intend to retain future earnings, if any, to finance the expansion of our business. The decision whether to pay cash dividends on our common stock will be made by our board of directors in its discretion and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. In addition, we are required to pay accrued dividends on our outstanding preferred stock before declaring any dividends on our common stock. Further, certain of our indebtedness prohibits us from declaring dividends until such indebtedness is repaid. We have not paid any cash dividends since our inception.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2014 as follows:

•

on an actual (unaudited) basis;

•

on a pro forma basis to reflect (i) the issuance of 50,000 shares of common stock through private placements after March 31, 2014, (ii) the conversion of approximately $5.9 million of our acquisition promissory notes (and accrued interest) and approximately $2.7 million of our short term promissory notes (and accrued interest) into shares of preferred stock and 1,244,626 shares of common stock, (iii) the conversion of an aggregate of 21,581,173 shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock into 3,019,813 shares of common stock, (iv) the issuance and subsequent automatic conversion of 1,331,250 shares of Series E Preferred Stock into 1,331,250 shares of common stock, (iv) the repayment of $1.5 million of our acquisition promissory notes from the proceeds of the offering of our Series E Preferred Stock, (v) the issuance of 41,667 shares issuable to certain officers and directors upon completion of this offering, (vi) the repayment of $0.5 million of short term obligations incurred in connection with our Summit acquisition, (vii) the automatic conversion of $2.5 million principal amount of convertible promissory notes into an aggregate of 595,238 shares of common stock, and (viii) the issuance of 50,000 shares of common stock in connection with our acquisition of trucks and equipment; and

•

on a pro forma as adjusted basis to give further effect to our issuance and sale of 2,500,000 shares of common stock in this offering at an assumed initial public offering price of $6.00 per share, the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma and pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.

On February 6, 2014, we completed a 1 for 3 reverse stock split of our common stock, whereby the holders of our common stock received one share of common stock for every three shares owned by such holders. Unless otherwise indicated in this prospectus, all numbers are reflected on a post-split basis. You should read this information in conjunction with our financial statements and the related notes appearing at the end of this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in this prospectus.


	As of March 31, 2014
	Actual (unaudited)		Pro Forma			Pro Forma As Adjusted⁽¹⁾
	(in thousands)
Current Assets:
Cash and cash equivalents	$	1,618		16,204			17,822
Current Liabilities:
Secured line of credit borrowing facilities		3,652		—			3,652
Accounts payable		5,306		—			5,306
Accrued expenses		1,423		(690	)		733
Other current liabilities		622		(300	)		322
Short term notes and current portion of long term debt – related party		1,818		(1,818	)		—
Short term notes and current portion of long-term debt		9,734		(7,334	)		2,400
	$	22,555		(10,142	)		12,413

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	As of March 31, 2014
	Actual (unaudited)		Pro Forma			Pro Forma As Adjusted⁽¹⁾
	(in thousands)
Long Term Liabilities:
Liens payable		897		—			897
Notes payable (net of current portion)		4,823		(1,654	)		3,169
Notes payable – related party		1,437		(1,437	)		—
Derivative liability		720		(720	)		—
Asset retirement obligation		8		—			8
	$	7,885		(3,811	)		4,074
Stockholders’ Equity:
Series A preferred stock, $0.0001 par value per share; 4,000,000 shares authorized, 3,200,000 shares issued and outstanding, actual; 4,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		320		(320	)		—
Series B preferred stock, $0.0001 par value per share; 8,000,000 shares authorized, 8,000,000 shares issued and outstanding, actual; 11,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		1		(1	)		—
Series C preferred stock, $0.0001 par value per share; 3,500,000 shares authorized, 3,500,000 shares issued and outstanding, actual; 7,000,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		—		—			—
Series D preferred stock, $0.0001 par value per share; 1,500,000 shares authorized, 1,500,000 shares issued and outstanding, actual; 1,500,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		—		—			—
Series E preferred stock, $0.0001 par value per share; 1,875,000 shares authorized, No shares issued and outstanding, actual; 1,875,000 shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		—		—			—
Undesignated preferred stock, $0.0001 par value per share; 33,000,000 shares authorized, no shares issued or outstanding, actual; 24,625,000 shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted		—		—			—
Common stock, $0.0001 par value per share; 100,000,000 shares authorized, 7,777,421 shares issued, issuable and outstanding, actual; 100,000,000 shares authorized, 16,650,018 issued and outstanding, pro forma and pro forma as adjusted		1		1			2
Additional paid in capital		15,668		28,303			43,971
		15,990		27,983			43,973

(1)

Each $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share, the midpoint of the price range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, total stockholders’ equity (deficit) and total capitalization by approximately $2.3 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts

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and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million shares in the number of shares offered by us at the assumed initial public offering price per share of $6.00 per share, the midpoint of the price range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, total stockholders’ equity (deficit) and total capitalization by approximately $5.5 million.

The number of our shares of common stock shown above to be outstanding after this offering is based on (i) 7,777,421 shares of common stock issued and outstanding as of March 31, 2014, (ii) 50,000 shares of common stock issued pursuant to private placements after March 31, 2014, (iii) 40,000 shares issued in connection with our Exclusive Distributor Agreement with RecyClean, (iv) 2,500,000 shares of common stock issued in this offering, (v) 41,667 shares issuable to certain officers and directors upon completion of this offering, (vi) the conversion of approximately $5.9 million of our acquisition promissory notes and $2.7 million of our short-term promissory notes (including accrued interest) into shares of preferred stock and 1,244,626 shares of common stock; (vii) 595,238 shares of common stock issuable upon the automatic conversion of $2.5 million principal amount of convertible promissory notes issued from October 2013 to January 2014, (vii) 3,019,813 shares of common stock issuable upon the conversion of our outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, (viii)1,331,250 shares of our common stock issuable upon the automatic conversion of our outstanding shares of Series E Preferred Stock upon the completion of this offering, and (ix) 50,000 shares of common stock issuable upon completion of this offering in connection with our acquisition of trucks and equipment. The number excludes: (i) shares of our common stock that we may issue upon the underwriter’s over-allotment option exercise; (ii) 998,958 shares of common stock underlying outstanding warrants exercisable at $6.52 per share; (iii) 1,353,333 shares of common stock underlying outstanding options exercisable at an average weighted average exercise price of $4.68 per share; (iv) 317,136 shares of our common stock potentially issuable upon the election of the holders of approximately $1.9 million principal amount of indebtedness issued in connection with our acquisition of our Summit business unit to convert such indebtedness into shares of common stock; (v) 1,333,333 shares of our common stock issuable if we exercise our option to acquire RecyClean Consulting Services, Inc. pursuant to an Exclusive Distributor Agreement entered into in June 2014; and (vi) shares of common stock underlying warrants that will be issued to the underwriter upon completion of this offering.

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DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering.

As of March 31, 2014, we had a historical net tangible book value (deficit) of $(5.04) million, or $(0.65) per share of common stock, based on 7,777,421 shares of common stock issuable and outstanding at March 31, 2014. Our historical net tangible book value represents total tangible assets less total liabilities at March 31, 2014.

After giving further effect to the sale of 2,500,000 shares of common stock that we are offering at an assumed initial public offering price of $6.00 per share, the midpoint of the price range listed on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2014 would have been approximately $7.68 million, or approximately $0.75 per share. This amount represents an immediate increase in pro forma net tangible book value of $1.40 per share to our existing stockholders and an immediate dilution of approximately $5.25 per share to new investors purchasing shares of common stock in this offering.

Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the initial public offering price per share paid by new investors. The following table illustrates this dilution:


Assumed public offering price per share				$	6.00
Historical net tangible book value (deficit) per share as of March 31, 2014	$	(0.65	)
Increase in net tangible book value per share attributable to this offering	$	1.40
Net tangible book value per share after this offering				$	0.75
Dilution per share to new public investors				$	5.25

A $1.00 increase (decrease) in the assumed initial public offering price of $6.00 per share (the midpoint of the range set forth on the cover page of this prospectus) would increase (decrease) our net tangible book value after this offering by $2.29 million and the dilution per share to new investors by $0.78, in each case assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

The following table sets forth, on an as adjusted basis as of March 31, 2014, the difference between the number of shares of common stock purchased from us, the total consideration paid, and the average price per share paid by our existing stockholders and the average price to be paid by new investors in this public offering before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, using an assumed public offering price of $6.00 per share of common stock (the midpoint of the range set forth on the cover page of this prospectus). Of the $30,982,582 in total consideration paid by existing stockholders set forth below, $21,815,748 consists of cash consideration for our equity and indebtedness that was converted into our equity, and the $9,166,834 balance consists of the equity value of our common stock and preferred stock issued in connection with our prior acquisitions. The table does not include shares that we issued for services provided.


	Shares Purchased					Total Consideration					Average Price per Share
	Number		Percent			Amount		Percent			Average Price per Share
Existing stockholders		13,732,947		84.6	%	$	30,982,582		67.4	%	$	2.26
New investors		2,500,000		15.4	%	$	15,000,000		32.6	%	$	6.00
Totals		16,232,947		100.0	%	$	45,982,582		100.0	%

The total consideration amount for shares of common stock held by our existing stockholders includes total cash paid for our outstanding shares of common stock as of March 31, 2014. Unless otherwise noted, the number of our shares outstanding after this offering as shown above excludes the shares of our common stock that we may issue upon the underwriter’s over-allotment option exercise. If the underwriter’s over-allotment option of shares of common stock is exercised in full, the number of shares held by existing stockholders will

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be reduced to 82.7% of the total number of shares that will be outstanding after this offering, and the number of shares held by the new investors in this offering will be increased to 2,875,000 shares, or 17.3% of the total number of shares of common stock outstanding after this offering.

The number of shares of our common stock to be outstanding immediately after this offering as shown above assumes that all of the shares offered hereby are sold and is based on 7,777,421 shares of common stock issued and outstanding as of March 31, 2014. This number also includes the issuance of 50,000 shares in a private placement after March 31, 2014, the issuance of 4,351,063 shares of our common stock upon the automatic conversion of all of the outstanding shares of our Series A, Series B, Series C, Series D and Series E Preferred Stock, the issuance of 1,244,624 shares in connection with the conversion of our acquisition indebtedness, and 595,238 shares issuable upon the automatic conversion of the $2.5 million principal amount convertible promissory notes. This number of shares also does not include: 375,000 shares of our common stock subject to the underwriters’ over-allotment option; the issuance to certain of our executive officers and directors of 41,667 shares of our common stock upon completion of this offering; 40,000 shares of our common stock issued in connection with entering into the RecyClean transaction; 50,000 shares of our common stock issuable upon completion of this offering in connection with our acquisition of trucks and equipment; 317,136 shares issuable upon the conversion, if at all, of the promissory notes issued in connection with our acquisition of Summit, which currently have an outstanding balance of $1.9 million; 40,000 shares of our common stock that are issuable if we extend the Exclusive Distributor Agreement with RecyClean or acquire RecyClean; 1,333,333 shares of our common stock that are issuable if we acquire RecyClean; and also assumes no exercise of any outstanding options and warrants. As of March 31, 2014, there were: (i) 1,353,333 shares of our common stock issuable upon exercise of stock options, at a weighted average exercise price of $4.68; and (ii) 998,958 shares of our common stock issuable upon exercise of common stock purchase warrants, at a weighted average exercise price of $6.52 per share. See “Description of Securities”. There will be additional dilution to new investors if any of the foregoing options or warrants, or convertible debt instruments, are exercised or converted. If all of the foregoing options, warrants, and convertible notes had been exercised or converted as of March 31, 2014, net tangible book value per share after this offering would have been $2.10 and total dilution per share to new investors would have been $3.90, or 65%, assuming no exercise of the over-allotment option.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Background

We are an early-stage company that was recently formed to develop and offer an all-inclusive platform of water supply, collection and remediation services and water treatment solutions, to the U.S. oil and gas industry. Our objective is to capitalize on the growing demand for water supply and remediation services associated with the recent growth of, and technology changes within, the oil and gas industry within the United States.

Our plan of operations was implemented during 2013 as we acquired and started to integrate and organically grow a diverse set of businesses that offer oil field services and water treatment solutions. Specifically, through our acquisitions and integration efforts, we intend to develop a cost-effective and environmentally responsible solution to the collection, transport, treatment and reuse of associated production water from producing oil and gas wells, as well as the flow-back water produced by hydraulic fracturing (often referred to as “frac-ing”) of geologic structures.

Once fully developed, we believe that our all-inclusive model will offer a compelling value proposition not otherwise readily available in the market, by offering our customers an opportunity reduce their water transportation, disposal and procurement costs and streamline their field operations and procurement process, while further enabling the promotion of environmental responsibility and stewardship.

We believe that our near-term success will depend particularly on our ability to develop customer awareness and confidence in our services, along with our ability to continue to raise sufficient capital on a timely basis. Since we have limited capital resources, we will need to closely manage our expenses and conserve our cash by continually monitoring any increase in expenses and reducing or eliminating unnecessary expenditures. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly given that we operate in rapidly evolving markets, that we have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

Our Acquisitions

We acquired Barstow Production Water Solutions, LLC (“Barstow”) on February 4, 2013, for total consideration comprising: (a) 3,200,000 newly-issued shares of our Series A Preferred Stock (the “Series A Shares”); (ii) promissory notes in the aggregate principal amount of $1.0 million (the “Barstow Promissory Notes”); and (iii) certain earn-out payments based on the future stand-alone EBITDA of Barstow (collectively, the “Barstow Purchase Price”). The Series A Shares are convertible into shares of our common stock at variable rates based upon the stand-alone EBITDA of Barstow, and are otherwise subject to the rights, preferences and designations summarized at “Description of Securities” on page 93 of this prospectus.

In the second quarter of 2014, we modified the terms of our Series A Preferred Stock, and agreed to issue an additional 551,157 Series A Shares and 99,461 common shares upon the conversion of approximately $0.62 million due under the Barstow Promissory Notes, which, in combination with certain cash repayments, constituted full satisfaction and repayment of the Barstow Promissory Notes. In connection with such conversion, we also eliminated the earn-out feature associated with the acquisition of Barstow.

In July 2014, the holders of the Series A Shares agreed to convert all outstanding Series A Shares into 682,029 shares of common stock upon the completion of this offering. The agreement to convert all of the

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Series A Shares was, in large part, done, at the suggestion of our underwriter, to simplify our capital structure in contemplation of this offering. The conversion ratio was agreed upon following arms-length negotiations between the holders of the Series A Shares and us.

On April 4, 2013, we acquired Devonian Acquisition Corp. (“Devonian”), the parent company of ORL Equipment, LLC (“ORL”) and Wes-Tex Vacuum Services, Inc. (“Wes-Tex”), for total consideration comprising: (a) 8,000,000 newly-issued shares of our Series B Preferred Stock (the “Series B Shares”); (b) 1,267,000 shares of our common stock; (c) promissory notes in the aggregate principal amount of $3.25 million (the “Devonian Promissory Notes”); and (d) the assumption of certain earn-out payment obligations based on the future consolidated EBITDA of Devonian (collectively, the “Devonian Purchase Price”). The Series B Shares are convertible into shares of our common stock at variable rates based upon the stand-alone EBITDA of Devonian, and are otherwise subject to the rights, preferences and designations summarized at “Description of Securities” on page 93 of this prospectus.

In the second quarter of 2014, we modified the terms of our Series B Preferred Stock, and agreed to issue an additional 2,127,500 Series B Shares and 172,710 common shares upon the conversion of approximately $2.4 million due under the Devonian Promissory Notes, which, in combination with certain cash repayments, constituted full satisfaction and repayment of the Devonian Promissory Notes. In connection with such conversion, we also eliminated the earn-out feature associated with the acquisition of Devonian.

In July 2014, the holders of the Series B Shares agreed to convert all outstanding Series B Shares into 1,558,077 shares of common stock upon the completion of this offering. The agreement to convert all of the Series B Shares was, in large part, done, at the suggestion of our underwriter, to simplify our capital structure in contemplation of this offering. The conversion ratio was agreed upon following arms-length negotiations between the holders of the Series B Shares and us.

In connection with the acquisition of Devonian, we assumed a $1.25 million revolving line of credit maturing on April 8, 2014, or earlier upon demand, and a term loan in the principal amount of $0.65 million maturing on February 8, 2018, each issued by Commercial State Bank, and each secured by all of the assets of ORL and Wes-Tex. As of March 31, 2014, the outstanding balances of the revolving line of credit and term loan were $1.06 million and $0.53 million, respectively. Both of these loans are guaranteed by certain of our stockholders. We repaid the credit facility in July 2014.

In June 2013, we acquired Summit Holdings, Inc. (“Summit”) for a total purchase price of $5.5 million, consisting of $1 million payable at closing, plus $4.5 million of purchase money indebtedness, consisting of $2 million payable on a short-term basis, and $2.5 million payable pursuant to promissory notes that mature in January 2017 (the “Summit Promissory Notes”), and through February 15, 2015, this indebtedness is convertible into shares of our common stock at the price at which our common stock is sold in this offering. To date, we have repaid approximately $1.5 million of the short-term obligations, and we intend to repay the $0.5 million balance of the short-term obligations from the proceeds of this offering.

Summit was also acquired under and subject to a $1 million senior secured credit facility maturing on April 05, 2014, and secured by all of the assets of Summit. As of March 31, 2014, the outstanding balance of the credit facility was approximately $0.9 million. The lender has agreed to extend the maturity date to August 15, 2014. If we are unable to further extend or refinance this facility, we intend to use a portion of the proceeds from this offering to repay this debt.

In September 2013, we acquired Western Slope Acquisition Corp (“Western Slope”), which in turn owns Harley Dome 1, LLC (“Harley Dome”) and annual water supply contracts, formerly serviced by UB Water LLC (“UB Water”), to oil and gas companies and a trucking company that supplies oil and gas companies, for total consideration consisting of: (a) 120,833 shares of our common stock; (b) 3,500,000 shares of our Series C Preferred Stock (“Series C Shares”); (c) 1,500,000 shares of our Series D Preferred Stock (“Series D Shares”); and (d) promissory notes in the aggregate principal amount of $2.875 million (the “Western Slope Promissory Notes”). Western Slope is also obligated to pay $300,000 under a promissory note maturing on December 15, 2014 issued in connection with its prior acquisition of UB Water. The Series C Shares and Series D Shares are convertible into shares of our common stock at variable rates based

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upon the stand-alone EBITDA, respectively, of Harley Dome and UB Water, and are otherwise subject to the rights, preferences and designations summarized at “Description of Securities” on page 93 of this prospectus.

In the second quarter of 2014, we modified the terms of our Series C Preferred Stock, and agreed to issue an additional 2,702,516 Series C Shares and 42,791 common shares upon the conversion of approximately $2.8 million due under the Western Slope Promissory Notes, which, in combination with certain cash repayments, constituted full satisfaction and repayment of the Western Slope Promissory Notes.

In July 2014, the holders of the Series C Shares and Series D Shares agreed to convert all outstanding Series C Shares and Series D Shares into 729,708 and 50,000 shares of common stock, respectively, upon the completion of this offering. The agreement to convert all of the Series C Shares and Series D Shares was, in large part, done, at the suggestion of our underwriter, to simplify our capital structure in contemplation of this offering. The conversion ratio was agreed upon following arms-length negotiations between the holders of the Series C Shares and the Series D Shares and us.

In addition to the shares and purchase money notes issued in connection with the acquisition, Western Slope was acquired subject to: (i) a $1 million purchase money note issued in connection with the acquisition of Harley Dome during June 2012; (ii) a mechanics lien in the amount of approximately $0.9 million; and (iii) a promissory note in the principal amount of $0.3 million issued in connection with the acquisition of UB Water, due and payable in monthly installments, together with interest at the rate of seven and one-half percent (7.5%) per annum, through December 15, 2014.

We expect to further develop our platform of water supply, collection and remediation services and water treatment solutions upon our successful completion of this offering by acquiring additional businesses, assets or technologies which are intended to permit us to expand our market presence, increase the scope and size of our service offerings and/or offer innovative solutions. Provided we secure sufficient proceeds through this offering, we expect to spend up to approximately $3.0 million over the next twelve months to complete these acquisitions. As of the date of this prospectus, we have no current plans or agreements to acquire any third party, and there can be no assurance that such acquisitions will occur.

Basis of Presentation

Although we were formed in October 2012, we did not commence operations until our initial acquisition of Barstow in February 2013 and were not able to open a checking account or issue founding shares until January 2013. Our business plan to date has encompassed acquiring smaller private entities with limited scopes of business for the purpose of restructuring and reorganizing them in order to integrate them into our business and to scale their operations in the future. Thus, we have incurred, and expect to incur in the future, significant additional expenses related to building the infrastructure necessary to operate as a larger, publicly-traded enterprise, including, without limitation, the costs of developing our management team and the legal and accounting costs related to our acquisitions and financing activities. Accordingly, the historic financial statements for us and our acquired companies may not be indicative of our expected results of operations in future periods.

In addition to our financial statements as of and for the three months ended March 31, 2014 and the year ended December 31, 2013, this prospectus includes the financial statements of our significant acquisition targets, which consist of: (i) through our acquisition of Devonian (which we acquired on April 4, 2013), the financial statements for the two years ended December 31, 2012 for Wes-Tex and Oil Raiders; (ii) the financial statements for the two years ended December 31, 2012 for Summit (which we acquired on June 5, 2013); and (iii) the financial statements for the period from inception on June 7, 2012 through December 31, 2012 of Harley Dome (which we acquired on September 25, 2013) (and its predecessor, ER & PWD Joint Venture, LLC for the period from its inception on August 11, 2010 through June 30, 2012). In addition we have provided condensed consolidated interim unaudited financial statements of (i) Devonian as of and for the three months ended March 31, 2013 and 2012, (ii) Summit as of and for the three months ended March 31, 2013 and 2012, and (iii) Western Slope as of and for the six months ended June 30, 2013 and 2012.

Our significant acquisitions in the first half of 2013, Devonian and Summit, primarily focused on transportation and logistics. It was not until the third quarter of 2013, with our acquisition of Western Slope, that we shifted our focus to water treatment and remediation. In addition, our Harley Dome water treatment

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facility commenced operations in the third quarter of 2014. In the second half of 2014, we expect the focus of our operational growth to shift towards remediation and treatment of flow-back and production water, with transportation and logistics services complimenting such services to allow us to offer an integrated all-inclusive service model to our customers.

In connection with our increased focus on water treatment and remediation, during June 2014, we entered into an agreement with RecyClean to serve as an exclusive licensee to distribute and operate proprietary mobile frac-flowback water treatment units called the HydroPod^TM system. In consideration for the license, we agreed to pay $500,000 in cash, and issue 40,000 shares of our common stock, with an additional 40,000 shares of our common stock due on the earlier of (i) six months after the effective date of the agreement, if we choose to renew the term of the agreement for an additional six months, or (ii) the date that we exercise our right to acquire RecyClean. During the term of the agreement, we have the exclusive right, but not the obligation, to acquire the business of RecyClean for $2.0 million in cash, 1,333,333 shares of our common stock (which amount is calculated by dividing $8.0 million by the price per share of common stock in this offering), and royalty payments over a five year period, provided that a number of material conditions to closing are satisfied, including without limitation, the completion of a due diligence examination by us of the assets, technology, and prospects of RecyClean, and the receipt of certain third party approvals. As a result, there can be no assurances that we will elect to exercise our option to purchase RecyClean or, if we exercise our option, we will be able to complete such an acquisition.

Results of Operations

Results of Operations for Armada Water Assets, Inc. for the period January 1 through March 31, 2014 and 2013

Our operations for the three months ended March 31, 2014 are not directly comparable to our operations for the three months ended March 31, 2013. For the three months ended March 31, 2014, our results include the operations for the entire quarter for all of our subsidiaries. For the three months ended March 31, 2013, our operations were limited as we had only recently completed the acquisition of Barstow in February 2013, and our results of operations primarily reflect only general and administrative costs and minimal revenues.

Revenues

During the three months ended March 31, 2014, we generated consolidated revenues of approximately $6.6 million, of which approximately $3.2 million was attributable to Wes-Tex, our West Texas water supply and logistics business (which includes the operations of Oil Raiders and Barstow) and $3.02 million was attributable to Summit, our water logistics business in western Colorado, compared to approximately $0.04 million for the three months ended March 31, 2013. The bulk of our revenues in the first quarter of 2014 at both Wes-Tex and Summit were derived from water logistics while we continued to invest in building out our Harley Dome water treatment facility and developing our core water treatment business. Our revenues in 2013 were attributable solely to our Barstow operations.

Cost of Revenues

During the three months ended March 31, 2014, we had cost of revenues of approximately $6.0 million, of which approximately $2.9 million was attributable to Wes-Tex and approximately $2.7 million was attributable to Summit, compared to approximately $0.06 million for the three months ended March 31, 2013. Our cost of revenues in 2014 consisted primarily of transportation costs. Those costs include driver and contract operator costs and benefits of $2.7 million, depreciation of $0.32 million, fuel of $0.95 million, insurance of $0.25 million, and repairs and maintenance of $0.26 million. As we note below, we expect that later in 2014 when our remediation operations come online will result in a much different mix of costs as we develop our water production, treatment and remediation business.

General & Administrative (G&A)

During the three months ended March 31, 2014, our G&A expenses were approximately $2.0 million, as compared to approximately $0.18 million during the three months ended March 31, 2013. Approximately $0.8 million of the 2014 G&A expenses was attributable to corporate-level G&A expenses while the remaining $1.2 million of the 2014 G&A expenses was attributable to G&A expenses at our operating divisions (primarily Wes-Tex and Summit). As we continue to build out our corporate infrastructure to manage

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growth and future acquisitions as a public company, we expect G&A expenses to increase in future periods. At the corporate level, our primary costs were salaries and benefits approximately $0.4 million, professional fees of approximately $0.3 million, and travel and entertainment expenses of approximately $0.04 million. At the operating division level, our primary costs were salaries and benefits of approximately $0.26 million, amortization of intangibles of approximately $0.3 million and rent and other office costs of approximately $0.07 million.

To date, the principal focus of our operations has included acquisitions, the development of our corporate infrastructure and capital raising activities. As a result, we have incurred higher legal, accounting and transactional costs that we expect to continue as our operations become more seasoned . In 2013 and the three months ended March 31, 2014, we incurred legal and accounting costs of approximately $1 million and $0.2 million, respectively.

Interest Expense

Interest expense consists of interest payable on our senior secured indebtedness, acquisition indebtedness, equipment financing, and other indebtedness. During the three months ended March 31, 2014, interest expense was $0.36 million. We expect that the recent conversion and repayment of approximately $9.3 million of our outstanding indebtedness after March 31, 2014, as further described under the sections entitled “Our Acquisitions” and “Liquidity and Capital Resources”, will result in approximately $0.9 million in savings on interest expense on an annual basis. However, some or all of these savings may be offset by higher interest expense as we obtain additional debt financing for working capital and incur additional acquisition financing in connection with our plan of operation.

Results of Operations for Armada Water Assets, Inc. for the period January 1 through December 31, 2013 and 2012

We were formed in October 2012 and did not commence any operations until January 2013. Therefore, the following discussion of our results of operations does not include any comparative financial results for the year ended December 31, 2012 as we had none.

Revenues

During the year ended December 31, 2013, we generated consolidated revenues of approximately $11.1 million, of which approximately $5.5 million was attributable to Wes-Tex, our West Texas water supply and logistics business (which includes the operations of Oil Raiders and Barstow) and $5.5 million was attributable to Summit, our water logistics business in western Colorado. The bulk of our revenues at both Wes-Tex and Summit were derived from water logistics while we invested in building out our Harley Dome water treatment facility. See below for a discussion of our expectations for 2014.

Cost of Revenues

During the year ended December 31, 2013, we had cost of revenues of approximately $10.2 million, of which approximately $5.2 million was attributable to Wes-Tex and approximately $4.9 million was attributable to Summit. Our cost of revenues in 2013 consisted primarily of transportation costs, as we noted above our primary revenue sources in 2013 were from water logistics. Those costs include driver and contract operator costs and benefits of $5.1 million, depreciation of $0.7 million, fuel of $1.6 million, insurance of $0.44 million, and repairs and maintenance of $0.8 million. As we note below, we expect that 2014 will result in a much different mix of costs as we develop our water production, treatment and remediation business.

General & Administrative (G&A)

During the year ended December 31, 2013, our G&A expenses were approximately $4.3 million. Approximately $2.1 million was attributable to corporate-level G&A expenses while the remaining $2.2 million was attributable to G&A expenses at our operating divisions (primarily Wes-Tex and Summit). As we continue to build out our corporate infrastructure to manage growth and future acquisitions as a public company, we expect G&A expenses to increase in future periods. At the corporate level, our primary costs were salaries and benefits approximately $0.7 million, professional fees of approximately $1.2 million, and travel and entertainment expenses of approximately $0.2 million. At the operating division level, our primary costs were salaries and benefits of approximately $0.8 million, amortization of intangibles of approximately $0.6 million and rent and other office costs of approximately $0.3 million.

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To date, the principal focus of our operations has included acquisitions, the development of our corporate infrastructure and capital raising activities. As a result, we have incurred higher legal, accounting and transactional costs than we expect to continue as our operations become more seasoned In 2013, we incurred legal and accounting costs of approximately $1 million.

Interest Expense

Interest expense consists of interest payable on our senior secured indebtedness, acquisition indebtedness, equipment financing, and other indebtedness. During the year ended December 31, 2013, interest expense was $0.83 million. We expect that the recent conversion and repayment of approximately $9.3 million of our outstanding indebtedness, as further described under the sections entitled “Our Acquisitions” and “Liquidity and Capital Resources”, will result in approximately $0.9 million in savings on interest expense on an annual basis. However, some or all of these savings may be offset by higher interest expense as we obtain additional debt financing for working capital and incur additional acquisition financing in connection with our plan of operation.

Results of Operations for the Predecessors

Our predecessor operations include the results of Barstow. The results include the operations of Barstow in 2013 for the period from January 1 through February 3 and for the comparison 2012 period from its inception on August 9, 2012 through December 31, 2012. Our predecessor was a development stage company and its results for 2012 and the period before we acquired it in 2013 were immaterial.

Trends Affecting Our Operating Results

Our results are driven by demand for our services, which are in turn affected by oil and gas exploration and production trends in the shale areas in which we operate, in particular the active wells (which impacts the amount of produced water being managed). Activity in the oil and gas drilling industry is also affected by market prices for those commodities, with persistent low natural gas prices and generally high oil prices driving reduced drilling and production in “dry” gas shale areas such as the Barnett, Haynesville and Marcellus Shale areas where natural gas is the predominant natural resource, and the relocation of assets and increased activity in the liquids-rich or “wet” gas shale areas, such as the Utica, Eagle Ford, Mississippian and Bakken Shale areas, where oil and natural gas liquids are the predominant natural resource. In addition, the low natural gas prices have in the past caused many natural gas producers to curtail capital budgets and these cuts in spending curtailed drilling programs as well as discretionary spending on well services in certain shale areas. The industry-wide redeployment of assets from natural gas basins to oil-and liquids-rich basins has resulted in downward pressure on pricing and utilization, particularly in Texas.

Our results are also driven by a number of other factors, including (i) our available inventory of equipment, which we have built through acquisitions and capital expenditures over the past year, (ii) transportation costs, which are affected by fuel and labor costs, (iii) utilization rates for our equipment, which are also affected by the level of our customers’ drilling and production activities, and our ability to deploy our equipment to areas in which oil and gas exploration and production activities are growing, (iv) availability of qualified drivers in the areas in which we operate, (v) labor costs, which we believe have been increasing throughout the industry due to tight labor market conditions and increased government regulation, (vi) developments in governmental regulations, (vii) seasonality and weather events and (viii) our health, safety and environmental performance record.

Our operating results are also affected by our acquisition activities, and the expenses we incur in connection with those activities, which can limit comparability of our results from period to period. We completed four acquisitions in the year ended December 31, 2013. We may complete other acquisitions in 2014 and beyond that will substantially change our future operating results from our historical operating results. See “Our Acquisitions” above and Notes 2, 4, 5 and 6 of the Notes to our Audited Consolidated Financial Statements for information regarding our recent acquisitions.

We expect 2014 revenues to be substantially greater than 2013 as our 2014 results will include the full year results from the various acquisitions that we completed in 2013. Through the first quarter of 2014 our consolidated revenues were approximately $6.6 million compared to $0.04 million for the same period in 2013, which only reflected the revenues from our Barstow acquisition. As a result of increased oil and gas

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drilling and production activity in the regions in which we operate, our revenues in the first quarter of 2014 were approximately 30% higher than the fourth quarter of 2013. Our Harley Dome water treatment facility began commercial operations in the third quarter of 2014. This, along with the planned deployment of mobile treatment trains during the remainder of 2014, may add considerable revenue in 2014. We expect this new water-treatment revenue to have higher margins than our logistics revenue. Finally, we continue to evaluate potential acquisitions to grow our company, and any further acquisitions may result in increased revenue growth.

We anticipate that our profitability in 2014 will benefit from two factors. First, we expect our revenue mix to shift from lower margin water logistics business to higher margin water treatment business. In 2013, water logistics comprised about 97% of our revenues. The water logistics business is centered on trucking, which in our markets is an undifferentiated and very competitive business, resulting in thin margins. In contrast, our water treatment business is based on a proprietary process and sophisticated know-how, which we expect will produce higher margins than our logistics business. Second, we expect to benefit from the larger scale of operations in 2014 resulting in the spreading of fixed costs over a greater revenue base, which will add to our profitability. We expect to incur greater G&A costs, particularly corporate overhead, in 2014 as a result of greater scope of operations and also as we expect to operate as a public company. We expect increases in personnel costs for sales, accounting, IT and professional services.

Liquidity and Capital Resources

Financing Activities

Since our inception, our principal source of liquidity and capital resources was generated primarily as a result of financing activities. As of March 31, 2014, we raised gross proceeds of approximately $13.53 million from debt and equity raises, along with an additional $2.24 million from draws on our lines of credit, and we incurred offering expenses of $1.4 million, resulting in net proceeds (after taking into account the repayment of $4.21 million of indebtedness from the proceeds of such raises) of $10.16 million, including the offering of our common stock as described below.

•

During January and February 2013, we sold an aggregate of 3,762,524 shares of our common stock in private placement transactions to accredited investors for aggregate proceeds of approximately $0.5 million.

•

From May 18 through July 18, 2013, we sold an aggregate of 2,108,333 shares of our common stock in private placement transactions to accredited investors for aggregate proceeds of approximately $6.325 million.

•

From October 29 through January 2014, we completed private placements of $2.5 million of convertible promissory notes. During 2013, we also issued short-term promissory notes in the aggregate principal amount of $3.14 million, of which we repaid $0.84 million in 2013.

•

In January 2014, we sold $0.5 million of short term promissory notes.

Our liquidity continued to be positively affected by events that occurred after the first quarter of 2014. During the second quarter of 2014, we raised $5.325 million through the sale of 1,331,250 shares of Series E Preferred Stock in a private placement transaction to accredited investors and converted an aggregate of approximately $8.6 million of debt and accrued interest into equity through a debt restructuring transaction. We also repaid approximately $1.5 million of indebtedness from the proceeds of our Series E Preferred Stock offering. In July 2014, our Wes-Tex subsidiary entered into a six month accounts receivable factoring arrangement with Meritus Capital. Pursuant to the terms of the arrangement, Wes-Tex, from time to time, shall sell to Meritus certain of its accounts receivable balances. Meritus remits 91% of the accounts receivable balance to Wes-Tex, with the remaining balance, less an initial servicing fee and an additional fee of 1.50% for the first 30 day period and then an additional fee of 0.3% for each 15 day period thereafter or fraction thereof that the balance is unpaid, to be forwarded to Wes-Tex once Meritus collects the full accounts receivable balance from the customer. If an account is unpaid after 90 days, Meritus will receive a late fee of 0.06% per day of the late amount. The amount of advances under the arrangement may not exceed $5.0 million. Wes-Tex’s obligations under the arrangement are secured by a substantially all of Wes-Tex’s assets.

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Operating Activities

Net cash provided by operating activities was $1.1 million for the three months ended March 31, 2014, which was primarily related to our increased revenues during the first quarter of 2014. Net cash used in operating activities was $2.7 million for the year ended December 31, 2013, which was primarily related to our losses during the period.

Our operating cash flows to date have been insufficient to sustain our current operations, and thus we will continue to require additional capital to meet our business plan both in terms of future acquisitions as well as operating capital to grow our business if we are unable to raise sufficient proceeds from the initial public offering of our common stock. We anticipate meeting our need for additional capital through private placements and/or public offerings of our debt and equity securities. There can be no assurance that such additional financing will be available to us on acceptable terms, if at all. To the extent we are unable to obtain such additional financing we may have to defer or scale-back our acquisition and growth plans.

Investing Activities

Net cash used in investing activities was $1.86 million for the three months ended March 31, 2014, which was primarily related to our capital expansion plan. Net cash used in investing activities was $5.1 million for the year ended December 31, 2013, which was primarily related to advances we made to businesses prior to their acquisition (which were primarily advances to Harley Dome) in addition to investments in our Harley Dome water treatment facility.

Indebtedness

Since our inception, we have incurred substantial indebtedness in order to finance our acquisitions and our operations. As of March 31, 2014, we had approximately $21.5 million of outstanding indebtedness, of which approximately $9.54 million outstanding as of March 31, 2014 was issued in connection with our prior acquisitions. We recently restructured a portion of our indebtedness into equity, which, in addition to reducing short-term and long-term maturities of our indebtedness, will provide us with greater cash resources that will allow us to focus our efforts on increasing our organic growth and pursuing additional acquisitions. The restructuring, which occurred in the second quarter of 2014, resulted in approximately $8.6 million of the outstanding indebtedness (and accrued interest) being converted into shares of common stock, Series A Preferred Stock, Series B Preferred Stock, and/or Series C Preferred Stock.

The following table presents (i) our outstanding indebtedness as of March 31, 2014, and (ii) our outstanding indebtedness on a pro forma basis after giving effect to the recent conversion of our acquisition promissory notes and certain short-term promissory notes (in thousands):



	Historical as of March 31, 2014						Pro Forma
	Amounts Due Within 1 Year		Amounts Due After 1 Year		Total Debt		Note Extinguishments		Debt Paydown From Series E Offering		Auto Conversion Of Convertible Notes		Pro Forma Amounts Due within 1 Year		Pro Forma Amounts Due after 1 Year
	(in thousands)
Secured lines of credit	$	3,652	$	—	$	3,652	$	—	$	—	$	—	$	3,652	$	—
Merger Notes	$	5,179	$	2,928	$	8,107	$	3,865	$	1,324	$	—	$	1,451	$	1,467
Merger Notes – Related party	$	—	$	1,438	$	1,438	$	1,262	$	176	$	—	$	—	$	—
Working capital notes	$	3,300	$	—	$	3,300	$	800	$	—	$	2,500	$	—	$	—
Working capital notes – related party	$	1,818	$	—	$	1,818	$	1,818	$	—	$	—	$	—	$	—
Equipment financing	$	544	$	1,150	$	1,694	$	—	$	—	$	—	$	544	$	1,150
Insurance financing	$	438	$	—	$	438	$	—	$	—	$	—	$	438	$	—
Other notes	$	467	$	552	$	1,019	$	—	$	—	$	—	$	467	$	552
Total	$	15,398	$	6,068	$	21,466	$	7,745	$	1,500	$	2,500	$	6,552	$	3,169

Since January 2013, in order to fund our operations, we have issued a series of short-term promissory notes to several accredited investors in the aggregate principal of approximately $4.3 million. Since this time, we have repaid the entire amount of such notes through a combination of cash repayments and the conversion of certain promissory notes into shares of our common stock in full satisfaction of the amounts due thereunder.

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From September 2013 to January 2014, we issued convertible promissory notes in the aggregate principal amount of $2.5 million. The notes accrue interest at a rate of 10% per annum and mature on the earlier of (i) a successful initial public offering, or (ii) one year from the date of issuance. The notes automatically convert into common stock upon our successful completion of an initial public offering at a 30% discount to our IPO price. We incurred commission costs equal to 12% of gross proceeds, and have agreed to grant the placement agent warrants with rights to acquire 70,000 shares of our common stock.

In March 2014, we obtained a $1.7 million term loan from Community Trust Bank. The loan accrues interest at a rate of 2.45% per annum, and matures on March 4, 2015.

The foregoing description does not include a description of the Barstow Promissory Notes, Devonian Promissory Notes, or Western Slope Promissory Notes, or certain indebtedness that we assumed in connection with our acquisitions of Devonian, Summit and Western Slope, all of which is described in more detail under “Our Acquisitions” above.

Investing Activities and Future Expenditures

The following table presents our planned sources and uses of cash in 2014.

Expected Sources and Uses of Cash in 2014


	*(in thousands)*
Sources of Cash
Net Proceeds from IPO	$	12,725
Planned Financings	$	8,000
Cash from Operations	$	1,500
Total	$	22,225
Uses of Cash
Principal Payments of Debt	$	3,000
Capital Expenditures	$	10,000
Potential Acquisitions	$	6,000
General Corp Purposes	$	3,225
Total	$	22,225

Since January 1, 2013, we advanced to Harley Dome 1, LLC approximately $6.4 million for the continued construction of our Harley Dome treatment facility. We intend to build several additional treatment facilities over the next few years, including a facility in Barstow, Texas that we anticipate commencing construction on in late 2014. Over the next two years, we expect to spend up to $18.0 million to construct new water treatment facilities.

Outlook

As of March 31, 2014, we have incurred an accumulated deficit of approximately $6.0 million and have cash resources of approximately $1.6 million. As of July 22, 2014, we have cash resources of approximately $1.1 million. We have incurred negative cash flows from operations since we started our business. In the first quarter of 2014, our operations generated sufficient cash flow to cover our operating needs but did not generate enough cash flow to cover corporate overhead, including costs related to this offering as well as capital expenditures to fund our growth and the development of our core water treatment business. Based on preliminary results, we believe that revenue trends for the second quarter of 2014 are comparable to the first quarter of 2014. We expect revenue from our operations to continue to grow during the second half of 2014. However, we do not expect our revenue from operations during such time to be sufficient to fund our non-recurring costs associated with our financing and acquisitions as well as our capital expenditures related to our Harley Dome project and construction of new water treatment facilities (including their development and start-up costs).

If we are not able to complete an initial public offering in the near term, we believe we have sufficient cash resources to sustain our existing operations at our current staffing and infrastructure levels during the next twelve months. Under this scenario, we would not have sufficient liquidity to fund our growth capital

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program or make acquisitions for cash or acquisitions that require substantial cash resources after acquisition. Additionally, we would need to refinance our bank line of credit to extend its maturity date. Upon completion of this offering, we expect our additional cash resources to provide us with greater flexibility to expand our operations and execute our business plan. However, we will need to increase our revenues to enable us to pay ongoing costs and expenses as they are incurred in the operation of our business, and we may need to raise additional capital to finance the continued development of our water treatment facilities, repay our outstanding indebtedness, and execute our business plan. We may need to obtain additional capital sooner or in greater amounts than we currently anticipate. We intend to strengthen our financial position by (i) increasing revenues from our existing operations as we integrate and grow our acquired businesses while maintaining a strong focus on costs, (ii) commencing operations at our Harley Dome treatment facility and other on-going capital projects, and (iii) securing funds from this transaction and from other sales of our debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to us, we may be unable to execute upon the business plan, pay our indebtedness, or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations.

Even if we are successful in generating sufficient revenue or in raising sufficient capital in order to complete our water treatment facilities and repay our indebtedness, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations. We do not expect that any material positive cash flow after payment of capital expenditures will be developed from our operations until the fourth quarter of 2014, if at all. There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan to aggressively develop, complete, and market our services. Moreover there can be no assurance that even if our operations are developed and marketed effectively and we achieve our user acquisition goals, that we will generate revenues sufficient to fund our operations. In either such situation, we may not be able to continue our operations and our business might fail.

Off Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of this exemption. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

While our significant accounting policies are more fully described in Note 3 to our financial statements provided at the end of this prospectus, we believe that the following accounting policies are the most critical to assist you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

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Use of Estimates

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States and, accordingly, include certain amounts that are based on management’s best estimates and judgments. Estimates are used when accounting for amounts recorded in connection with mergers and acquisitions, including initial fair value determinations of assets and liabilities. Additionally, estimates are used in determining such items as depreciable and amortizable lives, amounts recorded for contingencies, asset retirement obligations, derivative liabilities, share-based compensation assumptions, impairments of long-lived assets (including intangible assets and goodwill), and valuation allowances for taxes on income. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates.

Revenue

The Company recognizes revenue from the delivery of product at the time the goods are delivered and title has transferred, upon the fee becoming fixed and determinable, and upon reasonable assurance of customer payment. For well site construction and repair services, revenue is recognized at the time services are performed, when the fee has become fixed and determinable and upon reasonable assurance of customer payment.

Goodwill

We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.

Impairment or Disposal of Long-Lived Assets, Including Finite-Lived Intangible Assets

At each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved.

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BUSINESS

Company Overview

We are an early-stage growth company that was recently formed with the objective of delivering a broad range of water supply, treatment, disposal, and handling and transport services to the oil and gas industry. Our business was founded to capitalize on the growing demand for water supply and remediation services associated with the recent growth of, and technology changes within, the oil and gas industry within the United States.

Our plan of operations is to use the five (5) businesses we acquired during 2013 to form the basis of an all-inclusive platform of water supply, water logistics and water treatment solutions, to the U.S. oil and gas industry. Specifically, through these acquisitions, we intend to offer a cost-effective and environmentally responsible solution to the collection, transport, treatment and reuse of associated production water from producing oil and gas wells, as well as the flow-back water produced by hydraulic fracturing (often referred to as “frac-ing”) of geologic structures. We intend to do this by integrating and leveraging our acquired businesses to organically expand the scope of our oil field services and to offer our proprietary treatment train water treatment solutions. We also intend to expand the size and scope of our service offerings through the further acquisition of established and synergistic businesses that provide for water treatment growth opportunities in key basins. The expected value drivers of our existing and any future targeted businesses: access to and development of proprietary treatment technologies and solutions; geographic proximity to active exploration and production fields; access to key industry customers that offer growth and cross-selling opportunities; and industry reputation and experience.

As we integrate and grow our operating platform, we expect to offer our customers a unique one-stop solution for their water supply, transport and treatment needs. Our all-inclusive model has been designed to offer a compelling value proposition not otherwise readily available in the market, by offering our customers the opportunity to reduce their water transportation, disposal and procurement costs and streamline their field operations and procurement process, while further enabling the promotion of environmental responsibility and stewardship. Specifically, we expect that our treatment train systems will allow our customers to avoid a significant amount of water hauling costs, which can account for 76% of the total costs of the handling, transportation, procurement and disposal of production water and flow-back water in the oil and gas industry.⁶ Our mobile and temporary treatment train units, which can be sited directly in the oil and gas production fields, allow customers to recycle and reuse water onsite thereby substantially reducing their water handling and hauling costs. Our larger-scale permanent treatment trains can be sited at a central collection facility serving multiple fields, which provide a common point for contaminated water collection and clean water supply that will minimize hauling distances and increase efficiencies.

We believe that our innovative approach to water treatment and logistics delivers new economic and environmental paradigms to address the full water lifecycle in the oil and gas industry. The term “full water cycle” describes the continuous cycle of water on, above and below the surface of the Earth.

While the balance of water on Earth remains fairly constant over time, water comes and goes in and out of the atmosphere as water evaporates from both terrestrial and marine sources, condenses and falls back to earth. Water also moves from one location to another, from cloud to snowpack, from snowpack to stream, from stream to rivers and river to ocean and from all of these back to the atmosphere via evaporation or transpiration.

The changes of the states of water, from solid (ice) to liquid (water) and gas (vapor) involve the exchange of energy. When water evaporates it takes energy from its immediate environment so cooling the local environment. When water condenses to form rain, it releases energy into the environment causing local warming. These temperature changes have been implicated in some of the changes observed in local climate changes over a period of time. The water cycle is one of the most important natural cycles as it replenishes the land with freshwater, transports minerals around the world and plays a hugely important role in the maintenance of life and associated ecosystems.

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Niobrara Report, Niobrara and Bakken: How Water Management is Improving Operational Efficiencies, Phil Winner, June 23, 2013.

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Hydrocarbon production is impacting the water cycle in two main ways:

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Produced water associated with the production of conventional hydrocarbons is re-introducing water that has been locked in the subsurface for millions of years. This water has historically re-entered the water cycle in a haphazard manner. With an emerging scarcity of water in hydrocarbon producing areas, this water can now be used as an asset in those same areas.

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The recent growth in the development of unconventional hydrocarbons using the surface water intensive process of frac-ing has placed incremental pressure on the efficiency of local water cycle. Wherever possible the water used in these activities should be rationalized and re-used appropriately to ensure any long term impact on the local water cycle can be mitigated.

Hydrocarbon exploration has opened up access to new and contaminated water sources that have been trapped deep in the subsurface for millions of years. Previously considered a waste product this water can become an asset positively impacting the economics of water re-purposing within a local region.

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Our Operations

Our plan of operations consists of the lines of businesses described below.

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Water Treatment & Disposal

Our water disposal and water treatment businesses were established in September 2013, when we acquired Harley Dome I, LLC (“Harley Dome”) through our acquisition of Western Slope Acquisition Corp. Harley Dome owns approximately 23 acres of land in Grand County, Utah in close proximity to the Piceance and Uintah basins. It has two permitted and operational Class II Salt Water disposal wells and permits that allow for the completion of three additional wells that have yet to be drilled. Additional infrastructure at Harley Dome includes several storage tanks totaling over 12,000 barrels of storage capacity, off-loading stations, pumps and various other utilities.

We have recently completed construction of a water treatment facility at our Harley Dome site that houses our first generation proprietary treatment “train,” consisting of a sequencing of processes, systems and equipment, to enable the complete treatment of contaminated water. The treated production water will be sold or discharged to the environment. The sequencing and development of our treatment train can best be illustrated by the following chart:

Illustration of Treatment Train Process

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Our Harley Dome treatment facility has the capacity to treat up to 5,000 barrels per day of produced and/or frac-flowback water. We believe that Harley Dome is one of the largest water treatment facilities in the Piceance Basin. It has a Surface Discharge Permit that allows for up to 45,000 barrels per day of treatment capacity. Under our permit, we are able to discharge the effluent water from the treatment facility into the Colorado River system.

Under the 1972 federal Clean Water Act, the National Pollutant Discharge Elimination System (NPDES) permitting program was established to help protect the quality of the nation’s waters. These permits are generally referred to as Surface Water Discharge permits. The state issues Surface Water Discharge permits to any point source that is discharging wastewater to waters of the state. The permits contain effluent limits that will protect the beneficial uses of our surface waters. The permits also contain the sampling and reporting requirements that each facility must follow. The safe and effective discharge of treated water potentially enables others downstream of the discharge point to take additional waters from the source without detrimentally impacting the total mass flow of the water source through the area.

We are in the process of commissioning our first generation treatment train at our Harley Dome site. Commercial scale testing and customer deployment commenced during the third quarter of 2014. In addition, we are also in the design/engineering phase of the development of a second-generation treatment train and prototype test units are expected to be deployed in the fourth quarter of 2014.

We believe that the strategic location of Harley Dome allows us to cost-effectively gather produced and frac-flowback water from a number of oil and gas companies in the Piceance Basin. Following the commercial validation of the Harley Dome facility, and utilizing part of the proceeds from this offering, we intend to construct a similar facility at our Barstow, Texas site. We are also evaluating additional siting options including co-locating treatment train facilities at our customers’ sites for their dedicated use.

Water Logistics

Our water logistics business was founded in April 2013 when we acquired Devonian Acquisition Corp. and combined the operations and businesses of its subsidiaries, Oil Raiders Logistics, Inc. (“Oil Raiders”) and Wes-Tex Vacuum Services, Inc. (“Wes-Tex”). Through this combination, we have now established a complete water services solution provider to key drilling and production companies in the prolific oil and gas fields in West Texas. On a combined basis, our water logistics division has a 46 year operating history in the Permian Basin, with a particular strength in its historic customer base, having a foundation of 25 master services agreements servicing a diverse set of customers, including several global fortune 100 oil and gas companies and joint ventures. We provide customers with services ranging from brine water, fresh water, pump truck services utilizing an asset base of over 30 trucks and trailers. In addition, we also provide ancillary services such as well integrity testing and charting, polyline installation and re-spool, backhoe services, roustabout services both in operation and completions. We support operations in 15 drilling fields with a dedicated team of 50 employees.

We expanded the scope of our logistics business when we acquired Summit Holdings, Inc. (“Summit”) in June 2013. From its headquarters in Grand Junction, Colorado, Summit offers us significant benefits as it is close to our Harley Dome water treatment facility and is one of the leading logistics providers in the Piceance Basin of western Colorado. We are already benefitting from greater revenues by cross-selling water treatment services at Harley Dome to Summit customers. With a fleet of 34 trucks and specialty transport equipment, Summit offers logistics and water management services to a customer base including leading oil and natural gas exploration and production companies, including transportation of fresh and production water, oil hauling, water pumping, manifolding, circulation and skimming of tanks and pits, biociding of tanks and pits, and water testing. Summit employs more than 65 employees with broad experience in numerous areas, including business development, safety, trucking and equipment maintenance. Fleet service and maintenance is performed in our Grand Junction garage which is equipped with six bays, a wash bay, a five ton lift, one heavy equipment transport trailer, an “in the field” tire and service trucks. In addition, Summit has a field staging facility in nearby La Beque, Colorado, for closer contact with certain local customers.

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Water Sales

Our water sales business was founded in February 2013 when we acquired Barstow Production Water Solutions, LLC, (“Barstow”), a business engaged in fresh water production for the oil and gas industry. Located on 177 acres in West Texas, Barstow was identified by us as offering significant commercial opportunities because it: (i) is close to the Permian Shale field in Ward County, Texas, and some of the most active oilfields in North America (with over 45 drilling rigs within a radius of less than 30 miles); and (ii) contains an underground fresh water aquifer which permitted the conversion of an inactive well into a producing fresh water well, and offers the opportunity for the conversion of up to three additional inactive wells into producing fresh water wells. Flow testing has confirmed that the active Barstow well has an approximate capacity of 28,000 barrels of fresh water per day, producing water designated for sale and/or mixing with treated water and/or mixing to create brine water. Customers are serviced by four fast-fill stations constructed and operational on the property. In the future, we intend to commence operation of the three other inactive wells on the site, subject to availability of fresh water and market demand. Extrapolating data from our active well, we believe that all four wells could produce up to 55,000 barrels of fresh water per day.

In October 2013, we completed and started-up a brine water production facility at Barstow to provide brine water for the Permian Basin oil and gas industry. Our brine facility utilizes Barstow’s water production facility along with purchased salt to produce brine for our customers. We are currently selling approximately 1,500 barrels per day of brine.

We expanded our water sales business during September 2013 when we acquired a combination of “take or pay” and “as needed” water supply contracts formerly serviced by UB Water, LLC (“UB Water”). Under the UB Water acquired contracts, we have the exclusive use of a quick fill water depot facility that has eight fast fill stations which are operational 24 hours a day during all seasons and weather conditions. This facility is located in Platteville, Colorado, and is capable of providing a minimum of 146,000 barrels per day, to a maximum of up to 345,000 barrels per day, depending upon commercial demand and available pond capacity. We are currently selling approximately 140,000 barrels per day. We supply fresh water to a customer base servicing, or consisting primarily of, exploration and production companies.

Strategy Summary

As we integrate our business divisions and grow our commercial scale, we believe we can provide a competitively compelling set of business solutions based on: (i) our existing relationships with oil and gas customers; (ii) our proprietary water treatment solutions; and (iii) the strategic location of our existing or planned facilities near oil field service providers and exploration and production companies, together which should enable a material reduction of water handling costs for our customers. Provided we have sufficient available capital, we also intend to acquire additional companies that offer complementary services and technologies.

Water Supply and Treatment: Our Proprietary Solutions

Our business involves the supply, logistics and treatment of water of various grades, character and geologic composition, that can be best illustrated by the figures below.

There are typically two major types of water in the subsurface; (i) shallow water which includes surface water plus aquifers (freshwater and brackish water) located at depths up to 1,000 ft. below the surface; and (ii) deep water associated with hydrocarbon deposits at depths of greater than 6,500 ft.

Unconventional wells use surface acquired water with additional additives to fracture, or “frac” the reservoir source rock and enable hydrocarbon production from the hitherto impermeable rock. The aqueous flowback fluid requires cleaning and conditioning before it can be re-used or disposed of.

Conventional reservoirs produce associated water which is typically contaminated with hydrocarbons together with various salts and heavy metals. This aqueous phase can be readily re-purposed according to local needs.

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These types of water are illustrated in the figure below.

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0 ft.		Surface Water
150 – 300 ft.		Fresh Water Aquifer Normally produced from a sandstone formation Has a low solids content (low salt, total dissolved solids (“TDS”)), typically does not need treatment Used for irrigation and as a universal solvent in the oil & gas sector
400 – 1,000 ft.		Brackish Water Aquifer Normally produced from a sandstone or limestone formation Has a higher solids content (medium salt & TDS), does need treatment Used in the Oil & Gas sector with current limitations due to the need for treatment technology Treatment process is not very complex and in general is not cost prohibitive

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6,500 – 15,000 ft.		Production Water Is a by-product of oil and gas production Has a high solids content (TDS), mineral content and oil and condensate residues (i.e. hydrocarbons) Water is generally not suited to be re-used in oil & gas wells and needs to be disposed of or treated Currently disposed of by injection back into selected formations, via dedicated injection wells Injection is done with dedicated injection wells which are costly to drill Treatment process is complex and can be costly

Produced water is the aqueous liquid phase that is co-produced from a producing well along with the oil and/or gas phases during normal production operations. This includes water naturally occurring alongside hydrocarbon deposits, as well as water injected into the ground. The following are the main contaminants of concern in produced water:

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High level of total dissolved solids (TDS)

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Oil and grease

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Suspended solids

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Dispersed oil

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Dissolved and volatile organic compounds

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Heavy metals

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Radionuclides

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Dissolved gases and bacteria.

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Chemicals (additives) used in production such as biocides, scale and corrosion inhibitors, and emulsion and reverse-emulsion breakers

The amount of produced water, and the contaminant sand concentrations present in produced water usually vary significantly over the lifetime of a field. Early on, the water generation rate can be a very small fraction of the oil production rate, but it can increase with time to tens of times the rate of oil produced. In terms of composition, the changes are complex and site-specific because they are a function of the geological formation, the oil and water (both in-situ and injected) chemistry, rock/fluid interactions, the type of production, and required additives for oil-production-related activities.

The figure below shows the typical process that produced water receives in oil and gas field operations. Treatment has three main stages. In pre-treatment, the bulk of the oil and gas, as well as coarse particles are removed. This is followed by an additional treatment, which focuses on further removal of small hydrocarbon droplets and small particles from the water and includes the removal of the majority of the heavy metals, bacteria and organics from the process stream. Additional treatment is required to fully remove salts and minor impurities to render process stream suitable for discharge to the environment.

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U.S. Department of Energy, Argonne National Laboratory, Produced Water Volumes and Management Practices in the United States, September 2009.

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Considering the main contaminants present in produced water, treatment goals include de-oiling, desalination, degassing, suspended solids removal, organic compounds removal, heavy metal and radionuclides removal, and disinfection. These treatment goals are essentially the same for potable, non-potable reuse, or disposal, although the level of contaminant removal required for potable reuse can be significantly higher, depending on the quality of the produced water.

Achieving the various treatment goals requires the use of multiple treatment technologies, including physical, chemical, and biological treatment processes.

We believe that the key to successful economic water treatment operations lies in a holistic approach at the integrated oilfield water cycle and how it impacts economics of local stakeholders.

Our Treatment Train System

We intend to offer water treatment solutions that enable the complete treatment of contaminated production water and flow-back water. We expect to offer these solutions by using a proprietary system of sequenced processes, systems and equipment that we call our “treatment train.” Our treatment train has been designed with a modular approach incorporating separate components that can be serviced or interchanged without operational interruptions. This is intended to minimize footprint, reduce operating costs and to optimize operational efficiency. The treatment train combines a number of existing separation technologies, together with a proprietary mixing methodology to deliver an efficient cost-effective system that is scalable according to operational needs. At the heart of our treatment train system is an innovative high sheer reactor, which acts as a molecular accelerator, dynamically accelerating the natural vibration and spin of molecules in the process stream, which decreases the energetic barriers to separation. The proprietary process, when coupled with conventional separation techniques, is expected to produce a significant decrease in overall energy consumption, thereby significantly reducing operating and capital costs.

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equipment and components that constitute our treatment train system are conventional “off-the-shelf” components and have been utilized in the water treatment industry for many years, our proprietary mixing methodology remains unproven in the treatment of production and frac-flowback water. We are continuing to optimize our water treatment process based on the results achieved during our testing phase. In addition, we are also in the design/engineering phase of the development of a second-generation treatment train and prototype test units are expected to be deployed in the fourth quarter of 2014.

We believe that our holistic approach to water treatment ensures that the design requirements of the treatment train are practical and operationally efficient and take into account the objective to minimize footprint, reduce operating costs and to optimize the capital employed in the units.

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We believe that our treatment train production and frac-flow-back water treatment solution offers tangible economic benefits to our customers. In the figure above, the Industry Benchmark represents the average maximum price (on an indexed basis) our customers are willing to pay in our current operating regions for water treatment for reuse and or discharge. The benchmark is based on feedback we have received from customers in our current operating regions. Based on this analysis, our first generation treatment train process (Gen I), as deployed in Harley Dome, has an operating margin in the range of 20 – 30%. Our second generation treatment train process (Gen II), which is scheduled to start industry scale field trials in the fourth quarter of 2014, will benefit from, among other things, specific identified energy-saving improvements

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that will result in a targeted additional 20% reduction in operating costs compared to Gen I thus further improving profitability. We believe that Gen II will also require significantly less capital expenditure than Gen I.

We expect that our Harley Dome site, as well as being a fully functional waste disposal and water treatment plant, will also function as a large scale test facility for our future treatment train technology. We also expect in the future to construct Gen II treatment train systems at some of our other operating locations.

We anticipate that our Gen II treatment trains will be available in 3 different capacities and configurations and have been designed to meet targeted market segments:

Mobile Treatment Train (MTT). We anticipate that the Armada MTT will be manufactured to be a self-contained mobile unit capable of moving as an independent unit to various field locations, where it is likely to be under contract for 2 – 3 months. It is likely that such units will be involved in frac-flowback water cleanup for single well locations. Mobile units are typically only utilized for treatment to saltwater disposal standards as permitting for discharge typically takes 6 – 9 months and may not be congruent with operations.

Temporary Treatment Train (TTT). We expect that the Armada TTT will be constructed using independent mobile modular container units that are likely to be under contract for 12 – 18 months and would serve a field development plan. Such a plan would typically involve the drilling and completion of 10 – 20 horizontal wells within a localized area. Alternatively, a temporary unit could be placed in situ while a permanent facility was being constructed and commissioned for ongoing field development

Permanent Treatment Train (PTT). We expect that the Armada PTT will be an area-specific water treatment facility that is built to service produced water from the oil and gas industry in a particular geographic location. This produced water includes both, naturally produced water from conventional oil and gas developments, as well as frac-flowback water from hydraulic fracturing activities.

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Armada Mobile Treatment Train (MTT)

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We expect that the typical Armada MTT system will be deployable on 2 – 3 trailers on location for a number of weeks to process produced water or frac-flowback water for re-use drilling and completion activities. The 4 stage system integrates water oil separation, a proprietary hydro-mixing technology together with ultra-filtration and reverse osmosis technologies to render the process flow suitable for discharge or re-use. The MTT system is designed to process 5,000 bbls/d (155 gal/min).

To complement our core MTT system, in June 2014 we entered into an agreement with RecyClean to serve as an exclusive licensee to distribute and operate proprietary mobile frac-flowback water treatment units called the HydroPod^TM system. The HydroPod^TM system is a proprietary (patent pending) mobile treatment system for treating local wastewater streams. The HydroPod uses two core technologies coupled with proprietary chemical processes to remediate waste streams for re-use.

The HydroPod system is packaged into a single 15ft shipping container, environmentally protected from extremes of heat and cold, and is equipped with remote access communications to ensure 24/7 monitoring of the process stream. Each HydroPod unit is capable of treating up to 5,000 bbls (210,000 gallons) of produced water per day. If additional field capacity is required, HydroPod units may be added to meet demand.

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Armada Temporary Treatment Train (TTT)

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The Armada TTT system is deployable on 3 – 6 self-contained units and is designed to be on location for multiple months/years as an early stage temporary waste water treatment facility. The 4 stage system integrates water-oil separation, a proprietary hydro-mixing stage together with ultra-filtration and reverse osmosis technologies to render the process flow suitable for safe discharge to the environment. The MTT system is designed to process 5,000 bbls/d (155 gal/min) of production and frac-flowback water.

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Armada Permanent Treatment Train (PTT)

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Armada PTT system is permanent wastewater treatment plant strategically located to provide centralized, cost-effective, large volume system for multiple customers. The effluent from a PTT system would typically be discharged to the environment in accordance with the discharge permit. The 4-stage system integrates water-oil separation, a proprietary hydro-mixing stage together with ultra-filtration and reverse osmosis technologies to render the process flow suitable for safe environmental discharge. The PTT system is designed to process 20,000 bbl./d (310 gal/min) of production and frac-flowback water.

The Armada Innovation

At the heart of Armada’s treatment trains is an innovative high sheer reactor, which acts as a molecular accelerator, dynamically accelerating the natural vibration and spin of molecules in the process stream, which decreases the energetic barriers to separation.

The proprietary Armada process when coupled with conventional separation techniques has an expected three-fold decrease in overall energy consumption, based on our estimates.

Innovation is a source of new opportunities that lends itself to new ways of thinking. Innovation comes from unlikely sources, one such example being the pistol shrimp whose method of capturing its prey through displacing water and releasing energy into the water is the same principle on which hydrodynamic cavitation in wastewater is based.

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Armada involves a hydrodynamic cavitation process where small bubbles are generated within the process stream. The proprietary system controls the location, size, density and intensity of implosion of the bubbles in the zone to create optimum process conditions.

The subsequent collapse of the cavitation bubbles results in very high energy densities, very high temperatures (several thousand Kelvin) and hundreds of atmospheres pressure, for short periods of time (milliseconds). We harness the power of controlled cavitation to enhance chemical reactions, physical processes and to propagate certain reactions as a result of both the ultra-mixing that occurs during the cavitation process; and through the generation of free radicals during the process as vapors trapped in the cavitating bubbles rapidly disassociate.

All molecules interact with each other to varying degrees. Those that are easy to separate from each other (e.g. oil/water) have minimal interactions with each other and the energy that is required to separate the molecular types is low. Other interactions (e.g. benzene/water) are much more involved, one being dissolved in the other and held in solution through a number of different interactions including van der Waals forces, hydrogen, metallic, ionic and covalent bonding, and polar based interactions. The combination of one or more of these intramolecular forces results in a greater energy requirement to get separation between the molecules using conventional separation techniques.

Passing a liquid through a constricted channel at a specific velocity can produce hydrodynamic cavitation. A combination of pressure and kinetic energy is created when the low-pressure cavern is created downstream from the local constriction generates high-energy cavitation bubbles. The formation, growth and implosive collapse of these cavitation bubbles in the liquid releases tremendous localized energy in the form of shockwaves. Whether the waves are destructive or productive depends on your ability to control the process. At the edges of the cavity small amounts of vapor break off forming smaller and smaller cavities, 100 nm to 3 mm in diameter. The smaller cavities implode uniformly under the relatively high-pressure surrounding them.

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Figure illustrating the creation of a micro-jet through collapsing cavitation bubbles.

Our proprietary water treatment philosophy involves utilizing the unique properties of water itself to assist in the treatment process, harnessing the natural properties of water to enable energetically efficient separation processes. These processes use both “tuned” aeration systems to create large areas of exposed surface tension to trap contaminants as well as hydrodynamic cavitation to introduce energy into the water to breakup large molecular contaminants.

Water is called the “universal solvent” because it dissolves more substances than any other liquid. This is important to every living thing on earth. It means that wherever water goes, either through the air, the ground, or through our bodies, it takes along valuable chemicals, minerals and nutrients. It is this very characteristic that provides a challenge to enable efficient water treatment to separate the undesirable solutes from the desirable solvent.

It is water’s chemical composition and physical attributes that make it such an excellent solvent. Water molecules have a polar arrangement of oxygen and hydrogen atoms — one side (hydrogen) has a positive electrical charge and the other side (oxygen) has a negative charge. This allows the water molecule to become attracted to many other different types of molecules. Water can become so heavily attracted to a different compound, like salt (NaCl), that it can disrupt the attractive forces that hold the sodium and chloride in the salt compound together and, thus, dissolves it.

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The cohesive forces between liquid molecules are responsible for the phenomenon known as surface tension. The molecules at the surface of a glass of water do not have other water molecules on all sides of them and consequently they cohere more strongly to those directly associated with them (in this case, next to and below them, but not above). It is not really true that a “skin” forms on the water surface; the stronger cohesion between the water molecules as opposed to the attraction of the water molecules to the air makes it more difficult to move an object through the surface than to move it when it is completely submersed. The cohesive forces between molecules in a liquid are shared with all neighboring molecules. Those on the surface have no neighboring molecules above and, thus, exhibit stronger attractive forces upon their nearest neighbors on and below the surface. Surface tension could be defined as the property of the surface of a liquid that allows it to resist an external force, due to the cohesive nature of the water molecules. Water molecules want to cling to each other. At the surface, however, there are fewer water molecules to cling to since there is air above (thus, no water molecules). This results in a stronger bond between those molecules that actually do come in contact with one another, and a layer of strongly bonded water. This surface layer (held together by surface tension) creates a considerable barrier between the atmosphere and the water. In fact, other than mercury, water has the greatest surface tension of any liquid.

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Figure illustrating the surface tension dynamics of water molecules

Within a body of a liquid, a molecule will not experience a net force because the forces by the neighboring molecules all cancel out (diagram). However for a molecule on the surface of the liquid, there will be a net inward force since there will be no attractive force acting from above. This inward net force causes the molecules on the surface to contract and to resist being stretched or broken. Thus the surface is under tension, which is probably where the name “surface tension” came from.

Due to the surface tension, small objects will “float” on the surface of a fluid, as long as the object cannot break through and separate the top layer of water molecules. When an object is on the surface of the fluid, the surface under tension will behave like an elastic membrane. This elastic membrane provides a “vehicle” for dissolved solutes to come out of solution, and as such, the greater the overall surface area the greater the are available for exchange of solutes within the water and the external environment. The surface area available is greatly influenced by the size and number of bubbles present within the liquid.

Through a detailed understanding of the nature of water and how different substances interact with water Armada is able to utilize and optimize conventional separation techniques and deliver cost effective water treatment. Armada “works” its water to facilitate efficient release of dissolved solutes, particles and biological from the core water and so release “working water” back into the hydrological cycle for re-use in and efficient and effective manner.

Industry Overview

Water availability and quality are significant issues in many parts of the world. Water for use in oil and gas production competes with agricultural, industrial and drinking water for limited resources. These

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competing demands are increasing the demand for both water re-use in the oil and gas industry where water is being used. Frac-flow-back water and produced water must be cleaned of chemical additives and subsurface contaminants before it can be re-used. In addition, brine, saline and brackish water need to be treated for organic substances and dissolved and suspended solids before it can be used as process water. Process water can also be cleaned and treated to remove excess salts and dissolved organics to yield water suitable for environmental discharge or for use as drinking water.

Effective water treatment is based upon a thorough understanding of both the input stream and the desired output stream. While we consider “produced water” and frac flowback water” generic terms, in fact there are differences in the constituents of the fluids based upon where they are geographically located. Both salt type and water geochemistry must be taken into account when optimizing water treatment trains.

We believe that the water supply, recycling and reuse industries are highly fragmented, consisting of many companies involved in various operational capacities. Demand for water treatment and purification in the oil and gas industry has continued to grow due to economic expansion, population growth, scarcity of usable water, concerns about water quality and regulatory requirements.

According to the U.S. Department of Energy, in 2007 there were an estimated 1 million actively producing oil and gas wells in the United States generating about 21 billion barrels (bbl) of contaminated produced water annually⁸. For every one barrel of oil and gas produced in the U.S. there is, on average, 7.6 barrels of production water (i.e., water accompanying oil and gas extracted from wells). By 2025, the water to oil ratio is expected to dramatically increase due primarily to advances in drilling techniques and the development of unconventional hydrocarbon extraction methods that allow previously inaccessible or non-economical formations in the earth’s crust to be exploited by applying millions of gallons of fresh water (the process known as “hydrofracturing”, or “frac-ing”) to create fissures that create large quantities of natural gas, oil and other hydrocarbon condensates. Wells that utilize hydraulic fracturing technology use enormous amounts of fresh water, up to an estimated 8 million gallons of water for a single well.

The hydraulic fracturing process involves the injection of large amounts of water, sand and chemicals under high pressures into rock formations to stimulate production. Some portion of the water, so-called flow-back water, used in the production process will return to the surface as a byproduct or waste stream. In addition to flow-back water, oil and natural gas wells also generate salt water, or brine, so-called production water, which is water from underground formations that is brought to the surface during the normal course of oil or gas production. Because the production water has been in contact with hydrocarbon-bearing formations, it contains some of the chemical characteristics of the formations and the hydrocarbons. This water can also contain toxic metals and radioactive substances.

The physical and chemical properties of produced water vary considerably depending on the geographic location of the field, the geologic formation, and the type of hydrocarbon product being produced. Produced water properties and volume also vary through the lifetime of a reservoir. Produced water is the largest volume by-product or waste stream associated with oil and gas exploration and production. Although the details on generation and management of produced water are not well understood on a national scale, the U.S. Department of Energy’s National Energy Technology Laboratory, or “NETL,” estimates that the total volume of produced water generated by U.S. onshore and offshore oil and gas production activities in 2007 was nearly 21 bbl, or 882 billion gallons of water.

We believe that the handling, transportation, procurement, and disposal of production water and flow-back water in the oil and gas industry is one of the most significant short and long-term environmental issues facing every major and independent oil company that uses frac-ing techniques. This is particularly the case as handling, transporting, procuring and disposing of production water and flow-back water are some of the most material long term operational costs facing oil and gas operations. Transportation is believed to be the single largest water-related cost for the producers, with industry sources estimating that: approximately 76% of

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U.S. Department of Energy, Argonne National Laboratory, Produced Water Volumes and Management Practices in the United States, September 2009.

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transportation costs attributable to produced and flow-back waters; and approximately 26% of oil production costs attributable to the disposal of produced and flow-back water.⁹

According to a recent report by the U.S Department of the Interior¹⁰, produced water is generated in large volumes across the Western United States from both conventional and unconventional oil and gas production with the majority of the water produced in Texas, Oklahoma, Kansas, California, and the Rocky Mountain region including Montana, Wyoming, Utah Colorado and New Mexico. Given the large volume of water generated during operations, produced water could be considered an alternative water resource in locations experiencing water shortage.

Geographic location of major oil and gas producing basins in the United States

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Source: “Oil & Gas Produced Water Management and Beneficial Use in the Western United States”. U.S. Department of the Interior. Bureau of Reclamation. Sept. 2011

Overlay of oil & gas producing basins and areas with a potential for future water conflict

Source: “Oil & Gas Produced Water Management and Beneficial Use in the Western United States”. U.S. Department of the Interior. Bureau of Reclamation. Sept. 2011

The same report highlights areas and the relative severity of potential water supply issues by 2025 for the western United States. This figure is shown below.

⁹

Niobrara Report, Niobrara and Bakken: How Water Management is Improving Operational Efficiencies, Phil Winner, June 23, 2013.

¹⁰

U.S. Department of the Interior, Bureau of Reclamation, Oil and Gas Produced Water Management and Beneficial Use in the Western United States, September 2011.

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Source: “Oil & Gas Produced Water Management and Beneficial Use in the Western United States”. U.S. Department of the Interior. Bureau of Reclamation. Sept. 2011

Produced water could be used to augment conventional water supplies for use in irrigation and livestock watering, streamflow augmentation and industrial applications. Water quality issues may need to be addressed for produced water to be used for these beneficial uses within an acceptable economic window. For agricultural purposes, most produced water sources contain elevated levels of sodium and high conductivity that requires treatment to eliminate the possibility of damage to crops and livestock. In some states, produced water volumes are large enough to make a significant contribution to the water demand for irrigation and livestock.¹¹

Historically, production water and flow-back water was simply “spilled” on site and allowed to leech and evaporate. Eventually, companies gathered the water in “pits” (some were eventually lined to eliminate leeching). The water was then allowed to evaporate into the atmosphere. Today, for the most part, water generated by the oil and gas industry is transported by tanker trucks to “off-site” disposal facilities, where it is either evaporated in relatively un-sophisticated pits or injected into down-hole disposal wells. By injecting the water deep underground, the risk of surface contamination of soil and water may be limited. However, in many instances, both methods may be harmful to the environment and many of the off-site disposal facilities and injection wells are not EPA compliant. Off-site disposal facilities and injection wells are also costly to administer.

We believe that the oil and gas industry is now accepting that production water and flow-back water can be successfully treated, recycled and reused in hydraulic fracturing operations, thereby minimizing use of precious groundwater and underground water aquifers and the attendant costs. The residual oils, concentrated

¹¹

U.S. Department of the Interior, Bureau of Reclamation, Oil and Gas Produced Water Management and Beneficial Use in the Western United States, September 2011.

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brine and “clean” water are all marketable commodities generated by the treatment process. Residual oils are recovered from production and flow-back water via a conventional separation process as part of the water treatment, and is periodically sold back to oil and gas producers at a discounted rate. The discount is due to trace amounts of water and other contaminants in the residual oils. Concentrated brine, which is created from a byproduct of the reverse osmosis process, can be sold directly to oil and gas companies for various well servicing operations. “Clean” water, which is water with hydrocarbons, heavy metals, bacteria and sulphates removed (but with residual salts present) can be sold to drilling operators as a base for creating frac fluid. We believe that production water and flow-back water can be delivered to central locations and efficiently and profitably separated into marketable derivatives; all to the benefit of the industry and the environment.

Variations in produced water salt type distribution across the western United States can be demonstrated by the following chart:

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Source: “Oil & Gas Produced Water Management and Beneficial Use in the Western United States”. U.S. Department of the Interior. Bureau of Reclamation. Sept. 2011

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Variations in produced water geochemistry distribution across the western United States:

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Source: “Oil & Gas Produced Water Management and Beneficial Use in the Western United States”. U.S. Department of the Interior. Bureau of Reclamation. Sept. 2011

According to a study by Lux Research¹², the flow back water cleanup market from hydraulic fracturing is forecast to grow nine-fold to $9 billion in 2020, a 28% annual growth rate, while in addition, the total value of the produced water market is set to grow from $5.0 billion in 2010 to $9.9 billion in 2025 — a compound annual growth rate of 4.7%.

The services that are currently provided to meet this market are largely fragmented among the different service lines, logistics and transportation, water treatment and waste disposal. These service lines often end up competing against each other at different points of the industry cycles. We believe that by providing an integrated cradle-to-grave water solution to oil and gas operators, our business will be able to leverage technologies and optimize asset utilization across the spectrum of services to provide a stable economic foundation from which the oil and gas companies can budget and plan for their water usage/re-usage and disposal for the lifetime of the field.

Ultimately the most cost effective solution involves optimizing transport (minimizing road damage and fuel burden), providing efficient water treatment plants appropriately sized for variable demand, and effective waste disposal, and economic re-purposing of process streams to meet existing local needs, as well as planning for future local growth project requiring viable sources of water.

The water logistics market is made up of providers that include independent national or regional trucking and logistics companies, trucking and logistics companies owned by or dedicated to large oil and gas companies, and local providers focused on one or more particular shales. Water logistics providers are

¹²

Lux Research, Risk and Reward in the Frack Water Market, May 2012.

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impacted by the level of new drilling activity, which impacts the transportation of fresh water and flowback water used and the provision of related services used in those activities, and the number of active wells, which impacts the transportation of crude oil and produced water and the provision of related services used in those activities. The water logistics market is also impacted by market prices for oil and gas, which influence the production activities of our customers, the prices they are willing to pay for our services, and the shales in which they operate.

Competitive Conditions

There are several competitors and potential competitors that currently offer technologies involved in the water remediation process (for example, electro-coagulation, reverse osmosis, or membrane filtration). Similarly, there are competitors that have facilities offering injection wells and/or transportation of contaminated or clean water or offer fresh water for sale. Among these competitors are certain large exploration and production companies, as well as oil field services companies, all of which are substantially larger than we are. Some of the competitors operating within our target markets as to our water transport, handling and/or treatment services, include Rockwater Energy Solutions, Nuverra Environmental Solutions, Select Energy Services and GreenHunter Energy, Inc.; with competitors such as Schlumberger Limited, Halliburton Company and CETCO Oilfield Services, operating within our target markets as to general oilfield services and development of treatment technologies and services. There can be no assurance that there will not be additional competitors in the future or that such competitors will not develop technologies that are superior to ours.

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Frac Support services includes provision of frac tanks, pumps, manifolds, pressure control equipment, sand and associated technical services to perform the frac-ing process.

Water treatment services comprise proprietary permanent, temporary and mobile water treatment facilities, processes and systems that are supported by company engineering and service delivery personnel.

To date, companies in this market sector have tended to focus on either on providing one or more of logistics services, frac support services, water treatment services and waste disposal services. Their relative focus in the different service lines are shown in the table above and are based on Armada management experience.

We intend to differentiate ourselves from our competitors by building our company to offer the oil and gas industry in our targeted markets a simple and convenient, yet essential, “one-stop” solution based on water logistics, treatment and disposal. We believe that offering a comprehensive environmental solution to

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our customers, which includes certainty of control of environmental products from generation through disposal, is an important value proposition that will only increase in importance over time.

We believe that another significant competitive advantage resides with our team of managers, who have substantial experience performing field services in and around the oil and gas industry. Additionally, we have or intend to retain, the services of senior oil and gas field engineers who have significant hands-on experience in designing, constructing and operating water treatment facilities in and around the oil and gas industry.

While there are also other groups providing similar services, and even though we remain in the early stages of our development, we believe we will be able to provide a water treatment solutions and related support services that are competitively compelling based on, among others: (i) our existing relationships with oil and gas field customers; (ii) our access, through our existing and contemplated engineering and technology partners, to proprietary water treatment technologies that we believe are effective in terms of throughput, performance and reliability; and (iii) the strategic location of our existing or planned facilities near oil field service providers, that may enable reduction of transportation costs.

The Market and our Customers

Presently, the largest market sector in the oil and gas market is production water generated by conventional oil and gas on-shore fields.¹³ We believe that the fastest growing market for water treatment and reuse are the unconventional oil and gas producers. Conventional oil wells account for the majority of all domestic onshore production water. Most of the flow-back water is derived from oil and gas wells that have been treated with hydraulic fracturing. Unconventional hydrocarbon production, which utilize hydraulic fracturing, continues to grow as a percentage of all domestic onshore production in the United States.

Regulations and resistance to the issuance of on-site or off-site disposal permits are important problems for oil and gas producers. Currently, producers can either manage their own water disposal and facilities, or they can contract with third party service providers. We believe that this unavoidable dynamic, coupled with an industry-wide pressure to minimize the impact it is having on water resources in its areas of operation, the need to reduce the consumption of finite local water sources and increasing transportation costs for water procurement and disposal, result in us being able to capture market share for each of our planned future strategically located, state-of-the-art water treatment facilities.

US Rig Count: Q2 2013: Focus on Unconventionals

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¹³

Society of Petroleum Engineers (SPE) White Paper, Challenges in Reusing Produced Water, http://www.spe.org/industry/docs/reusingwater.pdf.

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Source: Baker Hughes Rig Count

The US rig count has historically been something of a barometer of the domestic oil and gas business. However the rise of the “unconventionals” over the last 4 – 5 years concomitant with greater focus on “subsurface oil & gas manufacturing” as compared to previous “oil and gas exploration and production “has resulted in greater stability and growth of the sector. Over 70% of the US Land rigs are involved in the development of unconventional oil and gas resources.

It has been estimated that shale gas developments in 2011 consumed in excess of 3 billion bbls of water, or which approx. 40% can be recovered from frac-water flow back, or just over 1 billion bbls per year.

(Source: the Energy Collective, April 6, 2013)

Initially, we will focus on the Western slope of Colorado and eastern Utah, the DJ basin area in central and northern Colorado, and the Midland/Odessa area in Texas, commonly known as the Permian basin.

Provided initial marketing and operational plans proceed as contemplated, we would expect to place a secondary focus on the other active oilfields in North Dakota, Pennsylvania, New York, and other high producing formations.

There are over 550,000 producing oil wells in the continental USA as of January 2013 and are distributed according to the map shown below.

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Produced water from conventional oil and gas developments in the USA represents approx. 2 billion bbls water per year.

Produced water quantities by State in the Western United States

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Produced water comprising both production water from conventional oil and gas wells and flow-back from hydro-fractured wells is shown graphically above. The states producing the most production water overall are Texas, Wyoming, California, Oklahoma and Kansas.

We believe that we have a strong base of existing customers, all of which we obtained through our various acquisitions. These customers include leading oil & gas companies in the basins where we operate. Our existing customers primarily use our water logistics and supply services, but we are working to expand the scope of our relationships with such customers to include other business lines, particularly our water treatment services.

For the year ended December 31, 2013, our two largest customers accounted for approximately 44.7% and 22.5%, respectively, of our revenues. We intend to seek new business from potential customers that are active in our core areas of operation, including, among others, major United States and international oil and gas companies, foreign national oil and gas companies and independent oil and natural gas production companies, although there can be no assurance that we will be able to achieve this goal. If we are unable to diversify our customer base, our future results will be heavily dependent on these customers. Our dependence on a limited number of customers means that the loss of a major customer or any reduction in orders by a major customer would materially reduce our revenues and adversely affect our results of operations. We expect that sales to relatively few customers will continue to account for a significant percentage of our revenues for the foreseeable future. However, these customers or our other customers may not use our services at current levels in the future, if at all. If any one of these customers reduces their demand for our services or is unable to pay us in full for the services that we have provided, it will have a material adverse effect on our operations.

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Permits and Approvals

Because a significant component of our business is the collection and disposal of flow-back and produced water in an environmentally compliant manner, a significant amount of our capital expenditures will likely be related, either directly or indirectly, to environmental protection measures, including compliance with federal, state and local provisions that regulate the discharge of treated water into the environment. There are costs associated with siting, design, operations, monitoring, site maintenance, corrective actions, financial assurance, and facility closure and post-closure obligations. There are also expenditures necessary to obtain access to water rights and supplies in the areas of our operations. In connection with the acquisition, development or expansion of a wells or transfer stations, we will need to spend considerable time, effort and money to obtain or maintain required permits and approvals. There cannot be any assurances that we will be able to obtain or maintain required governmental approvals. Once obtained, operating permits are subject to renewal, modification, suspension or revocation by the issuing agency. Compliance with current and any future regulatory requirements could require us to make significant capital and operating expenditures. However, most of these expenditures are made in the normal course of business and likely will not affect our competitive condition.

Government and Environmental Regulations

Our existing and planned water operations are subject to extensive United States Federal, state and local laws and regulations, that govern the protection of the environment, health and safety, water allocation rights, and the manner in which we collect, treat, discharge and dispose of wastewater.

These requirements include the United States Clean Water Act of 1972, which we refer to as the Clean Water Act and similar state laws. We may also be required to obtain various environmental permits from regulatory agencies for our operations. State regulatory agencies set conditions and standards for the water and wastewater services we deliver. In certain states, water supply sources, including rivers, lakes, streams and groundwater aquifers are held in the public trust or are subject to pre-existing private rights claims. If we establish operations in those states, we would not expect to own the water that we use in those operations, and the availability of our water supply could be established through obtaining allocation rights and complying with passing-flow requirements that may be set by governmental entities. Passing-flow requirements set minimum volumes of water that must pass through specified water sources, such as rivers and streams, in order to maintain environmental habitats and meet water allocation rights of downstream users. Allocation rights are often imposed to ensure sustainability of major water sources and passing flow requirements are frequently imposed on source waters from smaller rivers, lakes and streams. To date, our only water operations are located at our Barstow facility in Texas, which we believe are not subject to restrictions on public water supply and our UB Water facility located in Colorado, which is subject to restrictions on public water supply.

Our operations are also subject to United States federal, state and local laws and regulations regulating the discharge of materials into the environment or otherwise relating to health and safety or the protection of the environment. Additional laws and regulations, or changes in the interpretations of existing laws and regulations, that affect our business and operations may be adopted, which may in turn impact our financial condition. The following is a summary of the more significant existing health, safety and environmental laws and regulations to which our current and contemplated operations are subject.

Water Treatment. No comprehensive set of national standards exists at this time for the disposal of wastewater discharged from hydraulic fracturing activities. Under the Clean Water Act, oil and gas exploration, production, processing, or treatment operations or transmission facilities, including associated construction activities, are not required to obtain National Pollutant Discharge Elimination System (NPDES) permit coverage for stormwater discharges unless the discharge causes or contributes to a water quality violation. Our plan is to obtain NPDES permits for our planned water treatment facilities to allow us to surface discharge treated production water. We presently have an NPDES permit for our Harley Dome facility which allows for the discharge of up to 45,000 barrels per day of treated production water. Many states, including Colorado, Texas and Utah, regulate the disposal or treatment of production water.

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Hazardous Substances and Waste. The United States Comprehensive Environmental Response, Compensation, and Liability Act, as amended, referred to as “CERCLA” or the “Superfund” law, and comparable state laws, impose liability without regard to fault or the legality of the original conduct on certain defined persons, including current and prior owners or operators of a site where a release of hazardous substances occurred and entities that disposed or arranged for the disposal of the hazardous substances found at the site. Under CERCLA, these “responsible persons” may be liable for the costs of cleaning up the hazardous substances, for damages to natural resources and for the costs of certain health studies.

In the course of our operations, we may generate materials that are considered “hazardous substances” and, as a result, may incur CERCLA liability for cleanup costs. Also, claims may be filed against us for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants.

Although we intend to use operating and disposal practices that are standard in the industry, hydrocarbons or other wastes may be, or may have been, released, whether by us or one or more third parties, at properties owned or leased by us now or in the past, or at other locations where these hydrocarbons and wastes were taken for treatment or disposal. Under CERCLA and analogous state laws, we could be required to clean up such contaminated property (including contaminated groundwater), or to perform remedial activities to prevent future contamination, regardless of whether our operations caused such contamination.

State Environmental Regulations. Our current or contemplated operations could involve the storage, handling, transport and disposal of bulk waste materials, some of which contain oil, contaminants and other regulated substances. Various environmental federal and state laws and regulations require prevention, and where necessary, cleanup of spills and leaks of such materials and some of our operations must obtain permits that limit the discharge of materials. Failure to comply with such environmental requirements or permits may result in fines and penalties, remediation orders and revocation of permits.

Occupational Safety and Health Act. We are subject to the requirements of the United States Occupational Safety and Health Act, as amended, or “OSHA,” and comparable state laws that regulate the protection of employee health and safety. OSHA’s hazard communication standard requires that information about hazardous materials used or produced in our operations be maintained and provided to employees, state and local government authorities and citizens.

Saltwater Disposal Wells. Salt water disposal wells are subject to the Clean Water Act, the Safe Drinking Water Act, or “SWDA,” and state and local laws and regulations, including those established by the Underground Injection Control Program of the United States Environmental Protection Agency, or “EPA,” which establishes the minimum program requirements including for permitting, testing, monitoring, record keeping and reporting of injection well activities. The Underground Injection Control Program of the EPA designates five separate injection well classes based on similarity in the fluids injected, activities, construction, injection depth, design, and operating techniques. This categorization ensures that wells with common design and operating techniques are required to meet appropriate performance criteria for protecting underground sources of drinking water.

Certain state regulatory agencies have the general authority to suspend or modify one or more of these permits if operation of a water disposal well is likely to result in pollution of freshwater, substantial violation of permit conditions or applicable rules, or leaks to the environment. Any leakage from the subsurface portions of the wells we acquire could cause degradation of fresh groundwater resources, potentially resulting in cancellation of operations of a well, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and imposition of liability by third parties for property damages and personal injuries. We own and operate two Salt Water Disposal wells at Harley Dome. Both wells are permitted and have been operating since 2011.

Transportation Regulations. We operate our truck fleet on an interstate and intrastate basis and thus are subject to regulations of the states in which we operate as well as federal regulations. We are subject to federal regulation by the Federal Motor Carrier Safety Administration, or “FMCSA,” a unit within the United States Department of Transportation, or “USDOT.” The FMCSA publishes and enforces comprehensive trucking safety regulations covering a wide variety of subjects from the maintenance and

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operation of vehicles to driver qualifications to safety, including, among others, rules on commercial driver licensing, controlled substance testing, medical and other qualifications for drivers, equipment maintenance, and drivers’ hours of service. The agency also performs certain functions relating to such matters as motor carrier registration (licensing), insurance, and extension of credit to motor carriers’ customers. Another unit within USDOT publishes and enforces regulations regarding the transportation of hazardous materials, or “hazmat,” but the waste water and other water flows we transport by truck are not normally regulated as hazmat.

In December 2010, the FMCSA launched a program called Compliance, Safety, Accountability, or “CSA,” in an effort to improve commercial truck and bus safety. A component of CSA is the Safety Measurement System, or “SMS,” which will continuously analyze all safety violations recorded by the federal and state law enforcement personnel to determine a carrier’s safety performance. The SMS is intended to allow the FMCSA to identify carriers with safety issues and intervene to address those problems. Our Summit subsidiary, which operates an interstate trucking fleet, currently hold a “Satisfactory” safety rating from FMCSA (the best rating available). Our Wes-Tex trucking operation is not rated by the FMCSA. The FMCSA has announced a future intention to revise its safety rating system by making greater use of SMS data in lieu of on-site compliance audits of carriers. We cannot predict the effect of such a revision on our safety rating.

In addition, hours of service, or “HOS”, regulations published by the FMCSA establish the maximum number of hours that a commercial truck driver may work. A new FMCSA rule reducing the number of hours a commercial truck driver may work each day became effective in February 2012 and the compliance date of selected provisions was July 1, 2013. The new rule, which is intended to reduce the risk of fatigue and fatigue-related crashes and harm to driver health in several ways, among other things prohibits a driver from driving if more than eight hours have passed since the driver’s last off-duty or sleeper berth break of at least 30 minutes and limits the use of the restart to once a week, which, on average, will cut the maximum work week from 82 to 70 hours. The effect of reduced driver hours may raise operating costs for many if not most truck fleets.

Our intrastate trucking operations are also subject to the state environmental and waste water transportation regulations. Federal law also allows states to impose insurance and safety requirements on motor carriers conducting intrastate business within their borders, and to collect a variety of taxes and fees on an apportioned basis reflecting miles actually operated within that state.

Employees and Consultants

As of July 22, 2014, we had a total of 147 employees, 23 of whom are involved in management and administration, and 124 of whom are involved in operations. We also engage independent contractors as needed in our water logistics operations at Wes-Tex and in connection with the commission of the Harley Dome waste treatment facility. We have not experienced any work stoppages and we consider our relations with our employees to be good.

Properties

We lease corporate offices in Fort Collins, Colorado and Houston, Texas on short-term month-to-month leases. We also own or lease several facilities including administrative offices, sales offices, truck yards, maintenance facilities, warehouses and well disposal sites in several states.

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Through our subsidiaries, we own several properties as described below:


		*Description of Property*
Barstow		Our Barstow site consists of 177 acres located 4 miles north east of Pecos, Texas, upon which resides an active fresh water aquifer and three inactive former oil and gas wells that we expect to be able to convert into active fresh water aquifers, pending market demand and the availability of fresh water supply. The property also houses four fast-fill pumping stations and other support facilities, including restrooms with showers for driver use, a small office trailer, and multiple holding tanks.
Wes-Tex		Our Wes-Tex site consists of 4.5 acres located in Odessa, Texas, upon which resides a small building housing the Wes-Tex corporate offices, a three-bay work shop, welding area, tool room and trailer home to house our lead mechanic.
Harley Dome		Our Harley Dome site consists of 23 acres in Grand County, Utah, which contains several salt water disposal wells and a water treatment facility that is currently under development. Our Grand County, Utah facility is currently subject to a mechanics lien in connection with an outstanding legal proceeding, which is described in more detail under “Legal Proceedings” below.

We believe that we have satisfactory title to the properties owned and used in our businesses, subject to liens for taxes not yet payable, the mechanics lien on the Utah property, liens incident to minor encumbrances, liens for credit arrangements and easements and restrictions that do not materially detract from the value of these properties, our interests in these properties, or the use of these properties in our businesses.

We believe all properties that we currently occupy are suitable for their intended uses. We also believe that we have sufficient facilities to conduct our operations. However, we continue to evaluate the purchase or lease of additional properties or the consolidation of our properties, as our business requires.

Legal Proceedings

On January 18, 2012, a subsidiary of our Harley Dome business unit, ER & PWD, LLC, whose assets and certain liabilities were purchased in June 2012 by our Harley Dome subsidiary, along with several other third parties, was sued in the Seventh Judicial District Court of Grand County, Utah (Civil No. 120700003) by Electrical Contractors, Inc., an electrical contractor who alleges to have provided approximately $877,000 of unpaid contracting services on our partially constructed water treatment facility in Grand County, Utah. The lawsuit also named Westwater Farms, LLC and Stewart Environmental Consultants, as co-defendants. Although our subsidiary purchased the assets upon which the lien had been placed, we believe that the legal responsibility for the unpaid services resides with Westwater and Stewart, as the third party general contractors of the project, and as the parties responsible for hiring the sub-contractors and administering the project. However, the plaintiff is seeking a mechanics lien foreclosure of our Utah property. We expect, based on our attorneys judgment that the court processes in connection with the lien will not be satisfied until 2015 at the earliest. Our financial statements have included a liability for the lien that includes additional professional fees of approximately $20,000 to cover our costs in connection with the matter.

We are otherwise not involved in any material legal proceedings outside the ordinary course of business.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth information concerning our executive officers and directors. Each of the executive officers will serve until his or her successor is appointed by our board of directors or such executive officer’s earlier resignation or removal. Each of the directors will serve until the next annual meeting of stockholders or such director’s earlier resignation or removal.

The following individuals currently serve as our executive officers and directors:


Name	Age	Position
Richard Schaeffer	62	Chairman of the Board
Maarten Propper	48	Chief Executive Officer, President and Director
Mitch Burroughs	50	Vice President — Corporate Development and Director
Sami Ahmad	52	Chief Financial Officer, Treasurer, Secretary and Director
J. John Combs	56	Director
Thomas R. Ross	57	Director
William F. Miller III	69	Director

Richard Schaeffer has been our Chairman since March 25, 2014. Since June 2013, he has been a consultant to Liquid Holdings Group, LLC, a publicly traded company that he co-founded which specializes in software for the financial industry. He served as Executive Chairman of Liquid Holdings Group, LLC from April 2012 until March 2013 and as Chairman of the Board from March 2013 to June 2013. From 2011 – 2012, he served on the board of directors of Quantitative Alpha Trading Inc., a publicly traded technology company that researches, develops and markets proprietary sentiment based automated trading systems. Since 2008, he has served as a Special Advisor to General Atlantic LLC. From 2008 – 2011, Mr. Schaeffer served on the board of directors of magicJack VocalTec Ltd. Mr. Schaeffer served as a member of the board of directors of NYMEX from 1990 – 2008, including as Vice Chairman from 2004 – 2006 and Chairman from 2006 – 2008. He was also the Treasurer of NYMEX from 1993 – 2004. Mr. Schaeffer has served as a Director of International Maritime Exchange, or IMAREX, the leading Norwegian financial derivatives exchange, as well as a director of the Montreal Stock Exchange. He also held a seat on the board of directors of the University of Maryland’s Robert H. Smith School of Business. From 1997 until April 2006, Mr. Schaeffer was an executive director of Global Energy Futures for ABN AMRO Bank N.V., or ABN AMRO. From 1992 – 1997, Mr. Schaeffer was a senior vice president/director of The Chicago Corporation, which was a clearing member of both the NYMEX Division and the COMEX Division, until its buyout by ABN AMRO. Mr. Schaeffer currently serves on the Board of Directors of Sacred Heart University, and chairs its Investment committee. Mr. Schaeffer received his bachelor’s degree from the University of Maryland.

Mr. Schaeffer was selected to serve on our board of directors due to his extensive financial knowledge as well as his significant corporate governance experience as a result of more than twenty years of service on the board of directors of NYMEX.

Maarten Propper has been our Chief Executive Officer since April 3, 2013. Mr. Propper has spent his entire professional career within the oilfield services industry, having most recently been the President and Chief Executive Officer of Probe and Company since 2009. Probe and Company is a global company that designs, manufactures and sells measurement tools and systems used for well formation evaluation, integrity assessment and productivity determination in the petroleum and geothermal business. Prior to a brief consulting assignment in 2008, from 2005 through 2007, Mr. Propper was a vice-president in charge of the performance drilling and evaluation unit of Weatherford International, Ltd.; a unit that generated average annual revenue during Mr. Propper’s tenure in excess of $1.0 billion, and provided directional drilling and logging, controlled pressure drilling services and testing services. In this position, Mr. Propper was responsible for managing approximately 7,500 people. Prior to his experience at Weatherford, from 2003 through 2005, Mr. Propper was vice-president of Precision Drilling Corporation, an oilfield services company supplying drilling rigs and a range of technical services and solutions to the international oil and gas industry. From 1993 through 2003, Mr. Propper was employed in various capacities with Schlumberger Oilfield

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Services. Mr. Propper graduated in 1991 from Technical University of Delft, The Netherlands, with a Master of Science degree in Petroleum Engineering.

Mitch Burroughs has been a director of the Company since December 2012. He also currently serves as our Vice President — Corporate Development, and prior to this he served as our President from December 2012 to June 2014. Since January 2010, Mr. Burroughs has been the principal owner of New Water Financial, LLC, a Colorado company which owns water disposal and remediation facilities. From April 2009 through November 2010, Mr. Burroughs was the Chief Executive Officer of Majestic 360, and from September 1996 until April 2009, Mr. Burroughs was an owner of the predecessor business, NBS Enterprises, Inc., d/b/a/Majestic West, a Colorado-based company which provided commercial scale screen printing and embroidery services for Fortune 500 and other large companies represented by leading marketing agencies. Mr. Burroughs graduated from Colorado State University in 1989 with a degree in Marketing.

Mr. Burroughs was selected to serve on our board of directors because of his extensive experience in the water disposal and remediation industry.

Sami Ahmad has been our Chief Financial Officer since July 22, 2013. Mr. Ahmad has thirty years of experience in roles of increasing responsibility in the water, energy and chemicals industries. He has deep and extensive experience in capital markets, corporate finance, mergers and acquisitions and strategic planning as well as engineering and manufacturing. Most recently, from October 2012 to June 2013, Mr. Ahmad was CFO at SouthWest Water Company, a private-equity owned water and wastewater utility based in Houston. His responsibilities included finance, IT, accounting, tax, treasury, real estate and corporate development. Before this, from January 2012 to October 2012, he was a managing partner for Lexington Partners, LLC, a private M&A advisory firm. Prior to this, from May 2009 to November 2011, Mr. Ahmad was VP of Finance and Treasurer at Exterran, NYSE-listed, oil field services company. His past roles include Corporate Development, Treasury and Investor Relations at LyondellBasell Industries, a Fortune 100 global chemical company, and additional experiences in Finance, Engineering and Manufacturing at ARCO and Ashland Chemical. Mr. Ahmad holds a Bachelor of Science degree in Chemical Engineering from the University of Pennsylvania and an MBA from the University of Chicago. He serves on the Board of the Buffalo Bayou Partnership, a non-profit organization dedicated to developing parklands in Houston, and is the Chair of its Finance Committee.

J. John Combs III, served as our sole officer and director from inception, October 26, 2012, until December, 2012. Mr. Combs continued to serve as our interim Secretary until August 2013. Mr. Combs is the founder, chairman of the board of directors and Chief Executive Officer of Strategic Environmental & Energy Resources, Inc. (OTCQB: “SENR”), a publicly traded company that provides technology based industrial services to the environmental, energy and rail transportation services. Mr. Combs has held these positions with SENR since 2004. Mr. Combs is also Vice President of Resource Environmental Group Services, Inc. since 2004, and the founder and President of Tactical Cleaning Company since 2005, which are subsidiaries of SENR. Mr. Combs, also an attorney in private practice, specializes in corporate maintenance, international finance, and business litigation. He is a member of the California and Colorado Bars. Mr. Combs is a graduate of the University of Colorado and received his J.D. from Duke University.

Mr. Combs was selected to serve on our board of directors because of his knowledge of public company requirements along with his experience in the environmental, energy and rail transportation industry.

Thomas R. Ross has been a director since June 11, 2014. He is an energy trading professional and the former head of trading at BP North America. With over 30 years of experience in trading and risk management, his career spans London, New York and Chicago. Since 2009, Mr. Ross has been the owner of Carradale Partners LLC, an energy consulting firm. From 2006 to 2009, Mr. Ross oversaw BP’s North American crude and product trading operations, including offices in Calgary, Long Beach, Houston and Chicago with activities in exploration and production, refining and entrepreneurial trading in North and South America. He is a director and chairman of the compensation committee of Liquid Holdings Group, a publicly-traded financial services software provider and was a member of the ICE Board of Directors and an active member of the NYMEX advisory committee. Mr. Ross graduated from Strathclyde University in Scotland in 1978 with a Bachelor’s degree in Geography.

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Mr. Ross was selected to serve on our board of directors because of his extensive background in trading and risk management.

William F. Miller III has been a director since November 1, 2013. Mr. Miller has spent most of his professional career at Goldman Sachs, having spent more than 30 years as a vice president in Private Wealth Management and since 2008 as a consultant in the same division. He was one of the original four professionals who opened the Houston office for Goldman Sachs in 1975. Using his background and experience, he currently consults with several private companies in which he has invested. Mr. Miller offers volunteer assistance for several community organizations, including Center for Student Missions, Young Life, and the Prison Entrepreneur Program where Mr. Miller has served on the advisory board for six years and mentors recent graduates of the program. Mr. Miller earned a BA degree at the University of Texas in 1966 and a JD degree at the University of Texas School of Law in 1969.

Mr. Miller was selected to serve on our board of directors because of his financial expertise and management experience.

Board Leadership Structure

Our Board of Directors has determined that its current structure, with separate Chairman and Chief Executive Officer roles is in the best interests of the Company and its stockholders at this time.

A number of factors support the leadership structure chosen by the board, including, among others:

•

The board believes this governance structure promotes balance between the board’s independent authority to oversee our business and the Chief Executive Officer and his management team who manage the business on a day-to-day basis;

•

The current separation of the Chairman and Chief Executive Officer roles allows the Chief Executive Officer to focus his time and energy on operating and managing the Company leverage the experience and perspectives of the Chairman; and

•

The Chairman serves as a liaison between the board and senior management but having an independent chairman also enables non-management directors to raise issues and concerns for board consideration without immediately involving management.

Family Relationships

There are no family relationships between our officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.

Board of Directors and Committees and Director Independence

Applicable exchange rules require a majority of a listed company’s board of directors to be comprised of independent directors. In addition, applicable exchange rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Currently, our board of directors has determined that each of Messrs. Miller, Combs, Ross and Schaeffer is an “independent” director as defined by NASDAQ Rule 5605(a)(2) currently in effect and all applicable rules and regulations of the SEC. In addition, Messrs. Schaeffer, Miller, Combs and Ross satisfy the “independence” standards applicable to members of Audit and Executive Oversight Committee. The board of directors made this affirmative determination regarding these directors’ independence based on discussions with the directors and on its review of the directors responses to a standard questionnaire regarding employment and compensation history; affiliations, family and other relationships; and transactions with the Company. The board of directors considered relationships and transactions between each director or any member of his immediate family and the Company and its subsidiaries and affiliates.

Audit and Executive Oversight Committee

We expect the standing committee of the board of directors to be the Audit and Executive Oversight Committee, which will be formed upon the effectiveness of this public offering. The Audit and Executive

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Oversight Committee will fulfill the audit, compensation and nominating committee functions. The purpose of the Audit and Executive Oversight Committee will be to oversee (i) the integrity of our financial statements and disclosures, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent auditing firm (the “External Auditor”), (iv) the performance of our internal audit function and External Auditors, (v) our internal control systems, (vi) our procedures for monitoring compliance with our Code of Business Conduct and Ethics, (vii) our director nomination process and procedures, and (viii) the review and determination of matters of executive compensation.

We expect the members of the Audit and Executive Oversight Committee to be Messrs. Schaeffer, Miller and Ross. The board of directors has determined that Mr. Schaeffer qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, promulgated under the Exchange Act. The Audit and Executive Oversight Committee will operate under a written charter that will be reviewed annually. The charter will be available on our website at www.armadawater.com. Under the charter, the Audit and Executive Oversight Committee will be required to pre-approve the audit and non-audit services to be performed by our independent registered public accounting firm.

Compensation Committee Function of the Audit and Executive Oversight Committee: We do not have, and do not expect to have, a standing Compensation Committee. The Audit and Executive Oversight Committee will fulfill the compensation committee functions. The Audit and Executive Oversight Committee will review the compensation philosophy, strategy of the Company and consults with the Chief Executive Officer, as needed, regarding the role of our compensation strategy in achieving our objectives and performance goals and the long-term interests of our stockholders. The Audit and Executive Oversight Committee will have direct responsibility for approving the compensation of the Chief Executive Officer, and will make recommendations to the Board with respect to our other executive officers. The term “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) under the Exchange Act. Our Chief Executive Officer sets the compensation of anyone whose compensation is not set by the board of directors and reports to the board regarding the basis for any such compensation if requested by it. The Audit and Executive Oversight Committee may retain compensation consultants, outside counsel and other advisors as the board deems appropriate to assist it in discharging its duties. The board has not currently retained any outside advisor.

Nominating Committee Function of the Audit and Executive Oversight Committee: We do not have, and do not expect to have, a standing Nominating Committee. The Audit and Executive Oversight Committee will function as a nominating committee. The Audit and Executive Oversight Committee will identify and recommend to the Board individuals qualified to be nominated for election to the board and recommend to the board the members and chairperson for each board committee.

Role in Risk Oversight

Our board of directors oversees an enterprise-wide approach to risk management, designed to support the achievement of business objectives, including organizational and strategic objectives, to improve long-term organizational performance and enhance stockholder value. The involvement of our board of directors in setting our business strategy is a key part of its assessment of management’s plans for risk management and its determination of what constitutes an appropriate level of risk for the company. The participation of our board of directors in our risk oversight process includes receiving regular reports from members of senior management on areas of material risk to our company, including operational, financial, legal and regulatory, and strategic and reputational risks.

While our board of directors has the ultimate responsibility for the risk management process, senior management and the Audit and Executive Oversight Committee will also have responsibility for certain areas of risk management. Our senior management team is responsible for day-to-day risk management and regularly reports on risks to our full board of directors or our Audit and Executive Oversight Committee. Our finance and regulatory personnel serve as the primary monitoring and evaluation function for company-wide policies and procedures, and manage the day-to-day oversight of the risk management strategy for our ongoing business. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels.

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The Audit and Executive Oversight Committee will focus on monitoring and discussing our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. As appropriate, the Audit and Executive Oversight Committee will provide reports to and receive direction from the full board of directors regarding our risk management policies and guidelines, as well as the Audit and Executive Oversight Committee’s risk oversight activities.

In addition, the Audit and Executive Oversight Committee will assess our compensation policies to confirm that the compensation policies and practices do not encourage unnecessary risk taking. The Audit and Executive Oversight Committee will review and discuss the relationship between risk management policies and practices, corporate strategy and senior executive compensation and, when appropriate, report on the findings from the discussions to our board of directors. Our Audit and Executive Oversight Committee intends to set performance metrics that will create incentives for our senior executives that encourage an appropriate level of risk taking that is commensurate with our short-term and long-term strategies.

Code of Business Conduct and Ethics

We expect to adopt a Code of Business Conduct and Ethics (the “Code of Ethics”), to be effective upon the completion of this offering, that applies to all of the directors, officers and employees of the Company. The Code of Ethics will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. A copy of the Code of Ethics will be available on our website at www.armadawater.com. Requests for copies of the Code of Ethics should be sent in writing to Armada Water Assets, Inc., 2425 Fountainview Drive, Suite 300, Houston, Texas 77057, Attention: Chief Financial Officer.

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EXECUTIVE COMPENSATION

The following table provides certain summary information concerning compensation earned by the executive officers named below during the fiscal year ended December 31, 2013.

Summary Compensation Table


Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)⁽¹⁾⁽²⁾		Option Awards ($)⁽¹⁾		All Other Compensation ($)		Total ($)
Maarten Propper⁽³⁾ Chief Executive Officer		2013		148,888		—		83,333		22,904		—		255,125
Maarten Propper⁽³⁾ Chief Executive Officer		2012		—		—		—		—		—		—	⁽⁴⁾
Mitch Burroughs⁽⁵⁾ President		2013		106,250		—		—		—		—		106,250
Mitch Burroughs⁽⁵⁾ President		2012		—		—		—		—		—		—	⁽⁴⁾
Sami Ahmad Chief Financial Officer		2013		85,937		—		42,857		5,953		—		134,737
Sami Ahmad Chief Financial Officer		2012		—		—		—		—		—		—	⁽⁴⁾

(1)

Represents the grant date fair value of the award, calculated in accordance with FASB Accounting Standard Codification 718, “Compensation-Stock Compensation,” or ASC 718. A summary of the assumptions made in the valuation of these awards is provided in our notes to consolidated financial statements beginning on page F-11 of this prospectus.

(2)

Does not include 20,000 shares of common stock issued in 2014 as a bonus for 2013.

(3)

We changed Mr. Propper’s title to Chief Executive Officer and President in June 2014.

(4)

From inception (October 23, 2012) through December 31, 2012, and more recently, through March 31, 2013, we paid no executive compensation as we remained in the development stage.

(5)

We changed Mr. Burroughs’ title to Vice President — Corporate Development in June 2014.

Narrative Disclosure to Summary Compensation Table

Employment Agreements

As of January 1, 2014, we entered into an employment agreement with our Chief Executive Officer and President, Maarten Propper, which amended and restated our original employment agreement with Mr. Propper dated as of April 3, 2013. The amended and restated employment agreement has a three-year term commencing January 1, 2014, subject to automatic renewal for subsequent one-year terms until terminated. In addition to vacation and other standard and customary fringe benefits, such as Company provided health and insurance benefits, the amended and restated employment agreement provides for a base salary of $250,000, and the awarding of annual incentive bonuses, targeted at between 50% to 100% of Mr. Propper’s base salary, contingent upon our achievement of annual and aggregate EBITDA goals starting at between $6.5 million and $12 million of annual EBITDA, respectively, for 2014 and 2015. As of April 3, 2013, we awarded to Mr. Propper (i) 33,334 restricted shares of our common stock; 16,667 of which vested immediately, and 16,667 of which vest upon completion of our initial public offering, and (ii) an option to purchase up to 333,334 shares of our common stock; 166,666 of which were granted at an exercise price of $3.00 per share (the “Propper $3.00 Options”), and 166,667 of which were granted at an exercise price equal to the lower of $9.00 per share or the price per share at which we complete an initial public offering (the “Propper IPO Options”). Of the Propper $3.00 Options, 58,333 vest in equal annual installments on January 1, 2015, 2016 and 2017; and 108,334 vest if and when we achieve annual or aggregate EBITDA goals between $6.5 million and $13.5 million of annual EBITDA. Of the IPO Options, 58,333 vest in equal annual installments on January 1, 2015, 2016 and 2017; and 108,333 vest if and when we achieve annual or aggregate EBITDA goals between $6.5 million and $13.5 million of annual EBITDA.

As of January 1, 2014, we entered into an employment agreement with our Vice President — Corporate Development, Mitch Burroughs, which amended and restated our original employment agreement with Mr. Burroughs dated April 3, 2013. The amended and restated employment agreement has a three-year term commencing January 1, 2014, subject to automatic renewal for subsequent one-year terms until terminated. In addition to vacation and other standard and customary fringe benefits, such as Company provided health and

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insurance benefits, the employment agreement provides for a base salary of $187,500, and the awarding of annual incentive bonuses, targeted at between 50% to 100% of Mr. Burroughs’ base salary, contingent upon our achievement of annual and aggregate EBITDA goals starting at between $6.5 million and $12 million of annual EBITDA, respectively, for 2014 and 2015. We also awarded to Mr. Burroughs (i) an option to purchase 83,333 shares of our common stock at an exercise price of $3.00 per share (the “Burroughs $3.00 Options”), and (ii) an option to purchase up to 83,334 shares of our common stock at an exercise price equal to the price per share at which we complete an initial public offering (the “Burroughs IPO Options”). Of the Burroughs $3.00 Options and IPO Options, (i) 16,666 vest if our UB Water business unit achieves “free cash” of $420,000 by December 31, 2014, and (ii) 75,000 vest if and when we achieve annual or aggregate EBITDA goals during 2014 and 2015 of between $6.5 million and $13.5 million of annual EBITDA. The balance of 75,000 of the Burroughs $3.00 Options and Burroughs IPO Options shall vest upon the achievement of certain operational performance standards. Specifically, (i) 16,666 of each of the Burroughs $3.00 Options and Burroughs IPO Options shall vest if we treat an average of 20,000 barrels per day (45 day average) on December 31, 2014, and (iii) 20,834 of each of the Burroughs $3.00 Options and Burroughs IPO Options shall vest if we treat an average of 70,000 barrels per day (45 day average) on December 31, 2015. If we do not achieve the 20,000 barrel per day threshold in 2014, then the 16,666 $3.00 Options and Burroughs IPO Options applicable to such threshold may still vest if the aggregate treatment average (45 day average) on December 31, 2014 and December 31, 2015 is at least 90,000 barrels per day.

As of January 1, 2014, we entered into an employment agreement with our Chief Financial Officer, Sami Ahmad, which amended and restated our original employment agreement with Mr. Ahmad dated as of July 22, 2013. The amended and restated employment agreement has a three-year term commencing January 1, 2014, subject to automatic renewal for subsequent one-year terms until terminated. In addition to vacation and other standard and customary fringe benefits, such as Company provided health and insurance benefits, the amended and restated employment agreement provides for a base salary of $200,000, and the awarding of annual incentive bonuses, targeted at between 50% to 100% of Mr. Ahmad’s base salary, contingent upon our achievement of annual and aggregate EBITDA goals starting at between $6.5 million and $12 million of annual EBITDA, respectively, for 2014 and 2015. As of July 22, 2013, we awarded to Mr. Ahmad (i) 25,000 restricted shares of our common stock; 12,500 of which vested immediately, and 12,500 of which vest upon completion of our initial public offering, and (ii) an option to purchase up to 283,333 shares of our common stock; 141,666 of which were granted at an exercise price of $3.00 per share (the “Ahmad $3.00 Options”), and 141,667 of which were granted at an exercise price equal to the price per share at which we complete an initial public offering (the “Ahmad IPO Options”). Of the Ahmad $3.00 Options, 49,583 vest in equal annual installments on January 1, 2015, 2016 and 2017; and 92,084 vest if and when we achieve annual or aggregate EBITDA goals between $6.5 million and $13.5 million of annual EBITDA. Of the IPO Options, 49,583 vest in equal annual installments on January 1, 2015, 2016 and 2017; and 92,083 vest if and when we achieve annual or aggregate EBITDA goals between $6.5 million and $13.5 million of annual EBITDA.

Potential Payments Upon Termination of Employment

If Mr. Propper is terminated due to his death or disability, we are required to continue paying to him (or his estate) his then effective base salary for the shorter of (i) the twelve month period following such termination, or (ii) the remainder of the term of the employment agreement, subject to reduction in connection with any insurance proceeds payable for such death or disability. If we terminate Mr. Propper for “cause” or if he terminates without “good reason” (as those terms are defined in Mr. Propper’s employment agreement), we are required to pay him his then effective base salary and employee benefits through the date of such termination. All unvested options and stock awards shall terminate upon such termination, and he must exercise any vested stock and option awards within the ninety day period following the date of such termination. If we terminate Mr. Propper’s employment without “cause” or if he terminates for “good reason”, we are required to pay him his base salary and benefits, not including additional compensation, for a severance period of twelve (12) months from the effective date of termination; or until the term of the agreement expires, whichever period is shorter (during which period Mr. Propper has agreed to make himself available to provide strategic consulting and transition services), and the options we granted Mr. Propper in the agreement will accelerate upon termination, implying continued service during such severance period;

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provided, however, if Mr. Propper’s termination occurs following a “change of control” (as defined in Mr. Propper’s employment agreement), he shall fully vest in all options.

If Mr. Burroughs is terminated due to his death or disability, we are required to continue paying to him (or his estate) his then effective base salary for the shorter of (i) the six month period following such termination, or (ii) the remainder of the term of the employment agreement, subject to reduction in connection with any insurance proceeds payable for such death or disability. If we terminate Mr. Burroughs for “cause” or if he terminates without “good reason” (as those terms are defined in Mr. Burroughs’ employment agreement), we are required to pay him his then effective base salary and employee benefits through the date of such termination. If we terminate Mr. Burroughs’ employment without “cause” or if he terminates for “good reason”, we are required to pay him his base salary and benefits, not including additional compensation, for a severance period of six months from the effective date of termination (during which period Mr. Burroughs has agreed to make himself available to provide strategic consulting and transition services); provided, however, if Mr. Burroughs’ termination occurs following a “change of control” (as defined in Mr. Burroughs’ employment agreement), he shall fully vest in all options.

If Mr. Ahmad is terminated due to his death or disability, we are required to continue paying to him (or his estate) his then effective base salary for the shorter of (i) the twelve month period following such termination, or (ii) the remainder of the term of the employment agreement, subject to reduction in connection with any insurance proceeds payable for such death or disability. If we terminate Mr. Ahmad for “cause” or if he terminates without “good reason” (as those terms are defined in Mr. Ahmad’s employment agreement), we are required to pay him his then effective base salary and employee benefits through the date of such termination. All unvested options and stock awards shall terminate upon such termination, and he must exercise any vested stock and option awards within the ninety day period following the date of such termination. If we terminate Mr. Ahmad’s employment without “cause” or if he terminates for “good reason”, we are required to pay Mr. Ahmad his base salary and benefits, not including additional compensation, for a severance period of twelve (12) months from the effective date of termination (during which period Mr. Ahmad has agreed to make himself available to provide strategic consulting and transition services). If such termination occurs prior to July 22, 2014, all time-based options shall vest as if Mr. Ahmad had been employed for one full year. If such termination occurs after July 22, 2014, all time-based options shall vest provided that the option performance objectives have been met. If Mr. Ahmad’s employment is terminated without “cause” or for “good reason” following a “change of control” (as defined in Mr. Ahmad’s employment agreement), he shall fully vest in all options.

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Outstanding Equity Awards at Fiscal Year End

The following table sets forth officer information regarding outstanding unexercised options for each named executive officer outstanding as of January 1, 2014:



	Option Awards											Stock Awards
Name	Number of securities underlying unexercised options Exercisable (#)		Number of securities underlying unexercised options Unexercisable (#)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option exercise price ($)			Option expiration date			Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾		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 ($)
Maarten Propper													16,667	⁽²⁾		100,002
		0		58,333			3.00			4/2/2023	⁽³⁾
		0		108,333			3.00			4/2/2023	⁽⁴⁾
		0		58,333				⁽⁵⁾		4/2/2023	⁽³⁾
		0		108,334				⁽⁵⁾		4/2/2023	⁽⁴⁾
Mitch Burroughs		0		83,333			3.00			4/2/2023	⁽⁶⁾
		0		83,334				⁽⁷⁾		4/2/2023	⁽⁶⁾
Sami Ahmad													12,500	⁽⁸⁾		75,000
		0		49,583			3.00			7/21/2023	⁽⁹⁾
		0		92,083			3.00			7/21/2023	⁽¹⁰⁾
		0		49,583				⁽⁷⁾		7/21/2023	⁽⁹⁾
		0		92,084				⁽⁷⁾		7/21/2023	⁽¹⁰⁾

(1)

The market price for our common stock is based upon the assumed initial public offering price of $6.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus.

(2)

The restricted stock was granted on April 3, 2013 and vests in full upon the completion of our initial public offering.

(3)

The stock options were granted on April 3, 2013 and vest in equal annual installments over a three year period commencing on January 1, 2014.

(4)

The stock options were granted on April 3, 2013 and vest when we achieve annual or aggregate EBITDA goals starting at $6.5 million of annual EBITDA.

(5)

The exercise price is the lower $9.00 or the price per share at which we complete our initial public offering.

(6)

The stock options were granted on January 1, 2014 and vest partially based upon EBITDA goals starting at $6.5 million of annual EBITDA, as well as operational goals relating to our volume of treated barrels of water per day.

(7)

The exercise price is equal to the price per share at which we complete our initial public offering.

(8)

The restricted stock was granted on July 22, 2013 and vests in full upon the completion of our initial public offering.

(9)

The stock options were granted on July 22, 2013 and vest in equal annual installments over a three year period commencing on January 1, 2014.

(10)

The stock options were granted on July 22, 2013 and vest when we achieve annual or aggregate EBITDA goals starting at $6.5 million of annual EBITDA.

Directors’ Compensation

Other than as set forth below with respect to Mr. Schaeffer, we currently have no policy with respect to the granting of compensation to directors in connection with their services to the Company, except that we will not provide any such compensation to directors who are not independent. Until we develop a policy in this regard, we will reimburse directors for their cost of travel and lodging to attend meetings of the board of

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directors and for their out-of-pocket costs incurred on behalf of the Company. Other than our directors that received compensation in their capacity as officers of the Company, none of our directors received any compensation during the year ended December 31, 2013.

In connection with the appointment of Mr. Schaeffer as Chairman of our board of directors on March 25, 2014, we agreed to pay to Mr. Schaeffer $120,000 per year in cash payments, payable in quarterly installments of $30,000 in arrears. We provided Mr. Schaeffer with a short-term option to purchase 150,000 shares of common stock at an exercise price of $3.00 per share. We have also agreed to issue to Mr. Schaeffer a long-term option to purchase 270,000 shares of our common stock at an exercise price equal to the price at which our shares of common stock are sold in this offering. This option has a term of five years (subject to reduction upon resignation, removal or termination as a director) and will vest as follows: (i) 90,000 shares shall vest on March 25, 2015; (ii) 90,000 shares shall vest on March 25, 2016; and (iii) 90,000 shares shall vest when (A) Mr. Schaeffer recruits either an independent director or senior executive officer for the Company that is acceptable to the board of directors, and (B) we complete an additional equity financing generating at least $10 million in proceeds after the completion of our initial public offering. Further, we have issued to Mr. Schaeffer 12,500 shares of our common stock, and have agreed to issue an additional 12,500 shares of common stock upon the completion of this offering.

In connection with the appointment of Mr. Ross to our board of directors on June 11, 2014, we agreed to issue to him a short-term option to purchase 50,000 shares of common stock at an exercise price of $3.00 per share, which he promptly exercised. We have also agreed to issue to Mr. Ross a long-term option to purchase 75,000 shares of our common stock at an exercise price equal to the price at which our shares of common stock are sold in this offering. This option has a term of five years (subject to reduction upon resignation, removal or termination as a director) and will vest in three equal annual installments on June 11, 2015, 2016 and 2017.

In connection with his resignation in June 2014, we issued to Norman Manness, a former director, an option to purchase 50,000 shares of our common stock. The option is immediately exercisable, has an exercise price of $3.00 per share and expires five years after the grant date.

Equity Incentive Plan

Background

On January 15, 2014, our board of directors approved the Armada Water Assets, Inc. 2014 Performance Award and Option Plan (the “2014 Plan”). On February 4, 2014, our stockholders approved the 2014 Plan at a special meeting. The purpose of the 2014 Plan is to provide eligible officers, directors, key employees and consultants with an incentive to contribute to our success and to operate and manage our business in a manner that will provide for our long term growth and profitability and provide a means of obtaining, rewarding and retaining key personnel. In the judgment of the Board, awards under the 2014 Plan will be a valuable incentive and will serve to the ultimate benefit of stockholders by aligning more closely the interests of 2014 Plan participants with those of our stockholders.

The 2014 Plan is flexible in that it provides for the grant of stock options (“Options”), stock appreciation rights (“SARs”), shares of restricted stock (“Restricted Stock”), RSUs, performance shares and performance units (“Performance Shares” and “Performance Units”), and cash incentives (the “Cash Incentives”), singularly or in combination as determined by the Audit and Executive Oversight Committee.

Administration of the 2014 Plan

The 2014 Plan will be administered by a plan administrator consisting of either our board of directors or Audit and Executive Oversight Committee, or by such other committee consisting of not less than two non-employee directors appointed by the Board (the “Committee”). The Committee will be comprised solely of directors qualified to administer the 2014 Plan pursuant to Rule 16b-3 under the Exchange Act. It also is expected that the composition of the Committee will satisfy the requirements of Treas. Reg. Section 1.162-27(e)(3) with respect to grants made to certain key executive officers (the “Key Executives”). Compliance with this requirement is one of the factors necessary to enable us to avoid the income tax deduction limitation under Section 162(m) (the “Section 162(m) Limitation”) of the Code on annual

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compensation in excess of $1,000,000. As the limitations set forth under Code Section 162(m) only apply to annual compensation in excess of $1,000,000 per each Key Executive, they are not currently factored in with regard to our compensation planning.

Shares Subject to the 2014 Plan

The 2014 Plan authorizes the grant of awards relating to 2,000,000 shares of our common stock. If any corporate transaction occurs which causes a change in our capitalization, the Committee is authorized to make such adjustments to the number and class of shares of our common stock delivered, and the number and class and/or price of shares of our common stock subject to outstanding awards granted under the 2014 Plan, as it deems appropriate and equitable to prevent dilution or enlargement of participants’ rights.

Eligibility and Participation

Employees eligible to participate in the 2014 Plan include our management and key employees, as determined by the Committee, including employees who are members of the Board. Directors who are not employees (“Director Participants”) and consultants also will be able to participate in the 2014 Plan. We anticipate that the approximate number of individuals who will be eligible to participate under the 2014 Plan will be at least 125.

Amendment and Termination of the 2014 Plan

In no event may any award under the 2014 Plan be granted on or after the tenth anniversary of the 2014 Plan’s effective date. The Board may amend, modify or terminate the 2014 Plan at any time; provided that no amendment requiring stockholder approval for the 2014 Plan to continue to comply with Sections 162(m) or 422 of the Code shall be effective unless approved by stockholders, and no amendment, termination or modification shall materially and adversely affect any outstanding award without the consent of the participant.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides certain information with respect to all of our equity compensation plans in effect as of January 1, 2014.

Equity Compensation Plan Information


Plan Category	Number of common shares 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 common shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c)
Equity compensation plans approved by security holders:		—		—		—
Equity compensation plans not approved by security holders:		783,333				N/A
Total		783,333				—

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial ownership of our common stock as of July 22, 2014 by:

•

each of our named executive officers;

•

each of our directors;

•

all of our executive officers and directors as a group; and

•

each person or group of affiliated persons known by us to beneficially own more than 5% of our common stock.

The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power. Applicable percentage ownership determined prior to the offering is based on 9,112,050 shares of common stock outstanding on July 22, 2014, which does not include (i) the conversion of $2.5 million principal amount of convertible promissory notes into shares of common stock upon the closing of this offering, and (ii) the conversion of Series A, Series B, Series C, Series D, and Series E Preferred Stock into an aggregate of 4,351,063 shares of common stock upon the closing of this offering. Applicable percentage ownership determined after the offering is based on 9,112,050 shares of common stock outstanding on July 22, 2014, and includes (i) the issuance of 2,500,000 shares of common stock sold in this offering (not including the underwriter’s over-allotment), (ii) the conversion of $2.5 million principal amount of convertible promissory notes into 595,238 shares of common stock upon the closing of this offering, (iii) the issuance of 41,667 shares of common stock to certain of our officers and directors, (iv) the issuance of 50,000 shares of common stock in connection with our acquisition of trucks and equipment, and (v) the conversion of Series A, Series B, Series C, Series D and E Preferred Stock into 4,351,063 shares of common stock upon the closing of this offering. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days of July 22, 2014 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each beneficial owner listed below is c/o Armada Water Assets, Inc., 2425 Fountain View Drive, Suite 300, Houston, Texas 77057. We believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.


	Shares Beneficially Owned Prior to Offering						Shares Beneficially Owned After Offering
Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percentage of Class			Amount and Nature of Beneficial Ownership			Percentage of Class)
Officers and Directors
Maarten Propper		70,001	⁽¹⁾		*			86,668	⁽²⁾		*
Mitch Burroughs		204,987	⁽³⁾		2.25	%		952,158	⁽⁴⁾		5.72	%
Sami Ahmad		65,833	⁽⁵⁾		*			78,833	⁽⁶⁾		*
J. John Combs		83,334	⁽⁷⁾		*			148,719			*
Thomas R. Ross		50,000	⁽⁸⁾		*			50,000	⁽⁸⁾		*
William F. Miller III		192,454			2.11	%		192,454			1.16	%
Richard Schaeffer		262,500	⁽⁹⁾		2.88	%		275,000	⁽¹⁰⁾		1.65	%
Principal Stockholders
M. Austin Smith		956,211	⁽¹¹⁾		10.49	%		1,621,073	⁽¹²⁾		9.74	%
Stephen P. Harrington		729,824	⁽¹³⁾		7.85	%		732,252 ⁽¹⁴⁾			4.40	%
Clyde Berg		662,500	⁽¹⁵⁾		6.85	%		840,901	⁽¹⁶⁾		5.05	%
Michael J. Garnick		600,001			6.58	%		600,001			3.60	%
All officers and directors as a group (7 persons)		929,109	⁽¹⁷⁾		10.03	%		1,783,832	⁽¹⁸⁾		10.62	%

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Less than 1%.

(1)

Does not include an additional 16,667 shares of restricted stock which do not vest until completion of our initial public offering. Also does not include options to purchase 333,334 shares of common stock which are subject to vesting.

(2)

Does not include options to purchase 333,334 shares of common stock which are subject to vesting.

(3)

Includes 500,001 shares owned directly by Burroughs Investment Partners, LLC, a family investment fund in which Mr. Burroughs serves as sole investment manager, 79,555 shares owned by Mr. Burroughs in his capacity as managing member of Belphil Investment Partners, LLC, and 21,431 shares owned by Mr. Burroughs in his capacity as managing member of New Water Financial, LLC. Does not include options to purchase 166,667 shares of common stock subject to vesting. Also does not include shares of common stock issuable upon the conversion of 1,940,925 shares of Series A Preferred Stock that are beneficially owned by Mr. Burroughs in his capacity as managing member of Belphil Investment Partners, LLC, 425,000 shares of Series B Preferred Stock that are beneficially owned by Mr. Burroughs in his capacity as managing member of Burroughs Family Holdings, LLC, and 3,351,258 shares of Series C Preferred Stock that are beneficially owned by Mr. Burroughs in his capacity as managing member of New Water Financial, LLC, which shares will automatically convert into an aggregate of 812,546 shares of common stock upon the completion of this offering.

(4)

Includes 84,001 shares owned by Mr. Burroughs in his capacity as sole investment manager of Burroughs Investment Partners, LLC, 432,450 shares owned by Mr. Burroughs in his capacity as managing member of Belphil Investment Partners, LLC, 65,385 shares owned by Mr. Burroughs in his capacity as managing member of Burroughs Family Holdings, LLC, and 415,697 shares owned by Mr. Burroughs in his capacity as managing member of New Water Financial, LLC. Does not include options to purchase 166,667 shares of common stock subject to vesting.

(5)

Does not include 12,500 shares of restricted stock which do not vest until completion of our initial public offering. Also does not include options to purchase 283,334 shares of common stock which are subject to vesting.

(6)

Does not include options to purchase 283,334 shares of common stock which are subject to vesting.

(7)

Does not include shares of common stock issuable upon the conversion of 425,000 shares of Series B Preferred Stock that are beneficially owned by Mr. Combs, which shares will automatically convert into 65,385 shares of common stock upon the completion of this offering.

(8)

Does not include options to purchase 75,000 shares of common stock which are subject to vesting.

(9)

Includes 150,000 shares issuable upon the exercise of options. Does not include 12,500 shares of restricted stock to be issued upon completion of our initial public offering. Also does not include options to purchase 270,000 shares of common stock which are subject to vesting.

(10)

Includes 150,000 shares issuable upon the exercise of options. Does not include options to purchase 270,000 shares of common stock which are subject to vesting.

(11)

Includes 286,667 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of JP-Vel Investments, LLC, 632,535 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of Austin Leasing Partners, LLC, and 37,009 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of Austin Water Holdings, LLC. Does not include shares of common stock issuable upon the conversion of 4,321,607 shares of Series B Preferred Stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of Austin Leasing Partners, LLC, and Austin Water Holdings, LLC, which shares will automatically convert into an aggregate of 664,862 shares of common stock upon the completion of this offering.

(12)

Includes 286,667 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of JP-Vel Investments, LLC, 958,029 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of Austin Leasing Partners, LLC, and 376,377 shares of common stock that are beneficially owned by Mr. Smith in his capacity as sole investment manager of Austin Water Holdings, LLC.

(13)

Includes 163,629 shares of common stock that are beneficially owned by Mr. Harrington in his capacity as sole investment manager of Wiltain Investors, LLC, 252,835 shares of common stock that are beneficially owned by Mr. Harrington in his capacity as sole investment manager of SPH Investments, Inc. Profit Sharing Plan fbo Stephen P. Harrington, 21,359 shares of common stock beneficially owned by Mr. Harrington in his capacity as sole investment manager of Harley Dome Investors, LLC, and 187,500

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shares issuable upon conversion of our Series E Preferred Stock (at a conversion price of $4.00 per share, although the conversion price may be adjusted according to the price of the shares sold in this offering). Does not include shares issuable upon conversion of 2,851,258 shares of Series C Preferred Stock owned by Harley Dome Investors, LLC. See “Description of Securities.”

(14)

Includes 226,129 shares of common stock that are beneficially owned by Mr. Harrington in his capacity as sole investment manager of Wiltain Investors, LLC, 401,622 shares of common stock that are beneficially owned by Mr. Harrington in his capacity as sole investment manager of SPH Investments, Inc. Profit Sharing Plan fbo Stephen P. Harrington. All shares owned by Harley Dome Investors, LLC will be distributed to the owners thereof upon the closing of this offering.

(15)

Includes 375,000 shares issuable upon conversion of our Series E Preferred Stock (at a conversion price of $4.00 per share), and 187,500 shares issuable upon the exercise of warrants issued in connection with our Series E Preferred Stock (at an exercise price of $4.00 per share). See “Description of Securities.”

(16)

Includes 178,401 shares issued to Mr. Berg upon the conversion of shares of Series C Preferred Stock by Harley Dome Investors, LLC, of which Mr. Berg is a member. The shares were issued directly to Mr. Berg upon the request of Harley Dome Investors, LLC.

(17)

Includes 150,000 shares issuable upon the exercise of options. Does not include 41,667 shares of restricted stock to be issued upon completion of our initial public offering and options to purchase 1,128,335 shares of common stock which are subject to vesting. Also does not include shares of common stock issuable upon the conversion of 1,940,925 shares of Series A Preferred Stock, 425,000 shares of Series B Preferred Stock, and 3,351,258 shares of Series C Preferred Stock, which shares will convert into an aggregate of 812,546 shares of common stock upon the completion of this offering.

(18)

Includes 150,000 shares issuable upon the exercise of options. Does not include options to purchase 1,128,335 shares of common stock which are subject to vesting.

We do not currently have a formal related party approval policy for review and approval of transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. We expect to adopt such a policy that will identify the types of transactions covered by such policy and the standards to be applied pursuant to such policy. We expect that the Audit and Executive Oversight will be responsible for applying such policy.

Other than as described below, there have been no other transactions since our October 26, 2012 inception, or any currently proposed transaction, or series of similar transactions, to which the Company was or is to be a party, in which the amount involved exceeds $120,000 and in which any current or former director or officer of the Company, any 5% or greater stockholder of the Company or any member of the immediate family of any such persons had, or will have, a direct or indirect material interest other than as disclosed below.

Issuance and Conversion of Acquisition Debt

In connection with our acquisition of Barstow in February 2013, we issued to Belphil Investment Partners, LLC, an investment fund for which Mitch Burroughs at the time was a minority investor and now serves as sole investment manager, 1,500,000 shares of our Series A Preferred Stock and $800,000 principal amount of the Barstow Notes. In late 2013, the members of the fund elected Mr. Burroughs as the managing member of the fund. In April 2014, Belphil agreed to convert $0.44 million of such note (including accrued interest) into 440,925 shares of Series A Preferred Stock and 60,000 shares of common stock. We also modified the terms of the Series A Preferred Stock to, among other things, change the conversion terms of such stock. After we repaid a portion of the note from the proceeds of our offering of Series E Preferred Stock, in June 2014, Belphil agreed to convert the remaining principal and accrued interest of approximately $0.06 million into 19,555 shares of common stock in full satisfaction of the note.

In connection with our acquisition of Western Slope in September 2013, we issued to New Water Financial, LLC, an affiliate of Mr. Burroughs, 2,000,000 shares of our Series C Preferred Stock and $1.5 million principal amount of the Western Slope Promissory Notes. In addition, in that transaction we also issued to UB Water, LLC, 1,500,000 shares of our Series D Preferred Stock. Mr. Burroughs was at the time of that transaction a minority, non-controlling partner in UB Water, LLC. In April 2014, New Water Financial agreed to convert $1.35 million of such note and accrued interest into 1,351,258 shares of Series C Preferred Stock. We also modified the terms of the Series C Preferred Stock to, among other things, change the conversion terms of such stock. After we repaid a portion of the note from the proceeds of our offering of Series E Preferred Stock, in June 2014, New Water

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Financial agreed to convert the remaining principal and accrued interest of approximately $0.06 million into 21,431 shares of common stock in full satisfaction of the note.

Mr. Burroughs is currently our Vice President — Corporate Development and a member of our board of directors. He served as our President and a member of our board of directors at the time we acquired Barstow and Western Slope.

Promissory Notes

On November 26, 2013, we issued to William Miller III, a member of our board of directors, promissory notes in the aggregate principal amount of $0.4 million. The notes accrue interest at a rate of 10% per annum and is payable on the earlier of (i) November 26, 2014, or (ii) the date in which we complete an initial public offering of equity securities that yields more than $10 million in gross proceeds. In connection with the notes, we issued to Mr. Miller 15,000 shares of our common stock. In April 2014, Mr. Miller agreed to convert $0.3 million of the notes, which constituted the entire outstanding principal balance of one of the notes as of March 31, 2014, into 105,078 shares of common stock. In June 2014, Mr. Miller agreed to convert the balance of his outstanding notes and accrued interest into 38,709 shares of our common stock in full satisfaction of the note.

On January 14, 2014, we entered into a Third Amended and Restated Promissory Note with Austin Leasing Partners, LLC in the principal amount of $1,518,500. The note accrues interest at a rate of 12% per annum (other than the original advance of $251,000, which accrues interest at a rate of 10% per annum) and is payable (including all interest accrued prior to the amendment and restatement of the note) on the earlier of (i) September 24, 2014, or (ii) the date in which we realize proceeds of at least $10 million from any public offering of our equity securities. In connection with the note, we issued to Austin Leasing Partners 65,000 shares of our common stock. Austin Leasing is controlled by Mark Smith, a principal stockholder of Armada. In April 2014, Austin Leasing Partners agreed to convert $1,418,500 of the note, which constituted the entire outstanding principal balance as of March 31, 2014, into 496,764 shares of common stock. In June 2014, Austin Leasing agreed to convert the remaining $0.006 million payable under the note into 2,168 shares of our common stock in full satisfaction of the note.

Conversion of Acquisition Preferred Stock

In July 2014, Belphil Investment Partners, LLC agreed to convert 1,940,925 shares of Series A Preferred Stock into 352,895 shares of common stock, Burroughs Family Holdings, LLC agreed to convert 425,000 shares of Series B Preferred Stock into 65,385 shares of common stock, and New Water Financial, LLC agreed to convert 3,351,258 shares of Series C Preferred Stock into 394,266 shares of common stock. Mitch Burroughs, our Vice President — Corporate Development and a director of the Company, serves as the managing member of Belphil Investment Partners, LLC, Burroughs Family Holdings, LLC and New Water Financial, LLC. In addition, UB Water, LLC, in which Mr. Burroughs owns a minority interest, agreed to convert 1,500,000 shares of Series D Preferred Stock into 50,000 shares of common stock. The foregoing conversions are contingent upon the completion of this offering.

In July 2014, Austin Leasing Partners, LLC and Austin Water Holdings, LLC agreed to convert an aggregate of 4,321,607 shares of Series B Preferred Stock into 664,863 shares of common stock. In addition, John Combs, a director of the Company, agreed to convert 425,000 shares of Series B Preferred Stock into 65,385 shares of common stock. The foregoing conversions are contingent upon the completion of this offering.

The agreement to convert the foregoing shares of preferred stock was, in large part, done at the suggestion of our underwriter, to simplify our capital structure in contemplation of this offering. The conversion ratio was agreed upon following negotiations between the preferred stock holders and us.

Operational Services and Personnel

John Combs, a member of our board of directors, serves as the Chief Executive Officer of Strategic Environmental & Energy Resources, Inc., a publicly traded company (“SEER”). During 2013, REGS, LLC, a subsidiary of SEER, provided services and personnel to our Harley Dome business unit for aggregate annual consideration of approximately $450,000, of which approximately $146,000 was paid after we acquired the Harley Dome business unit. The services included offloading trucks, operating equipment, performing minor maintenance

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on our equipment, and completing certain billing and record keeping tasks. We expect REGS, LLC to continue providing personnel and services to our Harley Dome business unit for the foreseeable future.

Employment Arrangements

We have entered into employment agreements with Maarten Propper, Mitch Burroughs and Sami Ahmad. See “Employment Agreements” above.

Director Issuance

On March 28, 2014, after his appointment to our board of directors, Richard Schaeffer purchased 100,000 shares of our common stock at a purchase price of $3.00 per share.

On June 12, 2014, after his appointment to our board of directors, Thomas Ross, pursuant to an option we granted to him upon his appointment, purchased 50,000 shares of our common stock at a purchase price of $3.00 per share.

We also agreed to provide to Messrs. Schaeffer and Ross compensation for their services as directors consisting of a combination of cash, restricted stock and stock options, which is more fully described under the section entitled “Directors’ Compensation” above.

Director Independence

The Board applies the definition of independent director as set forth in NASDAQ Rule 5605(a)(2), as well as Rule 10A-3 under the Securities Exchange Act of 1934, as amended.

In accordance with this rule, the Board has determined that Messrs. Ross, Miller, Combs and Schaeffer are independent. We expect Messrs. Schaeffer, Ross and Miller to be the members of our Audit and Executive Oversight Committee.

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DESCRIPTION OF SECURITIES

The following summary of our capital stock, our articles of incorporation, our bylaws, certain indebtedness and the Nevada Revised Statutes (“NRS”) is intended as a summary only and is subject to and qualified in its entirety by reference to our articles of incorporation and bylaws.

Capital Stock

We are authorized to issue 150,000,000 shares of capital stock, 100,000,000 shares of which are designated common stock, $0.0001 par value per share, of which, as of the date of this prospectus, 9,112,050 shares of common stock were issued and outstanding and 50,000,000 shares of preferred stock of which, 3,751,157 shares of Series A Preferred Stock, 10,127,500 shares of Series B Preferred Stock, 6,202,516 shares of Series C Preferred Stock, 1,500,000 shares of Series D Preferred Stock, and 1,331,250 shares of Series E Preferred Stock were issued and outstanding. Additional shares may be issued by our board of directors without further stockholder approval.

Common Stock

Holders of our common stock are entitled to one vote for each share on all matters voted upon by our stockholders, including the election of directors, and do not have cumulative voting rights. Subject to the rights of holders of any then outstanding shares of our preferred stock, our common stockholders are entitled to any dividends that may be declared by our board. Holders of our common stock are entitled to share ratably in our net assets upon our dissolution or liquidation after payment or provision for all liabilities and any preferential liquidation rights of our preferred stock then outstanding. Holders of our common stock have no preemptive rights to purchase shares of our stock. The shares of our common stock are not subject to any redemption provisions and are not convertible into any other shares of our capital stock. All outstanding shares of our common stock are, and the shares of common stock to be issued in the offering will be, upon payment therefor, fully paid and nonassessable. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future. As of the date of this prospectus, we had 146 stockholders of record.

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends, although the terms of our preferred stock prohibit the distribution of dividends to the holders of our common stock until current dividends have been paid to the holders of our preferred stock. The NRS does, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend (1) we would not be able to pay our debts as they become due in the usual course of business or (2) our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution. We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future as we intend to use our funds towards working capital.

Reverse Stock Split

On February 6, 2014, we amended and restated our articles of incorporation to, among other things, institute a 1 for 3 reverse stock split of our common stock. On the effective date of the reverse stock split, each three shares of our common stock were exchanged for one share of our common stock. Unless otherwise indicated, all numbers in this prospectus are reflected on a post-split basis.

Preferred Stock

Within the limits and restrictions provided in the articles of incorporation, the board of directors has the authority, without further action by the stockholders, to issue up to 50,000,000 shares of preferred stock, $0.0001 par value per share, in one or more series. Our board of directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:

•

the designation of the series;

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•

the number of shares of the series, which our board of directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

•

whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

•

the dates at which dividends, if any, will be payable;

•

the redemption rights and price or prices, if any, for shares of the series;

•

the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

•

the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs;

•

whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

•

restrictions on the issuance of shares of the same series or of any other class or series; and

•

the voting rights, if any, of the holders of the series.

We have the authority to issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our common stock might believe to be in their best interests or in which the holders of our common stock might receive a premium for your common stock over the market price of the common stock. Additionally, the issuance of preferred stock may adversely affect the holders of our common stock by restricting dividends on the common stock, diluting the voting power of the common stock or subordinating the liquidation rights of the common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.

Acquisition Preferred Stock

In connection with our acquisition of Barstow, Devonian, and Western Slope in 2013, we issued to the former owners of such entities shares of our Series A (Barstow), Series B (Devonian), Series C (Western Slope) and Series D Preferred Stock (UB Water) (collectively, the “Acquisition Preferred Stock”).

Each class of Acquisition Preferred Stock has a liquidation preference of $1.00 plus accrued dividends thereon. The holders of the Acquisition Preferred Stock do not have any voting rights except: (i) voting rights, if any, required by law; and (ii) the right to vote as a separate class on any amendment or alteration that would materially and adversely alter the rights, preferences, privileges or powers of, or restrictions provided for the benefit of the respective class of Acquisition Preferred Stock. The Acquisition Preferred Stock is also convertible into common stock at variable rates in the future depending on the performance of the acquired entities. Specifically, the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock convert at a range of between $3.00 to $9.00 per share during the term of such preferred stock, subject to automatic conversion on July 1, 2017 if none of the designated financial targets are achieved, at a conversion rate equal to the greater of (i) $9.00 per share, or (ii) if our shares of common stock are publicly traded, the average closing price (or closing bid price, in the event our common stock is not listed on a national exchange) of our common stock over the ten trading day period ending five trading days prior to July 1, 2017. The Series D Preferred Stock is convertible at a variable rate of between the price per share sold in this offering and $90.00 per share during the term of the Series D Preferred Stock, subject to automatic conversion on December 31, 2015 if none of the designated financial targets are achieved, at a conversion rate equal to $150.00 per share.

Between April 2014 and June 2014, the holders of such Acquisition Preferred Stock agreed to convert outstanding acquisition indebtedness into shares of additional Acquisition Preferred Stock and common stock. In July 2014, in order to simplify our capitalization structure, we and the underwriter determined that it would

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be beneficial for us to convert the Acquisition Preferred Stock into shares of common stock. Therefore, in July 2014, the holders of each class of Acquisition Preferred Stock have agreed to convert all of the outstanding shares of Acquisition Preferred Stock into shares of common stock upon the closing of this offering. Specifically, (i) 3,751,157 shares of Series A Preferred Stock will convert into 682,029 shares of common stock, (ii) 10,127,500 shares of Series B Preferred Stock will convert into 1,558,077 shares of common stock, (iii) 6,202,516 shares of Series C Preferred Stock will convert into 729,708 shares of common stock, and (iv) 1,500,000 shares of Series D Preferred Stock will convert into 50,000 shares of common stock. After giving effect to the foregoing conversion and the automatic conversion of our Series E Preferred Stock, as described below, we do not expect to have any outstanding shares of preferred stock upon the completion of this offering.

Series E Preferred Stock

Between April 2014 and June 2014, we issued 1,331,250 shares of Series E Preferred Stock (the “Series E Shares”). The Series E Shares have a liquidation preference of $4.00 per share, plus accrued dividends thereon. The holders of Series E Shares have priority in all liquidation events over the holders of common stock and our other classes of preferred stock.

Commencing on July 1, 2014, the holders of Series E Stock are entitled to receive cumulative dividends, when, as and if declared by the board of directors. The dividends on our Series E Shares accrue at a rate of $0.32 per Series E Share per annum. No dividends may be made on our common stock or other classes of preferred stock unless all cumulative dividends on the Series E Shares have been paid or set aside for payment. We are currently restricted from declaring or paying any dividends on our Series E Preferred Stock under certain of our promissory notes.

The holders of Series E Shares do not have any voting rights except (i) voting rights, if any, required by law, and (ii) the right to vote as a separate class on any amendment or alteration that would materially and adversely alter the rights, preferences, privileges or powers of, or restrictions provided for the benefit of the Series E Preferred Stock.

The holders of the Series E Shares have the right to convert the Series E Shares into the number of shares of common stock equal to the quotient obtained by dividing $4.00 (plus all accrued and unpaid dividends, if any) by $4.00. If not converted sooner, the Series E Shares shall automatically convert upon the completion of this offering into the number of shares of common stock equal to the quotient obtained by dividing $4.00 by the lesser of $4.00 or 70% of the per share initial public offering price of our common stock.

Certificate of Designation

The terms described above are merely summaries of the salient features of the Acquisition Preferred Stock and the Series E Preferred Stock. The actual terms are contained within definitive certificates of designation filed with the Secretary of State of Nevada and filed with the SEC.

Options and Warrants

Options

Summit Acquisition Options

On February 1, 2014, in connection with the modification of certain payment requirements in the Summit acquisition, we issued to the former owners of Summit options to purchase an aggregate of 25,000 shares of common stock at an exercise price equal to the initial public offering price of our common stock, or $3.00 per share if our initial public offering does not occur by February 1, 2016. The options expire on February 1, 2017.

Officer/Director Options

We agreed to grant common stock purchase options to each of our three principal executive officers. See “Employment Agreements” above. We have also agreed to grant common stock purchase options to Richard

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Schaeffer and Thomas Ross in connection with their recent appointment to our board of directors. We also agreed to grant to Mr. Manness, a former director, an option to purchase 50,000 shares. See “Directors’ Compensation” above.

We have only recently adopted a formal option plan, and other than an option to purchase 270,000 shares issued to Mr. Schaeffer, 75,000 shares to Mr. Ross, and 50,000 shares to Mr. Manness, have awarded no options thereunder.

Warrants

Spring 2013 Placement Agent Warrants

In connection with a private offering of 2,108,333 shares of common stock between April and June 2013, we issued warrants to the placement agent to purchase an aggregate of 203,333 shares of common stock. The warrants have an exercise price of $4.50 per share and have a term of five years. Holders of such warrants have no voting rights, and therefore no right to participate in stockholder decisions, until such time as the warrants are exercised for shares of our common stock.

Fall 2013 Placement Agent Warrants

In connection with a private offering of $1,375,000 of convertible promissory notes between October 2013 and November 2013, we issued warrants to the placement agent to purchase an aggregate of 45,833 shares of our common stock at an exercise price of $4.50 per share; provided, however, that if we complete an initial public offering of our common stock prior to November 22, 2014, the foregoing warrants will be (i) exercisable for a quantity of shares equal to $137,500 divided by 105% of the IPO price, at (ii) an exercise price equal to 105% of the IPO price per share.

In connection with a subsequent private offering of $1,125,000 of convertible promissory notes between December 2013 and January 2014, we issued warrants to the placement agent to purchase an aggregate of 24,167 shares of our common stock at an exercise price of $4.50 per share; provided, however, that if we complete an initial public offering of our common stock prior to January 29, 2015, the foregoing warrants will be (i) exercisable for a quantity of shares equal to $72,500 divided by 105% of the IPO price, at (ii) an exercise price equal to 105% of the IPO price per share.

Spring 2014 Series E Preferred Stock Offering

We issued warrants to purchasers of our Series E Preferred Stock. The warrants are exercisable to purchase one share of common stock for every two shares of common stock issued in connection with the conversion of the Series E Preferred Stock that will automatically occur upon the completion of this initial public offering, and have an exercise price equal to 120% of the initial public offering price of our common stock. If we do not complete an initial public offering within six months after the completion of the offering of our Series E Preferred Stock, then the warrants shall be exercisable to purchase one share of common stock for every two shares of common stock issuable upon conversion of the Series E Preferred Stock at an assumed conversion price of $4.00 per share, and shall have an exercise price of $4.00 per share. The warrants expire on April 24, 2019.

Underwriter’s Warrants

We have agreed to issue to the underwriter warrants to purchase up to a maximum total of 143,750 shares of common stock (5% of the shares of common stock sold in this offering, including the over-allotment option). The warrants will be exercisable at any time, and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the offering, which period shall not extend further than five years from the effective date of the offering. The warrants are exercisable at a per share price equal to $7.50 per share, or 125% of the public offering price per share in the offering. In addition, the warrants provide for registration rights upon request, in certain cases. The demand registration right provided will not be greater than five years from the effective date of the offering, and the piggyback registration right provided will not be greater than seven years from the effective date of the offering. We will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend or

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our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.

Certain Provisions of Our Articles of Incorporation, Our Bylaws and the NRS

The following provisions of our articles of incorporation, our bylaws and the NRS may not be considered by some stockholders to be in their best interest. The effect of such provisions could, among other things, delay or frustrate a merger, tender offer or proxy contest, the removal of incumbent directors, or the assumption of control by stockholders, even if such proposed actions would be beneficial to our stockholders. Such effect could cause the market price of our common stock to decrease or could cause temporary fluctuations in the market price of our common stock that otherwise would not have resulted from actual or rumored takeover attempts.

No Cumulative Voting

Under Nevada law, the right to vote cumulatively does not exist unless the articles of incorporation specifically authorize cumulative voting. Our articles of incorporation do not grant stockholders the right to vote cumulatively; therefore stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors.

Limitation of Liability of Directors and Officers

Our articles of incorporation limit the liability of directors to the fullest extent permitted by Nevada law. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on behalf of the Company, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

Stockholder Meetings

Our amended and restated bylaws provide that a special meeting of stockholders may be called only by a resolution adopted by a majority of our board of directors.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

Blank Check Preferred Stock

We believe that the availability of the preferred stock under our articles of incorporation provides us with flexibility in addressing corporate issues that may arise. Having these authorized shares available for issuance will allow us to issue shares of preferred stock without the expense and delay of a special stockholders’ meeting. The authorized shares of preferred stock, as well as shares of common stock, will be available for issuance without further action by our stockholders, unless action is required by applicable law or the rules of any stock exchange on which our securities may be listed.

Our board has the power, subject to applicable law, to issue series of preferred stock that could, depending on the terms of the series, impede the completion of a merger, tender offer or other takeover attempt. For instance, subject to applicable law, a series of preferred stock might impede a business combination by including class voting rights which would enable the holder or holders of such series to block a proposed transaction. Our board will make any determination to issue shares of preferred stock based on its judgment as to our and our stockholders’ best interests. Our board, in so acting, could issue preferred stock having terms which could discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then prevailing market price of the stock.

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Convertible Indebtedness

Convertible Term Notes

General

From October 2013 to January 2014, we issued convertible promissory notes in the aggregate principal amount of $2.5 million. The notes accrue interest of 10% per annum and mature on the earlier of (i) a successful initial public offering, or (ii) one year from the date of issuance. The convertible notes are unsecured obligations.

Mandatory Conversion

The entire outstanding principal amount of and all accrued interest on the convertible notes automatically convert into shares of our common stock upon our successful completion of an initial public offering at a 30% discount to our IPO price. Assuming an offering price of $6.00 (the midpoint of the range set forth on the cover page of this prospectus), the convertible notes shall convert into 595,238 shares of our common stock upon the closing of this offering.

Events of Default

The convertible notes provide for certain events of default which, if any of them were to occur, would permit or require the principal of and accrued interest, if any, on the convertible note to become or be declared due and payable (subject, in some cases, to specified grace periods). These events of default include the following:

•

failure to pay any installment of principal, interest or other fees due and payable;

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breach of any representation, warranty, covenant or obligation under the convertible note;

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any assignment for the benefit of creditors, or the appointment of a receiver or trustee;

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any money judgment entered against us or any of our assets for more than $500,000;

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the institution by or against us of bankruptcy proceedings;

•

the sale by us of more than 80% of our outstanding stock, or the sale of substantially all of our assets; or

•

a default by us with respect to any other indebtedness in excess of $500,000.

Following the occurrence and continuation of an event of default, the convertible notes will accrue interest at a rate of 12% per annum. As of December 31, 2013, we were in compliance in all material respects with all covenants and the provisions contained in the convertible notes.

Summit Acquisition Long Term Notes

General

In connection with our acquisition of Summit, we issued to the former owners of Summit Promissory Notes in the aggregate principal amount of $2.5 million. The notes accrue interest of 4% per annum and mature in January 2017.

Conversion

All or any portion of the notes are convertible, at the option of the holder, at any time after the completion of this offering and prior to February 2015. The conversion price under the notes is equal to the price per share of common stock in this offering.

Events of Default

The notes provide that if we receive notice from the noteholders of any failure by us to pay any installment or interest when due and do not cure within 10 days of such notice, we will be in default under the note. Upon such default, the full amount outstanding under the note may, at the option of the holder, become immediately due and payable. After such event of default, any unpaid amounts that are immediately due and owing under the note shall accrue interest at 8% per annum.

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Indemnification of Directors and Officers

We are a Nevada corporation and generally governed by the Nevada Private Corporations Code, Title 78 of the Nevada Revised Statutes, or NRS.

Section 78.138 of the NRS provides that, unless the corporation’s articles of incorporation provide otherwise, a director or officer will not be individually liable unless it is proven that (i) the director’s or officer’s acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud, or a knowing violation of the law.

Section 78.7502 of the NRS permits a company to indemnify its directors and officers against expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending, or completed action, suit, or proceeding, if the officer or director (i) is not liable pursuant to NRS 78.138, or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director was unlawful. Section 78.7502 of the NRS also precludes indemnification by the corporation if the officer or director has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court determines that in view of all the circumstances, the person is fairly and reasonably entitled to indemnity for such expenses and requires a corporation to indemnify its officers and directors if they have been successful on the merits or otherwise in defense of any claim, issue, or matter resulting from their service as a director or officer.

Section 78.751 of the NRS permits a Nevada corporation to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action, suit, or proceeding as they are incurred and in advance of final disposition thereof, upon determination by the stockholders, the disinterested board members, or by independent legal counsel. Section 78.751 of NRS requires a corporation to advance expenses as incurred upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the company if so provided in the corporations articles of incorporation, bylaws, or other agreement. Section 78.751 of the NRS further permits the company to grant its directors and officers additional rights of indemnification under its articles of incorporation, bylaws, or other agreement.

Section 78.752 of the NRS provides that a Nevada company may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a director, officer, employee, or agent of the company, or is or was serving at the request of the company as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise, for any liability asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee, or agent, or arising out of his status as such, whether or not the company has the authority to indemnify him against such liability and expenses.

Disclosure of Commission Position on Indemnification for Securities Act Liabilities

Our articles of incorporation and bylaws provide that we may indemnify to the full extent of our power to do so, all directors, officers, employees, and/or agents. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors, officers and persons controlling us, we have been advised that it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.

Lock-up Agreement

For a description of the lock up agreements with the underwriter that restricts sales by us and our executive officers and directors, see the information under the heading “Underwriting.”

Listing

We have applied for listing of our common stock on the NASDAQ Capital Market under the symbol “AWA”.

Transfer Agent

The transfer agent and registrar for our common stock is Island Stock Transfer, 15500 Roosevelt Blvd., Suite 301, Clearwater, Florida, 33760.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for shares of our common stock. Future sales of substantial amounts of shares of our common stock, including shares issued upon the exercise of outstanding options and warrants, in the public market after this offering, or the possibility of these sales occurring, could adversely affect the prevailing market price for our common stock from time to time or impair our ability to raise equity capital in the future.

Upon the closing of this offering, a total of 16,650,018 shares of common stock will be outstanding, assuming (i) 7,777,421 shares of common stock issued and outstanding as of March 31, 2014, and 2,500,000 shares of common stock sold in this offering, (ii) 50,000 shares of common stock issued upon completion of this offering in connection with our acquisition of trucks and equipment in March 2014, (iii) 50,000 shares of common stock pursuant to private placements after March 31, 2014, (iv) 40,000 shares of common stock issued in connection with our Exclusive Distributor Agreement with RecyClean, (v) the conversion of approximately $5.9 million of our acquisition promissory notes and $2.7 million of our short-term promissory notes (included accrued interest) into shares of preferred stock and 1,244,626 shares of common stock, (vi) 3,019,813 shares of common stock issued upon the conversion of our Series A, Series B, Series C and Series D Preferred Stock, (vii) 1,331,250 shares of common stock issued upon the automatic conversion of our Series E Preferred Stock, (viii) 41,667 shares of common stock issued to certain of our executive officers and directors, and (ix) 595,238 shares of common stock issued upon the conversion of our $2.5 million principal amount convertible promissory notes. This number of shares does not include 375,000 shares of our common stock subject to the underwriters' over-allotment option and also assumes no exercise or conversion of any outstanding options, warrants, convertible preferred stock and convertible notes, except as set forth above. Of our outstanding shares, all 2,500,000 shares of common stock sold in this offering by us, plus any shares sold upon exercise of the underwriter’s option to purchase additional shares, will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by “affiliates,” as that term is defined in Rule 144 under the Securities Act.

The remaining shares of common stock will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below.

In addition, of the 1,353,333 shares of our common stock that were subject to our outstanding stock options, 75,000 options to purchase shares of common stock were vested as of the date of this prospectus and will be eligible for sale 180 days following the effective date of this offering, subject to extension as described in the section entitled “Underwriting.” In addition, warrants to purchase 998,958 shares of common stock were vested as of the date of this prospectus and will be eligible for sale 180 days following the effective date of this offering, subject to extension as described in the section entitled “Underwriting.”

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

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In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

•

1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or

•

the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701.

As of March 31, 2014, none of our shares of our outstanding common stock had been issued in reliance on Rule 701 as a result of exercises of stock options.

Equity Plan

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all shares of common stock subject to outstanding stock options and common stock issued or issuable under our stock plan. We expect to file the registration statement covering shares offered pursuant to our stock plan shortly after the date of this prospectus, permitting the resale of such shares by non-affiliates in the public market without restriction under the Securities Act and the sale by affiliates in the public market subject to compliance with the resale provisions of Rule 144.

Registration Rights

We granted registration rights in connection with the private placement of 2,108,333 shares of our common stock between April and July 2013. Under these registration rights, we agreed to allow the purchasers of these shares to participate in an initial public offering of our common stock, subject, however, to standard cut-back rights granted to the underwriter to, in its discretion, exclude these shares from this offering based upon market conditions. Since the underwriter has advised us that, in its discretion, it does not believe that market conditions would support the inclusion of these shares in this offering, the registration rights granted require us to file with the SEC a reoffer registration statement to register the shares of such purchasers after the expiration of a waiting period as determined by the underwriter. We are required to pay all expenses incurred in connection with the registration of such shares.

The holders of these shares are restricted from selling them upon the completion of our initial public offering. Specifically, each holder may only publicly sell or distribute: (i) one-half of the private placement shares owned by such holder commencing 60 days after the completion of this initial public offering, and (ii) the remaining private placement shares owned by such holder no sooner than 120 days after the completion of this offering, provided that the underwriter may modify or extend such time periods in its discretion based upon market conditions.

In addition, we also granted to our placement agent in the foregoing offering piggyback registration rights on 70,000 shares underlying warrants granted to the placement agent. While such registration rights do not require us to include the placement agent’s warrant shares in this initial public offering, it will have the right to include its warrant shares in reoffer registration statement described in the paragraph above.

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In addition, a warrant to purchase 125,000 shares of common stock (143,750 shares if the over-allotment is exercised in full) that we will issue to the underwriter as partial compensation for its services as underwriter provide for certain “demand” and “piggyback” registration rights at our expense with respect to the underlying shares of common stock during the five and seven year periods commencing six months after the effective date of the registration statement on Form S-1 of which this prospectus forms a part.

Lock-Up Agreements

From October 2013 to January 2014, we issued in a private placement an aggregate of $2.5 million in convertible promissory notes, which will automatically convert into shares of common stock upon the completion of this initial public offering. The holders of such notes have agreed that, if requested by us or the underwriter, they will not sell, transfer or dispose such shares of common stock for up to 180 days after the completion of this initial public offering.

From April through June 2014, in a series of transactions, we issued 1,331,250 shares of Series E Preferred Stock, which, if not converted sooner, will automatically convert into 1,331,250 shares of common stock upon the completion of this initial public offering. The holders have agreed that, unless otherwise waived by the underwriter, they will not sell, transfer or dispose such shares of common stock for up to 180 days after the completion of this initial public offering, along with an additional 20 days to the extent necessary to comply with applicable regulatory requirements.

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UNDERWRITING

Aegis Capital Corp. is acting as the sole underwriter of this offering. We have entered into an underwriting agreement, dated , 2014, with the underwriter. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to this underwriter and the underwriter has agreed to purchase from us, at the public offering price per share less the underwriting discounts set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:


Name of Underwriter		Number of Shares
Aegis Capital Corp.

The underwriter is committed to purchase all the shares of common stock offered by us other than those covered by the option to purchase additional shares described below, if it purchases any shares. The obligations of the underwriter may be terminated upon the occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriter’s obligations are subject to customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the underwriter of officers’ certificates and legal opinions.

The underwriter is offering the shares, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

The underwriter proposes to offer the common stock directly to the public at the public offering price set forth on the cover page of this prospectus and to certain dealers that are members of the Financial Industry Regulatory Authority, or FINRA, at that price less a concession not in excess of $ per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $ per share from the public offering price. After the public offering of the shares, the offering price and other selling terms may be changed by the underwriter.

We have agreed to indemnify the underwriter against specified liabilities, including liabilities under the Securities Act of 1933, and to contribute to payments the underwriter may be required to make in respect thereof.

Over-Allotment Option

We have granted the underwriter an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the underwriter to purchase a maximum of 375,000 additional shares (15% of the shares sold in this offering) from us to cover over-allotments, if any. If the underwriter exercises all or part of this option, it will purchase shares covered by the option at the public offering price per share that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total price to the public will be $ and the total net proceeds, before expenses, to us will be $ .

Discount

The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriter of its over-allotment option.

Per Share

Total Without Over-
Allotment Option

Total With
Over-
Allotment
Option

Public Offering Price

Underwriting discount (7.5%)

Proceeds, before expenses, to us

Non-accountable expense allowance (1%)⁽¹⁾

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(1)

The expense allowance of 1% is not payable with respect to the shares sold upon exercise of the underwriter’s over-allotment option.

The underwriter proposes to offer the shares to the public at the public offering price per share set forth on the cover of this prospectus. In addition, the underwriter may offer some of the shares to other securities dealers at such price less a concession of $ per share. After the initial offering, the public offering price and concession to dealers may be changed.

We have agreed to pay to Aegis a non-accountable expense allowance equal to 1% of the public offering price. We have paid an aggregate expense deposit of $25,000 to the underwriter for out-of-pocket accountable expenses which will be applied against the 1% non-accountable expense allowance. The underwriting agreement, however, provides that in the event the offering is terminated, the $25,000 expense deposit paid to the underwriter will be returned to the extent such out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(f)(2)(C).

In addition to the 1% non-accountable expense allowance, we have also agreed to pay or reimburse the underwriter for certain of the underwriter’s expenses relating to the offering in a maximum amount of $100,000 for all such expenses, including: (i) all Public Filing System filing fees associated with the review of the offering by FINRA; (ii) all fees, expenses incurred by the underwriter in conducting background checks of our directors and officers in an amount not to exceed $5000 per individual; (iii) the fees and expenses of the underwriters’ legal counsel up to a maximum of $25,000, but exclusive of the fees relating to the registration or qualification of the shares under the “blue sky” securities laws; (iv) the $21,775 cost associated with the underwriter’s use of Ipreo’s book-building, prospectus tracking and compliance software for the offering; (v) all fees, expenses and disbursements relating to background checks of our officers and directors in an amount not to exceed $5,000 per individual and $15,000 in the aggregate; (vi) the costs associated with bound volumes of the public offering materials as well as commemorative mementos and lucite tombstone not to exceed $4,000; and (vii) up to $20,000 of the underwriter’s actual accountable “road show” expenses for the offering. We have also agreed that underwriter’s counsel will act as our “blue sky” counsel and receive a fee of $5000 in connection therewith if the offering is commenced on the NASDAQ Global Market, NASDAQ Global Select Market or the NYSE MKT or a fee of $20,000 if the offering is commenced on the NASDAQ Capital Market or the Over the Counter Bulletin Board.

We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount, will be approximately $1 million.

Discretionary Accounts

The underwriter does not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.

Lock-Up Agreements

Subject to the Registration Rights Agreements described in “Shares Eligible for Future Sale” above, we have agreed with the underwriter that for a period of six months following the date of this prospectus, we will not offer, sell, assign, transfer, pledge, contract to sell or otherwise dispose of, or hedge, any shares of our common stock or any securities convertible into or exchangeable for shares of our common stock, subject to specified exceptions. The underwriter may, in its sole discretion, waive this prohibition. The restriction is not applicable to shares issuable upon conversion or exercise of any existing securities.

In addition, subject to the Registration Rights Agreements, all of our officers, directors and holders of 10% or more of the outstanding shares of our common stock have agreed not to sell any shares beneficially owned by them for a period of six months from the effective date of this Registration Statement.

Underwriter’s Warrants

We have agreed to issue to the underwriter warrants to purchase up to a total of 125,000 shares of common stock (5% of the shares of common stock sold in this offering, including the over-allotment option). The warrants will be exercisable at any time, and from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the offering, which period shall not extend further than

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five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(i). The warrants are exercisable at a per share price equal to $7.50 per share, or 125% of the public offering price per share in the offering. The warrants have been deemed compensation by FINRA and are therefore subject to a 180 day lock-up pursuant to Rule 5110(g)(1) of FINRA. The underwriter (or permitted assignees under Rule 5110(g)(1)) will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will they engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period of 180 days from the date of effectiveness. In addition, the warrants provide for registration rights upon request, in certain cases. The demand registration right provided will not be greater than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(iv). The piggyback registration right provided will not be greater than seven years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(v). We will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants other than underwriting commissions incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend or our recapitalization, reorganization, merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.

Right of First Refusal

If the gross proceeds of this offering are at least $20 million, the underwriting agreement will provide that until twelve months after the date of effectiveness of the offering, the underwriter will have a right of first refusal to act as lead underwriter for each and every future public offering and private equity and public debt offering by us or any of our subsidiaries or successors provided that the term, scope and cost of the engagement of the underwriter by us is competitive with prevailing market terms and conditions available from third parties covering similar transactions.

Electronic Offer, Sale and Distribution of Shares

A prospectus in electronic format may be made available on the websites maintained by the underwriter or selling group members, if any, participating in this offering and the underwriter participating in this offering may distribute the prospectus electronically. The underwriter may agree to allocate a number of shares to selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriter and selling group members that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Stabilization

In connection with this offering, the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and purchases to cover positions created by short sales.

•

Stabilizing transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.

•

Over-allotment transactions involve sales by the underwriter of shares in excess of the number of shares the underwriters are obligated to purchase. This creates a syndicate short position that may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriter may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.

•

Syndicate covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares

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to close out the short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise of the over-allotment option. If the underwriter sells more shares than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the underwriter is concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in the offering.

•

Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the shares originally sold by that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

•

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our shares or common stock or preventing or retarding a decline in the market price of our shares or common stock. As a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions may be effected on the , in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Passive market making. In connection with this offering, the underwriter and the selling group members may engage in passive market making transactions in our common stock on the in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.

Determination of the Initial Public Offering Price

Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined through negotiations between us and the underwriter. In addition to prevailing market conditions, the factors considered in determining the initial public offering price included, our financial information, market valuations of other companies that we and the underwriter believe to be comparable to us, estimates of our business potential, including our prospects for growing our services, the prospects for of the industry in which we compete, the present state of our development, our capital structure and other factors deemed relevant.

An active trading market for our common stock may not develop. It is also possible that, after the offering, the shares will not trade in the public market at or above the initial public offering price.

Other Terms

The underwriter and certain of its affiliates have provided, and may in the future provide, various investment banking, commercial banking and other financial services for us and our affiliates for which they have received, and may in the future receive, customary fees, however, except as disclosed in this prospectus, we have no present arrangements with any of the underwriters for any further services.

From time to time, the underwriter and its affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

Aegis Capital Corp., the underwriter of this offering, acted as placement agent for two private placement offerings of our securities that were closed on November 22, 2013 and January 29, 2014. In its capacity as placement agent with respect to the first private placement, Aegis Capital Corp. was paid an aggregate of $165,100 in cash fees and received warrants exercisable for 45,833 shares of our common stock at $4.50 per share that expire on November 22, 2018; provided, however, that if there is an IPO prior to November 22,

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2014, the foregoing warrants will be (i) exercisable for a quantity of shares equal to $137,500 divided by 105% of the IPO price, at (ii) an exercise price equal to 105% of the IPO price per share. In connection with the second private placement, Aegis Capital Corp. was paid an aggregate of $81,250 in cash fees and received warrants exercisable for 24,167 shares of our common stock at $4.50 per share that expire on January 29, 2019; provided, however, that if there is an IPO prior to January 29, 2015, the foregoing warrants will be (i) exercisable for a quantity of shares equal to $72,500 divided by 105% of the IPO price, at (ii) an exercise price equal to 105% of the IPO price per share. Prior to the pricing of this offering, Aegis Capital Corp. will execute a lock-up agreement pursuant to which it will agree that it will not, sell, transfer, assign, pledge, or hypothecate, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants by any person for a period of 180 days from the date of effectiveness of this registration statement, except as provided in Rule 5110(g)(2) of the Financial Industry Regulatory Authority.

Offer restrictions outside the United States

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

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LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon for us by Fox Rothschild LLP, Philadelphia, Pennsylvania. Certain legal matters in connection with this offering will be passed upon for the underwriters by Loeb & Loeb, LLP, New York, New York.

EXPERTS

The consolidated financial statements of the Company as of and for the years ended December 31, 2013 and 2012 included in this prospectus have been audited by L. J. Soldinger Associates, LLC an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

We filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the shares of 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 and schedule 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. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Armada Water Assets Inc.
Audited Financial Statements
Reports of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2013 and 2012		F-4
Consolidated Statement of Operations for the year ended December 31, 2013 and the period from inception on October 23, 2012 through December 31, 2012		F-5
Consolidated Statement of Cash Flows for the year ended December 31, 2013 and the period from inception on October 23, 2012 through December 31, 2012		F-7
Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2013 and the period form Inception on October 23, 2012 through December 31, 2012		F-9
Notes to Consolidated Financial Statements		F-11
Unaudited Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2014		F-43
Condensed Consolidated Statement of Operations for the three months ended March 31, 2014		F-45
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014		F-47
Notes to Condensed Consolidated Financial Statements		F-50
Wes Tex Vacuum Service, Inc.
Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-79
Balance sheets as of December 31, 2012 and 2011		F-80
Statement of Operations for the years ended December 31, 2012 and 2011		F-81
Statement of Cash Flows for the years ended December 31, 2012 and 2011		F-82
Statement of Stockholders Equity from January 1, 2011 through December 31, 2012		F-83
Notes to Financial Statements		F-84
Oil Raiders Logistics, Inc.
Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-91
Balance sheets as of December 31, 2012 and 2011		F-92
Statement of Operations for the period from Inception on June 16, 2011 through December 31, 2012		F-93
Statement of Cash Flows for the period from Inception on June 16, 2011 through December 31, 2012		F-94
Statement of Stockholders Equity from Inception on June 16, 2011 through December 31, 2012		F-95
Notes to Financial Statements		F-96
Summit Holdings, Inc. and Subsidiaries
Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-104
Balance sheets as of December 31, 2012 and 2011		F-105
Statement of Operations for the years ended December 31, 2012 and 2011		F-106
Statement of Cash Flows for the years ended December 31, 2012 and 2011		F-107
Statement of Stockholders Equity from January 1, 2011 through December 31, 2012		F-108
Notes to Financial Statements		F-109

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	Page
Harley Dome 1, LLC
Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-120
Balance sheet as of December 31, 2012		F-121
Statement of Operations for the period from Inception on June 2, 2012 through December 31, 2012		F-122
Statement of Changes in Members’ Equity for the period from Inception on June 2, 2012 through December 31, 2012		F-123
Statement of Cash Flows for the period from Inception on June 2, 2012 through December 31, 2012		F-124
Notes to Financial Statements		F-125
ER & PWD Joint Venture, LLC
Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-136
Balance sheet as of December 31, 2011		F-137
Statement of Operations for the period from Inception on August 11, 2010 through June 27, 2012		F-138
Statement of Cash Flows for the period from Inception on August 11, 2010 through June 27, 2012		F-139
Statement of Changes in Members’ Equity for the period from Inception on August 11, 2010 through June 27, 2012		F-140
Notes to Financial Statements		F-141
Devonian Acquisition Corp.
Unaudited Interim Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012		F-148
Condensed Consolidated Statement of Operations for the three months ended March 31, 2013 and 2012		F-149
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2013 and 2012		F-151
Notes to Condensed Consolidated Financial Statements		F-153
Summit Holdings, Inc.
Unaudited Interim Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012		F-162
Condensed Consolidated Statement of Operations for the three months ended March 31, 2013 and 2012		F-163
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2013 and 2012		F-164
Notes to Condensed Consolidated Financial Statements		F-165
Western Slope Acquisition Corp.
Unaudited Interim Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012		F-174
Condensed Consolidated Statement of Operations for the six months ended June 30, 2013 and 2012		F-175
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2013 and 2012		F-177
Notes to Condensed Consolidated Financial Statements		F-179

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Armada Water Assets, Inc.:

We have audited the accompanying consolidated balance sheets of Armada Water Assets, Inc. (Successor) as of December 31, 2013 and December 31, 2012, and the related statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2013 and for the period from inception on October 23, 2012 through December 31, 2012 (Successor period). 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 audits in accordance with the 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 misstatement. 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the aforementioned Successor consolidated financial statements present fairly, in all material respects, the financial position of Armada Water Assets, Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the Successor period, in conformity with U.S. generally accepted accounting principles.

As discussed in note 2 to the consolidated financial statements, effective February 4, 2013, Armada Water Assets, Inc. acquired all of the outstanding membership interests of Barstow Production Water Solutions, LLC in a business combination accounted for as a purchase. As a result of the acquisition, the financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable.

/s/ L J Soldinger Associates, LLC
Deer Park, Illinois
April 28, 2014

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Armada Water Assets, Inc. as parent of Barstow Production Water Solutions, LLC:

We have audited the accompanying statement of operations of Barstow Production Water Solutions, LLC (Predecessor) for the period from January 1, 2013 through February 3, 2013, and the related statements of members’ equity and cash flows for the period then ended (Predecessor period). 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.

In our opinion, the aforementioned Predecessor financial statements present fairly, in all material respects, results of operations for the period from January 1, 2013 through February 3, 2013, and the results of its cash flows for the Predecessor period, in conformity with U.S. generally accepted accounting principles.

As discussed in note 2 to the financial statements, effective February 4, 2013, Armada Water Assets, Inc. acquired all of the outstanding membership interests of Barstow Production Water Solutions, LLC in a business combination accounted for as a purchase. As a result of the acquisition, the financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable.

/s/ L J Soldinger Associates, LLC
Deer Park, Illinois
April 28, 2014

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Armada Water Assets, Inc. as parent of Barstow Production Water Solutions, LLC:

We have audited the accompanying balance sheet of Barstow Production Water Solutions, LLC (Predecessor) as of December 31, 2012 and the related statements of operations, members’ equity, and cash flows from August 9, 2012 (inception) to December 31, 2012 (Predecessor Period). The company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Barstow Production Water Solutions, LLC as of December 31, 2012 and the results of its operations and its cash flows for the predecessor period in conformity with accounting principles generally accepted in the United States of America.

/s/ L J Soldinger Associates, LLC
Deer Park, Illinois
February 4, 2013

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ARMADA WATER ASSETS, INC.

CONSOLIDATED BALANCE SHEETS


	Successor					Predecessor
	December 31, 2013			December 31, 2012		December 31, 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents		224,834			—		202,168
Trade accounts receivable		3,171,205			—		130
Other receivables		22,538			—		1,579
Due from related party		—			—		9,257
Prepaid expenses and short term deposits		311,231			—		—
TOTAL CURRENT ASSETS		3,729,808			—		213,134
Property and equipment		17,616,433			—		429,882
Accumulated depreciation		(718,864	)		—		(7,514	)
Property and equipment, net		16,897,569			—		422,368
Intangible assets, net		9,618,797			—		—
Goodwill		4,747,973			—		—
Deferred offering costs, net		271,669			—		—
TOTAL ASSETS		35,265,816			—		635,502
LIABILITIES CURRENT LIABILITIES
Secured line of credit borrowing facilities		1,951,746			—		—
Accounts payable		3,131,590			—		—
Accrued expenses		1,269,987			—		41,593
Other current liabilities		116,304			—		—
Short term notes and current portion of long-term debt – related party		1,918,500
Short term notes and current portion of long-term debt		5,718,474			—		—
TOTAL CURRENT LIABILITIES		14,106,601			—		41,593
NON CURRENT LIABILITIES
Liens payable		897,000

Registration No. 333-196953

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

FORM S-1/A(Amendment No. 1)

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ARMADA WATER ASSETS, INC.

CALCULATION OF REGISTRATION FEE

2,500,000 Shares Common Stock

ARMADA WATER ASSETS, INC.

Aegis Capital Corp

TABLE OF CONTENTS

Industry and Market Data

PROSPECTUS SUMMARY

Overview

Industry and Market

Our Water Treatment Solutions: The Armada Treatment Train System

Strengths and Competitive Advantages

Risk Factors

Company Data and Organizational Chart

Emerging Growth Company Status

The Offering

Summary Consolidated Financial Data

RISK FACTORS

Risks Related to Our Operations

We have acquired a number of businesses to form our operating platform, all of which must be integrated in our all-inclusive operating model.

We are subject to significant operating risks.

We have a limited operating history and our historical financial statements may not provide a meaningful understanding of our future prospects.

Our operating losses and limited liquidity may cause concern about our expansion and growth plans in 2014 and beyond.

The absence of any significant operating history for us makes forecasting our future revenue and expenses difficult, and we may be unable to adjust our spending in a timely manner to compensate for unexpected revenue shortfalls or unexpected expenses.

We incurred substantial indebtedness in connection with our recent acquisitions.

We may be required to repay our $1 million Summit Credit Facility.

We are party to a legal proceeding related to unpaid constructions costs by the former general contractor of our Utah property.

Risks Related to our Acquisition Strategy

We may not be able to grow successfully through future acquisitions or successfully manage future growth.

We may need to raise further capital to finance our acquisition strategy.

We depend on our management, without whose services our business operations could be adversely affected or cease.

We will need to increase the size of our organization, and may experience difficulties in managing growth.

We expect our operating expenses to increase substantially in the future as we attempt to grow our business, and we may need to raise additional funds to meet the demands of growth initiatives.

We may not be able to fully develop the water treatment solutions we are presently targeting.

Our HydroPodTM license is for a short-term period with no assurances that we will be able to extend the license or acquire RecyClean.

Our proposed water treatment solutions are unproven and may not achieve widespread market acceptance among our prospective customers. If we are unable to sell our water treatment systems, our business will suffer.

Our operations are subject to extensive environmental laws and regulations. Our operating costs may increase as a result of complying with environmental laws and regulations. We also could incur substantial costs as a result of violations of or liabilities under such laws and regulations.

Our business depends on spending by the oil and natural gas industry in the United States, and this spending may be adversely affected by industry and financial market conditions that are beyond our control.

Improvements in or new discoveries of alternative energy technologies or frac-ing methodologies could have a material adverse effect on our financial condition and results of operations.

Increased regulation of hydraulic fracturing could result in the reduction in drilling and completing new oil and natural gas wells or minimize water use or disposal, which could adversely impact the demand for our services.

Our logistics business subjects us to the risks of operating within the trucking industry; the trucking industry is extremely competitive and fragmented.

Our water logistics business may suffer if production shifts away from or slows in the shale regions in which we have or plan to have operations.

The trucking industry is subject to regulation, and changes in trucking regulations may significantly increase our costs.

The loss of qualified drivers or other personnel could limit our growth and negatively affect operations.

Geopolitical conditions and global economic factors may adversely affect us.

Weather conditions, natural hazards, availability of water supplies and competing uses may interfere with our sources of water, demand for water services and our ability to supply water to customers.

Risks associated with the collection and delivery of water may impose significant costs.

Contamination of our sources of water could result in service interruptions and human exposure to hazardous substances and subject us to civil or criminal enforcement actions, private litigation and cleanup obligations.

Changes in laws and regulations over which we have no control can significantly affect our business and results of operations.

Risks Related to Ownership of Common Stock and this Offering.

There is no current trading market for our common stock, and there is no assurance of an established public trading market, which would adversely affect the ability of our investors to sell their securities in the public market.

The market price and trading volume of shares of our common stock may be volatile.

If you purchase securities in this offering, you will suffer immediate dilution of your investment.

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

If we continue to fail to maintain effective internal control over financial reporting, the price of our shares of common stock may be adversely affected.

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

If NASDAQ or any other national securities exchange or national quotation system does not list our shares of common stock, our shares of common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.

If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price and trading volume of our common stock could decline.

We do not foresee paying cash dividends on our common stock in the foreseeable future and, as a result, our investors’ sole source of gain, if any, will depend on capital appreciation, if any.

We have adopted an equity incentive plan under which we may grant securities to compensate employees and other services providers, which could result in increased share-based compensation expenses and, therefore, reduce net income.

We are an “emerging growth company” and we cannot be certain that the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

While we currently qualify as an “emerging growth company” under the JOBS Act, we will lose that status at the latest by the end of 2019, which will increase the costs and demands placed upon our management.

The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares.

Our articles of incorporation and bylaws and Nevada law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

USE OF PROCEEDS

DETERMINATION OF OFFERING PRICE

DIVIDEND POLICY

CAPITALIZATION

DILUTION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background

Our Acquisitions

Basis of Presentation

Results of Operations

Results of Operations for Armada Water Assets, Inc. for the period January 1 through March 31, 2014 and 2013

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

FORM S-1/A
(Amendment No. 1)

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

2,500,000 Shares
Common Stock

Our HydroPod^TM license is for a short-term period with no assurances that we will be able to extend the license or acquire RecyClean.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ARMADA WATER ASSETS INC S-1/A